Question 1

By specializing in the production of particular goods, a nation is:

Accepted Answer

A)  less likely to make efficient use of available resources.
B)  more likely to engage in international trade.
C)  able to become self-sufficient.
D)  unable to develop a comparative advantage.

Question 2

The model that shows the goods and services the economy is capable of producing is the model of:

Accepted Answer

A)  utility.
B)  the fallacy of composition.
C)  production possibilities.
D)  scarcity.

Question 3

The slope of a production possibilities curve is based on opportunity cost.

Accepted Answer

A) True 
 B)False

Question 4

The slope of a production possibilities curve is based on opportunity cost.

Accepted Answer

A) True 
 B)False

Question 5

The difference between iron ore deposits and the steel produced from these deposits that is later used to make factory equipment illustrates the difference between:

Accepted Answer

A)  labor and a natural resource.
B)  labor and capital.
C)  a natural resource and capital.
D)  a natural resource and entrepreneurship.

Question 6

A point inside the production possibilities curve may indicate that resources are not being used efficiently.

Accepted Answer

A) True 
 B)False

Question 7

Use the following to answer questions 
Exhibit: Production Possibilities Curve-Military and Civilian Goods
 
-(Exhibit: Production Possibilities Curve-Military and Civilian Goods) 
If an economy is at point U, and its production possibilities curve is Curve 1, this would indicate that:

Accepted Answer

A)  resources are fully employed.
B)  economic growth has taken place.
C)  there is inefficiency and/or unemployment.
D)  the economy is maximizing its economic objectives.

Question 8

By specializing in the production of particular goods in which it has a comparative advantage, a nation is:

Accepted Answer

A)  less likely to make efficient use of available resources.
B)  less likely to engage in international trade.
C)  able to become self-sufficient.
D)  able to operate efficiently.

Question 9

In the 1980s, the federal government undertook a major build-up of the military sector, leading to reports that prices charged by military contractors were spiraling upward.According to production possibilities analysis, this result is not surprising due to:

Accepted Answer

A)  the law of increasing opportunity cost.
B)  economic efficiency.
C)  technical efficiency.
D)  resource underutilization.

Question 10

If the United States has a lower opportunity cost than Mexico in the production of wheat, then it will import wheat from Mexico.

Accepted Answer

A) True 
 B)False

Question 11

Use the following to answer questions 
Exhibit: Production Possibilities Curve-Military and Civilian Goods
 
-(Exhibit: Production Possibilities Curve-Military and Civilian Goods) 
The movement from point G on Curve 1 to point E on Curve 2 means that the:

Accepted Answer

A)  economy has grown.
B)  economy has become less efficient.
C)  quality and/or the quantity of the factors of production has decreased.
D)  demand for military goods has risen.

Question 12

The concept of comparative advantage is based upon:

Accepted Answer

A)  absolute labor productivity.
B)  relative labor costs.
C)  dollar prices of labor.
D)  relative opportunity costs.

Question 13

Countries import some goods and export other goods primarily because of:

Accepted Answer

A)  unemployment.
B)  self-sufficiency.
C)  comparative advantage.
D)  the law of increasing opportunity cost.

Question 14

Use the following to answer questions 
Exhibit: Guns and Butter 
-(Exhibit: Guns and Butter) 
If the economy were operating at point B, producing 16 units of guns and 12 units of butter per period, a decision to move to point E and produce 18 units of butter:

Accepted Answer

A)  indicates you can have more butter and guns simultaneously.
B)  makes it clear that this economy experiences decreasing opportunity costs.
C)  involves a loss of 8 units of guns per period.
D)  involves a loss of 4 units of guns per period.

Question 15

Any factor of production is capital if it:

Accepted Answer

A)  was produced and can be used to produce other goods and services.
B)  generates utility.
C)  uses human effort to produce goods and services.
D)  is included in financial capital.

Question 16

Use the following to answer questions 
Exhibit: Guns and Butter 
-(Exhibit: Guns and Butter) 
This production possibilities curve is:

Accepted Answer

A)  linear and because of the constant cost and
B)  bowed in toward the origin because of increasing opportunity costs.
C)  bowed in toward the origin because of constant cost of guns and butter.
D)  bowed out from the origin because of increasing opportunity costs.

Question 17

When the government provides national defense, it is:

Accepted Answer

A)  providing goods and services.
B)  enforcing the legal system.
C)  maintaining the money supply.
D)  stabilizing the economy.

Question 18

Without government, the "for whom" question could not be solved.

Accepted Answer

A) True 
 B)False

Question 19

The major difference between natural resources and capital is that the former refers to naturally occurring resources whereas the latter refers to produced resources.

Accepted Answer

A) True 
 B)False

Question 20

Human capital is:

Accepted Answer

A)  the set of acquired skills and abilities that workers bring to the production of goods and services.
B)  the financial wealth the economy has available to produce goods and services.
C)  the ability to produce one of two goods at relatively lower cost.
D)  a factor of production only if it occurs naturally.

Exam 2: Confronting Scarcity: Choices in Production

The slope of a production possibilities curve is based on opportunity cost.

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When the government provides national defense, it is:

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Human capital is:

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The concept of comparative advantage is based upon:

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The major difference between natural resources and capital is that the former refers to naturally occurring resources whereas the latter refers to produced resources.

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In the 1980s, the federal government undertook a major build-up of the military sector, leading to reports that prices charged by military contractors were spiraling upward.According to production possibilities analysis, this result is not surprising due to:

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Use the following to answer questions Exhibit: Production Possibilities Curve-Military and Civilian Goods -(Exhibit: Production Possibilities Curve-Military and Civilian Goods) If an economy is at point U, and its production possibilities curve is Curve 1, this would indicate that:

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Without government, the "for whom" question could not be solved.

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The difference between iron ore deposits and the steel produced from these deposits that is later used to make factory equipment illustrates the difference between:

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Use the following to answer questions Exhibit: Guns and Butter -(Exhibit: Guns and Butter) This production possibilities curve is:

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Use the following to answer questions Exhibit: Production Possibilities Curve-Military and Civilian Goods -(Exhibit: Production Possibilities Curve-Military and Civilian Goods) The movement from point G on Curve 1 to point E on Curve 2 means that the:

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The model that shows the goods and services the economy is capable of producing is the model of:

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The slope of a production possibilities curve is based on opportunity cost.

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By specializing in the production of particular goods in which it has a comparative advantage, a nation is:

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Any factor of production is capital if it:

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If the United States has a lower opportunity cost than Mexico in the production of wheat, then it will import wheat from Mexico.

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Use the following to answer questions Exhibit: Guns and Butter -(Exhibit: Guns and Butter) If the economy were operating at point B, producing 16 units of guns and 12 units of butter per period, a decision to move to point E and produce 18 units of butter:

Correct AnswerverifiedShow Answer

By specializing in the production of particular goods, a nation is:

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Countries import some goods and export other goods primarily because of:

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A point inside the production possibilities curve may indicate that resources are not being used efficiently.

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