Question 1

If an economy is producing inefficiently, it is

Accepted Answer

A) possible to increase production of all goods simultaneously. 
B) possible to increase production of one good at the expense of another. 
C) not possible to increase production of any good. 
D) not possible to increase economic growth. 
E) possible to increase production with no effort. 
A) possible to increase production of all goods simultaneously. 
B) possible to increase production of one good at the expense of another. 
C) not possible to increase production of any good. 
D) not possible to increase economic growth. 
E) possible to increase production with no effort.

Question 2

A ticket to an Eric Clapton concert costs $45.If you have a ticket, you can "scalp" it (sell it illegally) for $75.To a ticket holder, the opportunity cost of actually attending the concert is

Accepted Answer

A) $45. 
B) $50. 
C) $75. 
D) $115. 
A) $45. 
B) $50. 
C) $75. 
D) $115.

Question 3

Efficiency is defined as minimizing waste.

Accepted Answer

A) True 
 B)False

Question 4

In terms of the production possibilities diagram, the principle of increasing cost simply asserts that the frontier is

Accepted Answer

A) downward sloping. 
B) upward sloping. 
C) bowed inward. 
D) bowed outward. 
E) undefined, because no market will exist in this case. 
A) downward sloping. 
B) upward sloping. 
C) bowed inward. 
D) bowed outward. 
E) undefined, because no market will exist in this case.

Question 5

Which of the following is likely to affect the position and shape of society's production possibilities frontier?

Accepted Answer

A) volume of physical resources 
B) level of labor skills 
C) level of technology 
D) amount of factories on hand 
E) All of the above are correct. 
A) volume of physical resources 
B) level of labor skills 
C) level of technology 
D) amount of factories on hand 
E) All of the above are correct.

Question 6

The political party that is in power determines the position and shape of the production possibilities frontier that constrains the choices of the economy.

Accepted Answer

A) True 
 B)False

Question 7

A market economy allocates resources primarily in accordance with orders from government bureaucrats.

Accepted Answer

A) True 
 B)False

Question 8

If the U.S.government decides to increase military spending, one opportunity cost will be lower spending on education.

Accepted Answer

A) True 
 B)False

Question 9

Specialization and division of labor are made easier by the existence of money.

Accepted Answer

A) True 
 B)False

Question 10

Economics examines the options open to households and business firms, but ignores the options of governments and entire societies.

Accepted Answer

A) True 
 B)False

Question 11

Carefully define the following terms and explain their importance to the study of economics.
a.resources
b.rational decision
c.scarcity
d.opportunity cost

Accepted Answer

a.Resources are the instruments provided

Question 12

If a society uses the market system, it must rely solely on markets to solve all of its problems.

Accepted Answer

A) True 
 B)False

Question 13

Only a market economy must answer the questions of what goods to produce, how to produce them, and for whom to produce them.

Accepted Answer

A) True 
 B)False

Question 14

Figure 3-7
  
-What is the opportunity cost of moving from point B to point A in Figure 3-7?

Accepted Answer

A) 20 units of X 
B) 50 units of X 
C) 25 units of X 
D) 75 units of X 
A) 20 units of X 
B) 50 units of X 
C) 25 units of X 
D) 75 units of X

Question 15

The first economist to point out the importance of specialization of labor was

Accepted Answer

A) Leonardo da Vinci. 
B) Adam Smith. 
C) David Ricardo. 
D) John Maynard Keynes. 
E) Enrico Caruso. 
A) Leonardo da Vinci. 
B) Adam Smith. 
C) David Ricardo. 
D) John Maynard Keynes. 
E) Enrico Caruso.

Question 16

President Barack Obama pushed forward a national health care plan to increase the availability of medical care for all Americans.How would one determine the opportunity cost of the proposal?

Accepted Answer

Every decision by government has an oppo

Question 17

The concept of opportunity cost is more applicable to society as a whole than it is for an individual household.

Accepted Answer

A) True 
 B)False

Question 18

A normal production possibilities frontier has a

Accepted Answer

A) positive slope, and is steeper near the horizontal axis than near the vertical axis. 
B) negative slope, and is steeper near the horizontal axis than near the vertical axis. 
C) positive slope, and is steeper near the vertical axis than near the horizontal axis. 
D) negative slope, and is steeper near the vertical axis than near the horizontal axis. 
E) zero slope, and it does not touch the horizontal axis. 
A) positive slope, and is steeper near the horizontal axis than near the vertical axis. 
B) negative slope, and is steeper near the horizontal axis than near the vertical axis. 
C) positive slope, and is steeper near the vertical axis than near the horizontal axis. 
D) negative slope, and is steeper near the vertical axis than near the horizontal axis. 
E) zero slope, and it does not touch the horizontal axis.

Question 19

The production possibilities frontier slopes downward and to the right because of limited resources.

Accepted Answer

A) True 
 B)False

Question 20

How are money cost and opportunity cost related to each other?

Accepted Answer

A) If markets function well, they are closely related. 
B) They are always identical in any economic system. 
C) Opportunity cost always exceeds money cost. 
D) Money cost is less than or equal to opportunity cost. 
E) In a market economy, they are always equal to each other. 
A) If markets function well, they are closely related. 
B) They are always identical in any economic system. 
C) Opportunity cost always exceeds money cost. 
D) Money cost is less than or equal to opportunity cost. 
E) In a market economy, they are always equal to each other.

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

If an economy is producing inefficiently, it is

A ticket to an Eric Clapton concert costs $45.If you have a ticket, you can "scalp" it (sell it illegally) for $75.To a ticket holder, the opportunity cost of actually attending the concert is

Efficiency is defined as minimizing waste.

In terms of the production possibilities diagram, the principle of increasing cost simply asserts that the frontier is

Which of the following is likely to affect the position and shape of society's production possibilities frontier?

The political party that is in power determines the position and shape of the production possibilities frontier that constrains the choices of the economy.

A market economy allocates resources primarily in accordance with orders from government bureaucrats.

If the U.S.government decides to increase military spending, one opportunity cost will be lower spending on education.

Specialization and division of labor are made easier by the existence of money.

Economics examines the options open to households and business firms, but ignores the options of governments and entire societies.

Carefully define the following terms and explain their importance to the study of economics. a.resources b.rational decision c.scarcity d.opportunity cost

If a society uses the market system, it must rely solely on markets to solve all of its problems.

Only a market economy must answer the questions of what goods to produce, how to produce them, and for whom to produce them.

Figure 3-7 -What is the opportunity cost of moving from point B to point A in Figure 3-7?

The first economist to point out the importance of specialization of labor was

President Barack Obama pushed forward a national health care plan to increase the availability of medical care for all Americans.How would one determine the opportunity cost of the proposal?

The concept of opportunity cost is more applicable to society as a whole than it is for an individual household.

A normal production possibilities frontier has a

The production possibilities frontier slopes downward and to the right because of limited resources.

How are money cost and opportunity cost related to each other?

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

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