Question 1

The Economy Tomorrow on "Harnessing the Sun" states that the percentage of electricity that is generated from burning oil and coal is:

Accepted Answer

A)   Less than 10%.
B)   Between 10% and 30%.
C)   Between 30% and 50%.
D)   Greater than 50%.E) A) and D)
F) B) and C)

Question 2

Table 1.2 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus. Complete the table by calculating the required opportunity costs for both the B-1 and Stealth bombers.  On the basis of your calculations in Table 1.2, what is gained by producing at point B rather than point C?

Accepted Answer

A)   45 B-1 bombers.
B)   30 Stealth bombers.
C)   180 Stealth bombers.
D)   10 B-1 bombers.E) A) and B)
F) None of the above

Question 3

Economic growth would best be represented by a

Accepted Answer

A)   Shift outward of the production possibilities curve.
B)   Shift inward of the production possibilities curve.
C)   Movement from inside the production possibilities curve to a point on the production possibilities curve.
D)   Movement from the production possibilities curve to a point inside the production possibilities curve.E) A) and D)
F) None of the above

Question 4

Which of the following is true about the combination of mops and brooms represented by point E in Figure 1.3 and using PP1?

Accepted Answer

A)   Point E is efficient now.
B)   Point E is attainable if this economy uses more of its available resources.
C)   Point E is unattainable if this economy becomes more efficient.
D)   Point E is attainable only if more resources become available or technological advances are made.E) A) and B)
F) A) and C)

Question 5

The Latin phrase ceteris paribus refers to holding other variables constant.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is true about the combination of plasma televisions and MP3 players represented by point F in Figure 1.4?

Accepted Answer

A)   Point F is inefficient now.
B)   Point F is unattainable even with advances in technology.
C)   Point F will be more easily attainable if the government takes control of all privately run factories.
D)   Point F can possibly be reached if more economic resources become available or technology improves.E) B) and D)
F) B) and C)

Question 7

All economies must make decisions concerning what to produce, how to produce it, and for whom to produce.

Accepted Answer

A) True 
 B)False

Question 8

Table 1.2 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus. Complete the table by calculating the required opportunity costs for both the B-1 and Stealth bombers.  The highest opportunity cost anywhere in Table 1.2 for B-1 bombers in terms of Stealth bombers is

Accepted Answer

A)   10 Stealth bombers per B-1 bomber.
B)   .33 B-1 bomber per Stealth bomber.
C)   .10 B-1 bomber per Stealth bomber.
D)   .10 Stealth bomber per B-1 bomber.E) All of the above
F) C) and D)

Question 9

Output combinations that lie inside the production possibilities curve are characterized by efficient use of resources.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following correctly characterizes the shape of a constant opportunity cost production possibilities curve?

Accepted Answer

A)   A straight line indicating that the law of increasing opportunity costs applies.
B)   A straight line when there is constant opportunity costs.
C)   A line that curves outward when resources are perfectly adaptable in the production of different goods.
D)   A line that curves inward when resources are perfectly adaptable in the production of different goods.E) None of the above
F) B) and C)

Question 11

If the United States decides to convert automobile factories to tank production, as it did during World War II, but finds that some auto manufacturing facilities are not well suited to tank production, then

Accepted Answer

A)   The production possibilities curve between tanks and automobiles will appear as a straight line.
B)   The production possibilities curve between tanks and automobiles will shift outward.
C)   Decreasing opportunity costs will occur with greater automobile production.
D)   Increasing opportunity costs will occur with greater tank production.E) C) and D)
F) A) and D)

Question 12

In using a guns and butter production possibilities curve with increasing opportunity cost, producing more and more tanks

Accepted Answer

A)   Lowers the cost of each individual tank.
B)   Can be done at a constant opportunity cost.
C)   Requires us to give up larger and larger amounts of butter per tank produced.
D)   Is not possible due to scarcity.E) None of the above
F) A) and B)

Question 13

In Figure 1.6, if the opportunity cost of producing cars was zero at all levels of production, the production possibilities curve would be best be represented by a

Accepted Answer

A)   Vertical line.
B)   45-degree line starting at the origin.
C)   Horizontal line.
D)   Circle.E) All of the above
F) B) and C)

Question 14

Producing at a point inside the production possibilities curve

Accepted Answer

A)   Means society must be using its resources efficiently.
B)   Is unattainable given the present level of technology.
C)   Is feasible when the nation is at war but not feasible when the nation is at peace.
D)   Suggests we are forgoing the ability to produce more of both goods.E) A) and D)
F) None of the above

Question 15

Table 1.1 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus. Complete the table by calculating the required opportunity costs for both the B-1 and Stealth bombers.  On the basis of your calculations in Table 1.1, what is the opportunity cost of producing at point S rather than point T?

Accepted Answer

A)   1 Stealth bomber.
B)   1 B-1 bomber.
C)   10 Stealth bombers.
D)   0.9 Stealth bombersE) A) and B)
F) A) and C)

Question 16

The essential feature of the market mechanism is the price signal.

Accepted Answer

A) True 
 B)False

Question 17

Every time we use scarce resources in one way, we give up the opportunity to use them in other ways.

Accepted Answer

A) True 
 B)False

Question 18

Critics of government regulation argue that government interference in the marketplace stifles the animal spirits of entrepreneurship.

Accepted Answer

A) True 
 B)False

Question 19

The doctrine of laissez faire is based on the belief that

Accepted Answer

A)   Markets are likely to do a better job of allocating resources than government directives.
B)   Government directives are likely to do a better job of allocating resources than markets.
C)   Government failure does not exist.
D)   Markets result in an unfair distribution of income.E) All of the above
F) A) and B)

Question 20

According to the text, there is no such thing as a free lunch because

Accepted Answer

A)   The producer must charge something to cover the cost of production.
B)   Resources used to produce the lunch could be used to produce other goods and services.
C)   The government must raise taxes to pay for the lunches.
D)   No one would pay for lunch anymore if they could get it for free.E) A) and B)
F) A) and C)

Exam 1: Economics: the Core Issues

All economies must make decisions concerning what to produce, how to produce it, and for whom to produce.

Correct Answer
verified

Critics of government regulation argue that government interference in the marketplace stifles the animal spirits of entrepreneurship.

Correct Answer
verified

The Economy Tomorrow on "Harnessing the Sun" states that the percentage of electricity that is generated from burning oil and coal is:

Correct Answer
verified

Economic growth would best be represented by a

Correct Answer
verified

In using a guns and butter production possibilities curve with increasing opportunity cost, producing more and more tanks

Correct Answer
verified

Output combinations that lie inside the production possibilities curve are characterized by efficient use of resources.

Correct Answer
verified

Correct Answer
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Producing at a point inside the production possibilities curve

Correct Answer
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The Latin phrase ceteris paribus refers to holding other variables constant.

Correct Answer
verified

Which of the following correctly characterizes the shape of a constant opportunity cost production possibilities curve?

Correct Answer
verified

If the United States decides to convert automobile factories to tank production, as it did during World War II, but finds that some auto manufacturing facilities are not well suited to tank production, then

Correct Answer
verified

Every time we use scarce resources in one way, we give up the opportunity to use them in other ways.

Correct Answer
verified

Correct Answer
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The doctrine of laissez faire is based on the belief that

Correct Answer
verified

In Figure 1.6, if the opportunity cost of producing cars was zero at all levels of production, the production possibilities curve would be best be represented by a

Correct Answer
verified

According to the text, there is no such thing as a free lunch because

Correct Answer
verified

Which of the following is true about the combination of mops and brooms represented by point E in Figure 1.3 and using PP1?

Correct Answer
verified

Correct Answer
verified

The essential feature of the market mechanism is the price signal.

Correct Answer
verified

Which of the following is true about the combination of plasma televisions and MP3 players represented by point F in Figure 1.4?

Correct Answer
verified

Exam 1: Economics: the Core Issues

All economies must make decisions concerning what to produce, how to produce it, and for whom to produce.

Correct AnswerverifiedShow Answer

Critics of government regulation argue that government interference in the marketplace stifles the animal spirits of entrepreneurship.

Correct AnswerverifiedShow Answer

The Economy Tomorrow on "Harnessing the Sun" states that the percentage of electricity that is generated from burning oil and coal is:

Correct AnswerverifiedShow Answer

Economic growth would best be represented by a

Correct AnswerverifiedShow Answer

In using a guns and butter production possibilities curve with increasing opportunity cost, producing more and more tanks

Correct AnswerverifiedShow Answer

Output combinations that lie inside the production possibilities curve are characterized by efficient use of resources.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Producing at a point inside the production possibilities curve

Correct AnswerverifiedShow Answer

The Latin phrase ceteris paribus refers to holding other variables constant.

Correct AnswerverifiedShow Answer

Which of the following correctly characterizes the shape of a constant opportunity cost production possibilities curve?

Correct AnswerverifiedShow Answer

If the United States decides to convert automobile factories to tank production, as it did during World War II, but finds that some auto manufacturing facilities are not well suited to tank production, then

Correct AnswerverifiedShow Answer

Every time we use scarce resources in one way, we give up the opportunity to use them in other ways.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The doctrine of laissez faire is based on the belief that

Correct AnswerverifiedShow Answer

In Figure 1.6, if the opportunity cost of producing cars was zero at all levels of production, the production possibilities curve would be best be represented by a

Correct AnswerverifiedShow Answer

According to the text, there is no such thing as a free lunch because

Correct AnswerverifiedShow Answer

Which of the following is true about the combination of mops and brooms represented by point E in Figure 1.3 and using PP1?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The essential feature of the market mechanism is the price signal.

Correct AnswerverifiedShow Answer

Which of the following is true about the combination of plasma televisions and MP3 players represented by point F in Figure 1.4?

Correct AnswerverifiedShow Answer

Correct Answer
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