Question 1

A consulting firm is advising its government clients that their economies really do not need to sacrifice consumption goods today in order to grow. Which of the following options would make it possible for clients to experience growth without making sacrifices?

Accepted Answer

A)   increasing current consumption and reducing the quantity of capital goods produced
B)   receiving gifts of capital or technological innovations
C)   reducing consumption today in order to increase future consumption
D)   reducing food production in order to increase the production of hydroelectric dams

Question 2

A virulent disease spreads throughout the population of an economy, causing death and disability. How can this be portrayed on the production possibilities curve?

Accepted Answer

A)   a movement from a point on the curve to the northeast
B)   a movement along the curve to the southeast
C)   an outward shift of the curve
D)   an inward shift of the curve

Question 3

Using the production possibilities curve, which of the following illustrates an inefficient use of resources?

Accepted Answer

A)   a movement off the curve in a southwest direction
B)   a movement to the southeast along the curve
C)   a movement to the northeast along the curve
D)   a movement off the curve in a northeast direction

Question 4

Alex must prepare for exams in both biology and economics this week. Assume that the production possibilities curve showing the trade-off between exam scores in biology and economics is concave toward the origin. As Alex moves along the curve spending more of his time studying for economics, what is the effect on the opportunity cost of an hour of preparation for economics?

Accepted Answer

A)   It first increases, then decreases.
B)   It decreases.
C)   It increases.
D)   It remains constant.

Question 5

It can be said that, ultimately, consumers are the driving force behind answers to the three basic economic questions faced by societies. Explain the consumer's role in providing these answers.

Accepted Answer

What will be produced is directly determ...

Question 6

Under what circumstances will an economy's production possibility curve be a straight line?

Accepted Answer

A)   if the opportunity cost of production of a good is constant as more of it is produced
B)   if the opportunity cost of production of a good decreases as more of it is produced
C)   if resources are not equally substitutable among productive tasks
D)   if the economy experiences significant unemployment

Question 7

Draw a picture of a production possibilities curve. Identify each axis as measuring either guns or butter. Select and label Point A, which is beyond the economy's ability to produce; Point B, which represents an inefficient level of production; Point C, an efficient combination of output in which more guns are produced than units of butter; and Point D, an efficient production point in which more units of butter are produced than guns. Be sure to label each clearly.

Accepted Answer

Diagrams will vary. ...

Question 8

FIGURE 2-2
 
-Refer to Figure 2-2. Which of the following statements about a movement from Point G to Point F is the most accurate?

Accepted Answer

A)   It involves sacrificing wine in order to produce a greater quantity of bread.
B)   It will increase the level of unemployment in the economy.
C)   It involves no sacrifice of output, as both more wine and bread can be produced if available resources are used more efficiently.
D)   It involves sacrificing bread in order to produce a greater quantity of wine.

Question 9

FIGURE 2-6
 
-Refer to Figure 2-6. If the economy moves from Point C to Point A, what is the result?

Accepted Answer

A)   There is no net change in the number of prison cells and classrooms, as all points on the frontier are equally efficient.
B)   More prison cells are created.
C)   It sacrifices an increasing quantity of classrooms per prison cell produced the further the movement toward Point A.
D)   More classrooms are created.

Question 10

FIGURE 2-4
 
-Refer to Figure 2-4. Which of the following statements about the movement from Point D to Point E is the most accurate?

Accepted Answer

A)   It results in an increase in the production of both capital and consumption goods this period.
B)   It results in an increase in the production of capital goods but a decrease in the production of consumption goods this period.
C)   It does not change the level of output produced since both points are on the production possibilities curve.
D)   It results in an increase in the production of consumption goods but a decrease in the production of capital goods this period.

Question 11

What is the circular flow of economic activity a model of?

Accepted Answer

A)   the interaction among taxes, prices, and profits
B)   the influence of government on business behaviour
C)   the role of unions and government in the economy
D)   the movement of goods, services, and payments between households and firms

Question 12

FIGURE 2-1
 
-Refer to Figure 2-1. What does the arrow from the factor markets to the households represent?

Accepted Answer

A)   wages, rent interest, and profits
B)   revenue
C)   money income
D)   goods and services sold

Question 13

What could one expect approximately two decades after a "baby boom"?

Accepted Answer

A)   an outward shift of the production possibilities curve along both axes
B)   an inward shift of the production possibilities curve
C)   production to change from an interior point to a point along the production possibilities curve
D)   a movement along the production possibilities curve from one point to another

Question 14

Why is a production possibilities curve negatively sloped?

Accepted Answer

A)   Along the curve, production of one good must be sacrificed in order to increase production of another.
B)   Unemployment increases as an economy moves down along the curve.
C)   As the price falls, more goods are purchased.
D)   Unemployment decreases as an economy moves down along the curve.

Question 15

What effect will improving the level of education of the labour force have on the production possibilities curve?

Accepted Answer

A)   It will move the economy from a point on the production possibilities curve to a point inside the production possibilities curve.
B)   It will shift the production possibilities curve inward.
C)   It will move the economy from a point inside the production possibilities curve to a point on the production possibilities curve.
D)   It will shift the production possibilities curve outward.

Question 16

Movement from one point on the production possibilities curve to another leads to more of both goods being produced.

Accepted Answer

A) True 
 B)False

Question 17

FIGURE 2-8
 
-Refer to Figure 2-8. Assume the economy is operating at Point D. What is the opportunity cost of moving to Point B?

Accepted Answer

A)   about 200 bushels of wheat
B)   about 200 bushels of soybeans
C)   zero
D)   infinite, as Point B cannot be produced at any cost

Question 18

FIGURE 2-2
 
-Refer to Figure 2-2. Which of the following statements about a movement from Point C to Point B is the most accurate?

Accepted Answer

A)   It involves sacrificing bread in order to produce a greater quantity of wine.
B)   It involves sacrificing wine in order to produce a greater quantity of bread.
C)   It involves no sacrifice of output, as the opportunity cost of production is zero everywhere along the production possibilities curve.
D)   It will increase the level of unemployment in the economy.

Question 19

Which of the following would most likely shift the production possibilities curve inward?

Accepted Answer

A)   an increase in the production of capital goods
B)   an increase in the number of hours factories are in use
C)   technological progress
D)   a decrease in the average number of hours worked per week

Question 20

If additional units of output could be produced at constant opportunity cost, what would the shape of the production possibilities curve be?

Accepted Answer

A)   positively sloped
B)   a straight line with a negative slope
C)   bowed inward toward the origin
D)   bowed outward away from the origin

Exam 2: Scarcity, Trade-Offs, and Production Possibilities

Movement from one point on the production possibilities curve to another leads to more of both goods being produced.

Correct Answer
verified

A consulting firm is advising its government clients that their economies really do not need to sacrifice consumption goods today in order to grow. Which of the following options would make it possible for clients to experience growth without making sacrifices?

Correct Answer
verified

What could one expect approximately two decades after a "baby boom"?

Correct Answer
verified

Which of the following would most likely shift the production possibilities curve inward?

Correct Answer
verified

Under what circumstances will an economy's production possibility curve be a straight line?

Correct Answer
verified

It can be said that, ultimately, consumers are the driving force behind answers to the three basic economic questions faced by societies. Explain the consumer's role in providing these answers.

Correct Answer
verified
What will be produced is directly determ...
View Answer

FIGURE 2-1 -Refer to Figure 2-1. What does the arrow from the factor markets to the households represent?

Correct Answer
verified

A virulent disease spreads throughout the population of an economy, causing death and disability. How can this be portrayed on the production possibilities curve?

Correct Answer
verified

Using the production possibilities curve, which of the following illustrates an inefficient use of resources?

Correct Answer
verified

Why is a production possibilities curve negatively sloped?

Correct Answer
verified

What is the circular flow of economic activity a model of?

Correct Answer
verified

FIGURE 2-2 -Refer to Figure 2-2. Which of the following statements about a movement from Point G to Point F is the most accurate?

Correct Answer
verified

If additional units of output could be produced at constant opportunity cost, what would the shape of the production possibilities curve be?

Correct Answer
verified

What effect will improving the level of education of the labour force have on the production possibilities curve?

Correct Answer
verified

Correct Answer
verified
Diagrams will vary. ...
View Answer

FIGURE 2-4 -Refer to Figure 2-4. Which of the following statements about the movement from Point D to Point E is the most accurate?

Correct Answer
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FIGURE 2-6 -Refer to Figure 2-6. If the economy moves from Point C to Point A, what is the result?

Correct Answer
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FIGURE 2-8 -Refer to Figure 2-8. Assume the economy is operating at Point D. What is the opportunity cost of moving to Point B?

Correct Answer
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FIGURE 2-2 -Refer to Figure 2-2. Which of the following statements about a movement from Point C to Point B is the most accurate?

Correct Answer
verified

Correct Answer
verified

Exam 2: Scarcity, Trade-Offs, and Production Possibilities

Movement from one point on the production possibilities curve to another leads to more of both goods being produced.

Correct AnswerverifiedShow Answer

A consulting firm is advising its government clients that their economies really do not need to sacrifice consumption goods today in order to grow. Which of the following options would make it possible for clients to experience growth without making sacrifices?

Correct AnswerverifiedShow Answer

What could one expect approximately two decades after a "baby boom"?

Correct AnswerverifiedShow Answer

Which of the following would most likely shift the production possibilities curve inward?

Correct AnswerverifiedShow Answer

Under what circumstances will an economy's production possibility curve be a straight line?

Correct AnswerverifiedShow Answer

It can be said that, ultimately, consumers are the driving force behind answers to the three basic economic questions faced by societies. Explain the consumer's role in providing these answers.

Correct AnswerverifiedWhat will be produced is directly determ...View AnswerShow Answer

FIGURE 2-1 -Refer to Figure 2-1. What does the arrow from the factor markets to the households represent?

Correct AnswerverifiedShow Answer

A virulent disease spreads throughout the population of an economy, causing death and disability. How can this be portrayed on the production possibilities curve?

Correct AnswerverifiedShow Answer

Using the production possibilities curve, which of the following illustrates an inefficient use of resources?

Correct AnswerverifiedShow Answer

Why is a production possibilities curve negatively sloped?

Correct AnswerverifiedShow Answer

What is the circular flow of economic activity a model of?

Correct AnswerverifiedShow Answer

FIGURE 2-2 -Refer to Figure 2-2. Which of the following statements about a movement from Point G to Point F is the most accurate?

Correct AnswerverifiedShow Answer

If additional units of output could be produced at constant opportunity cost, what would the shape of the production possibilities curve be?

Correct AnswerverifiedShow Answer

What effect will improving the level of education of the labour force have on the production possibilities curve?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedDiagrams will vary. ...View AnswerShow Answer

FIGURE 2-4 -Refer to Figure 2-4. Which of the following statements about the movement from Point D to Point E is the most accurate?

Correct AnswerverifiedShow Answer

FIGURE 2-6 -Refer to Figure 2-6. If the economy moves from Point C to Point A, what is the result?

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FIGURE 2-8 -Refer to Figure 2-8. Assume the economy is operating at Point D. What is the opportunity cost of moving to Point B?

Correct AnswerverifiedShow Answer

FIGURE 2-2 -Refer to Figure 2-2. Which of the following statements about a movement from Point C to Point B is the most accurate?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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What will be produced is directly determ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Diagrams will vary. ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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