Question 1

At a point on a production possibilities curve,opportunity cost of more capital goods today is

Accepted Answer

A) fewer capital goods in the future. 
B) fewer consumer goods in the future. 
C) fewer consumer goods today. 
D) more unemployed resources in the future.

Question 2

The problem of economic scarcity applies

Accepted Answer

A) only in industrially developed countries,because resources are scarce in these nations. 
B) only in underdeveloped countries,because there are no productive resources in these nations. 
C) only in economic systems that are just beginning to develop,because specialized resources are scarce in developing nations. 
D) to economic systems in all nations,regardless of their level of development.

Question 3

Technology is

Accepted Answer

A) society's pool of knowledge of how to produce goods and services. 
B) a resource like land or physical capital. 
C) computers and lasers. 
D) not obtainable by engaging in activities that increase human capital.

Question 4

If Irene can make either four chairs or one table in an hour and Greg can make either three chairs or two tables in an hour,then

Accepted Answer

A) Irene has the absolute advantage in the production of tables. 
B) Greg has the absolute advantage in the production of chairs. 
C) Irene has the comparative advantage in the production of chairs. 
D) Greg has the comparative advantage in the production of chairs.

Question 5

Which of the following is NOT considered to be an economic resource?

Accepted Answer

A) your economics professor 
B) the telephone company repair truck 
C) the local gas station 
D) a view of the stars on a clear night

Question 6

By going to school an individual will obtain which resource?

Accepted Answer

A) Money 
B) Physical capital 
C) Knowledge 
D) Human capital

Question 7

The conversion of resources into consumer goods or services is called

Accepted Answer

A) human capital. 
B) production. 
C) opportunity cost. 
D) absolute advantage.

Question 8

Which is the best example of specialization?

Accepted Answer

A) A high school math teacher who teaches only calculus. 
B) A firm that produces both luggage and cooking oil. 
C) A person whose job includes accounting,personnel and maintenance tasks. 
D) A high school math teacher who teaches algebra and calculus.

Question 9

Which of the following statements is NOT an assumption underlying the production possibilities curve?

Accepted Answer

A) Resources are fully and efficiently employed. 
B) Technology is fixed. 
C) Production occurs over some specified time period. 
D) The amount of resources available for production can be changed quickly.

Question 10

Carlos is an executive of a major corporation.Boris is a baker.Carlos earns a salary ten times as large as the salary Boris earns,and Carlos has a much larger oven for baking break.Carlos can make a loaf of bread that tastes better than Boris's bread but Boris can bake faster.

Accepted Answer

A) Carlos has an absolute and comparative advantage over Boris in making bread. 
B) Carlos has an absolute but not comparative advantage over Boris in making bread. 
C) Carlos had a comparative but not absolute advantage over Boris in making bread. 
D) Carlos does not have an absolute or comparative advantage over Boris in making bread.

Question 11

When a country or a region of a country specializes in producing the product that has the lower opportunity cost compared to another country or region,it is practicing

Accepted Answer

A) absolute advantage. 
B) cost disadvantage. 
C) regional advantage. 
D) comparative advantage.

Question 12

When a society takes increasing amounts of resources and applies them to the production of a specific good,resulting in increasing opportunity costs for each additional unit produced,which of the following applies?

Accepted Answer

A) the law of demand 
B) the law of supply 
C) the law of scarcity 
D) the law of increasing additional costs

Question 13

When determining the production possibilities curve

Accepted Answer

A) the trade-off between the goods in the economy remains constant. 
B) the amount of productive resources remains constant. 
C) the prices of the goods are used. 
D) the prices of resources are used.

Question 14

List and explain three major factors that cause economic growth.

Accepted Answer

The answer of List and explain three major factors that...

Question 15

Why does the trade-off between consumption goods and capital goods represent a trade-off between the present and the future?

Accepted Answer

The answer of Why does the trade-off between consumption goods...

Question 16

Generally,if a nation produces more consumer goods than capital goods

Accepted Answer

A) more of all goods may be produced in the future. 
B) less of all goods may be produced in the future. 
C) about the same amount of capital goods may be produced in the future as are being produced today. 
D) society will have to forego future consumption of capital goods .

Question 17

Opportunity cost is

Accepted Answer

A) the combined value of all the alternatives not selected. 
B) the same thing as the money price of a good. 
C) the value of the next best alternative which was given up. 
D) based on the intrinsic value of the good itself.

Question 18

A point outside a production possibilities curve indicates

Accepted Answer

A) that resources are not being used efficiently. 
B) that resources are being used very efficiently. 
C) opportunity costs are constant. 
D) an output combination that is unobtainable with the current resource and technology levels.

Question 19

Which of the following is held constant when constructing a production possibilities curve?

Accepted Answer

A) the price level 
B) the income level 
C) combination of goods produced 
D) the amount of total resources used

Question 20

-In the above figure,what is the opportunity cost of one bushel of soybeans?

Accepted Answer

A) 1 bushel of corn 
B) 0.5 bushels of corn 
C) 2 bushels of corn 
D) unable to determine

Exam 2: Scarcity and the World of Trade-Offs