Question 1

A point on a production possibilities curve indicates

Accepted Answer

A) resources are not being used efficiently. 
B) resources are being used efficiently. 
C) opportunity costs are constant. 
D) an output combination that can be attained only if society gets more resources or there is technological change. 
A) resources are not being used efficiently. 
B) resources are being used efficiently. 
C) opportunity costs are constant. 
D) an output combination that can be attained only if society gets more resources or there is technological change.

Question 2

-Refer to the above figure.The Law of Increasing Additional Costs applies in

Accepted Answer

A) Panel A only. 
B) Panel B only. 
C) Panels A and B. 
D) neither Panel A nor B. 
A) Panel A only. 
B) Panel B only. 
C) Panels A and B. 
D) neither Panel A nor B.

Question 3

Opportunity cost exists because

Accepted Answer

A) of scarcity. 
B) prices must adjust to eliminate shortages. 
C) production could not occur without the opportunity cost of using resources. 
D) the value of economic goods is positive while the value of goods is zero. 
A) of scarcity. 
B) prices must adjust to eliminate shortages. 
C) production could not occur without the opportunity cost of using resources. 
D) the value of economic goods is positive while the value of goods is zero.

Question 4

-In the above figure,moving from producing 50 guitars and 50 ukuleles to producing 25 guitars and 75 ukuleles,the opportunity cost of one ukulele is

Accepted Answer

A) 25 guitars. 
B) 75 ukuleles. 
C) 25 ukuleles. 
D) 1 guitar. 
A) 25 guitars. 
B) 75 ukuleles. 
C) 25 ukuleles. 
D) 1 guitar.

Question 5

Scarcity

Accepted Answer

A) exists in all human societies. 
B) is a problem for less-developed nations only. 
C) used to be a problem,but is not an issue for modern industrial nations. 
D) afflicts greedy people only. 
A) exists in all human societies. 
B) is a problem for less-developed nations only. 
C) used to be a problem,but is not an issue for modern industrial nations. 
D) afflicts greedy people only.

Question 6

Production refers to

Accepted Answer

A) physically producing material goods only. 
B) any activity carried on by a firm,whether a corporation,partnership,or sole proprietorship. 
C) any activity that results in the conversion of resources into goods and services that can be consumed. 
D) any activity that causes a material conversion of manufactured goods. 
A) physically producing material goods only. 
B) any activity carried on by a firm,whether a corporation,partnership,or sole proprietorship. 
C) any activity that results in the conversion of resources into goods and services that can be consumed. 
D) any activity that causes a material conversion of manufactured goods.

Question 7

Typically,the greater the specialization of resources,

Accepted Answer

A) the less production that takes place. 
B) the greater the bow of the production possibilities curve. 
C) the poorer the country becomes. 
D) the greater the unemployment in the country. 
A) the less production that takes place. 
B) the greater the bow of the production possibilities curve. 
C) the poorer the country becomes. 
D) the greater the unemployment in the country.

Question 8

A bowed outward production possibilities curve occurs when

Accepted Answer

A) opportunity costs are constant. 
B) resources are not scarce. 
C) additional units of output of one good necessitate greater reductions in the other good. 
D) there are shortages in the goods being produced. 
A) opportunity costs are constant. 
B) resources are not scarce. 
C) additional units of output of one good necessitate greater reductions in the other good. 
D) there are shortages in the goods being produced.

Question 9

Opportunity cost is

Accepted Answer

A) the intrinsic value of an economic good. 
B) the total value of all the alternatives given up when a choice is made. 
C) the value of the opportunity selected when a need is satisfied. 
D) the value of the next highest ranked alternative that must be sacrificed to obtain a want. 
A) the intrinsic value of an economic good. 
B) the total value of all the alternatives given up when a choice is made. 
C) the value of the opportunity selected when a need is satisfied. 
D) the value of the next highest ranked alternative that must be sacrificed to obtain a want.

Question 10

A point outside a society's production possibilities curve is one that is

Accepted Answer

A) unattainable given the resources of the society. 
B) technologically inefficient. 
C) undesirable given the implied underemployment of resources. 
D) desirable since it satisfies the desires of the population. 
A) unattainable given the resources of the society. 
B) technologically inefficient. 
C) undesirable given the implied underemployment of resources. 
D) desirable since it satisfies the desires of the population.

Question 11

When deriving the production possibilities curve,it is assumed that

Accepted Answer

A) the amount of each good that is to be produced is fixed. 
B) the prices of resources are fixed along the curve. 
C) most resources can be used to produce only one good. 
D) resources are efficiently used. 
A) the amount of each good that is to be produced is fixed. 
B) the prices of resources are fixed along the curve. 
C) most resources can be used to produce only one good. 
D) resources are efficiently used.

Question 12

If individual X has comparative advantage in painting and individual Y has comparative advantage in carpentry,then

Accepted Answer

A) individual X must use fewer hours to paint a fence than individual Y. 
B) individual Y will specialize in painting. 
C) there is a lower opportunity cost (expressed in units of carpentry)for individual X to paint than for individual Y to paint. 
D) specialization will not occur,since each does not have a clear absolute advantage. 
A) individual X must use fewer hours to paint a fence than individual Y. 
B) individual Y will specialize in painting. 
C) there is a lower opportunity cost (expressed in units of carpentry)for individual X to paint than for individual Y to paint. 
D) specialization will not occur,since each does not have a clear absolute advantage.

Question 13

-Refer to the above figure.Which of the following points indicates an unobtainable point of production?

Accepted Answer

A) a 
B) d 
C) e 
D) More information is needed to answer the question. 
A) a 
B) d 
C) e 
D) More information is needed to answer the question.

Question 14

The law of increasing additional costs is due to

Accepted Answer

A) taxes. 
B) scarcity. 
C) the fact that it is more difficult to use resources efficiently the more society produces. 
D) the fact that resources are not perfectly adaptable for alternative uses. 
A) taxes. 
B) scarcity. 
C) the fact that it is more difficult to use resources efficiently the more society produces. 
D) the fact that resources are not perfectly adaptable for alternative uses.

Question 15

Inefficient use of resources is shown on the production possibilities curve

Accepted Answer

A) by an inward shifting of the curve. 
B) by a point inside the curve. 
C) by a point near the top of the curve. 
D) by a point outside the curve. 
A) by an inward shifting of the curve. 
B) by a point inside the curve. 
C) by a point near the top of the curve. 
D) by a point outside the curve.

Question 16

A person goes to college to become an engineer.This is an example of an

Accepted Answer

A) investment in physical capital. 
B) investment in human capital. 
C) increase in entrepreneurship. 
D) increase in labor. 
A) investment in physical capital. 
B) investment in human capital. 
C) increase in entrepreneurship. 
D) increase in labor.

Question 17

In order for a production possibilities curve to shift to the right,which of the following must occur?

Accepted Answer

A) government involvement 
B) increasing consumer wants 
C) economic growth 
D) reductions in the supply of resources 
A) government involvement 
B) increasing consumer wants 
C) economic growth 
D) reductions in the supply of resources

Question 18

John and Mary work at a bakery.John can decorate either 10 ice-cream cakes or 4 wedding cakes; Mary can decorate either 8 ice-cream cakes or 2 wedding cakes.According to this scenario,

Accepted Answer

A) the opportunity cost of decorating an ice-cream cake for John is 1/4 wedding cake. 
B) the opportunity cost of decorating an ice-cream cake for John is 2/5 wedding cake. 
C) the opportunity cost of decorating an ice-cream cake for John is 2.5 wedding cakes. 
D) the opportunity cost of decorating an ice-cream cake for John is 4 wedding cakes. 
A) the opportunity cost of decorating an ice-cream cake for John is 1/4 wedding cake. 
B) the opportunity cost of decorating an ice-cream cake for John is 2/5 wedding cake. 
C) the opportunity cost of decorating an ice-cream cake for John is 2.5 wedding cakes. 
D) the opportunity cost of decorating an ice-cream cake for John is 4 wedding cakes.

Question 19

-If the farmer is producing 5000 bushels of soybeans at point "b" in the above figure,we know that

Accepted Answer

A) the farmer is not using his resources efficiently. 
B) the farmer is using his land to produce a crop other than soybeans or corn. 
C) the farmer must be using more land than was used in constructing the production possibilities curve. 
D) the farmer is using his resources efficiently. 
A) the farmer is not using his resources efficiently. 
B) the farmer is using his land to produce a crop other than soybeans or corn. 
C) the farmer must be using more land than was used in constructing the production possibilities curve. 
D) the farmer is using his resources efficiently.

Question 20

Which of the following statements about economic scarcity is FALSE?

Accepted Answer

A) Scarcity occurs among the poor and the rich. 
B) Scarcity only occurs if there are shortages and people wait in line to buy things. 
C) Scarcity results from not having enough resources to produce all the things we want. 
D) Scarcity results in the necessity to make choices. 
A) Scarcity occurs among the poor and the rich. 
B) Scarcity only occurs if there are shortages and people wait in line to buy things. 
C) Scarcity results from not having enough resources to produce all the things we want. 
D) Scarcity results in the necessity to make choices.

Exam 2: Scarcity and the World of Trade-Offs

A point on a production possibilities curve indicates

-Refer to the above figure.The Law of Increasing Additional Costs applies in

Opportunity cost exists because

-In the above figure,moving from producing 50 guitars and 50 ukuleles to producing 25 guitars and 75 ukuleles,the opportunity cost of one ukulele is

Scarcity

Production refers to

Typically,the greater the specialization of resources,

A bowed outward production possibilities curve occurs when

Opportunity cost is

A point outside a society's production possibilities curve is one that is

When deriving the production possibilities curve,it is assumed that

If individual X has comparative advantage in painting and individual Y has comparative advantage in carpentry,then

-Refer to the above figure.Which of the following points indicates an unobtainable point of production?

The law of increasing additional costs is due to

Inefficient use of resources is shown on the production possibilities curve

A person goes to college to become an engineer.This is an example of an

In order for a production possibilities curve to shift to the right,which of the following must occur?

John and Mary work at a bakery.John can decorate either 10 ice-cream cakes or 4 wedding cakes; Mary can decorate either 8 ice-cream cakes or 2 wedding cakes.According to this scenario,

-If the farmer is producing 5000 bushels of soybeans at point "b" in the above figure,we know that

Which of the following statements about economic scarcity is FALSE?

The Nature of Economics

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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