Question 1

Figure 3-1
  
-According to Figure 3-1,the opportunity cost of one more bushel of wheat is

Accepted Answer

A)  higher at B than at D. 
B)  lower at B than at D. 
C)  equal at B and D. 
D)  impossible to determine from the information given. 
A)  higher at B than at D. 
B)  lower at B than at D. 
C)  equal at B and D. 
D)  impossible to determine from the information given.

Question 2

Opportunity cost always arises when a trade-off decision is made.

Accepted Answer

A) True 
 B)False

Question 3

The U.S.government has an annual budget of about $1,600 billion.Does the U.S.government face the problem of scarcity?

Accepted Answer

A)  No, a government with $1,600 billion faces no real constraints. 
B)  No, scarcity does not apply to governments. 
C)  Yes, resources are limited even for the U.S. government. 
D)  Yes, although the U.S. government can easily obtain more resources. 
E)  Uncertain-economic theory has no answer to this question. 
A)  No, a government with $1,600 billion faces no real constraints. 
B)  No, scarcity does not apply to governments. 
C)  Yes, resources are limited even for the U.S. government. 
D)  Yes, although the U.S. government can easily obtain more resources. 
E)  Uncertain-economic theory has no answer to this question.

Question 4

Opportunity cost cannot be measured in money terms,only in conceptual terms.

Accepted Answer

A) True 
 B)False

Question 5

The idea of opportunity cost is relevant

Accepted Answer

A)  only in consumption decisions. 
B)  only in production decisions. 
C)  only in financial decisions. 
D)  in almost any kind of decision. 
A)  only in consumption decisions. 
B)  only in production decisions. 
C)  only in financial decisions. 
D)  in almost any kind of decision.

Question 6

A market system is not considered an effective way of controlling self-interest.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following observations is t?

Accepted Answer

A)  Free markets will achieve all of society's goals. 
B)  The ability to buy goods is divided equally among consumers. 
C)  The market deals with efficiency in production through the profit motive. 
D)  The market system encourages firms to use inputs wastefully. 
A)  Free markets will achieve all of society's goals. 
B)  The ability to buy goods is divided equally among consumers. 
C)  The market deals with efficiency in production through the profit motive. 
D)  The market system encourages firms to use inputs wastefully.

Question 8

Voluntary exchange

Accepted Answer

A)  is usually beneficial to one party, but not the other. 
B)  is always beneficial to both parties. 
C)  is occasionally beneficial to both parties. 
D)  occurs only between nations, not between individuals. 
A)  is usually beneficial to one party, but not the other. 
B)  is always beneficial to both parties. 
C)  is occasionally beneficial to both parties. 
D)  occurs only between nations, not between individuals.

Question 9

How does scarcity affect the range of possible choices that decision makers face?

Accepted Answer

A)  It narrows the choice to a single option. 
B)  It narrows the range of choices. 
C)  It increases the possible methods for solving problems. 
D)  It clarifies the choices by highlighting the best solutions. 
E)  It simplifies the choices and therefore widens the range. 
A)  It narrows the choice to a single option. 
B)  It narrows the range of choices. 
C)  It increases the possible methods for solving problems. 
D)  It clarifies the choices by highlighting the best solutions. 
E)  It simplifies the choices and therefore widens the range.

Question 10

Opportunity cost can always be measured in money terms.

Accepted Answer

A) True 
 B)False

Question 11

Increasing opportunity cost tends to occur if

Accepted Answer

A)  management is disorganized. 
B)  markets do not equate money and opportunity cost. 
C)  production is inefficient. 
D)  resources are scarce. 
E)  resources are specialized. 
A)  management is disorganized. 
B)  markets do not equate money and opportunity cost. 
C)  production is inefficient. 
D)  resources are scarce. 
E)  resources are specialized.

Question 12

In the Wealth of Nations,Adam Smith wrote about how countries could increase their consumption of goods and services through specialization and trade with other countries.

Accepted Answer

A) True 
 B)False

Question 13

Is increased capital spending the only way for an economy to expand its production possibilities frontier?

Accepted Answer

A)  No, an economy can also expand by invention and innovation. 
B)  No, an economy can also grow by investment instead of capital spending. 
C)  Yes, more capital is the only way to expand its production possibilities frontier. 
D)  Yes, although more capital clearly has a high opportunity cost. 
E)  Yes, because capital is the only constraining resource that limits growth. 
A)  No, an economy can also expand by invention and innovation. 
B)  No, an economy can also grow by investment instead of capital spending. 
C)  Yes, more capital is the only way to expand its production possibilities frontier. 
D)  Yes, although more capital clearly has a high opportunity cost. 
E)  Yes, because capital is the only constraining resource that limits growth.

Question 14

The division of labor usually refers to splitting

Accepted Answer

A)  the three coordination decisions among different sets of planners. 
B)  the parts of a complex task among different workers. 
C)  the production of consumption goods and capital goods among different workers. 
D)  political leaders into radical and conservative camps each year. 
A)  the three coordination decisions among different sets of planners. 
B)  the parts of a complex task among different workers. 
C)  the production of consumption goods and capital goods among different workers. 
D)  political leaders into radical and conservative camps each year.

Question 15

When a firm or economy is operating efficiently,it is operating

Accepted Answer

A)  outside its production possibilities frontier. 
B)  inside its production possibilities frontier. 
C)  on its production possibilities frontier. 
D)  at the intersection of the production possibilities frontier and the vertical axis. 
E)  at the intersection of the production possibilities frontier and the horizontal axis. 
A)  outside its production possibilities frontier. 
B)  inside its production possibilities frontier. 
C)  on its production possibilities frontier. 
D)  at the intersection of the production possibilities frontier and the vertical axis. 
E)  at the intersection of the production possibilities frontier and the horizontal axis.

Question 16

Why would it be a mistake to treat opportunity costs and explicit monetary costs as identical?

Accepted Answer

A)  Because sometimes the market does not function well. 
B)  Because opportunity costs are different for different goods. 
C)  Because there are trade-offs involved in any decision. 
D)  Because of existence of efficient markets. 
A)  Because sometimes the market does not function well. 
B)  Because opportunity costs are different for different goods. 
C)  Because there are trade-offs involved in any decision. 
D)  Because of existence of efficient markets.

Question 17

Every economic decision involves a trade-off because of

Accepted Answer

A)  theory. 
B)  opportunism. 
C)  consumption. 
D)  scarcity. 
E)  efficiency. 
A)  theory. 
B)  opportunism. 
C)  consumption. 
D)  scarcity. 
E)  efficiency.

Question 18

A market system solves the

Accepted Answer

A)  "what" and "how" decisions but not the "to whom." 
B)  "what" and "to whom" decisions but not the "how." 
C)  "how" and "to whom" decisions but not the "what." 
D)  "what," "how," and "to whom" decisions. 
A)  "what" and "how" decisions but not the "to whom." 
B)  "what" and "to whom" decisions but not the "how." 
C)  "how" and "to whom" decisions but not the "what." 
D)  "what," "how," and "to whom" decisions.

Question 19

Figure 3-5
  
-At present,faculty in the Economics Department teach introductory and upper-level courses.Which graph in Figure 3-5 represents the change in the production possibilities of the Economics Department after a policy of using graduate students in addition to faculty to teach introductory sections was implemented?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 20

The economic problem of scarcity

Accepted Answer

A)  is unique to a capitalist economy. 
B)  requires that choices be made among alternatives. 
C)  disappears as technology advances. 
D)  affects only less-developed countries. 
A)  is unique to a capitalist economy. 
B)  requires that choices be made among alternatives. 
C)  disappears as technology advances. 
D)  affects only less-developed countries.

Figure 3-1 -According to Figure 3-1,the opportunity cost of one more bushel of wheat is

Opportunity cost always arises when a trade-off decision is made.

The U.S.government has an annual budget of about $1,600 billion.Does the U.S.government face the problem of scarcity?

Opportunity cost cannot be measured in money terms,only in conceptual terms.

The idea of opportunity cost is relevant

A market system is not considered an effective way of controlling self-interest.

Which of the following observations is t?

Voluntary exchange

How does scarcity affect the range of possible choices that decision makers face?

Opportunity cost can always be measured in money terms.

Increasing opportunity cost tends to occur if

In the Wealth of Nations,Adam Smith wrote about how countries could increase their consumption of goods and services through specialization and trade with other countries.

Is increased capital spending the only way for an economy to expand its production possibilities frontier?

The division of labor usually refers to splitting

When a firm or economy is operating efficiently,it is operating

Why would it be a mistake to treat opportunity costs and explicit monetary costs as identical?

Every economic decision involves a trade-off because of

A market system solves the

The economic problem of scarcity

What Is Economics?

The Economy: Myth and Reality

Supply and Demand: An Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

Filters

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

Figure 3-1 -According to Figure 3-1,the opportunity cost of one more bushel of wheat is

Opportunity cost always arises when a trade-off decision is made.

The U.S.government has an annual budget of about $1,600 billion.Does the U.S.government face the problem of scarcity?

Opportunity cost cannot be measured in money terms,only in conceptual terms.

The idea of opportunity cost is relevant

A market system is not considered an effective way of controlling self-interest.

Which of the following observations is t?

Voluntary exchange

How does scarcity affect the range of possible choices that decision makers face?

Opportunity cost can always be measured in money terms.

Increasing opportunity cost tends to occur if

In the Wealth of Nations,Adam Smith wrote about how countries could increase their consumption of goods and services through specialization and trade with other countries.

Is increased capital spending the only way for an economy to expand its production possibilities frontier?

The division of labor usually refers to splitting

When a firm or economy is operating efficiently,it is operating

Why would it be a mistake to treat opportunity costs and explicit monetary costs as identical?

Every economic decision involves a trade-off because of

A market system solves the

The economic problem of scarcity

What Is Economics?

The Economy: Myth and Reality

Supply and Demand: An Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

Filters