Question 1

Which of the following is a good example of efficient specialization and voluntary exchange?

Accepted Answer

A)  A college professor hires someone to rototill a garden for spring planting.
B)  A college professor works on the engine of a car for a neighbor who is a mechanic.
C)  A lawyer decides to babysit his young child and agrees to do so for others for cash.
D)  A physician agrees to help a neighbor work on her income tax return in exchange for her bookkeeping services.E) A) and D)
F) C) and D)

Question 2

In a market economy, government decides the answers to the three economic decisions.

Accepted Answer

A) True 
 B)False

Question 3

If an economy wants to experience economic growth, what decision must it make and carry out?
 Explain.

Accepted Answer

People in the economy must decide to con...

Question 4

The scarcity of physical resources is far more fundamental to the study of economics than the scarcity of funds.

Accepted Answer

A) True 
 B)False

Question 5

The production possibilities curve illustrates the basic principle that

Accepted Answer

A)  an economy's capacity to produce increases in proportion to its population.
B)  if all resources of an economy are in use, more of one good can be produced only if less of another is produced.
C)  an economy will automatically seek that output at which all of its resources are employed.
D)  no opportunity cost exists in production.E) A) and B)
F) C) and D)

Question 6

How are the slope of a production possibilities frontier and the opportunity cost of the goods related?

Accepted Answer

A)  The slope is a graphical representation of the cost of expanding production of both goods.
B)  The slope is a graphical measure of the growth rate of the economy.
C)  The slope is a graphical representation of the cost of decreasing unemployment.
D)  The slope is a graphical representation of the rate of trade-off between the goods.
E)  The slope is a graphical representation of the cost of economic growth in the economy.F) D) and E)
G) A) and E)

Question 7

Although finished goods are scarce, the inputs to produce them are not scarce.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following quotations best captures the idea of opportunity cost?

Accepted Answer

A)  "Opportunity knocks but once." 
B)  "Every choice involves a sacrifice." 
C)  "Let's not ask for the moon; we have the stars." 
D)  "Fools rush in where wise men fear to tread." 
E)  "All that glitters is not gold."F) B) and D)
G) C) and D)

Question 9

Which of the following is a listing of the types or categories of resources?

Accepted Answer

A)  land, labor, and capital 
B)  land, labor, and education 
C)  land, labor, and efficiency 
D)  land, labor, and markets 
E)  land, labor, and inputsF) D) and E)
G) All of the above

Question 10

Because resources tend to be specialized, increased production of military goods tends to

Accepted Answer

A)  decrease the opportunity cost of more military goods.
B)  increase the opportunity cost of more non-military goods.
C)  increase the opportunity cost of more military goods.
D)  change the position of the production possibilities curve.
E)  alter the slope of the production possibilities curve.F) A) and E)
G) C) and D)

Question 11

Scarcity of resources implies that people must make decisions consistent with the means they have available to them.

Accepted Answer

A) True 
 B)False

Question 12

What mechanism assures that firms produce outputs that consumers actually desire?

Accepted Answer

A)  governmental regulations on the mix of outputs 
B)  altruism 
C)  the desire for profit 
D)  a desire to serve others without thought of reward 
E)  All of the above are correct.F) A) and B)
G) D) and E)

Question 13

If the quantity of one good that must be forgone increases as successive units of another good are produced, then there is said to be increasing opportunity cost between the two goods.

Accepted Answer

A) True 
 B)False

Question 14

A recent study found that it was cheaper to buy a chicken dinner from Kentucky Fried Chicken than it was to prepare it at home.The researcher included all costs including the imputed value of time involved to prepare the meal at home.This study illustrates the

Accepted Answer

A)  value of marginal analysis.
B)  law of increasing costs.
C)  difference between real costs and money costs.
D)  cost disease of the service sector.E) A) and C)
F) B) and C)

Question 15

The fundamental goal of economics is to

Accepted Answer

A)  allow everyone to have five yachts and two automobiles.
B)  redistribute income and eliminate poverty.
C)  reduce unemployment so that lower welfare payments are necessary.
D)  learn to cope with the scarcity of virtually all resources.E) B) and D)
F) All of the above

Question 16

Figure 3-1
 
-The shape of the production possibilities frontier in Figure 3-1 implies that

Accepted Answer

A)  some resources are better suited for producing wheat than for producing barley.
B)  the opportunity cost of producing more wheat falls as wheat production rises.
C)  the farmer's technology is not subject to the principle of increasing costs.
D)  the financial cost of producing wheat is higher than the financial cost of producing barley.E) A) and C)
F) B) and D)

Question 17

Free markets further all of society's goals.​

Accepted Answer

A) True 
 B)False

Question 18

The statement "Resources employed in producing X are better suited to making Y" is another way of saying

Accepted Answer

A)  the production possibilities frontier is "bowed out." 
B)  the production possibilities frontier is a straight line.
C)  the production possibilities frontier is "bowed in." 
D)  resources are unproductive.
E)  resources have no opportunity cost.F) None of the above
G) A) and B)

Question 19

If production involves constant opportunity cost, the production possibilities curve

Accepted Answer

A)  is "bowed inward." 
B)  is a straight line.
C)  is "bowed outward." 
D)  is a wavy line.
E)  has an unpredictable shape.F) A) and D)
G) B) and C)

Question 20

Millionaires do not face the problem of scarcity.

Accepted Answer

A) True 
 B)False

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

In a market economy, government decides the answers to the three economic decisions.

Correct AnswerverifiedShow Answer

Scarcity of resources implies that people must make decisions consistent with the means they have available to them.

Correct AnswerverifiedShow Answer

Which of the following quotations best captures the idea of opportunity cost?

Correct AnswerverifiedShow Answer

Free markets further all of society's goals.​

Correct AnswerverifiedShow Answer

The statement "Resources employed in producing X are better suited to making Y" is another way of saying

Correct AnswerverifiedShow Answer

If the quantity of one good that must be forgone increases as successive units of another good are produced, then there is said to be increasing opportunity cost between the two goods.

Correct AnswerverifiedShow Answer

The fundamental goal of economics is to

Correct AnswerverifiedShow Answer

If an economy wants to experience economic growth, what decision must it make and carry out? Explain.

Correct AnswerverifiedPeople in the economy must decide to con...View AnswerShow Answer

Which of the following is a listing of the types or categories of resources?

Correct AnswerverifiedShow Answer

A recent study found that it was cheaper to buy a chicken dinner from Kentucky Fried Chicken than it was to prepare it at home.The researcher included all costs including the imputed value of time involved to prepare the meal at home.This study illustrates the

Correct AnswerverifiedShow Answer

Although finished goods are scarce, the inputs to produce them are not scarce.

Correct AnswerverifiedShow Answer

The scarcity of physical resources is far more fundamental to the study of economics than the scarcity of funds.

Correct AnswerverifiedShow Answer

If production involves constant opportunity cost, the production possibilities curve

Correct AnswerverifiedShow Answer

Because resources tend to be specialized, increased production of military goods tends to

Correct AnswerverifiedShow Answer

What mechanism assures that firms produce outputs that consumers actually desire?

Correct AnswerverifiedShow Answer

How are the slope of a production possibilities frontier and the opportunity cost of the goods related?

Correct AnswerverifiedShow Answer

Which of the following is a good example of efficient specialization and voluntary exchange?

Correct AnswerverifiedShow Answer

The production possibilities curve illustrates the basic principle that

Correct AnswerverifiedShow Answer

Figure 3-1 -The shape of the production possibilities frontier in Figure 3-1 implies that

Correct AnswerverifiedShow Answer

Millionaires do not face the problem of scarcity.

Correct AnswerverifiedShow Answer

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Free markets further all of society's goals.

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People in the economy must decide to con...
View Answer

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