Question 1

The production possibilities curve represents

Accepted Answer

A) the maximum amount of labor and capital available to society. 
B) the combinations of goods and services among which consumers are indifferent. 
C) the maximum combination of goods and services that can be produced with fixed resources and technology,given efficient use of the resources. 
D) the maximum rate of growth of capital and labor in a country. 
A) the maximum amount of labor and capital available to society. 
B) the combinations of goods and services among which consumers are indifferent. 
C) the maximum combination of goods and services that can be produced with fixed resources and technology,given efficient use of the resources. 
D) the maximum rate of growth of capital and labor in a country.

Question 2

Suppose that nuclear power plants are banned.What are examples of the opportunity costs of this decision?

Accepted Answer

Electricity must be produced by some met

Question 3

-Refer to the above figure.Which one of the following statements is true with regard to the economy depicted in the graph?

Accepted Answer

A) Starting from point A,this economy does not incur any opportunity cost in producing more bread. 
B) Starting from point A,this economy does not incur any opportunity cost in producing more wool. 
C) In moving from point A to point B,the economy produces 30 additional bales of wool at an opportunity cost of 250 loaves of bread. 
D) In moving from point A to point B,the economy is experiencing economic growth. 
A) Starting from point A,this economy does not incur any opportunity cost in producing more bread. 
B) Starting from point A,this economy does not incur any opportunity cost in producing more wool. 
C) In moving from point A to point B,the economy produces 30 additional bales of wool at an opportunity cost of 250 loaves of bread. 
D) In moving from point A to point B,the economy is experiencing economic growth.

Question 4

At a zero price,which of the following conditions is TRUE for an economic good?

Accepted Answer

A) Its quantity supplied exceeds its quantity demanded. 
B) Its quantity demanded exceeds its quantity supplied. 
C) Its quantity demanded equals its quantity supplied. 
D) Scarcity disappears. 
A) Its quantity supplied exceeds its quantity demanded. 
B) Its quantity demanded exceeds its quantity supplied. 
C) Its quantity demanded equals its quantity supplied. 
D) Scarcity disappears.

Question 5

The curve that represents all possible combinations of goods that can be produced is called

Accepted Answer

A) the production possibilities curve. 
B) the resource allocation curve. 
C) the efficiency curve. 
D) the supply curve. 
A) the production possibilities curve. 
B) the resource allocation curve. 
C) the efficiency curve. 
D) the supply curve.

Question 6

Technology

Accepted Answer

A) is constantly changing at every point along a production possibilities curve. 
B) is the recipe for combining land,labor,physical capital,and entrepreneurship to produce a good. 
C) does not have an effect on the amount of a good a society can produce with its given resources. 
D) only changes if resources change. 
A) is constantly changing at every point along a production possibilities curve. 
B) is the recipe for combining land,labor,physical capital,and entrepreneurship to produce a good. 
C) does not have an effect on the amount of a good a society can produce with its given resources. 
D) only changes if resources change.

Question 7

The tasks performed by the chef at your favorite restaurant could be categorized as

Accepted Answer

A) a good. 
B) an economic good. 
C) a service or intangible good. 
D) All of the above are correct. 
A) a good. 
B) an economic good. 
C) a service or intangible good. 
D) All of the above are correct.

Question 8

What does a production possibilities curve show?

Accepted Answer

A production possibilities cur

Question 9

Specialization can occur because

Accepted Answer

A) governments pass laws that require it. 
B) varying skills differentiate workers. 
C) absolute advantage creates specialization among laborers. 
D) managers and laborers share job tasks. 
A) governments pass laws that require it. 
B) varying skills differentiate workers. 
C) absolute advantage creates specialization among laborers. 
D) managers and laborers share job tasks.

Question 10

Opportunity cost exists because of

Accepted Answer

A) poverty. 
B) scarcity. 
C) greed. 
D) self-interest. 
A) poverty. 
B) scarcity. 
C) greed. 
D) self-interest.

Question 11

The term "labor" for an economist includes

Accepted Answer

A) all skilled workers,but not the unskilled workers. 
B) all productive contributions of humankind. 
C) only the value of the work done by scientists. 
D) all employees who have high school diplomas. 
A) all skilled workers,but not the unskilled workers. 
B) all productive contributions of humankind. 
C) only the value of the work done by scientists. 
D) all employees who have high school diplomas.

Question 12

The division of labor refers to

Accepted Answer

A) workers being assigned specific tasks. 
B) workers performing multiple tasks. 
C) separating men and women in the workforce. 
D) creating jobs that all people can perform at the same level. 
A) workers being assigned specific tasks. 
B) workers performing multiple tasks. 
C) separating men and women in the workforce. 
D) creating jobs that all people can perform at the same level.

Question 13

Which of the following is an assumption used in deriving a production possibilities curve?

Accepted Answer

A) Poverty always exists in society. 
B) The wages in an industry increase constantly. 
C) Prices will continue to increase. 
D) The amount of resources is fixed. 
A) Poverty always exists in society. 
B) The wages in an industry increase constantly. 
C) Prices will continue to increase. 
D) The amount of resources is fixed.

Question 14

Economic goods are items that

Accepted Answer

A) are used only by economists. 
B) provide satisfaction to users. 
C) cannot be sold at any price in the market. 
D) individuals would pay to get rid off. 
A) are used only by economists. 
B) provide satisfaction to users. 
C) cannot be sold at any price in the market. 
D) individuals would pay to get rid off.

Question 15

Scarcity

Accepted Answer

A) does not exist in the United States. 
B) applies only to developing countries. 
C) is caused by production problems. 
D) is not a shortage. 
A) does not exist in the United States. 
B) applies only to developing countries. 
C) is caused by production problems. 
D) is not a shortage.

Question 16

The production possibilities curve can shift inward when

Accepted Answer

A) production increases. 
B) employment increases. 
C) the stock of productive capital rises. 
D) a country experiences a natural disaster. 
A) production increases. 
B) employment increases. 
C) the stock of productive capital rises. 
D) a country experiences a natural disaster.

Question 17

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

Accepted Answer

A) 25 guitars. 
B) 75 ukuleles. 
C) 25 ukuleles. 
D) 50 guitars. 
A) 25 guitars. 
B) 75 ukuleles. 
C) 25 ukuleles. 
D) 50 guitars.

Question 18

Why do most people choose to specialize in a narrow set of skills for their work,rather than to learn a little bit about several varied fields of endeavor?

Accepted Answer

A) They feel that doing so will minimize their chances of being unemployed. 
B) They don't correctly perceive the costs of being so specialized. 
C) It allows them to earn more income by being more productive. 
D) They are unaware of how much better off they would be if they diversified their skills. 
A) They feel that doing so will minimize their chances of being unemployed. 
B) They don't correctly perceive the costs of being so specialized. 
C) It allows them to earn more income by being more productive. 
D) They are unaware of how much better off they would be if they diversified their skills.

Question 19

Scarcity implies that

Accepted Answer

A) people should limit their wants,since shortages exist. 
B) firms should be more efficient when producing goods. 
C) people must make choices. 
D) nonrenewable resources should never be used. 
A) people should limit their wants,since shortages exist. 
B) firms should be more efficient when producing goods. 
C) people must make choices. 
D) nonrenewable resources should never be used.

Question 20

Which of the following statements is FALSE?

Accepted Answer

A) Economic goods are available in desired quantities at a zero price. 
B) A good is anything that gives satisfaction or happiness to individuals. 
C) Services are intangible goods such as dry cleaning,hospital care,and restaurant meal preparation. 
D) Wants are unlimited and include all material and nonmaterial desires. 
A) Economic goods are available in desired quantities at a zero price. 
B) A good is anything that gives satisfaction or happiness to individuals. 
C) Services are intangible goods such as dry cleaning,hospital care,and restaurant meal preparation. 
D) Wants are unlimited and include all material and nonmaterial desires.

Exam 2: Scarcity and the World of Trade-Offs

The production possibilities curve represents

Suppose that nuclear power plants are banned.What are examples of the opportunity costs of this decision?

-Refer to the above figure.Which one of the following statements is true with regard to the economy depicted in the graph?

At a zero price,which of the following conditions is TRUE for an economic good?

The curve that represents all possible combinations of goods that can be produced is called

Technology

The tasks performed by the chef at your favorite restaurant could be categorized as

What does a production possibilities curve show?

Specialization can occur because

Opportunity cost exists because of

The term "labor" for an economist includes

The division of labor refers to

Which of the following is an assumption used in deriving a production possibilities curve?

Economic goods are items that

Scarcity

The production possibilities curve can shift inward when

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

Why do most people choose to specialize in a narrow set of skills for their work,rather than to learn a little bit about several varied fields of endeavor?

Scarcity implies that

Which of the following statements 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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