Question 1

Things that have already been produced that are in turn used to produce other goods and services over time are called "capital."

Accepted Answer

A) True 
 B)False

Question 2

Refer to the information provided in Figure 2.4 below to answer the questions that follow.   Figure 2.4
-According to Figure 2.4, as the economy moves from Point A to Point E, the opportunity cost of motorcycles, measured in terms of hybrid cars,

Accepted Answer

A)  decreases. 
B)  increases. 
C)  remains constant. 
D)  initially increases, then decreases. 
A)  decreases. 
B)  increases. 
C)  remains constant. 
D)  initially increases, then decreases.

Question 3

If an economy begins to use its resources more efficiently, it will move

Accepted Answer

A)  closer to its ppf. 
B)  farther away from its ppf. 
C)  from a point along its ppf to a point outside its ppf. 
D)  from one point to another point along its ppf. 
A)  closer to its ppf. 
B)  farther away from its ppf. 
C)  from a point along its ppf to a point outside its ppf. 
D)  from one point to another point along its ppf.

Question 4

Refer to the information provided in Figure 2.6 below to answer the questions that follow.   Figure 2.6
-Refer to Figure 2.6. Which of the following is most likely to shift the production possibility frontier from ppf1 to ppf2?

Accepted Answer

A)  a change in consumer tastes 
B)  the purchase of stocks on the New York Stock Exchange 
C)  moving resources from capital to consumer goods 
D)  an increase in the general educational level of the population 
A)  a change in consumer tastes 
B)  the purchase of stocks on the New York Stock Exchange 
C)  moving resources from capital to consumer goods 
D)  an increase in the general educational level of the population

Question 5

Refer to the information provided in Table 2.1 below to answer the following questions.
Table 2.1
 $$\begin{array} { | c | c | c | } 
\hline & \text { Krystal } & \text { Mark } \
\hline \text { Writing Poerns } & 8 & 12 \
\hline \text { Writing TV Comrnercials } & 2 & 4 \
\hline
\end{array}$$
-Refer to Table 2.1. For Krystal, the opportunity cost of writing four TV commercials is ________ poems.

Accepted Answer

A)  2 
B)  8 
C)  16 
D)  32 
A)  2 
B)  8 
C)  16 
D)  32

Question 6

The basic coordinating mechanism in a free market system is

Accepted Answer

A)  quantity. 
B)  price. 
C)  a central government authority. 
D)  the corporation. 
A)  quantity. 
B)  price. 
C)  a central government authority. 
D)  the corporation.

Question 7

The notion that buyers determine what will be produced by choosing what they purchase is called consumer sovereignty.

Accepted Answer

A) True 
 B)False

Question 8

As more of a good, such as television sets, is produced, the opportunity costs of producing it increases. This most likely occurs because

Accepted Answer

A)  as more of a good is produced, the inputs used to produce that good will increase in price. 
B)  consumers would be willing to pay higher prices for the good as more of the good is produced. 
C)  resources are not equally well suited to producing all goods, and as more of a good is produced, it is necessary to use resources less well suited to the production of that good. 
D)  as more of a good is produced, the quality of that good declines, and therefore the costs of production increase. 
A)  as more of a good is produced, the inputs used to produce that good will increase in price. 
B)  consumers would be willing to pay higher prices for the good as more of the good is produced. 
C)  resources are not equally well suited to producing all goods, and as more of a good is produced, it is necessary to use resources less well suited to the production of that good. 
D)  as more of a good is produced, the quality of that good declines, and therefore the costs of production increase.

Question 9

Refer to the information provided in Figure 2.1 below to answer the questions that follow.   Figure 2.1
-Refer to Figure 2.1. Macroland's production possibility frontier is bowed out from the origin due to

Accepted Answer

A)  decreasing opportunity costs. 
B)  trade. 
C)  unemployment. 
D)  specialized resources. 
A)  decreasing opportunity costs. 
B)  trade. 
C)  unemployment. 
D)  specialized resources.

Question 10

Refer to the information provided in Table 2.1 below to answer the following questions.
Table 2.1
 $$\begin{array} { | c | c | c | } 
\hline & \text { Krystal } & \text { Mark } \
\hline \text { Writing Poerns } & 8 & 12 \
\hline \text { Writing TV Comrnercials } & 2 & 4 \
\hline
\end{array}$$
-Refer to Table 2.1. To maximize total production,

Accepted Answer

A)  Krystal should specialize in writing TV commercials, and Mark should specialize in writing poems. 
B)  Mark should specialize in writing TV commercials, and Krystal should specialize in writing poems. 
C)  Krystal and Mark should both split their time between writing poems and writing TV commercials. 
D)  Krystal should write poems and write TV commercials, but Mark should only write poems. 
A)  Krystal should specialize in writing TV commercials, and Mark should specialize in writing poems. 
B)  Mark should specialize in writing TV commercials, and Krystal should specialize in writing poems. 
C)  Krystal and Mark should both split their time between writing poems and writing TV commercials. 
D)  Krystal should write poems and write TV commercials, but Mark should only write poems.

Question 11

An improvement in technology will cause the

Accepted Answer

A)  production possibility frontier to shift outward. 
B)  production possibility frontier to shift inward. 
C)  economy to move down the production possibility frontier. 
D)  economy to move closer to its production possibility frontier. 
A)  production possibility frontier to shift outward. 
B)  production possibility frontier to shift inward. 
C)  economy to move down the production possibility frontier. 
D)  economy to move closer to its production possibility frontier.

Question 12

Periods of less than full employment correspond to

Accepted Answer

A)  points outside the ppf. 
B)  points underneath the ppf. 
C)  points on the ppf. 
D)  either points inside or outside the ppf. 
A)  points outside the ppf. 
B)  points underneath the ppf. 
C)  points on the ppf. 
D)  either points inside or outside the ppf.

Question 13

If resources are combined efficiently in production, then the society

Accepted Answer

A)  is producing at the most-desirable point on the production possibility frontier. 
B)  is producing at a point on the production possibility frontier but not necessarily at the most-desirable point. 
C)  is producing at a point outside the production possibility frontier. 
D)  is experiencing economic growth. 
A)  is producing at the most-desirable point on the production possibility frontier. 
B)  is producing at a point on the production possibility frontier but not necessarily at the most-desirable point. 
C)  is producing at a point outside the production possibility frontier. 
D)  is experiencing economic growth.

Question 14

Economic growth may occur when

Accepted Answer

A)  a society acquires new resources. 
B)  a society learns to produce more using existing resources. 
C)  the society begins to produce the combination of goods society wants most. 
D)  both A and B 
A)  a society acquires new resources. 
B)  a society learns to produce more using existing resources. 
C)  the society begins to produce the combination of goods society wants most. 
D)  both A and B

Question 15

If the unemployment rate increases from 10% to 14%, the economy will

Accepted Answer

A)  move closer to a point on the ppf. 
B)  move away from the ppf toward the origin. 
C)  remain on the ppf. 
D)  remain on the origin. 
A)  move closer to a point on the ppf. 
B)  move away from the ppf toward the origin. 
C)  remain on the ppf. 
D)  remain on the origin.

Question 16

In a laissez-faire economy, ________ what gets produced, how it is produced, and who gets it.

Accepted Answer

A)  the behavior of buyers and sellers determines 
B)  the central government authority determines 
C)  firms but not consumers determine 
D)  consumers but not firms determine 
A)  the behavior of buyers and sellers determines 
B)  the central government authority determines 
C)  firms but not consumers determine 
D)  consumers but not firms determine

Question 17

The process of using resources to produce new capital is

Accepted Answer

A)  research and development. 
B)  investment. 
C)  consumption. 
D)  economic growth. 
A)  research and development. 
B)  investment. 
C)  consumption. 
D)  economic growth.

Question 18

The opportunity cost of investment in capital is forgone present consumption because

Accepted Answer

A)  capital takes a long time to produce. 
B)  capital increases the productivity of labor. 
C)  resources are scarce. 
D)  capital is an intangible good. 
A)  capital takes a long time to produce. 
B)  capital increases the productivity of labor. 
C)  resources are scarce. 
D)  capital is an intangible good.

Question 19

Outputs in the production process are

Accepted Answer

A)  pollution. 
B)  money. 
C)  goods and services of value to households. 
D)  resources. 
A)  pollution. 
B)  money. 
C)  goods and services of value to households. 
D)  resources.

Question 20

Comparative advantage refers to the ability to produce better quality goods than a competitor.

Accepted Answer

A) True 
 B)False

Exam 2: The Economic Problem: Scarcity and Choice

Things that have already been produced that are in turn used to produce other goods and services over time are called "capital."

Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4 -According to Figure 2.4, as the economy moves from Point A to Point E, the opportunity cost of motorcycles, measured in terms of hybrid cars,

If an economy begins to use its resources more efficiently, it will move

Refer to the information provided in Figure 2.6 below to answer the questions that follow. Figure 2.6 -Refer to Figure 2.6. Which of the following is most likely to shift the production possibility frontier from ppf1 to ppf2?

Refer to the information provided in Table 2.1 below to answer the following questions. Table 2.1 Krystal Mark Writing Poerns 8 12 Writing TV Comrnercials 2 4 -Refer to Table 2.1. For Krystal, the opportunity cost of writing four TV commercials is ________ poems.

The basic coordinating mechanism in a free market system is

The notion that buyers determine what will be produced by choosing what they purchase is called consumer sovereignty.

As more of a good, such as television sets, is produced, the opportunity costs of producing it increases. This most likely occurs because

Refer to the information provided in Figure 2.1 below to answer the questions that follow. Figure 2.1 -Refer to Figure 2.1. Macroland's production possibility frontier is bowed out from the origin due to

Refer to the information provided in Table 2.1 below to answer the following questions. Table 2.1 Krystal Mark Writing Poerns 8 12 Writing TV Comrnercials 2 4 -Refer to Table 2.1. To maximize total production,

An improvement in technology will cause the

Periods of less than full employment correspond to

If resources are combined efficiently in production, then the society

Economic growth may occur when

If the unemployment rate increases from 10% to 14%, the economy will

In a laissez-faire economy, ________ what gets produced, how it is produced, and who gets it.

The process of using resources to produce new capital is

The opportunity cost of investment in capital is forgone present consumption because

Outputs in the production process are

Comparative advantage refers to the ability to produce better quality goods than a competitor.

The Scope and Method of Economics

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Social Choice

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: The Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing and Transitional Economies

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