Deck 2: Economic Tools and Economic Systems

Question 1

Opportunity cost is generally considered a subjective measure.Given this fact, which of the following best describes the concept of opportunity cost?  

A) It must be the same for everyone. 
B) It is the value of all alternative activities that are forgone. 
C) It has a maximum value equal to the minimum wage. 
D) It is the value of the next best alternative foregone.

Answer 1

 It is the value of the next best alternative foregone.

Question 2

What is the opportunity cost of an item?  

A) the number of hours needed to earn money to buy it 
B) what a person gives up to get the item 
C) usually more than the dollar value of the item 
D) usually less than the dollar value of the item

Answer 2

 what a person gives up to get the item 

Question 3

Why does opportunity cost exist?  

A) because technology is fixed at any point in time 
B) because the law of comparative advantage is working 
C) because resources are scarce but wants are unlimited 
D) because the value of lost opportunities varies from person to person

Answer 3

 because resources are scarce but wants are unlimited 

Question 4

Which of the following is an opportunity cost of going to college?  

A) the total spent on food, clothing, books, and other expenses 
B) the value of the best opportunity a student gives up to attend college 
C) zero for students fortunate enough to have all their college expenses paid for by someone else 
D) zero, because a college education will give a student the opportunity to earn a larger income after graduation

Question 5

Melissa is a self-employed lawyer.She chooses to dine at a higher-priced restaurant 2 kilometres from her home over a cheaper restaurant 15 kilometres from home.Which of the following is the most likely explanation for her behaviour?  

A) The opportunity cost of her time is very low. 
B) She did NOT take travel time into consideration. 
C) The prices at the more expensive restaurant understate the opportunity cost of eating there. 
D) The higher monetary cost of the more expensive restaurant is offset by the higher opportunity cost of the lower-priced restaurant.

Question 6

When faced with a choice, a person will assess alternatives provided that the expected marginal benefit exceeds which of the following?  

A) marginal incentive 
B) marginal opportunity 
C) marginal scarcity 
D) marginal cost

Question 7

Suppose Roger has an hour before his next class starts.He can study, snack, or have a nap.What is this concept known as?  

A) incentive 
B) opportunity cost 
C) marginal cost 
D) specialization

Question 8

Which economic concept is reflected by the expression "time is money"?  

A) opportunity cost 
B) specialization 
C) market exchange 
D) comparative advantage

Question 9

What is being measured when the opportunity cost of going to college is calculated?  

A) the expense of room and board 
B) the expense of tuition 
C) the expense of room and board plus tuition 
D) the income forgone by NOT working, plus tuition

Question 10

In the context of a person choosing whether to attend college or go to work, which of the following best describes the expenses associated with room and board?  

A) Room and board is an opportunity cost of attending college because it is subsidized by the government or by the college. 
B) Room and board is an opportunity cost of attending college because it involves cash expenditures. 
C) Room and board is NOT an opportunity cost of attending college if the student is on a scholarship. 
D) Room and board is NOT usually part of the opportunity cost of attending college because a person requires a place to live and food to eat whether or NOT attending college.

Question 11

How is the opportunity cost of an activity best measured?  

A) only by the monetary costs 
B) by the number of alternative activities that were forgone 
C) by the cost difference between the chosen activity and the next best alternative 
D) by the value expected from the best alternative that is forgone

Question 12

What is the term for what you give up to get an item?  

A) explicit cost 
B) direct cost 
C) true cost 
D) opportunity cost

Question 13

Suppose Rashida has the choice of working full time during the summer or going to summer school full time.The cost of summer tuition and books are $3200.If Rashida worked, she could make $7,000.Her rent is $1,000 for the summer, regardless of her choice.What is the opportunity cost of going to summer school?  

A) $3,200 
B) $7,000 
C) $8,000 
D) $10,200

Question 14

How is opportunity cost defined?  

A) as the value of all alternatives NOT chosen 
B) as value of the best alternative NOT chosen 
C) as the difference between the benefits from a choice and the benefits from the next best alternative 
D) as the difference between the benefits from a choice and the costs of that choice

Question 15

Besides the cost of books, tuition, and fees, what is another opportunity cost of attending college fulltime?  

A) room and board 
B) earnings forgone by NOT working 
C) the cost of another college certificate 
D) the time spent at college

Question 16

Attending college involves many explicit and implicit costs.Which of the following best describes the opportunity cost of attending college?  

A) It is entirely monetary and consists of expenditures on tuition, books, transportation, and meals. 
B) It is NOT monetary, but consists solely of forgone income. 
C) It is the most valued alternative given up to attend college. 
D) It is negligible for most people, because they really have no choice but to attend college.

Question 17

A test is scheduled for Monday morning.James goes to a party on Saturday night, but if he had NOT attended the party, he could have studied for the test or gone to a movie.Which of the following is the opportunity cost of going to the party?  

A) only the time spent studying for the test 
B) only the time spent going to the movie 
C) both the time spent going to the movie and the time spent studying 
D) either the time spent going to the movie or the time spent studying for the test

Question 18

Which statement describes how accurately a person's opportunity cost can be measured?  

A) It can be easily and accurately calculated. 
B) It cannot even be estimated. 
C) It does NOT change over time. 
D) The ability to calculate it varies, depending on time and circumstances.

Question 19

What is the opportunity cost of an activity?  

A) the amount of money spent on the activity 
B) the value of the best alternative NOT chosen 
C) the sum of benefits from all of the sacrificed alternatives 
D) the difference between the benefits and the costs of that activity

Question 20

Upon graduating from high school Carmen has a job offer, and the job would provide her with $20,000 in income for the coming year.She has also been accepted to Isaac and Avery College.Tuition for the coming year at the College is $15,000, room and board is $10,000, and she expects that books will cost $2,000.What is the opportunity cost of attending Isaac & Avery College?  

A) $37,000 
B) $32,000 
C) $27,000 
D) $20,000

Question 21

What can be concluded if Sam can chop up more carrots per minute than Joe can?  

A) Joe has an absolute advantage in carrot chopping. 
B) Joe must have a comparative advantage in carrot chopping. 
C) Sam has an absolute advantage in carrot chopping. 
D) Sam must have a comparative advantage in carrot chopping.

Question 22

Eileen has a comparative advantage over Jan in piano tuning but NOT in shoe polishing.What can therefore be concluded?  

A) Jan must have an absolute advantage in piano tuning. 
B) Eileen must have an absolute advantage in shoe polishing. 
C) Jan must have a lower opportunity cost of shoe polishing. 
D) Eileen must have an absolute advantage in shoe polishing and in piano tuning.

Question 23

Don can produce 10 pens or 20 pencils in 1 hour while Bob can produce 15 pens or 5 pencils in 1 hour.Which statement best describes Don's comparative advantage?  

A) Don has a comparative advantage in the production of pens. 
B) Don has a comparative advantage in the production of pencils. 
C) Don has a comparative advantage in producing both goods. 
D) Don does NOT have a comparative advantage in the production of either good.

Question 24

The law of comparative advantage states which person should produce a good.Who is that person?  

A) the person who has the lowest opportunity cost of producing that good 
B) the person who can produce that good using the fewest resources 
C) the person who will produce that good using the most expensive resources 
D) the person who has the most desire for that good

Question 25

Who would benefit from a trade if David has an absolute advantage in both gardening and baking compared to Robert?  

A) David would benefit by specializing in gardening if Robert specializes in baking. 
B) David would benefit by specializing in baking if Robert specializes in gardening. 
C) Both David and Robert may benefit from trading, but there is insufficient information to determine who should specialize in what. 
D) Neither David nor Robert would benefit from trading with the other.

Question 26

When does a country have an absolute advantage in the production of a good?  

A) when that country can produce the good using fewer resources than another country would require 
B) when that country has the lowest opportunity cost of producing the good and can produce it with the fewest resources 
C) when that country has the lowest opportunity cost of producing the good regardless of whether it is produced with the fewest resources 
D) when that country has the greatest opportunity cost of producing the good regardless of whether it is produced with the fewest resources

Question 27

For each room she paints, Helen gives up the opportunity to bake 40 cakes.Josh can paint one room in the time it takes him to bake 60 cakes.What is the opportunity cost of a cake for Josh?  

A) painting 1/60 of a room 
B) painting 1/40 of a room 
C) painting 2/3 of a room 
D) painting 1 1/2 rooms

Question 28

When does the law of comparative advantage say that a person should produce a good?  

A) if she has the greatest desire to consume that good 
B) if she has the lowest opportunity cost of producing that good 
C) if she has an absolute advantage in a related activity 
D) if she has a comparative advantage in a related activity

Question 29

Which of the following best describes the concept of sunk costs?  

A) They can only be measured in monetary terms. 
B) They are opportunity costs. 
C) They should influence a person's choice if that person is a marginal decision maker. 
D) They should NOT be considered when making economic decisions.

Question 30

John takes 10 minutes to iron a shirt and 20 minutes to type a paper.Harry takes 10 minutes to iron a shirt and 30 minutes to type a paper.Which statement best describes Harry's advantage?  

A) Harry has a comparative advantage in ironing. 
B) Harry has a comparative advantage in typing. 
C) Harry has an absolute advantage in typing. 
D) Harry has an absolute advantage in ironing.

Question 31

Janis mows the lawn in 1 hour and types a paper in 1 hour.Kristen mows the lawn in 2 hours and types a paper in 1 hour.Which statement best describes Janis's comparative advantage?  

A) Janis has a comparative advantage in mowing a lawn. 
B) Janis has a comparative advantage in typing a paper. 
C) Janis does NOT have a comparative advantage in either service. 
D) Janis has a comparative advantage in both services.

Question 32

What can be concluded if Fred agrees to exchange four ginger snaps for one of Hazel's chocolate chip cookies?  

A) Both Fred and Hazel are at least as well off as they were before the exchange. 
B) Fred is better off than he was before the exchange, but Hazel is NOT. 
C) Hazel is better off than she was before the exchange, but Fred is NOT. 
D) Both Fred and Hazel are worse off than before the exchange.

Question 33

Which of the following best describes comparative advantage?  

A) the ability of an individual to specialize and produce a greater amount of some good than can another individual 
B) the number of units of one good given up in order to acquire something else 
C) the ability of an individual to produce a good at a lower opportunity cost than can another individual 
D) the amount of labour a particular individual needs to produce a fixed amount of capital goods

Question 34

Suppose Julian has the absolute advantage in producing two goods.Which statement best describes possible specialization?  

A) Julian must also have a comparative advantage in both goods. 
B) Julian cannot benefit from trade 
C) Julian will have the comparative advantage in only one good. 
D) Julian should specialize in the production of both goods.

Question 35

Suppose Marlene has purchased a non-refundable $700 plane ticket.But, at the last moment, she cannot take the trip.She can, however, sell the ticket.The cost of sending the ticket to a buyer through overnight mail is $20, and it costs $10 for a courier to get the ticket to the post office for overnight delivery.What is the minimum amount of money Marlene should accept for the ticket?  

A) $730, because that is the total cost of the ticket and getting it to the buyer 
B) $720, because that is the total cost of the ticket and of getting it to the buyer 
C) $700, because that is what the ticket cost 
D) $30, because the ticket cost is a sunk cost

Question 36

Which statement best describes the concept of the law of comparative advantage?  

A) The individual with the lowest opportunity cost of producing a particular good should produce it. 
B) Comparative advantage exists only when one person has an absolute advantage in the production of two goods. 
C) Whoever has a comparative advantage in producing a good also has an absolute advantage in producing that good. 
D) Whoever has an absolute advantage in producing a good also has a comparative advantage in producing that good.

Question 37

Jason can wash a car in 20 minutes and wash a dog in 10 minutes.Megan can wash a car in 15 minutes and wash a dog in 15 minutes.Which statement best describes Megan's comparative advantage?  

A) Megan has a comparative advantage in washing a dog. 
B) Megan has a comparative advantage in washing a car. 
C) Megan has a comparative advantage in both activities. 
D) Megan does NOT have a comparative advantage in either activity.

Question 38

For each room she paints, Helen gives up the opportunity to bake 40 cakes.Josh can paint one room in the time it takes him to bake 60 cakes.What is the opportunity cost of a cake for Helen?  

A) painting 1/60 of a room 
B) painting 1/40 of a room 
C) painting 2/3 of a room 
D) painting 1 1/2 rooms

Question 39

For each room she paints Helen gives up the opportunity to bake 40 cakes.And, for each room he paints, Josh gives up the opportunity to bake 60 cakes.What can be concluded regarding opportunity cost?  

A) The opportunity cost of painting is higher for Helen. 
B) The opportunity cost of baking cakes is lower for Josh. 
C) Helen's opportunity cost of painting one room is 1/40 of a cake. 
D) Josh's opportunity cost of baking one cake is 60 painted rooms.

Question 40

Suppose Monica has a comparative advantage in baking and George has a comparative advantage in sewing.What can be concluded regarding absolute advantage?  

A) Monica must have an absolute advantage in baking, but nothing can be concluded about absolute advantage. 
B) Monica must have an absolute advantage in baking. 
C) George must have an absolute advantage in sewing. 
D) Monica and George have equal absolute advantages in producing both products.

Question 41

Exhibit 2-1
$$\begin{array} { l r r } & \text { Hans } & \text { Maria } \\\hline \text { Loads of laundry per hour } & 4 & 12 \\\text { Pages typed per hour } & 6 & 8\end{array}$$

-Refer to the exhibit.What is Maria's opportunity cost of typing a page?  

A) 6 loads of laundry 
B) 4 loads of laundry 
C) 1 1/2 loads of laundry 
D) 2/3 of a load of laundry

Question 42

Exhibit 2-1
$$\begin{array} { l r r } & \text { Hans } & \text { Maria } \\\hline \text { Loads of laundry per hour } & 4 & 12 \\\text { Pages typed per hour } & 6 & 8\end{array}$$

-Refer to the exhibit.Suppose Maria types one fewer pages.How many loads of laundry can she do in the time saved on typing?  

A) 2/3 of a load 
B) 1 1/2 loads 
C) 4 loads 
D) 6 loads

Question 43

In the period of one week, Mohammed can knit 5 sweaters or bake 240 cookies.In period of one week, Tetah can knit 15 sweaters or bake 480 cookies.How can Mohammed and Tetah produce the maximum quantities of cookies and sweaters?  

A) if Mohammed knits and bakes, and Tetah does nothing 
B) if Tetah knits and bakes, and Mohammed does nothing 
C) if Mohammed knits and Tetah bakes 
D) if Tetah knits and Mohammed bakes

Question 44

Exhibit 2-1
$$\begin{array} { l r r } & \text { Hans } & \text { Maria } \\\hline \text { Loads of laundry per hour } & 4 & 12 \\\text { Pages typed per hour } & 6 & 8\end{array}$$

-Refer to the exhibit.What is Hans' opportunity cost of doing a load of laundry?  

A) 12 typed pages 
B) 8 typed pages 
C) 1 1/2 typed pages 
D) 2/3 of a typed page

Question 45

Exhibit 2-2
$\begin{array}{lrr} & \text { Boat captain } & \text { Crew member } \\\hline \text { Fishhooks per day } & 30 & 60 \\\text { Fishing poles per day } & 2 & 10\end{array}$

-Refer to the exhibit.What should the crew member make?  

A) fishhooks, because he can make 30 more per day than the captain 
B) both fishhooks and fishing poles, because he is better at making both 
C) fishing poles, because that is where his comparative advantage lies 
D) neither fish hooks nor fishing poles, because the captain is better at making both

Question 46

When does barter occur?  

A) when two people share everything 
B) when one product is exchanged directly for another product 
C) when money is used to buy goods 
D) when goods are used to buy money

Question 47

In the period of one week, Tetah can knit 15 sweaters or bake 480 cookies.What is Tetah's opportunity cost per sweater?  

A) 480 cookies 
B) 32 cookies 
C) 15 cookies 
D) 1/32 of a cookie

Question 48

What can be concluded if Daniel produces one pair of shoes in 4 hours and Sarah produces one pair of shoes in 3 hours?  

A) Sarah has a comparative advantage in shoemaking. 
B) Daniel has a comparative advantage in shoemaking. 
C) Sarah has both an absolute advantage and a comparative advantage in shoemaking. 
D) Sarah has an absolute advantage in shoemaking.

Question 49

Exhibit 2-1
$$\begin{array} { l r r } & \text { Hans } & \text { Maria } \\\hline \text { Loads of laundry per hour } & 4 & 12 \\\text { Pages typed per hour } & 6 & 8\end{array}$$

-Refer to the exhibit.Suppose Hans does one fewer loads of laundry.How many pages can he type in the time saved on laundry?  

A) 12 pages 
B) 8 pages 
C) 1 1/2 pages 
D) 2/3 of a page

Question 50

Exhibit 2-1
$$\begin{array} { l r r } & \text { Hans } & \text { Maria } \\\hline \text { Loads of laundry per hour } & 4 & 12 \\\text { Pages typed per hour } & 6 & 8\end{array}$$

-Refer to the exhibit.What are Hans and Maria's trading opportunities?  

A) Maria has an absolute and a comparative advantage in typing. 
B) Maria has an absolute and a comparative advantage in doing laundry. 
C) Hans has an absolute and a comparative advantage in typing. 
D) Hans has an absolute advantage in doing laundry.

Question 51

In the period of one week, Mohammed can knit 5 sweaters or bake 240 cookies.What is Mohammed's opportunity cost per cookie?  

A) 5 sweaters 
B) 48 sweaters 
C) 1/48 of a sweater 
D) 48 cookies

Question 52

Exhibit 2-1
$$\begin{array} { l r r } & \text { Hans } & \text { Maria } \\\hline \text { Loads of laundry per hour } & 4 & 12 \\\text { Pages typed per hour } & 6 & 8\end{array}$$

-Refer to the exhibit.Suppose Maria does one fewer loads of laundry.How many pages can she type in the time saved on laundry?  

A) 2/3 of a page 
B) 1 1/2 pages 
C) 4 pages 
D) 6 pages

Question 53

In a period of one week, Mohammed can knit 5 sweaters or bake 240 cookies.In a period of one week, Tetah can knit 15 sweaters or bake 480 cookies.Which of the following best describes Mohammed's and Tetah's resource allocation?  

A) Mohammed has the absolute and comparative advantage in both tasks. 
B) Tetah has the absolute and comparative advantage in both tasks. 
C) Mohammed has the absolute advantage in both tasks and the comparative advantage in knitting sweaters. 
D) Tetah has the absolute advantage in both tasks and the comparative advantage in knitting sweaters.

Question 54

Exhibit 2-1
$$\begin{array} { l r r } & \text { Hans } & \text { Maria } \\\hline \text { Loads of laundry per hour } & 4 & 12 \\\text { Pages typed per hour } & 6 & 8\end{array}$$

-Refer to the exhibit.What is Hans' opportunity cost of typing one page?  

A) 12 loads of laundry 
B) 8 loads of laundry 
C) 1 1/2 loads of laundry 
D) 2/3 of a load of laundry

Question 55

Exhibit 2-1
$$\begin{array} { l r r } & \text { Hans } & \text { Maria } \\\hline \text { Loads of laundry per hour } & 4 & 12 \\\text { Pages typed per hour } & 6 & 8\end{array}$$

-Refer to the exhibit.What is Maria's opportunity cost of doing a load of laundry?  

A) 6 typed pages 
B) 4 typed pages 
C) 1 1/2 typed pages 
D) 2/3 of a typed page

Question 56

In the period of one week, Tetah can knit 15 sweaters or bake 480 cookies.What is Tetah's opportunity cost per cookie?  

A) 480 sweaters 
B) 32 sweaters 
C) 15 sweaters 
D) 1/32 of a sweater

Question 57

Exhibit 2-1
$$\begin{array} { l r r } & \text { Hans } & \text { Maria } \\\hline \text { Loads of laundry per hour } & 4 & 12 \\\text { Pages typed per hour } & 6 & 8\end{array}$$

-Refer to the exhibit.When would Hans and Maria both be better off?  

A) if Hans specialized in typing and Maria specialized in doing laundry 
B) if Hans specialized in doing laundry and Maria specialized in typing 
C) if Maria did all of the typing and all of the laundry 
D) if Hans did all of the typing and all of the laundry

Question 58

Exhibit 2-1
$$\begin{array} { l r r } & \text { Hans } & \text { Maria } \\\hline \text { Loads of laundry per hour } & 4 & 12 \\\text { Pages typed per hour } & 6 & 8\end{array}$$

-Refer to the exhibit.Suppose Hans types one fewer pages.How many loads of laundry can he do in the time saved on typing?  

A) 12 loads of laundry 
B) 8 loads of laundry 
C) 1 1/2 loads of laundry 
D) 2/3 of a load of laundry

Question 59

In the period of one week, Mohammed can knit 5 sweaters or bake 240 cookies.What is Mohammed's opportunity cost per sweater?  

A) 240 cookies 
B) 48 sweaters 
C) 1/48 of a cookie 
D) 48 cookies

Question 60

Suppose James trades a ginger snap cookie for a chocolate chip cookie.What is James engaging in?  

A) barter 
B) comparative advantage 
C) absolute advantage 
D) division of labour

Question 61

Which of the following is an example of specialization?  

A) a firm that produces a line of related products, such as eight kinds of breakfast cereal 
B) a physician with an orthopaedic surgery practice 
C) a family that eats at Wendy's every Thursday night 
D) a retailer that sells goods but provides no services

Question 62

Which of the following is NOT a reason why the division of labour facilitates productivity increases?  

A) because it allows people to do those tasks for which they have the greatest natural ability 
B) because workers get better at performing tasks, the more they repeat the tasks 
C) because the more experience workers gain by specializing in a task, the more likely they will enjoy that task 
D) because more sophisticated production techniques are introduced

Question 63

How does money facilitate trade?  

A) It eliminates the need for specialization. 
B) It prevents people from taking advantage of each other. 
C) It serves as a medium of exchange. 
D) It allows for the division of labour.

Question 64

Why does division of labour increase productivity?  

A) because tasks can be assigned according to individual tastes and abilities 
B) because each worker must learn each of the numerous tasks in the total production process 
C) because specialization of labour allows for the introduction of cheaper, less-sophisticated production techniques 
D) because managers can force workers to produce goods that are valued more highly than the costs of producing them

Question 65

One function of money is as a medium of exchange.Which of the following best describes medium of exchange?  

A) It is socially acceptable for goods and services. 
B) It is easy to reproduce. 
C) It is used to eliminate specialization and the division of labour. 
D) It is used when a system of barter exists.

Question 66

What does the term "division of labour" refer to?  

A) discrimination in labour markets 
B) separating a job into smaller tasks completed by different people 
C) a worker who divides his time among different jobs and duties 
D) defining a job according to the appropriate gender

Question 67

Which statement best describes the results of specialization of labour?  

A) It increases productivity without creating any problems. 
B) It reduces productivity, and is usually eliminated by business firms. 
C) It can create problems of boredom and repetitive motion injuries. 
D) It prevents the introduction of more sophisticated and efficient production techniques.

Question 68

When drawing a production possibilities frontier, which of the following is NOT usually assumed?  

A) that the quantity of resources is rapidly growing 
B) that technology is fixed 
C) that resources can be shifted between production of the two goods 
D) that resources are fully and efficiently employed

Question 69

Which of the following is the best definition of barter?  

A) when money is exchanged for goods 
B) when money is exchanged for money 
C) when goods are exchanged directly without the use of money 
D) when goods are exchanged for a promise to pay money later

Question 70

Which of the following is NOT a gain from division of labour?  

A) when workers' abilities are matched to tasks 
B) when workers gain experience from repeated performance of the tasks 
C) when workers save time by NOT switching to different tasks 
D) when workers' morale increases as tasks become more specialized

Question 71

Which of the following best describes the concept of "division of labour"?  

A) It allows more people to be employed. 
B) It allows tasks to be performed more efficiently. 
C) It makes people happier on the job. 
D) It means that less management is required.

Question 72

Because of specialization and comparative advantage, which products do most people consume?  

A) only what they produce themselves 
B) the products produced by family and friends 
C) the products made by many other people 
D) whatever they can keep from what they produce

Question 73

Which scenario involves specialization?  

A) a solo carpenter who builds a whole bedroom furniture set 
B) a woman stranded on an island who must look after herself 
C) someone who is a "jack of all trades" 
D) professional mourners in Taiwan

Question 74

Exhibit 2-3

Refer to the exhibit.In Costa Rica, what is the opportunity cost of 1 tonne of rice?  

A) 1/2 of a T-shirt 
B) 3/4 of a T-shirt 
C) 1 T-shirt 
D) 1 1/2 T-shirts

Question 75

Which of the following is an example of division of labour?  

A) an author writing a book one chapter at a time 
B) a firm trying to get rid of a labour union 
C) a firm allocating revenue among its resource suppliers 
D) a firm dividing an assembly process into separate steps

Question 76

Which statement describes the usefulness of the production possibilities frontier?  

A) The production possibilities frontier demonstrates that, although resources are scarce for individuals, there is no problem of scarcity for society as a whole. 
B) The production possibilities frontier is based on unrealistic assumptions and therefore has no value as an economic tool. 
C) The production possibilities frontier is based on simplifying assumptions, but illustrates scarcity, opportunity cost, and economic growth. 
D) The production possibilities frontier is based on the assumption that technology is constantly changing.

Question 77

On a given production possibilities frontier, which of the following is NOT assumed to be fixed?  

A) the amount of labour available 
B) the production of each item 
C) the level of technology 
D) the amount of land and natural resources available

Question 78

Restaurant fast food is faster to make and cheaper to buy than a similar meal prepared at home.Which of the following does NOT explain these facts?  

A) The preparation of restaurant fast food is divided into many separate tasks. 
B) The larger-scale production of food in a restaurant allows the introduction of more efficient machines. 
C) Workers in a fast-food restaurant gain productivity at a task over time. 
D) Workers are more productive when they are being paid.

Question 79

In economics, what does specialization mean?  

A) producing something using only one type of resource, such as labour 
B) producing something using only one type of labour 
C) focusing efforts on a particular product or a single task 
D) producing only one unit of output

Question 80

Which statement best describes the various points along a production possibilities frontier?  

A) The greatest achievable output levels are illustrated. 
B) Resources are NOT fully employed. 
C) More of one good can be obtained without giving up more of the other. 
D) More efficient output levels are possible.