Question 1

Suppose you order a slice of pepperoni pizza and a soda at a shopping mall food court. What are examples of the opportunity costs of this decision?

Accepted Answer

The opportunity cost of an action is the...

Question 2

Production refers to

Accepted Answer

A)   physically producing material goods only.
B)   any activity carried on by a firm, whether a corporation, partnership, or sole proprietorship.
C)   any activity that results in the conversion of resources into goods and services that can be consumed.
D)   any activity that causes a material conversion of manufactured goods.E) A) and B)
F) All of the above

Question 3

Opportunity cost

Accepted Answer

A)   can only be measured as a paid cost.
B)   is always the value of the next best forgone opportunity.
C)   does not exist since there are no receipts.
D)   is always the lowest valued alternative.E) A) and B)
F) A) and C)

Question 4

Suppose that at a bicycle shop, instead of having each worker assemble an entire bicycle themselves, one person welds the frames, another person works on the braking system, another person works on the tires, and another person works on the gears. This best demonstrates the concept of

Accepted Answer

A)   division of labor.
B)   microeconomics.
C)   comparative advantage.
D)   absolute advantage.E) None of the above
F) All of the above

Question 5

To have more consumer goods in the future, we must

Accepted Answer

A)   produce more capital goods today.
B)   lower current income.
C)   get government involved in the production process.
D)   stop producing all goods today.E) A) and C)
F) None of the above

Question 6

-In the above figure, the opportunity cost of moving from point D to point E is

Accepted Answer

A)   75 guitars.
B)   55 guitars.
C)   100 ukuleles.
D)   100 guitars.E) A) and B)
F) B) and D)

Question 7

The production possibilities curve shifts outward when

Accepted Answer

A)   the law of increasing additional cost takes hold.
B)   the economy is producing efficiently.
C)   we produce more consumption goods over productive investment in equipment.
D)   there is an increase in resources or technology.E) A) and B)
F) B) and C)

Question 8

What is production? What economic factors are involved in production?

Accepted Answer

Production involves any activity that co...

Question 9

All of the following would cause the production possibilities curve to shift outward EXCEPT

Accepted Answer

A)   an improvement in technology.
B)   an increase in the amount of labor available.
C)   a decline in the unemployment rate.
D)   an increase in the level of capital stock.E) All of the above
F) A) and B)

Question 10

Technology

Accepted Answer

A)   is constantly changing at every point along a production possibilities curve.
B)   is the recipe for combining land, labor, physical capital, and entrepreneurship to produce a good.
C)   does not have an effect on the amount of a good a society can produce with its given resources.
D)   only changes if resources change.E) A) and B)
F) B) and D)

Question 11

John and Mary work at a bakery. John can decorate either 10 ice-cream cakes or 4 wedding cakes; Mary can decorate either 8 ice-cream cakes or 2 wedding cakes. According to this scenario,

Accepted Answer

A)   the opportunity cost of decorating a wedding cake for Mary is 4 ice-cream cakes.
B)   the opportunity cost of decorating a wedding cake for Mary is 1/4 ice-cream cake.
C)   the opportunity cost of decorating a wedding cake for Mary is 2 1/2 ice-cream cakes.
D)   the opportunity cost of decorating a wedding cake for Mary is 2/5 ice-cream cake.E) A) and D)
F) A) and C)

Question 12

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.E) C) and D)
F) A) and D)

Question 13

Which of the following statements is TRUE about scarcity?

Accepted Answer

A)   Both rich and poor people face the problem of scarcity.
B)   Scarcity exists only when supply is insufficient to meet demand.
C)   Scarcity exists only when a shortage exists.
D)   Scarcity can be eliminated when a country becomes richer.E) None of the above
F) A) and B)

Question 14

Education increases the stock of which factor of production?

Accepted Answer

A)   physical capital
B)   human capital
C)   land
D)   entrepreneurshipE) B) and C)
F) A) and D)

Question 15

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.E) B) and C)
F) A) and B)

Question 16

Whenever a society forgoes current consumption to invest in capital goods,

Accepted Answer

A)   it will have less to consume next year.
B)   it will be easier for that society to consume less in the future because people will become accustomed to less.
C)   that society can consume more in the future.
D)   it will be forced to produce fewer capital goods in the future.E) B) and D)
F) C) and D)

Question 17

In economics, international trade is based on the existence of

Accepted Answer

A)   absolute advantage between countries.
B)   relative advantage between countries.
C)   comparative advantage between countries.
D)   output advantage between countries.E) A) and D)
F) B) and D)

Question 18

Explain what is meant by economic efficiency. Does efficiency imply that the fastest production processes or the most powerful equipment must always be used? Explain.

Accepted Answer

Efficiency involves a situatio...

Question 19

The only way that a society can produce outside the production possibilities curve is

Accepted Answer

A)   through economic growth.
B)   by producing efficiently.
C)   by obeying the Law of Increasing Additional Cost.
D)   to use the concept of opportunity cost.E) All of the above
F) A) and B)

Question 20

John and Mary work at a bakery. John can decorate either 10 ice-cream cakes or 4 wedding cakes; Mary can decorate either 8 ice-cream cakes or 2 wedding cakes. According to this scenario,

Accepted Answer

A)   the opportunity cost of decorating an ice-cream cake for John is 1/4 wedding cake.
B)   the opportunity cost of decorating an ice-cream cake for John is 2/5 wedding cake.
C)   the opportunity cost of decorating an ice-cream cake for John is 2.5 wedding cakes.
D)   the opportunity cost of decorating an ice-cream cake for John is 4 wedding cakes.E) None of the above
F) A) and B)

Exam 2: Scarcity and the World of Trade-Offs

Explain what is meant by economic efficiency. Does efficiency imply that the fastest production processes or the most powerful equipment must always be used? Explain.

Correct AnswerverifiedEfficiency involves a situatio...View AnswerShow Answer

The production possibilities curve shifts outward when

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John and Mary work at a bakery. John can decorate either 10 ice-cream cakes or 4 wedding cakes; Mary can decorate either 8 ice-cream cakes or 2 wedding cakes. According to this scenario,

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Technology

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Education increases the stock of which factor of production?

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The only way that a society can produce outside the production possibilities curve is

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John and Mary work at a bakery. John can decorate either 10 ice-cream cakes or 4 wedding cakes; Mary can decorate either 8 ice-cream cakes or 2 wedding cakes. According to this scenario,

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To have more consumer goods in the future, we must

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Which of the following statements is TRUE about scarcity?

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Opportunity cost

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-In the above figure, the opportunity cost of moving from point D to point E is

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

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Suppose that at a bicycle shop, instead of having each worker assemble an entire bicycle themselves, one person welds the frames, another person works on the braking system, another person works on the tires, and another person works on the gears. This best demonstrates the concept of

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Production refers to

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All of the following would cause the production possibilities curve to shift outward EXCEPT

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

Correct AnswerverifiedShow Answer

What is production? What economic factors are involved in production?

Correct AnswerverifiedProduction involves any activity that co...View AnswerShow Answer

Whenever a society forgoes current consumption to invest in capital goods,

Correct AnswerverifiedShow Answer

Suppose you order a slice of pepperoni pizza and a soda at a shopping mall food court. What are examples of the opportunity costs of this decision?

Correct AnswerverifiedThe opportunity cost of an action is the...View AnswerShow Answer

In economics, international trade is based on the existence of

Correct AnswerverifiedShow Answer

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Efficiency involves a situatio...
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Correct Answer
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Production involves any activity that co...
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The opportunity cost of an action is the...
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Correct Answer
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