Question 1

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) C) and D)
F) A) and D)

Question 2

Explain the concept of the law of increasing additional cost.

Accepted Answer

The law of increasing relative cost is t...

Question 3

Labor,human capital,and entrepreneurship are resources related to human beings.Distinguish among the three resources.

Accepted Answer

Labor is the work done by human beings.H...

Question 4

Which of the following is NOT an economic resource?

Accepted Answer

A)  Money
B)  Low-skilled labor
C)  Coal
D)  An engineerE) All of the above
F) A) and B)

Question 5

-When the economy moves from point D to E in the above table,the opportunity cost of a computer in terms of televisions is

Accepted Answer

A)  3.
B)  4.
C)  2.
D)  5.E) B) and C)
F) A) and B)

Question 6

The trade-off between current consumption and the production of capital goods is also a trade-off between

Accepted Answer

A)  the future cost for capital goods and future cost of consumption goods.
B)  having fewer needs and more wants in the future.
C)  satisfying the needs of the poor and the wants of the wealthy.
D)  current consumption and future consumption.E) C) and D)
F) A) and C)

Question 7

The above table shows the daily production possibilities for a bakery.
Currently the bakery bakes 60 pizzas and 180 loaves of bread,that is-it is at alternative C.
-Using the above table,moving from alternative C to alternative B,what is the opportunity cost of one loaf of bread?

Accepted Answer

A)  1 pizza pie
B)  30 pizza pies
C)  2 pizza pies
D)  0.5 pizza pieE) All of the above
F) B) and C)

Question 8

Why do most people choose to specialize in a narrow set of skills for their work,rather than to learn a little bit about several varied fields of endeavor?

Accepted Answer

A)  They feel that doing so will minimize their chances of being unemployed.
B)  They don't correctly perceive the costs of being so specialized.
C)  It allows them to earn more income by being more productive.
D)  They are unaware of how much better off they would be if they diversified their skills.E) All of the above
F) A) and B)

Question 9

A movement along the production possibilities curve would imply that

Accepted Answer

A)  the labor force has grown.
B)  productivity has increased.
C)  society has chosen a different set of outputs.
D)  productivity has declined because workers are demanding more leisure.E) None of the above
F) A) and D)

Question 10

When a country or a region of a country specializes in producing the product that has the lower opportunity cost compared to another country or region,it is practicing

Accepted Answer

A)  absolute advantage.
B)  cost disadvantage.
C)  regional advantage.
D)  comparative advantage.E) All of the above
F) C) and D)

Question 11

Generally,if a nation produces more consumer goods than capital goods

Accepted Answer

A)  more of all goods may be produced in the future.
B)  less of all goods may be produced in the future.
C)  about the same amount of capital goods may be produced in the future as are being produced today.
D)  society will have to forego future consumption of capital goods .E) All of the above
F) A) and B)

Question 12

-Refer to the above figure.The shape of the production possibility curve indicates that production of

Accepted Answer

A)  wheat is characterized by increasing costs while the production of beans is characterized by decreasing costs.
B)  wheat is characterized by decreasing costs while the production of beans is characterized by increasing costs.
C)  both goods are characterized by increasing costs.
D)  both goods are characterized by decreasing costs.E) None of the above
F) B) and D)

Question 13

A waitress brings a free glass of wine when you sit down in a restaurant.This glass of wine is

Accepted Answer

A)  a service because the waitress carried it instead of making it.
B)  a good,but not an economic good because there is no price charged for the wine.
C)  a nongood because there is no price charged for the wine.
D)  an economic good because wine is produced with scarce resources,even if it is free to you.E) A) and C)
F) None of the above

Question 14

The production possibilities curve represents

Accepted Answer

A)  the maximum amount of labor and capital available to society.
B)  the combinations of goods and services among which consumers are indifferent.
C)  the maximum combination of goods and services that can be produced with fixed resources and technology,given efficient use of the resources.
D)  the maximum rate of growth of capital and labor in a country.E) C) and D)
F) B) and D)

Question 15

A man-made resource such as a building or a machine is an example of which resource?

Accepted Answer

A)  Entrepreneurial ability
B)  Labor
C)  Physical capital
D)  Human capitalE) B) and D)
F) All of the above

Question 16

The opportunity cost of going to college full time away from home is

Accepted Answer

A)  the income you could have earned from a full-time job.
B)  the funds you would have saved if you had not paid the tuition.
C)  the time you could have spent with friends back home.
D)  All of the above are correct.E) B) and D)
F) A) and B)

Question 17

Opportunity cost

Accepted Answer

A)  can only be measured as a paid cost.
B)  is always the value of the next best forgone opportunity.
C)  does not exist since there are no receipts.
D)  is always the lowest valued alternative.E) A) and B)
F) A) and C)

Question 18

Human capital is

Accepted Answer

A)  what people get from physical capital.
B)  the accumulation of skills,training and education of workers.
C)  the value obtained from selling stocks and bonds.
D)  the human resources that perform the function of raising capital.E) C) and D)
F) A) and B)

Question 19

-Refer to the above figure.Which of the following points indicates an unobtainable point of production?

Accepted Answer

A)  a
B)  d
C)  e
D)  More information is needed to answer the question.E) A) and D)
F) A) and C)

Question 20

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) C) and D)
F) All of the above

Exam 2: Scarcity and the World of Trade-Offs

The production possibilities curve represents

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Scarcity

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A man-made resource such as a building or a machine is an example of which resource?

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A waitress brings a free glass of wine when you sit down in a restaurant.This glass of wine is

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Explain the concept of the law of increasing additional cost.

Correct AnswerverifiedThe law of increasing relative cost is t...View AnswerShow Answer

-When the economy moves from point D to E in the above table,the opportunity cost of a computer in terms of televisions is

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Opportunity cost

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When a country or a region of a country specializes in producing the product that has the lower opportunity cost compared to another country or region,it is practicing

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Human capital is

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-Refer to the above figure.Which of the following points indicates an unobtainable point of production?

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Which of the following statements about scarcity is TRUE?

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A movement along the production possibilities curve would imply that

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The opportunity cost of going to college full time away from home is

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The above table shows the daily production possibilities for a bakery. Currently the bakery bakes 60 pizzas and 180 loaves of bread,that is-it is at alternative C. -Using the above table,moving from alternative C to alternative B,what is the opportunity cost of one loaf of bread?

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Why do most people choose to specialize in a narrow set of skills for their work,rather than to learn a little bit about several varied fields of endeavor?

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Generally,if a nation produces more consumer goods than capital goods

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-Refer to the above figure.The shape of the production possibility curve indicates that production of

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Labor,human capital,and entrepreneurship are resources related to human beings.Distinguish among the three resources.

Correct AnswerverifiedLabor is the work done by human beings.H...View AnswerShow Answer

The trade-off between current consumption and the production of capital goods is also a trade-off between

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Which of the following is NOT an economic resource?

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The law of increasing relative cost is t...
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Labor is the work done by human beings.H...
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