Question 1

A market system works very well in solving some basic problems of the economy but it fails in some cases.Provide examples.

Accepted Answer

The market deals with efficiency in prod

Question 2

The major coordination tasks can be summarized with the questions

Accepted Answer

A) who, what, when, where? 
B) how, what, for whom? 
C) how, what, why? 
D) how, why, for whom? 
E) who, how, what? 
A) who, what, when, where? 
B) how, what, for whom? 
C) how, what, why? 
D) how, why, for whom? 
E) who, how, what?

Question 3

The U.S.government spent over $3.6 trillion in budget year 2010.

Accepted Answer

A) True 
 B)False

Question 4

Centrally planned economies are not constrained by the problem of scarcity.

Accepted Answer

A) True 
 B)False

Question 5

A well-functioning market will have high monetary costs applied to high opportunity costs.

Accepted Answer

A) True 
 B)False

Question 6

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 7

Both conservatives and liberals tend to approve of markets because

Accepted Answer

A) markets are effective in solving many of society's problems. 
B) markets work well in all cases, and can be relied upon to solve problems. 
C) their goals are similar enough that they can rely on the same means. 
D) production is the most important goal, and market systems are very productive. 
E) of all of the above. 
A) markets are effective in solving many of society's problems. 
B) markets work well in all cases, and can be relied upon to solve problems. 
C) their goals are similar enough that they can rely on the same means. 
D) production is the most important goal, and market systems are very productive. 
E) of all of the above.

Question 8

Economics is often described as a science of constrained choice.How do you justify this argument?

Accepted Answer

Economics deals with the allocation of l

Question 9

Scarcity is a concept that applies to all of the following except

Accepted Answer

A) time. 
B) natural resources. 
C) human wants. 
D) machinery. 
A) time. 
B) natural resources. 
C) human wants. 
D) machinery.

Question 10

All of the points inside a production possibilities frontier are ____; all of the points outside the production possibilities frontier are ____.

Accepted Answer

A) efficient, inefficient 
B) optimal, irrational 
C) attainable, unattainable 
D) rational, zero-cost 
E) unattainable, efficient 
A) efficient, inefficient 
B) optimal, irrational 
C) attainable, unattainable 
D) rational, zero-cost 
E) unattainable, efficient

Question 11

The opportunity cost of a college education includes wages lost while enrolled in school.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is an example of opportunity cost not measured by money cost?

Accepted Answer

A) the time spent eating a business lunch at a restaurant 
B) the time spent preparing a meal eaten at home 
C) the time spent studying to obtain an "A" in economics 
D) the time spent repairing a car in one's own garage 
E) All of the above are correct. 
A) the time spent eating a business lunch at a restaurant 
B) the time spent preparing a meal eaten at home 
C) the time spent studying to obtain an "A" in economics 
D) the time spent repairing a car in one's own garage 
E) All of the above are correct.

Question 13

For a given production possibilities frontier, which points are attainable?

Accepted Answer

A) points inside the frontier 
B) points outside the frontier 
C) points on or outside the frontier 
D) points on the frontier only 
E) points on or inside the frontier 
A) points inside the frontier 
B) points outside the frontier 
C) points on or outside the frontier 
D) points on the frontier only 
E) points on or inside the frontier

Question 14

An optimal decision is one that is selected based on an analysis of

Accepted Answer

A) explicit costs but not implicit costs. 
B) implicit costs but not explicit costs. 
C) both explicit costs and implicit costs. 
D) neither explicit costs nor implicit costs. 
A) explicit costs but not implicit costs. 
B) implicit costs but not explicit costs. 
C) both explicit costs and implicit costs. 
D) neither explicit costs nor implicit costs.

Question 15

In terms of efficiency, any point on a production possibilities frontier is as good another.

Accepted Answer

A) True 
 B)False

Question 16

Is faster economic growth unambiguously better?

Accepted Answer

A) No, because growth has an opportunity cost. 
B) No, because growth serves no useful purpose. 
C) Yes, because more goods and services are always better. 
D) Yes, because it expands the production possibilities of an economy. 
E) Uncertain-economic growth has no answer to this question. 
A) No, because growth has an opportunity cost. 
B) No, because growth serves no useful purpose. 
C) Yes, because more goods and services are always better. 
D) Yes, because it expands the production possibilities of an economy. 
E) Uncertain-economic growth has no answer to this question.

Question 17

Figure 3-2
  
-In Figure 3-2, the production possibilities frontier has a bowed-out shape because of the law of

Accepted Answer

A) decreasing costs. 
B) increasing costs. 
C) demand. 
D) comparative advantage. 
A) decreasing costs. 
B) increasing costs. 
C) demand. 
D) comparative advantage.

Question 18

At various times, the United States has undergone the painful process of reducing military spending.Military bases from the Carolinas to California pleaded to be spared, citing huge job losses if they close.How can one rationally decide which bases to shut down, given the necessity of jobs?

Accepted Answer

One must examine the opportunity cost of

Question 19

Suppose a presidential candidate campaigns on the need to improve U.S.infrastructure, a term for capital goods like bridges, highways, and technology (much of it publicly owned).Which would lead to faster growth: government expenditure on capital goods or expenditure on consumption goods such as sports stadiums?
 Illustrate your answer, drawing appropriate production possibilities frontiers accompanied by an explanation.

Accepted Answer

Draw a PPF labeling one axis (say, Y) ca

Question 20

What is Jim's opportunity cost of operating his own business?

Accepted Answer

A) the total amount of money he puts into capital equipment 
B) the value of his labor that is put into the business 
C) the cost of hiring his laborers 
D) All of the above are correct. 
A) the total amount of money he puts into capital equipment 
B) the value of his labor that is put into the business 
C) the cost of hiring his laborers 
D) All of the above are correct.

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

A market system works very well in solving some basic problems of the economy but it fails in some cases.Provide examples.

The major coordination tasks can be summarized with the questions

The U.S.government spent over $3.6 trillion in budget year 2010.

Centrally planned economies are not constrained by the problem of scarcity.

A well-functioning market will have high monetary costs applied to high opportunity costs.

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

Both conservatives and liberals tend to approve of markets because

Economics is often described as a science of constrained choice.How do you justify this argument?

Scarcity is a concept that applies to all of the following except

All of the points inside a production possibilities frontier are ____; all of the points outside the production possibilities frontier are ____.

The opportunity cost of a college education includes wages lost while enrolled in school.

Which of the following is an example of opportunity cost not measured by money cost?

For a given production possibilities frontier, which points are attainable?

An optimal decision is one that is selected based on an analysis of

In terms of efficiency, any point on a production possibilities frontier is as good another.

Is faster economic growth unambiguously better?

Figure 3-2 -In Figure 3-2, the production possibilities frontier has a bowed-out shape because of the law of

At various times, the United States has undergone the painful process of reducing military spending.Military bases from the Carolinas to California pleaded to be spared, citing huge job losses if they close.How can one rationally decide which bases to shut down, given the necessity of jobs?

What is Jim's opportunity cost of operating his own business?

What Is Economics

The Economy: Myth and Reality

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

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

He 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

All of the points inside a production possibilities frontier are ; all of the points outside the production possibilities frontier are .