Question 1

-Refer to the above figure.If the farmer is growing 8,000 bushels of beans and 8,000 bushels of wheat,then we know that

Accepted Answer

A) the farmer is not using resources efficiently. 
B) the farmer is using more land for wheat than for beans. 
C) the farmer should increase the amount of wheat grown and reduce the amount of beans. 
D) the farmer cannot be using the amount of land that was used to construct the curve. 
A) the farmer is not using resources efficiently. 
B) the farmer is using more land for wheat than for beans. 
C) the farmer should increase the amount of wheat grown and reduce the amount of beans. 
D) the farmer cannot be using the amount of land that was used to construct the curve.

Question 2

How does an economy represented by a straight-line production possibilities curve differ from one represented by a traditional production possibilities curve with a bowed shape?

Accepted Answer

A) In the economy represented by a straight-line production possibilities curve,there is no opportunity cost. 
B) In the economy represented by a straight-line production possibilities curve,neither good is scarce. 
C) In the economy represented by a straight-line production possibilities curve,the law of increasing relative cost does not apply. 
D) In the economy represented by a straight-line production possibilities curve,changing the amount of resources devoted to the production of each good will not alter the amount of each good actually produced. 
A) In the economy represented by a straight-line production possibilities curve,there is no opportunity cost. 
B) In the economy represented by a straight-line production possibilities curve,neither good is scarce. 
C) In the economy represented by a straight-line production possibilities curve,the law of increasing relative cost does not apply. 
D) In the economy represented by a straight-line production possibilities curve,changing the amount of resources devoted to the production of each good will not alter the amount of each good actually produced.

Question 3

Why specialize?

Accepted Answer

A) Because assigning each worker a variety of tasks makes her more productive. 
B) It usually increases productivity. 
C) To decrease our dependence on each other. 
D) There is no economic rationale for specialization. 
A) Because assigning each worker a variety of tasks makes her more productive. 
B) It usually increases productivity. 
C) To decrease our dependence on each other. 
D) There is no economic rationale for specialization.

Question 4

The discovery of new natural resources will cause

Accepted Answer

A) the economy to move closer to the production possibilities curve. 
B) the production possibilities curve to shift up and to the right. 
C) an upward movement along the curve. 
D) the curve to shift back and to the left. 
A) the economy to move closer to the production possibilities curve. 
B) the production possibilities curve to shift up and to the right. 
C) an upward movement along the curve. 
D) the curve to shift back and to the left.

Question 5

If all resources were perfectly adaptable for alternative uses,the production possibilities curve would

Accepted Answer

A) be bowed out. 
B) be bowed in. 
C) be a straight line. 
D) not exist. 
A) be bowed out. 
B) be bowed in. 
C) be a straight line. 
D) not exist.

Question 6

-Refer to the above figure.Production at Point E

Accepted Answer

A) would indicate that this economy is producing beyond its capabilities. 
B) would indicate production at a level below that which is attainable. 
C) is not attainable with given resources and technology. 
D) would demonstrate a total lack of technical expertise. 
A) would indicate that this economy is producing beyond its capabilities. 
B) would indicate production at a level below that which is attainable. 
C) is not attainable with given resources and technology. 
D) would demonstrate a total lack of technical expertise.

Question 7

Briefly explain the factors of production and give an example of each.

Accepted Answer

The resources,which are the inputs used

Question 8

"My brother is better at cooking,better at cleaning,and better at fixing the car than I am." Relative to me,my brother has

Accepted Answer

A) an absolute advantage in cooking,cleaning,and car repair. 
B) a comparative advantage in cooking,cleaning,and car repair. 
C) more intelligence than me. 
D) more income than me. 
A) an absolute advantage in cooking,cleaning,and car repair. 
B) a comparative advantage in cooking,cleaning,and car repair. 
C) more intelligence than me. 
D) more income than me.

Question 9

Physical capital is distinguished from human capital because

Accepted Answer

A) physical capital refers to trained people. 
B) physical capital refers to equipment and machinery,whereas human capital refers to trained people. 
C) human capital refers only to day laborers. 
D) physical capital refers to trained people,whereas human capital refers to equipment and machinery. 
A) physical capital refers to trained people. 
B) physical capital refers to equipment and machinery,whereas human capital refers to trained people. 
C) human capital refers only to day laborers. 
D) physical capital refers to trained people,whereas human capital refers to equipment and machinery.

Question 10

All of the following are examples of physical capital EXCEPT

Accepted Answer

A) buildings. 
B) machinery. 
C) company stocks and bonds. 
D) a hydroelectric power plant. 
A) buildings. 
B) machinery. 
C) company stocks and bonds. 
D) a hydroelectric power plant.

Question 11

"Economics is the study of how people eliminate scarcity." Do you agree or disagree? Why?

Accepted Answer

Disagree.Economics is the study of how p

Question 12

Explain what is meant by economic efficiency.Does efficiency imply that the fastest production processes or the most powerful equipment must always be used? Explain.

Accepted Answer

Efficiency involves a situatio

Question 13

An outward bowed production possibilities curve illustrates

Accepted Answer

A) inefficient production. 
B) the law of increasing additional cost. 
C) a lack of scarcity. 
D) zero opportunity cost of moving from inefficient production to currently unobtainable production. 
A) inefficient production. 
B) the law of increasing additional cost. 
C) a lack of scarcity. 
D) zero opportunity cost of moving from inefficient production to currently unobtainable production.

Question 14

-In the above figure,the opportunity cost of moving from point A to point C is

Accepted Answer

A) 50 guitars. 
B) 0 guitars. 
C) 25 guitars. 
D) 50 ukuleles. 
A) 50 guitars. 
B) 0 guitars. 
C) 25 guitars. 
D) 50 ukuleles.

Question 15

Efficiency is achieved

Accepted Answer

A) when output is being produced at a point inside a production possibilities curve. 
B) when producers are getting the maximum possible output from the available resources. 
C) when consumers are able to buy everything that they want. 
D) when prices of all goods and services go to zero. 
A) when output is being produced at a point inside a production possibilities curve. 
B) when producers are getting the maximum possible output from the available resources. 
C) when consumers are able to buy everything that they want. 
D) when prices of all goods and services go to zero.

Question 16

-Which of the following would NOT allow society to move to point "h" in the above figure?

Accepted Answer

A) An improvement in technology 
B) More efficient use of current resources 
C) An increase in quantity of labor 
D) An increase in quantity of capital 
A) An improvement in technology 
B) More efficient use of current resources 
C) An increase in quantity of labor 
D) An increase in quantity of capital

Question 17

Would a country with an absolute advantage in the production of all goods and services trade with other countries? Explain.

Accepted Answer

Yes.Trade is based on comparative advant

Question 18

An example of an entrepreneur would be

Accepted Answer

A) the owner of a new Indian food restaurant. 
B) the cafeteria employee who won the employee of the month award. 
C) a Greyhound bus driver. 
D) the cashier at your local supermarket. 
A) the owner of a new Indian food restaurant. 
B) the cafeteria employee who won the employee of the month award. 
C) a Greyhound bus driver. 
D) the cashier at your local supermarket.

Question 19

John and Mary work eight hours 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) Mary has the absolute advantage in decorating wedding cakes. 
B) Mary has the absolute advantage in decorating ice-cream cakes. 
C) Mary has the comparative advantage in decorating ice-cream cakes. 
D) John has the comparative advantage in decorating ice-cream cakes. 
A) Mary has the absolute advantage in decorating wedding cakes. 
B) Mary has the absolute advantage in decorating ice-cream cakes. 
C) Mary has the comparative advantage in decorating ice-cream cakes. 
D) John has the comparative advantage in decorating ice-cream cakes.

Question 20

-Refer to the above figure.Which of the following points indicates an inefficient use of resources?

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.

Exam 2: Scarcity and the World of Trade-Offs

-Refer to the above figure.If the farmer is growing 8,000 bushels of beans and 8,000 bushels of wheat,then we know that

How does an economy represented by a straight-line production possibilities curve differ from one represented by a traditional production possibilities curve with a bowed shape?

Why specialize?

The discovery of new natural resources will cause

If all resources were perfectly adaptable for alternative uses,the production possibilities curve would

-Refer to the above figure.Production at Point E

Briefly explain the factors of production and give an example of each.

"My brother is better at cooking,better at cleaning,and better at fixing the car than I am." Relative to me,my brother has

Physical capital is distinguished from human capital because

All of the following are examples of physical capital EXCEPT

"Economics is the study of how people eliminate scarcity." Do you agree or disagree? Why?

Explain what is meant by economic efficiency.Does efficiency imply that the fastest production processes or the most powerful equipment must always be used? Explain.

An outward bowed production possibilities curve illustrates

-In the above figure,the opportunity cost of moving from point A to point C is

Efficiency is achieved

-Which of the following would NOT allow society to move to point "h" in the above figure?

Would a country with an absolute advantage in the production of all goods and services trade with other countries? Explain.

An example of an entrepreneur would be

John and Mary work eight hours 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,

-Refer to the above figure.Which of the following points indicates an inefficient use of resources?

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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