Question 1

Give examples of reasons why some people might prefer a pure capitalist economy and others a mixed economy.

Accepted Answer

One reason an person might prefer a mixe...

Question 2

Figure 2-3
Tonnes
of
Soybeans 
-In Figure 2-3,how many units of corn are produced at point "a"?

Accepted Answer

A)  2,500
B)  3,000
C)  2,000
D)  Can't tell without more information.

Question 3

The law of increasing relative cost states that

Accepted Answer

A)  producing additional units of one good results in increasing amounts of lost output of the other.
B)  producing additional units of one good results in proportionately smaller reductions in output of the other.
C)  the economy will be producing on its production possibilities curve.
D)  the production possibilities curve will be a straight line. A

Question 4

A country that must reduce current consumption if it wished to increase future consumption possibilities

Accepted Answer

A)  must be producing along its production possibilities curve.
B)  must be producing outside the production possibilities curve.
C)  must be allocating resources inefficiently.
D)  must not have private ownership of property.

Question 5

If all resources are perfectly adaptable for alternative uses,the production possibilities curve will

Accepted Answer

A)  be a straight line.
B)  be bowed in.
C)  be bowed out.
D)  not exist.

Question 6

A mixed economy is one in which decisions about how resources are used

Accepted Answer

A)  are made entirely by the private sector.
B)  are made entirely by the public sector.
C)  are made partly by the private sector and partly by the public sector.
D)  are made entirely by firms and consumers.

Question 7

Economy A and Economy B have the same resources,but workers in Economy A have specialized whereas individuals in Economy B have not.Given this information,you can determine that

Accepted Answer

A)  Economy A will have a lower output than Economy B.
B)  Economy A will have a higher output than Economy B.
C)  Individuals in Economy A will have lower incomes than individuals in Economy B.
D)  Economy A and Economy B will have identical outputs.

Question 8

"The institutional means by which scarce resources are used to satisfy human wants" is the definition of

Accepted Answer

A)  a system of property rights.
B)  an economic system.
C)  a social system.
D)  an educational system.

Question 9

Figure 2-4 
-The shape of the production possibilities curve in Figure 2-4 indicates that

Accepted Answer

A)  production of both corn and cloth is characterized by constant costs.
B)  production of corn is characterized by constant costs and the production of cloth by increasing costs.
C)  production of both corn and cloth is characterized by increasing costs.
D)  production of corn is characterized by increasing costs while the production of cloth is characterized by decreasing costs.

Question 10

Discuss the problems of developing nations in terms of capital investment versus consumption goods.Specifically,what could be done for poorer nations to get out of poverty?

Accepted Answer

To raise future incomes,the decision mus...

Question 11

Figure 2-2 
-The combination of personal computers and televisions shown in Figure 2-2 by point W

Accepted Answer

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

Question 12

A production possibilities curve that is bowed outward occurs when

Accepted Answer

A)  successive additions of one good require greater and greater reductions in the other.
B)  resources are not scarce.
C)  opportunity costs are constant.
D)  the society is operating on the production possibilities curve.

Question 13

The concept "terms of trade" refers to

Accepted Answer

A)  the system of rules and regulations established to govern trade.
B)  the quantity of one good that must be traded in order to obtain a unit of another.
C)  the provisions of a contract between import-export firms in two countries.
D)  the time period during which trade is to take place. B

Question 14

A movement along the production possibilities curve would suggest that

Accepted Answer

A)  society has chosen to produce a different set of outputs.
B)  productivity has declined because workers are demanding more leisure.
C)  the labour force has grown.
D)  productivity has increased.

Question 15

If an economy is operating at a point located inside the production possibilities curve,then

Accepted Answer

A)  society's resources are being inefficiently utilized.
B)  the curve will move to the left.
C)  the curve will move to the right.
D)  society's resources are being used to produce too many consumer goods.

Question 16

Explain why,if specialization and trade always makes it possible to increase a country's consumption,in effect generating extra output from the existing stock of scarce resources,anyone would favour placing restrictions on trade through such means as tariffs or quotas.

Accepted Answer

Specializing in the production of a good...

Question 17

Figure 2-3
Tonnes
of
Soybeans 
-The PPC shown in Figure 2-3 shows that the opportunity cost of a tonne of corn is

Accepted Answer

A)  1/2 tonne of soybeans..
B)  1 tonne of soybeans.
C)  1 1/2 tonnes of soybeans.
D)  2 tonnes of soybeans.

Question 18

In both capitalist and mixed economies,the incomes and wealth levels of households

Accepted Answer

A)  always will be less fairly distributed than in command economies.
B)  are independent of the ownership of resources.
C)  are determined by government decision-makers.
D)  depend on the degree to which households own marketable resources and on the prices of those resources.

Question 19

Describe the three basic types of economic systems.

Accepted Answer

A pure command economy is an economic sy...

Question 20

Figure 2-2 
-Given the production possibilities schedule in Table 2-1,a combination of nine televisions and four personal computers

Accepted Answer

A)  is attainable but involves an inefficient use of society's resources.
B)  is not attainable because society does not have enough resources to produce this combination.
C)  would be attainable only if a new production technology was introduced.
D)  is not attainable because it is not listed in the schedule.

Exam 2: Production Possibilities and Economic Systems

Give examples of reasons why some people might prefer a pure capitalist economy and others a mixed economy.

Correct AnswerverifiedOne reason an person might prefer a mixe...View AnswerShow Answer

Figure 2-3 Tonnes of Soybeans -In Figure 2-3,how many units of corn are produced at point "a"?

Correct AnswerverifiedShow Answer

The law of increasing relative cost states that

Correct AnswerverifiedA

A country that must reduce current consumption if it wished to increase future consumption possibilities

Correct AnswerverifiedShow Answer

If all resources are perfectly adaptable for alternative uses,the production possibilities curve will

Correct AnswerverifiedShow Answer

A mixed economy is one in which decisions about how resources are used

Correct AnswerverifiedShow Answer

Economy A and Economy B have the same resources,but workers in Economy A have specialized whereas individuals in Economy B have not.Given this information,you can determine that

Correct AnswerverifiedShow Answer

"The institutional means by which scarce resources are used to satisfy human wants" is the definition of

Correct AnswerverifiedShow Answer

Figure 2-4 -The shape of the production possibilities curve in Figure 2-4 indicates that

Correct AnswerverifiedShow Answer

Discuss the problems of developing nations in terms of capital investment versus consumption goods.Specifically,what could be done for poorer nations to get out of poverty?

Correct AnswerverifiedTo raise future incomes,the decision mus...View AnswerShow Answer

Figure 2-2 -The combination of personal computers and televisions shown in Figure 2-2 by point W

Correct AnswerverifiedB

A production possibilities curve that is bowed outward occurs when

Correct AnswerverifiedShow Answer

The concept "terms of trade" refers to

Correct AnswerverifiedB

A movement along the production possibilities curve would suggest that

Correct AnswerverifiedShow Answer

If an economy is operating at a point located inside the production possibilities curve,then

Correct AnswerverifiedShow Answer

Explain why,if specialization and trade always makes it possible to increase a country's consumption,in effect generating extra output from the existing stock of scarce resources,anyone would favour placing restrictions on trade through such means as tariffs or quotas.

Correct AnswerverifiedSpecializing in the production of a good...View AnswerShow Answer

Figure 2-3 Tonnes of Soybeans -The PPC shown in Figure 2-3 shows that the opportunity cost of a tonne of corn is

Correct AnswerverifiedShow Answer

In both capitalist and mixed economies,the incomes and wealth levels of households

Correct AnswerverifiedShow Answer

Describe the three basic types of economic systems.

Correct AnswerverifiedA pure command economy is an economic sy...View AnswerShow Answer

Figure 2-2 -Given the production possibilities schedule in Table 2-1,a combination of nine televisions and four personal computers

Correct AnswerverifiedShow Answer

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One reason an person might prefer a mixe...
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A

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To raise future incomes,the decision mus...
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B

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B

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Specializing in the production of a good...
View Answer

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A pure command economy is an economic sy...
View Answer

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