Question 1

What does a production possibilities curve show?

Accepted Answer

The answer of What does a production possibilities curve show?...

Question 2

Opportunity cost is best defined as

Accepted Answer

A) the sum of the dollar values of all alternatives given up when choices are made. 
B) the cost of producing the purchased goods. 
C) the next highest valued alternative when a choice is made. 
D) the dollar price of the purchased item.

Question 3

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 4

"Economics deals with human needs." Do you agree or disagree? Why?

Accepted Answer

The answer of "Economics deals with human needs." Do you...

Question 5

A country that must reduce current consumption to increase future consumption possibilities

Accepted Answer

A) must be allocating resources inefficiently. 
B) must be producing along the production possibilities curve. 
C) must be producing outside the production possibilities curve. 
D) must not have private ownership of property.

Question 6

Physical capital is distinguished from human capital because

Accepted Answer

A) physical capital refers to trained people. 
B) physical capital refers to equipment and machinery,whereas human capital refers to trained people. 
C) human capital refers only to day laborers. 
D) physical capital refers to trained people,whereas human capital refers to equipment and machinery.

Question 7

Trading off capital goods for increasing amounts of consumer goods today will most likely result in

Accepted Answer

A) increased long-term growth. 
B) decreased long-term growth. 
C) decreased prices in consumer goods. 
D) increases in the quantity of consumer goods.

Question 8

The term "labor" for an economist includes

Accepted Answer

A) all skilled workers,but not the unskilled workers. 
B) all productive contributions of humankind. 
C) only the value of the work done by scientists. 
D) all employees who have high school diplomas.

Question 9

Human resources that perform the functions of organizing,managing,and assembling the other factors of production are called

Accepted Answer

A) physical capital. 
B) venture capital. 
C) entrepreneurs. 
D) productive capital.

Question 10

Juanita has just opened a new business selling pet supplies through the Internet.

Accepted Answer

A) Juanita is an entrepreneur. 
B) Juanita is not providing economic goods since people purchase the goods. 
C) Juanita is not providing economic goods since pet supplies are not being sold in a store. 
D) Juanita is not an entrepreneur since there are other businesses that sell pet supplies.

Question 11

-Refer to the above figure.How do you describe what is happening as the economy moves from point C to point B?

Accepted Answer

A) Previously unemployed resources are now being devoted to the production of wool. 
B) Previously unemployed resources are now being devoted to the production of bread. 
C) The economy has increased its wool production by 30 bales at an opportunity cost of 250 loaves of bread. 
D) The economy has acquired new resources for making bread.

Question 12

Both an NBA basketball player and a fast-food cook are going to graduate school.Who has a higher opportunity cost? Explain.

Accepted Answer

The answer of Both an NBA basketball player and a...

Question 13

A technological improvement can cause the production possibilities curve to shift outward because

Accepted Answer

A) it increases costs and contributes to lower production rates. 
B) maximum feasible outputs of both goods increase. 
C) production will fall,but jobs will be saved. 
D) it causes increases in unemployment.

Question 14

Briefly explain why people make choices.

Accepted Answer

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

Question 15

A point outside a society's production possibilities curve is one that is

Accepted Answer

A) unattainable given the resources of the society. 
B) technologically inefficient. 
C) undesirable given the implied underemployment of resources. 
D) desirable since it satisfies the desires of the population.

Question 16

The production possibilities curve represents

Accepted Answer

A) the total amount of stocks and bonds that exist in the economy. 
B) the trade-off between human capital and physical capital that exists. 
C) all possible combinations of total output that can be produced. 
D) society's needs.

Question 17

Which of the following is TRUE about comparative advantage?

Accepted Answer

A) Comparative advantage explains trade among nations,but not within nations. 
B) Comparative advantage explains trade within nations,but not among nations. 
C) Comparative advantage explains trade within nations and among nations. 
D) Comparative advantage has nothing to do with trade among nations;it only is concerned with specialization within a firm.

Question 18

If individual X has comparative advantage in painting and individual Y has comparative advantage in carpentry,then

Accepted Answer

A) individual X must use fewer hours to paint a fence than individual Y. 
B) individual Y will specialize in painting. 
C) there is a lower opportunity cost (expressed in units of carpentry)for individual X to paint than for individual Y to paint. 
D) specialization will not occur,since each does not have a clear absolute advantage.

Question 19

As an economy moves from point to point along its production possibilities curve,which one of the following variables changes?

Accepted Answer

A) the total amount of resources employed 
B) the level of technology 
C) the time frame under consideration 
D) the amount of each good or service produced

Question 20

-In the above figure,as more ukuleles are produced,the opportunity cost in terms of guitars is

Accepted Answer

A) decreasing. 
B) increasing. 
C) constant. 
D) zero.

Exam 2: Scarcity and the World of Trade-Offs