Question 1

Capital, which includes all manufactured products that are used to produce other goods and services, earns:

Accepted Answer

A)   profit.
B)   wages.
C)   interest.
D)   rent.

Question 2

To answer the question of how goods and services are to be produced, society must decide:

Accepted Answer

A)   what products businesses want to produce.
B)   how to combine its scarce resources to produce the desired products.
C)   what products the government wants.
D)   what products to export.

Question 3

Capital, as a factor of production, includes all manufactured products that are used to produce other goods.

Accepted Answer

A) True 
 B)False

Question 4

The Scandinavian countries of Europe:

Accepted Answer

A)   have economies coordinate solely by markets.
B)   allow a large role for government services.
C)   have no barriers to the market.
D)   do not protect property rights.

Question 5

The two basic determinants of economic growth are _____ and _____.

Accepted Answer

A)   expanding resources; improving technologies
B)   tariffs; trading with weaker countries
C)   income taxes; human capital
D)   government spending; labor productivity

Question 6

A country can use its given resources to produce capital goods or consumer goods. This implies that:

Accepted Answer

A)   an economy can "have it all."
B)   there is a conflict between capitalists and consumers.
C)   more consumption in the present leads to higher economic growth for future generations.
D)   there is a tradeoff between the current and the future standard of living.

Question 7

The "what" question of the three basic questions is "What price should be charged for a good?"

Accepted Answer

A) True 
 B)False

Question 8

The derivation of a production possibilities frontier assumes that:

Accepted Answer

A)   some resources are not being used.
B)   there is a fixed quantity of resources and technology available.
C)   some resources are not being produced efficiently.
D)   technology is free.

Question 9

(Figure: Pork and Corn PPF) It is possible to produce 15 units of corn and 4 units of pork at the same time.

Accepted Answer

A) True 
 B)False

Question 10

(Figure: Biscuits and Cookies PPFs)  Looking at Greg and Melissa's production possibilities frontiers (PPFs) , what production and trade situation would allow both Greg and Melissa to consume a combination of biscuits and cookies outside their PPF?

Accepted Answer

A)   Greg produces 200 cookies, Melissa produces 160 biscuits, and Greg trades 100 cookies in exchange for 30 biscuits.
B)   Greg produces 200 cookies, Melissa produces 160 biscuits, and Greg trades 100 cookies in exchange for 60 biscuits.
C)   Greg produces 100 biscuits, Melissa produces 80 cookies, and Greg trades 50 biscuits in exchange for 40 cookies.
D)   Greg produces 100 biscuits, Melissa produces 80 cookies, and Greg trades 50 biscuits in exchange for 70 cookies.

Question 11

Natural resources, such as water, are included in capital resources.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following shifts the production possibilities frontier outward?

Accepted Answer

A)   a decreasing population
B)   capital accumulation
C)   increasing prices
D)   increasing consumption

Question 13

If the government of Spain decides to spend less on the military and more on health care, the forgone spending on military items represents the:

Accepted Answer

A)   cost factor of the extra health care.
B)   production efficiency of the extra health care.
C)   opportunity cost of the extra health care.
D)   allocative cost of the extra health care.

Question 14

A country operating inside of its production possibilities frontier (PPF)  is operating:

Accepted Answer

A)   efficiently.
B)   inefficiently and at an unattainable level.
C)   inefficiently but in an area that can be attained.
D)   in the unattainable region.

Question 15

Which is considered a land resource?

Accepted Answer

A)   a sewing machine
B)   an apprentice
C)   mineral deposits
D)   a copier

Question 16

(Figure: Tanks and Health Care)  Which point in the figure is obtainable but NOT efficient?

Accepted Answer

A)   point a
B)   point b
C)   point f
D)   point g

Question 17

When a society is producing the mix of goods that the society wants to consume, then it is said to have:

Accepted Answer

A)   solved the economic problem.
B)   an equitable distribution of goods and services.
C)   an efficient form of government.
D)   obtained allocative efficiency.

Question 18

Natural resources in the production process are called land and their payment is called interest.

Accepted Answer

A) True 
 B)False

Question 19

The key benefit of countries engaging in trade based on comparative advantage is that:

Accepted Answer

A)   both countries will be able to consume more than they would with no trade.
B)   it allows countries to produce efficiently inside of their individual production possibilities frontiers.
C)   it allows both countries to maximize their opportunity cost.
D)   None of these is a key benefit.

Question 20

The conversion of resources to satisfy wants is described as:

Accepted Answer

A)   consumption.
B)   distribution.
C)   production.
D)   conservation.

Exam 2: Production, Economic Growth, and Trade

Which is considered a land resource?

Correct AnswerverifiedShow Answer

A country operating inside of its production possibilities frontier (PPF) is operating:

Correct AnswerverifiedShow Answer

To answer the question of how goods and services are to be produced, society must decide:

Correct AnswerverifiedShow Answer

The two basic determinants of economic growth are _____ and _____.

Correct AnswerverifiedShow Answer

Capital, which includes all manufactured products that are used to produce other goods and services, earns:

Correct AnswerverifiedShow Answer

(Figure: Biscuits and Cookies PPFs) Looking at Greg and Melissa's production possibilities frontiers (PPFs) , what production and trade situation would allow both Greg and Melissa to consume a combination of biscuits and cookies outside their PPF?

Correct AnswerverifiedShow Answer

(Figure: Tanks and Health Care) Which point in the figure is obtainable but NOT efficient?

Correct AnswerverifiedShow Answer

The key benefit of countries engaging in trade based on comparative advantage is that:

Correct AnswerverifiedShow Answer

The Scandinavian countries of Europe:

Correct AnswerverifiedShow Answer

A country can use its given resources to produce capital goods or consumer goods. This implies that:

Correct AnswerverifiedShow Answer

The derivation of a production possibilities frontier assumes that:

Correct AnswerverifiedShow Answer

Natural resources, such as water, are included in capital resources.

Correct AnswerverifiedShow Answer

When a society is producing the mix of goods that the society wants to consume, then it is said to have:

Correct AnswerverifiedShow Answer

(Figure: Pork and Corn PPF) It is possible to produce 15 units of corn and 4 units of pork at the same time.

Correct AnswerverifiedShow Answer

The conversion of resources to satisfy wants is described as:

Correct AnswerverifiedShow Answer

Natural resources in the production process are called land and their payment is called interest.

Correct AnswerverifiedShow Answer

Capital, as a factor of production, includes all manufactured products that are used to produce other goods.

Correct AnswerverifiedShow Answer

If the government of Spain decides to spend less on the military and more on health care, the forgone spending on military items represents the:

Correct AnswerverifiedShow Answer

The "what" question of the three basic questions is "What price should be charged for a good?"

Correct AnswerverifiedShow Answer

Which of the following shifts the production possibilities frontier outward?

Correct AnswerverifiedShow Answer

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The two basic determinants of economic growth are _ and _.

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