Question 1

Economic growth can be pictured in a production possibilities curve diagram by

Accepted Answer

A) shifting the production possibilities curve in. 
B) shifting the production possibilities curve out. 
C) making the production possibilities curve straighter. 
D) moving from a point inside the production possibilities curve to a point on the curve.

Question 2

During periods of unemployment

Accepted Answer

A) the economy operates at a point inside the production possibilities curve. 
B) the economy operates at a point outside the production possibilities curve. 
C) the production possibilities curve shifts inward. 
D) the production possibilities curve shifts outward.

Question 3

A waitress brings a free glass of wine when you sit down in a restaurant.This glass of wine is

Accepted Answer

A) a service because the waitress carried it instead of making it. 
B) a good,but not an economic good because there is no price charged for the wine. 
C) a nongood because there is no price charged for the wine. 
D) an economic good because wine is produced with scarce resources,even if it is free to you.

Question 4

If the quantity desired of something exceeds the amount available at zero price,that item is called

Accepted Answer

A) a service. 
B) an economic good. 
C) an intangible good. 
D) a bad.

Question 5

Oil found in Alaska is an example of

Accepted Answer

A) physical capital. 
B) land or natural resource. 
C) human capital. 
D) labor.

Question 6

Which of the following is true with respect to specialization?

Accepted Answer

A) Adam Smith in The Wealth of Nations referred to specialization and division of labor. 
B) With a given set of resources,specialization results in higher output. 
C) Individuals and nations specialize in their areas of comparative advantage in order to reap the gains of specialization. 
D) All of the above are correct.

Question 7

$$\begin{array}{l}
\text { Possibility }\
\begin{array} { l r r r r r r r } 
\hline \text { Good } & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } & \text { F } & \text { G } \
\hline \text { Televisions } & 21 & 20 & 18 & 15 & 11 & 6 & 0 \
\text { Personal computers } & 0 & 1 & 2 & 3 & 4 & 5 & 6\\hline
\end{array}
\end{array}$$
-Given the production possibilities schedule in the above table,a combination of 9 televisions and 4 personal computers

Accepted Answer

A) is attainable but involves an inefficient use of society's resources. 
B) would be attainable only if a new technology of producing televisions or computers were introduced. 
C) is not attainable because it is not listed in the schedule. 
D) is not attainable because society does not have enough resources to produce this combination.

Question 8

Efficiency can correctly be defined as

Accepted Answer

A) producing outside the production possibilities boundary. 
B) minimizing opportunity cost. 
C) producing the maximum output with given technology and resources. 
D) providing for the immediate needs of the greatest proportion of the population.

Question 9

How are scarcity,choice,and opportunity cost related?

Accepted Answer

The answer of How are scarcity,choice,and opportunity cost related?...

Question 10

If an economy is operating at a point inside the production possibilities curve,then

Accepted Answer

A) society's resources are being inefficiently utilized. 
B) the curve will move to the left. 
C) society's resources are being used to produce too many consumer goods. 
D) economic policy must implemented to slow growth of the economy further.

Question 11

A tractor used to prepare land for planting is called

Accepted Answer

A) land. 
B) labor. 
C) physical capital. 
D) human capital.

Question 12

Why is a point below the production possibilities curve less efficient than a point on that curve?

Accepted Answer

The answer of Why is a point below the production...

Question 13

Briefly explain how specialization and trade can benefit nations.

Accepted Answer

The answer of Briefly explain how specialization and trade can...

Question 14

If a country wants to promote future growth,it should

Accepted Answer

A) produce more capital goods today. 
B) produce more consumer goods today. 
C) produce only economic goods. 
D) produce only needed goods.

Question 15

If the production possibilities curve is a downward sloping straight line,then

Accepted Answer

A) resources are highly specialized,making it difficult to use them for alternative uses. 
B) technological change has increased. 
C) production is efficient only when producing at the mid-point. 
D) all resources must be perfectly adaptable for alternative uses.

Question 16

Activities designed to convert resources into goods and services is known as

Accepted Answer

A) supply. 
B) consumption. 
C) production. 
D) scarcity.

Question 17

Briefly explain why people make choices.

Accepted Answer

The answer of Briefly explain why people make choices....

Question 18

Tiger Woods,a professional golfer,pays a garage mechanic to change the motor oil of his car even though he can do the work himself.Which of the following best explains why Tiger Woods does not change the oil himself?

Accepted Answer

A) Tiger Woods has an absolute advantage in changing oil. 
B) Tiger Woods has a comparative advantage in changing oil. 
C) There is no opportunity cost for the garage mechanic to change oil. 
D) The opportunity cost of changing oil is higher for Tiger Woods than for the garage mechanic.

Question 19

Explain: "The law of increasing additional cost is an inevitable phenomenon in economics."

Accepted Answer

The answer of Explain: "The law of increasing additional cost...

Question 20

According to the concept of comparative advantage,a good should be produced in that nation in which

Accepted Answer

A) domestic opportunity cost is greatest. 
B) domestic opportunity cost is the smallest. 
C) money is used. 
D) terms of trade are maximized.

Exam 2: Scarcity and the World of Trade-Offs