Question 1

In economics, investment always refers to

Accepted Answer

A)  the act of buying stocks or bonds. 
B)  the creation of capital. 
C)  increasing the quantity of labor. 
D)  an increase in per capita output. 
A)  the act of buying stocks or bonds. 
B)  the creation of capital. 
C)  increasing the quantity of labor. 
D)  an increase in per capita output.

Question 2

Given scarce resources, how societies go about deciding what to produce, how to produce it, and for whom to produce best describes

Accepted Answer

A)  decreasing opportunity costs. 
B)  the fallacy of composition. 
C)  Ockham's razor. 
D)  the economic problem. 
A)  decreasing opportunity costs. 
B)  the fallacy of composition. 
C)  Ockham's razor. 
D)  the economic problem.

Question 3

The marginal rate of transformation is the

Accepted Answer

A)  slope of the production possibility frontier. 
B)  dollar value of the best forgone alternative. 
C)  process of using resources to produce new capital. 
D)  transformation of resources into a form that is useful to people. 
A)  slope of the production possibility frontier. 
B)  dollar value of the best forgone alternative. 
C)  process of using resources to produce new capital. 
D)  transformation of resources into a form that is useful to people.

Question 4

In a laissez-faire economy

Accepted Answer

A)  individual people and firms pursue their own self-interest. 
B)  the government decides how to distribute goods and services. 
C)  a centralized authority establishes what will be produced. 
D)  consumers do not exercise choice. 
A)  individual people and firms pursue their own self-interest. 
B)  the government decides how to distribute goods and services. 
C)  a centralized authority establishes what will be produced. 
D)  consumers do not exercise choice.

Question 5

In a market system, self-interest motivates most people to

Accepted Answer

A)  avoid paying insurance premiums. 
B)  remain self-sufficient. 
C)  provide products for other people. 
D)  rely on government central planning. 
A)  avoid paying insurance premiums. 
B)  remain self-sufficient. 
C)  provide products for other people. 
D)  rely on government central planning.

Question 6

Refer to the information provided in Figure 2.6 below to answer the questions that follow.   Figure 2.6
-Refer to Figure 2.6. An improvement in technology may be represented by a

Accepted Answer

A)  shift from ppf2 to ppf1. 
B)  shift from ppf1 to ppf2. 
C)  movement along ppf2. 
D)  movement along ppf1. 
A)  shift from ppf2 to ppf1. 
B)  shift from ppf1 to ppf2. 
C)  movement along ppf2. 
D)  movement along ppf1.

Question 7

Periods of full employment correspond to

Accepted Answer

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

Question 8

As you move down the production possibility frontier, the absolute value of the marginal rate of transformation

Accepted Answer

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

Question 9

Refer to the information provided in Figure 2.4 below to answer the questions that follow.   Figure 2.4
-According to Figure 2.4, the optimal point for the economy is

Accepted Answer

A)  A. 
B)  B. 
C)  F. 
D)  indeterminate from the information given. 
A)  A. 
B)  B. 
C)  F. 
D)  indeterminate from the information given.

Question 10

Refer to the information provided in Table 2.1 below to answer the following questions.
Table 2.1
  
-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 11

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 12

Refer to the information provided in Table 2.1 below to answer the following questions.
Table 2.1
  
-Refer to Table 2.1. For Mark, the opportunity cost of writing one TV commercial is

Accepted Answer

A)  1/3 of a poem. 
B)  2 poems. 
C)  3 poems. 
D)  8 poems. 
A)  1/3 of a poem. 
B)  2 poems. 
C)  3 poems. 
D)  8 poems.

Question 13

Related to the Economics in Practice on p. 25: One reason for the increase in sales of frozen foods from $1 billion in 1950 to $44 billion in 2012 is the

Accepted Answer

A)  increased opportunity cost of cooking frozen meals. 
B)  decrease in the number of women in the labor force. 
C)  increased opportunity cost of preparing home-cooked meals. 
D)  decrease in popularity of the microwave oven. 
A)  increased opportunity cost of cooking frozen meals. 
B)  decrease in the number of women in the labor force. 
C)  increased opportunity cost of preparing home-cooked meals. 
D)  decrease in popularity of the microwave oven.

Question 14

If a vintner has a comparative advantage in producing wine,

Accepted Answer

A)  he can produce more wine using the same resources than other vintners. 
B)  wine is the only product he can produce. 
C)  he can produce wine at a lower opportunity cost than other vintners. 
D)  he also has an absolute advantage in producing wine. 
A)  he can produce more wine using the same resources than other vintners. 
B)  wine is the only product he can produce. 
C)  he can produce wine at a lower opportunity cost than other vintners. 
D)  he also has an absolute advantage in producing wine.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Comparative advantage refers to the ability to produce at a lower financial cost than a competitor.

Accepted Answer

A) True 
 B)False

Question 17

In a free-market system, the amount of output that any one household gets depends on its

Accepted Answer

A)  income. 
B)  wealth. 
C)  wage and interest income. 
D)  income and wealth. 
A)  income. 
B)  wealth. 
C)  wage and interest income. 
D)  income and wealth.

Question 18

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 will shift an economy's production possibility frontier from ppf2 to ppf1?

Accepted Answer

A)  a decrease in the economy's capital stock 
B)  an increase in production efficiency 
C)  a change in consumer's tastes 
D)  economic growth 
A)  a decrease in the economy's capital stock 
B)  an increase in production efficiency 
C)  a change in consumer's tastes 
D)  economic growth

Question 19

Related to the Economics in Practice on page 35: The results of the survey conducted by Esther Duflo and Abhijit Banerjee found that in extremely poor societies,

Accepted Answer

A)  household choice plays no role in consumption decisions. 
B)  all consumption decisions are made by the government. 
C)  household choice even plays a role in non-food-related consumption decisions. 
D)  the only consumption decisions in which household choice plays a role is in the consumption of biological needs such as food. 
A)  household choice plays no role in consumption decisions. 
B)  all consumption decisions are made by the government. 
C)  household choice even plays a role in non-food-related consumption decisions. 
D)  the only consumption decisions in which household choice plays a role is in the consumption of biological needs such as food.

Question 20

If the opportunity costs of producing a good increase as more of that good is produced, the economy's production possibility frontier will be

Accepted Answer

A)  negatively sloped and "bowed inward" toward the origin. 
B)  negatively sloped and "bowed outward" from the origin. 
C)  a negatively sloped straight line. 
D)  a positively sloped straight line. 
A)  negatively sloped and "bowed inward" toward the origin. 
B)  negatively sloped and "bowed outward" from the origin. 
C)  a negatively sloped straight line. 
D)  a positively sloped straight line.

Exam 2: The Economic Problem: Scarcity and Choice

In economics, investment always refers to

Given scarce resources, how societies go about deciding what to produce, how to produce it, and for whom to produce best describes

The marginal rate of transformation is the

In a laissez-faire economy

In a market system, self-interest motivates most people to

Refer to the information provided in Figure 2.6 below to answer the questions that follow. Figure 2.6 -Refer to Figure 2.6. An improvement in technology may be represented by a

Periods of full employment correspond to

As you move down the production possibility frontier, the absolute value of the marginal rate of transformation

Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4 -According to Figure 2.4, the optimal point for the economy is

Refer to the information provided in Table 2.1 below to answer the following questions. Table 2.1 -Refer to Table 2.1. For Krystal, the opportunity cost of writing four TV commercials is ________ poems.

If resources are combined efficiently in production, then the society

Refer to the information provided in Table 2.1 below to answer the following questions. Table 2.1 -Refer to Table 2.1. For Mark, the opportunity cost of writing one TV commercial is

Related to the Economics in Practice on p. 25: One reason for the increase in sales of frozen foods from $1 billion in 1950 to $44 billion in 2012 is the

If a vintner has a comparative advantage in producing wine,

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

Comparative advantage refers to the ability to produce at a lower financial cost than a competitor.

In a free-market system, the amount of output that any one household gets depends on its

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 will shift an economy's production possibility frontier from ppf2 to ppf1?

Related to the Economics in Practice on page 35: The results of the survey conducted by Esther Duflo and Abhijit Banerjee found that in extremely poor societies,

If the opportunity costs of producing a good increase as more of that good is produced, the economy's production possibility frontier will be

The Scope and Method of Economics

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Measuring National Output and National Income

Unemployment, Inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

Money, the Federal Reserve, and the Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Cost Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, Stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade, Comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

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 will shift an economy's production possibility frontier from ppf² to ppf¹?