Question 1

Which of the following statements about economic scarcity is FALSE?

Accepted Answer

A)   Scarcity occurs among the poor and the rich.
B)   Scarcity only occurs if there are shortages and people wait in line to buy things.
C)   Scarcity results from not having enough resources to produce all the things we want.
D)   Scarcity results in the necessity to make choices.E) A) and B)
F) None of the above

Question 2

The ability to produce a good at a lower opportunity cost that others is known as

Accepted Answer

A)   comparative advantage.
B)   absolute advantage.
C)   specialization.
D)   marginal cost production.E) None of the above
F) All of the above

Question 3

Which of the following is a true statement?

Accepted Answer

A)   Cost is always measured in the nation's currency.
B)   Opportunity cost is an objective measure since the cost of an activity is the same for everyone.
C)   The less alternatives there are the greater the cost.
D)   Opportunity cost is always a foregone opportunity.E) All of the above
F) C) and D)

Question 4

Why is a point below the production possibilities curve less efficient than a point on that curve?

Accepted Answer

A point on the production possibilities ...

Question 5

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 opportunity cost is the income lost ...

Question 6

A straight-line production possibilities curve takes this shape because

Accepted Answer

A)   the opportunity cost of producing a good is constant.
B)   the opportunity cost of producing more of a good is decreasing.
C)   resources are better suited for producing one output than another.
D)   resources are fixed.E) None of the above
F) B) and C)

Question 7

John and Mary work eight hours 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)   Mary has the absolute advantage in decorating wedding cakes.
B)   John has the absolute advantage in decorating wedding cakes.
C)   Mary has the comparative advantage in decorating wedding cakes.
D)   John has the comparative advantage in decorating ice-cream cakes.E) C) and D)
F) B) and D)

Question 8

-In the above figure, the combination of personal computers and televisions shown by point w

Accepted Answer

A)   is an efficient use of society's resources because it is below the production possibilities curve.
B)   is more desirable than point x because producing at point w does not put a strain on society's resources.
C)   is attainable but involves the inefficient use of some of society's resources.
D)   is beyond the capacity of society to produce.E) A) and B)
F) B) and D)

Question 9

Which of the following sets of terms describes the problem of scarcity in economics?

Accepted Answer

A)   Goods, land, and needs
B)   Labor, needs, and opportunity costs
C)   Choices, opportunity costs, and trade-offs
D)   Production, consumption, and wantsE) A) and B)
F) All of the above

Question 10

The principle of comparative advantage implies that

Accepted Answer

A)   only wealthy countries ultimately can benefit from international trade.
B)   every country can benefit from international trade.
C)   we should limit the extent to which people specialize.
D)   most people are harmed by trade.E) B) and C)
F) None of the above

Question 11

The opportunity cost of going to college for a student receiving a scholarship

Accepted Answer

A)   is the income that she would have earned if she did not go to college.
B)   is the risk of dropping out.
C)   is the food and living expenses that she has to purchase while in college.
D)   is zero because she does not have to pay tuition.E) A) and B)
F) B) and D)

Question 12

Economic goods are

Accepted Answer

A)   abundant goods, about which we must constantly make decisions about their best use.
B)   all imaginable items from which individuals derive satisfaction or happiness.
C)   goods that are scarce, for which the quantity demanded exceeds the quantity supplied at a zero price.
D)   goods that are scarce, for which the quantity demanded exceeds the quantity supplied at any price.E) All of the above
F) A) and B)

Question 13

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.E) B) and D)
F) C) and D)

Question 14

Scarcity

Accepted Answer

A)   does not exist in the United States.
B)   applies only to developing countries.
C)   is caused by production problems.
D)   is not a shortage.E) All of the above
F) C) and D)

Question 15

Which of the following statements about scarcity is TRUE?

Accepted Answer

A)   Scarcity is no longer a problem for industrialized countries.
B)   Scarcity exists in all societies.
C)   Scarcity is a problem only for greedy people.
D)   Scarcity is a problem only in countries that do not use markets to organize economic activity.E) B) and D)
F) B) and C)

Question 16

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

Accepted Answer

A)   a fixed amount of resources
B)   the efficient use of resources
C)   resources of a given quality
D)   All of the above are correct.E) A) and D)
F) A) and C)

Question 17

A point inside a society's production possibilities curve represents

Accepted Answer

A)   an unattainable combination of outputs.
B)   an output combination that satisfies the needs of the population.
C)   an underutilization of productive resources.
D)   a technically superior output combination.E) None of the above
F) B) and C)

Question 18

If a country increased the production of its capital goods, then

Accepted Answer

A)   the more consumption of goods we can have today.
B)   the less consumption we can have today, but we will have more in the future.
C)   the more unemployed resources there will be in the future.
D)   the more unemployed resources there are today.E) All of the above
F) A) and C)

Question 19

-A farmer has 100 acres of land on which he can grow soybeans or corn. An acre of land yields 200 bushels of soybeans or 100 bushels of corn. The above figure refers to the farmer's

Accepted Answer

A)   production possibilities curve.
B)   substitution options curve.
C)   demand curve.
D)   opportunity cost curve.E) B) and C)
F) None of the above

Question 20

The division of labor refers to

Accepted Answer

A)   workers being assigned specific tasks.
B)   workers performing multiple tasks.
C)   separating men and women in the workforce.
D)   creating jobs that all people can perform at the same level.E) A) and B)
F) A) and C)

Exam 2: Scarcity and the World of Trade-Offs

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

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A point inside a society's production possibilities curve represents

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Why is a point below the production possibilities curve less efficient than a point on that curve?

Correct AnswerverifiedA point on the production possibilities ...View AnswerShow Answer

John and Mary work eight hours 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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The opportunity cost of going to college for a student receiving a scholarship

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The division of labor refers to

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Which of the following is a true statement?

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-A farmer has 100 acres of land on which he can grow soybeans or corn. An acre of land yields 200 bushels of soybeans or 100 bushels of corn. The above figure refers to the farmer's

Correct AnswerverifiedShow Answer

Which of the following statements about economic scarcity is FALSE?

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If a country increased the production of its capital goods, then

Correct AnswerverifiedShow Answer

Economic goods are

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Scarcity

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Which of the following sets of terms describes the problem of scarcity in economics?

Correct AnswerverifiedShow Answer

A straight-line production possibilities curve takes this shape because

Correct AnswerverifiedShow Answer

The principle of comparative advantage implies that

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The ability to produce a good at a lower opportunity cost that others is known as

Correct AnswerverifiedShow Answer

The production possibilities curve represents

Correct AnswerverifiedShow Answer

Which of the following statements about scarcity is TRUE?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedThe opportunity cost is the income lost ...View AnswerShow Answer

-In the above figure, the combination of personal computers and televisions shown by point w

Correct AnswerverifiedShow Answer

Correct Answer
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A point on the production possibilities ...
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The opportunity cost is the income lost ...
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Correct Answer
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