Question 1

Society can operate on the production possibilities curve only if it has achieved efficiency.

Accepted Answer

A) True 
 B)False

Question 2

Technological improvements will:

Accepted Answer

A)  leave the production possibilities curve unchanged. 
B)  shift the production possibilities curve inward. 
C)  shift the production possibilities curve to outward. 
D)  necessarily lead to increased unemployment. 
A)  leave the production possibilities curve unchanged. 
B)  shift the production possibilities curve inward. 
C)  shift the production possibilities curve to outward. 
D)  necessarily lead to increased unemployment.

Question 3

Use the following to answer question(s): 
Exhibit: Strawberries and Submarines
  
-(Exhibit: Strawberries and Submarines) The downward slope of the production possibilities curve implies that resources:

Accepted Answer

A)  must be used efficiently. 
B)  are scarce. 
C)  should not be wasted. 
D)  should be allocated so that approximately equal amounts of both goods are produced. 
A)  must be used efficiently. 
B)  are scarce. 
C)  should not be wasted. 
D)  should be allocated so that approximately equal amounts of both goods are produced.

Question 4

Natural resources are resources that occur in nature, while capital is a produced good that is used to produce another good.

Accepted Answer

A) True 
 B)False

Question 5

An economy is said to have a comparative advantage in the production of a good if it can:

Accepted Answer

A)  produce that good with more resources than another economy. 
B)  produce that good with a higher opportunity cost than another economy. 
C)  produce that good outside its production possibilities curve. 
D)  produce the good at a lower opportunity cost than another economy. 
A)  produce that good with more resources than another economy. 
B)  produce that good with a higher opportunity cost than another economy. 
C)  produce that good outside its production possibilities curve. 
D)  produce the good at a lower opportunity cost than another economy.

Question 6

For a factor of production to be called capital it must:

Accepted Answer

A)  be produced. 
B)  occur in the natural environment. 
C)  be a part of human skill. 
D)  be a result of a stock issue. 
A)  be produced. 
B)  occur in the natural environment. 
C)  be a part of human skill. 
D)  be a result of a stock issue.

Question 7

The law of increasing opportunity cost says that:

Accepted Answer

A)  opportunity costs of production always tend to increase. 
B)  increases in wages cause increases in the opportunity costs of production. 
C)  as output increases for one good on its production possibilities curve, the opportunity cost of additional units of the other good will be greater and greater. 
D)  along a production possibilities curve, as output increases in the production of one good, the opportunity costs of additional units of the other good will be less and less. 
A)  opportunity costs of production always tend to increase. 
B)  increases in wages cause increases in the opportunity costs of production. 
C)  as output increases for one good on its production possibilities curve, the opportunity cost of additional units of the other good will be greater and greater. 
D)  along a production possibilities curve, as output increases in the production of one good, the opportunity costs of additional units of the other good will be less and less.

Question 8

When the government provides national defense, it is:

Accepted Answer

A)  providing goods and services. 
B)  enforcing the legal system. 
C)  maintaining the money supply. 
D)  stabilizing the economy. 
A)  providing goods and services. 
B)  enforcing the legal system. 
C)  maintaining the money supply. 
D)  stabilizing the economy.

Question 9

If an economy is producing a combination of goods that places it inside the production possibilities curve, then it has:

Accepted Answer

A)  economic growth. 
B)  full employment. 
C)  efficiency. 
D)  idle factors of production or inefficient use of resources. 
A)  economic growth. 
B)  full employment. 
C)  efficiency. 
D)  idle factors of production or inefficient use of resources.

Question 10

Use the following to answer question(s): 
Exhibit: Sugar and Freight Trains
  
-(Exhibit: Sugar and Freight Trains) Suppose the economy is operating at point A, producing 244 tons of sugar and 1 freight train. The opportunity cost of producing the second freight train is:

Accepted Answer

A)  225 tons of sugar. 
B)  25 tons of sugar. 
C)  19 tons of sugar. 
D)  6 tons of sugar. 
A)  225 tons of sugar. 
B)  25 tons of sugar. 
C)  19 tons of sugar. 
D)  6 tons of sugar.

Question 11

Use the following to answer question(s): 
Exhibit: Consumer and Capital Goods
  
-(Exhibit: Consumer and Capital Goods) Point Z:

Accepted Answer

A)  is unattainable, all other things unchanged. 
B)  is attainable if the economy is able to get to full employment. 
C)  is attainable if the quantity and/or quality of factors decreases. 
D)  will be attained as soon as the economy becomes efficient and moves to Curve 2. 
A)  is unattainable, all other things unchanged. 
B)  is attainable if the economy is able to get to full employment. 
C)  is attainable if the quantity and/or quality of factors decreases. 
D)  will be attained as soon as the economy becomes efficient and moves to Curve 2.

Question 12

Without government, the "for whom" question could not be solved.

Accepted Answer

A) True 
 B)False

Question 13

A point inside the production possibilities curve may indicate that resources are not being used efficiently.

Accepted Answer

A) True 
 B)False

Question 14

Use the following to answer question(s): 
Exhibit: Production Possibilities Curve 1
  
-(Exhibit: Production Possibilities Curve 1) Resource underutilization occurs at point _____ with respect to Curve __ ___ .

Accepted Answer

A)  I; y 
B)  I; x 
C)  J; z 
D)  F; x 
A)  I; y 
B)  I; x 
C)  J; z 
D)  F; x

Question 15

Use the following to answer question(s): 
Exhibit: Production Possibilities Curve for Firms A and B
  
-(Exhibit: Production Possibilities Curve for Firms A and B. It is clear that:

Accepted Answer

A)  Firm A is capable of producing more than Firm B. 
B)  Firm B is capable of producing more than Firm A. 
C)  they are capable of producing equal amounts. 
D)  they will gain from trading with one another. 
A)  Firm A is capable of producing more than Firm B. 
B)  Firm B is capable of producing more than Firm A. 
C)  they are capable of producing equal amounts. 
D)  they will gain from trading with one another.

Question 16

Government's role of providing national defense is considered:

Accepted Answer

A)  enforcing a legal system. 
B)  providing certain goods and services. 
C)  redistributing income. 
D)  expanding economic growth. 
A)  enforcing a legal system. 
B)  providing certain goods and services. 
C)  redistributing income. 
D)  expanding economic growth.

Question 17

There is an important role for government in a market capitalist economy.

Accepted Answer

A) True 
 B)False

Question 18

The law of increasing opportunity costs is a result of the fact that:

Accepted Answer

A)  the value of the dollar has declined over time. 
B)  wage rates rise as the economy reaches full employment. 
C)  consumers tend to value a good more when they don't have much of it. 
D)  resources are not equally productive in all output categories. 
A)  the value of the dollar has declined over time. 
B)  wage rates rise as the economy reaches full employment. 
C)  consumers tend to value a good more when they don't have much of it. 
D)  resources are not equally productive in all output categories.

Question 19

In a market capitalist economy, which of the following is not an accepted role for government?

Accepted Answer

A)  provision of national defense 
B)  enforcing a legal system 
C)  establishing policies to encourage full employment 
D)  All of the above are acceptable roles for government. 
A)  provision of national defense 
B)  enforcing a legal system 
C)  establishing policies to encourage full employment 
D)  All of the above are acceptable roles for government.

Question 20

One reason you go to college is to improve your employment opportunities and obtain a higher income in the future. In the context of production possibilities, this is most comparable to:

Accepted Answer

A)  producing at any point on the production possibilities curve. 
B)  producing at a point inside the production possibilities curve. 
C)  producing relatively more consumer goods and relatively fewer capital goods. 
D)  producing relatively more capital goods and relatively fewer consumer goods. 
A)  producing at any point on the production possibilities curve. 
B)  producing at a point inside the production possibilities curve. 
C)  producing relatively more consumer goods and relatively fewer capital goods. 
D)  producing relatively more capital goods and relatively fewer consumer goods.

Society can operate on the production possibilities curve only if it has achieved efficiency.

Technological improvements will:

Use the following to answer question(s): Exhibit: Strawberries and Submarines -(Exhibit: Strawberries and Submarines) The downward slope of the production possibilities curve implies that resources:

Natural resources are resources that occur in nature, while capital is a produced good that is used to produce another good.

An economy is said to have a comparative advantage in the production of a good if it can:

For a factor of production to be called capital it must:

The law of increasing opportunity cost says that:

When the government provides national defense, it is:

If an economy is producing a combination of goods that places it inside the production possibilities curve, then it has:

Use the following to answer question(s): Exhibit: Sugar and Freight Trains -(Exhibit: Sugar and Freight Trains) Suppose the economy is operating at point A, producing 244 tons of sugar and 1 freight train. The opportunity cost of producing the second freight train is:

Use the following to answer question(s): Exhibit: Consumer and Capital Goods -(Exhibit: Consumer and Capital Goods) Point Z:

Without government, the "for whom" question could not be solved.

A point inside the production possibilities curve may indicate that resources are not being used efficiently.

Use the following to answer question(s): Exhibit: Production Possibilities Curve 1 -(Exhibit: Production Possibilities Curve 1) Resource underutilization occurs at point _ with respect to Curve _ .

Use the following to answer question(s): Exhibit: Production Possibilities Curve for Firms A and B -(Exhibit: Production Possibilities Curve for Firms A and B. It is clear that:

Government's role of providing national defense is considered:

There is an important role for government in a market capitalist economy.

The law of increasing opportunity costs is a result of the fact that:

In a market capitalist economy, which of the following is not an accepted role for government?

One reason you go to college is to improve your employment opportunities and obtain a higher income in the future. In the context of production possibilities, this is most comparable to:

Economics: The Study of Choice

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Exam 2: Confronting Scarcity: Choices in Production

Society can operate on the production possibilities curve only if it has achieved efficiency.

Technological improvements will:

Use the following to answer question(s): Exhibit: Strawberries and Submarines -(Exhibit: Strawberries and Submarines) The downward slope of the production possibilities curve implies that resources:

Natural resources are resources that occur in nature, while capital is a produced good that is used to produce another good.

An economy is said to have a comparative advantage in the production of a good if it can:

For a factor of production to be called capital it must:

The law of increasing opportunity cost says that:

When the government provides national defense, it is:

If an economy is producing a combination of goods that places it inside the production possibilities curve, then it has:

Use the following to answer question(s): Exhibit: Sugar and Freight Trains -(Exhibit: Sugar and Freight Trains) Suppose the economy is operating at point A, producing 244 tons of sugar and 1 freight train. The opportunity cost of producing the second freight train is:

Use the following to answer question(s): Exhibit: Consumer and Capital Goods -(Exhibit: Consumer and Capital Goods) Point Z:

Without government, the "for whom" question could not be solved.

A point inside the production possibilities curve may indicate that resources are not being used efficiently.

Use the following to answer question(s): Exhibit: Production Possibilities Curve 1 -(Exhibit: Production Possibilities Curve 1) Resource underutilization occurs at point _____ with respect to Curve __ ___ .

Use the following to answer question(s): Exhibit: Production Possibilities Curve for Firms A and B -(Exhibit: Production Possibilities Curve for Firms A and B. It is clear that:

Government's role of providing national defense is considered:

There is an important role for government in a market capitalist economy.

The law of increasing opportunity costs is a result of the fact that:

In a market capitalist economy, which of the following is not an accepted role for government?

One reason you go to college is to improve your employment opportunities and obtain a higher income in the future. In the context of production possibilities, this is most comparable to:

Economics: The Study of Choice

Demand and Supply

Applications of Supply and Demand

Elasticity: a Measure of Response

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Use the following to answer question(s): Exhibit: Production Possibilities Curve 1 -(Exhibit: Production Possibilities Curve 1) Resource underutilization occurs at point _ with respect to Curve _ .