Question 1

Using a production possibilities curve, an economy that produces an output combination less than the maximum possible is depicted by a point located:

Accepted Answer

A)   at the top corner of the curve.
B)   near the middle of the curve.
C)   at the bottom corner of the curve.
D)   outside the curve.
E)   inside the curve.F) B) and E)
G) A) and B)

Question 2

Ralph wants to buy some milk and a box of cereal. If Ralph buys 2 quarts of milk at $1 per quart, the box of cereal costs 75 cents. If he buys 3 quarts of milk at $1 per quart, the box of cereal is free. For Ralph, the marginal cost of the third quart of milk is:

Accepted Answer

A)   zero.
B)   25 cents.
C)   75 cents.
D)   $1.E) C) and D)
F) B) and D)

Question 3

Exhibit 2-16  Production possibilities curve  In Exhibit 2-16, which of the following points on the production possibilities curve are full-employment production points?

Accepted Answer

A)   A, B, C, D
B)   A, B, C, D, U
C)   E, U, W
D)   B, C, D, U
E)   A, B, C, UF) C) and D)
G) A) and C)

Question 4

The opportunity cost of a purchase is:

Accepted Answer

A)   the selling price of the good or service.
B)   zero if the good or service satisfies a need.
C)   greater for persons who are rich.
D)   the good or service given up for the good or service purchased.E) All of the above
F) A) and D)

Question 5

Why are all costs really "opportunity costs"?

Accepted Answer

An opportunity cost is what must be give...

Question 6

Exhibit 2-18  Production possibilities curves  In Exhibit 2-18, the production possibilities curves for a country are shown for the years Year X and Year Y. Suppose this country was located at point A in Year X and point B in Year Y. This country:

Accepted Answer

A)   is producing the same number of capital goods in both years.
B)   is producing the same number of consumption goods in both years.
C)   has shown no growth between Year X and Year Y.
D)   has higher unemployment in Year X than in Year Y.
E)   has higher unemployment in Year Y than in Year X.F) A) and D)
G) B) and C)

Question 7

In economics terminology, the process of accumulating money is investment.

Accepted Answer

A) True 
 B)False

Question 8

When the opportunity cost of producing carrots increases as more carrots are produced, then:

Accepted Answer

A)   no more carrots will be produced.
B)   resources are equally suited to the production of carrots and to other goods.
C)   the production possibilities curve is a straight line.
D)   the production possibilities curve becomes positively sloped.
E)   the law of increasing costs is present.F) C) and E)
G) D) and E)

Question 9

Which of the following would be least likely to cause the production possibilities curve to shift outward?

Accepted Answer

A)   a decreased desire for leisure by workers in the economy.
B)   an invention that requires fewer resources to produce a good.
C)   a shift in consumer preferences that causes expansion in the output of one product and a decline in output of other products.
D)   an expansion in the man-made productive resources available to the economy as the result of a high rate of investment.E) None of the above
F) A) and B)

Question 10

Along a production possibilities curve showing capital and consumption goods production, which of the following pairs are being held fixed?

Accepted Answer

A)   Unemployment and capital goods production.
B)   Number of resources and consumption goods production.
C)   Composition of the economy's output and number of resources.
D)   Capital and consumption goods production.
E)   Technology and number of resources.F) B) and C)
G) D) and E)

Question 11

Exhibit 2-1  Production possibilities curve data  In Exhibit 2-1, according to the information, the opportunity cost of producing 3 units of capital is:

Accepted Answer

A)   3 units of consumption goods.
B)   4 units of consumption goods.
C)   6 units of consumption goods.
D)   7 units of consumption goods.E) B) and D)
F) A) and C)

Question 12

Exhibit 2-16  Production possibilities curve  In Exhibit 2-16, which of the following points on the production possibilities curve are unattainable with the resources and technology currently available?

Accepted Answer

A)   A, B, C, U
B)   A, B, C, D, U
C)   E and W
D)   B, C, D, U
E)   A, B, C, DF) C) and D)
G) B) and C)

Question 13

Which fundamental economic question is most closely related to the issues of income distribution and poverty?

Accepted Answer

A)   The What to Produce question.
B)   The Why to Produce question.
C)   The How to Produce question.
D)   The For Whom to Produce question.E) All of the above
F) A) and B)

Question 14

The production possibilities curve illustrates all of the following concepts except :

Accepted Answer

A)   the law of increasing costs.
B)   unlimited wants.
C)   scarcity.
D)   opportunity cost.
E)   availability of resources.F) A) and B)
G) A) and E)

Question 15

A rightward (an outward)  shift of a nation's production possibilities curve could be caused by:

Accepted Answer

A)   a decrease in technology.
B)   an increase in resources.
C)   producing more consumer and fewer capital goods.
D)   a decline in the labor force's level of education and skills.E) B) and D)
F) C) and D)

Question 16

Exhibit 2-10  Production possibilities curve data  Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10. As additional units of capital goods are produced, the opportunity cost in terms of sacrificed units of consumption goods ____ because of ____.

Accepted Answer

A)   decreases; greater efficiency in production
B)   increases; decreasing opportunity cost
C)   increases; the law of increasing costs
D)   increases; greater efficiency in production
E)   decreases; the law of increasing costsF) B) and D)
G) B) and E)

Question 17

Three basic decisions must be made by all economies. What are they?

Accepted Answer

A)   How much will be produced, when it will be produced, and how much it will cost.
B)   What the price of each good will be, who will produce each good, and who will consume each good.
C)   What will be produced, how goods will be produced, and for whom goods will be produced.
D)   How the opportunity cost principle will be applied, if and how the law of comparative advantage will be utilized, and whether the production possibilities constraint will apply.E) A) and C)
F) All of the above

Question 18

Opportunity cost represents the worst of the various alternatives that must be given up when a choice is made in the context of scarcity.

Accepted Answer

A) True 
 B)False

Question 19

In Europe during the 14th century, the Black Plague killed 24 million people or close to 37 percent of the population. How would this affect the production possibilities curves for the countries of Europe at that time?

Accepted Answer

A)   The production possibilities curves for these countries would have shifted outward.
B)   The production possibilities curves for these countries would have shifted inward.
C)   The production possibilities curves for these countries would have been unaffected.
D)   This would have been illustrated by a movement along the production possibilities curves for these countries, but it would not have shifted them.E) None of the above
F) All of the above

Question 20

The production possibilities curve depicts the various combinations of two goods that can be:

Accepted Answer

A)   interchanged among two countries.
B)   produced with a given technology.
C)   consumed with a given quantity of resources.
D)   produced with increments in resources and changes in technology.
E)   consumed as the resources increase.F) All of the above
G) A) and E)

Exam 2: Production Possibilities, Opportunity Cost, and Economic Growth

Why are all costs really "opportunity costs"?

Correct AnswerverifiedAn opportunity cost is what must be give...View AnswerShow Answer

In economics terminology, the process of accumulating money is investment.

Correct AnswerverifiedShow Answer

When the opportunity cost of producing carrots increases as more carrots are produced, then:

Correct AnswerverifiedShow Answer

Exhibit 2-16 Production possibilities curve In Exhibit 2-16, which of the following points on the production possibilities curve are full-employment production points?

Correct AnswerverifiedShow Answer

The opportunity cost of a purchase is:

Correct AnswerverifiedShow Answer

In Europe during the 14th century, the Black Plague killed 24 million people or close to 37 percent of the population. How would this affect the production possibilities curves for the countries of Europe at that time?

Correct AnswerverifiedShow Answer

Along a production possibilities curve showing capital and consumption goods production, which of the following pairs are being held fixed?

Correct AnswerverifiedShow Answer

Ralph wants to buy some milk and a box of cereal. If Ralph buys 2 quarts of milk at $1 per quart, the box of cereal costs 75 cents. If he buys 3 quarts of milk at $1 per quart, the box of cereal is free. For Ralph, the marginal cost of the third quart of milk is:

Correct AnswerverifiedShow Answer

The production possibilities curve depicts the various combinations of two goods that can be:

Correct AnswerverifiedShow Answer

Exhibit 2-16 Production possibilities curve In Exhibit 2-16, which of the following points on the production possibilities curve are unattainable with the resources and technology currently available?

Correct AnswerverifiedShow Answer

Exhibit 2-1 Production possibilities curve data In Exhibit 2-1, according to the information, the opportunity cost of producing 3 units of capital is:

Correct AnswerverifiedShow Answer

The production possibilities curve illustrates all of the following concepts except :

Correct AnswerverifiedShow Answer

Which fundamental economic question is most closely related to the issues of income distribution and poverty?

Correct AnswerverifiedShow Answer

Using a production possibilities curve, an economy that produces an output combination less than the maximum possible is depicted by a point located:

Correct AnswerverifiedShow Answer

A rightward (an outward) shift of a nation's production possibilities curve could be caused by:

Correct AnswerverifiedShow Answer

Which of the following would be least likely to cause the production possibilities curve to shift outward?

Correct AnswerverifiedShow Answer

Three basic decisions must be made by all economies. What are they?

Correct AnswerverifiedShow Answer

Exhibit 2-10 Production possibilities curve data Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10. As additional units of capital goods are produced, the opportunity cost in terms of sacrificed units of consumption goods ____ because of ____.

Correct AnswerverifiedShow Answer

Exhibit 2-18 Production possibilities curves In Exhibit 2-18, the production possibilities curves for a country are shown for the years Year X and Year Y. Suppose this country was located at point A in Year X and point B in Year Y. This country:

Correct AnswerverifiedShow Answer

Opportunity cost represents the worst of the various alternatives that must be given up when a choice is made in the context of scarcity.

Correct AnswerverifiedShow Answer

Correct Answer
verified
An opportunity cost is what must be give...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Exhibit 2-10 Production possibilities curve data Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10. As additional units of capital goods are produced, the opportunity cost in terms of sacrificed units of consumption goods because of .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified