Question 1

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 2

A market system (market economy) depends on the market to

Accepted Answer

A) find the most efficient way of using resources. 
B) determine how large the budget deficit should be. 
C) decide how much government regulation there should be. 
D) provide minimum incomes for everyone. 
E) All of the above are correct. 
A) find the most efficient way of using resources. 
B) determine how large the budget deficit should be. 
C) decide how much government regulation there should be. 
D) provide minimum incomes for everyone. 
E) All of the above are correct.

Question 3

The total amount of consumption of a society can be increased if

Accepted Answer

A) firms allow each worker to perform multiple tasks. 
B) resources are allocated by a central planning group. 
C) individuals engage in specialization and voluntary trade. 
D) barter exchange is used in place of money. 
A) firms allow each worker to perform multiple tasks. 
B) resources are allocated by a central planning group. 
C) individuals engage in specialization and voluntary trade. 
D) barter exchange is used in place of money.

Question 4

The law of comparative advantage explains why

Accepted Answer

A) individuals choose specialized careers. 
B) firms specialize in the production of certain goods. 
C) nations develop strengths in certain industries. 
D) All of the above are correct. 
A) individuals choose specialized careers. 
B) firms specialize in the production of certain goods. 
C) nations develop strengths in certain industries. 
D) All of the above are correct.

Question 5

The fact that resources tend to be specialized is one reason the production possibilities frontier is drawn

Accepted Answer

A) bowed outward. 
B) bowed inward. 
C) as a straight line (but not horizontal). 
D) as a horizontal straight line. 
A) bowed outward. 
B) bowed inward. 
C) as a straight line (but not horizontal). 
D) as a horizontal straight line.

Question 6

Explain the relationship between opportunity costs and money costs.Can they be treated as identical?

Accepted Answer

The two costs are usually closely tied b

Question 7

-In Table 3-2, from point C, the opportunity cost of 3 more units of cotton would be

Accepted Answer

A) 4 units of corn. 
B) 8 units of corn. 
C) 14 units of corn. 
D) 16 units of corn. 
A) 4 units of corn. 
B) 8 units of corn. 
C) 14 units of corn. 
D) 16 units of corn.

Question 8

See table below.Does production exhibit increasing costs?
 Which ring and machine combination will achieve the highest growth in the production of mood rings?

Accepted Answer

Production exhibits increasing cost.The

Question 9

Generally, the opportunity cost and the money cost of a good

Accepted Answer

A) are identical only if the good sells in a free market. 
B) are different. 
C) matter only to the purchaser of the good. 
D) are not reflected in its price. 
A) are identical only if the good sells in a free market. 
B) are different. 
C) matter only to the purchaser of the good. 
D) are not reflected in its price.

Question 10

Opportunity cost can always be measured in money terms.

Accepted Answer

A) True 
 B)False

Question 11

As more of a good is produced, its opportunity cost tends to increase because resources are not equally efficient at producing all goods.

Accepted Answer

A) True 
 B)False

Question 12

A society's decision to produce more tanks may require it to forgo production of some cars.

Accepted Answer

A) True 
 B)False

Question 13

A society which is inside its production possibilities frontier is efficient.

Accepted Answer

A) True 
 B)False

Question 14

Money is scarce, but resources are not.

Accepted Answer

A) True 
 B)False

Question 15

Figure 3-2
  
-In Figure 3-2, at point B

Accepted Answer

A) it is impossible to increase production of consumer goods. 
B) it is impossible to increase production of capital goods. 
C) it is possible to increase production of both capital goods and consumer goods simultaneously. 
D) it is impossible to increase production of both capital goods and consumer goods simultaneously. 
A) it is impossible to increase production of consumer goods. 
B) it is impossible to increase production of capital goods. 
C) it is possible to increase production of both capital goods and consumer goods simultaneously. 
D) it is impossible to increase production of both capital goods and consumer goods simultaneously.

Question 16

Market economies are not constrained by scarcity; only planned economies have that problem.

Accepted Answer

A) True 
 B)False

Question 17

In order to make an optimal choice we must use

Accepted Answer

A) percentage analysis. 
B) total analysis. 
C) average analysis. 
D) marginal analysis. 
A) percentage analysis. 
B) total analysis. 
C) average analysis. 
D) marginal analysis.

Question 18

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 19

Why might the money price for something be higher than the opportunity cost? Why might it be lower? Give an example of each to illustrate your answer.

Accepted Answer

Money price can be higher than opportuni

Question 20

Which of the following must cope with scarcity?

Accepted Answer

A) individuals 
B) companies 
C) governments 
D) families 
E) All of the above are correct. 
A) individuals 
B) companies 
C) governments 
D) families 
E) All of the above are correct.

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

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

A market system (market economy) depends on the market to

The total amount of consumption of a society can be increased if

The law of comparative advantage explains why

The fact that resources tend to be specialized is one reason the production possibilities frontier is drawn

Explain the relationship between opportunity costs and money costs.Can they be treated as identical?

-In Table 3-2, from point C, the opportunity cost of 3 more units of cotton would be

See table below.Does production exhibit increasing costs? Which ring and machine combination will achieve the highest growth in the production of mood rings?

Generally, the opportunity cost and the money cost of a good

Opportunity cost can always be measured in money terms.

As more of a good is produced, its opportunity cost tends to increase because resources are not equally efficient at producing all goods.

A society's decision to produce more tanks may require it to forgo production of some cars.

A society which is inside its production possibilities frontier is efficient.

Money is scarce, but resources are not.

Figure 3-2 -In Figure 3-2, at point B

Market economies are not constrained by scarcity; only planned economies have that problem.

In order to make an optimal choice we must use

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

Why might the money price for something be higher than the opportunity cost? Why might it be lower? Give an example of each to illustrate your answer.

Which of the following must cope with scarcity?

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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