Question 1

In terms of the production possibilities curve,inefficiency is represented by

Accepted Answer

A)  All points on the curve.
B)  All points outside the curve.
C)  All points inside the curve.
D)  A rightward shift of the curve.E) A) and B)
F) C) and D)

Question 2

A line that slopes downward from left to right has a

Accepted Answer

A)  Negative slope.
B)  Positive slope.
C)  Slope that changes as you move along the curve.
D)  Slope of zero.E) A) and C)
F) C) and D)

Question 3

One World View article is titled "Chronic Food Shortage Shows Despite Efforts by North Korea to Hide It." If North Korea reduces the size of its military and produces more food,this is most consistent with

Accepted Answer

A)  A movement along the economy's production possibilities curve.
B)  Privatization.
C)  A laissez faire policy.
D)  The law of increasing opportunity costs.E) A) and D)
F) C) and D)

Question 4

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.   Combination  Number  of Stealth  Bombers  Opportunity cost  of Stealth  Bombers in  Terms of B-1s  Number  of B-1s  Opportunity  Terms of Stealth  Bombers S100T91U72V43\begin{array}{|c|c|c|c|c|}\hline 	ext { Combination }& \begin{array}{c}	ext { Number } \	ext { of Stealth } \	ext { Bombers }\end{array} & \begin{array}{c}	ext { Opportunity cost } \	ext { of Stealth } \	ext { Bombers in } \	ext { Terms of B-1s }\end{array} & \begin{array}{c}	ext { Number } \	ext { of B-1s }\end{array} & \begin{array}{c}	ext { Opportunity } \	ext { Terms of Stealth } \	ext { Bombers }\end{array} \\hline \mathrm{S} & 10 & & 0 \\hline \mathrm{T} & 9 & & 1 \\hline \mathrm{U} & 7 & & 2 \\hline \mathrm{V} & 4 & & 3 \\hline\end{array} Combination STUV​ Number  of Stealth  Bombers ​10974​ Opportunity cost  of Stealth  Bombers in  Terms of B-1s ​​ Number  of B-1s ​0123​ Opportunity  Terms of Stealth  Bombers ​​

Table 1.1
Production Possibilities for Bombers On the basis of your calculations in Table 1.1,you may infer that the law of increasing opportunity costs applies to

Accepted Answer

A)  Stealth bombers but not to B-1 bombers.
B)  B-1 bombers but not to Stealth bombers.
C)  Both B-1 bombers and Stealth bombers.
D)  Neither B-1 bombers nor Stealth bombers. E) B) and C)
F) B) and D)

Question 5

Opportunity cost may be defined as the

Accepted Answer

A)  Goods or services that are forgone in order to obtain something else.
B)  Dollar prices paid for final goods and services.
C)  Dollar cost of producing a particular product.
D)  Difference between wholesale and retail prices.E) A) and B)
F) A) and C)

Question 6

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.   Combination  Number of  Opportunity Cost of  Stealth Bombers in  Number of  Opportunity Cost of B-  Stealth  Terms of B-1  B-1 1 Bombers in Terms of  Bombers  Bombers  Bombers  Stealth Bombers A19520B18035C15045D10050\begin{array}{|c|c|c|c|c|}\hline 	ext { Combination }&	ext { Number of } & \begin{array}{c}	ext { Opportunity Cost of } \	ext { Stealth Bombers in }\end{array} & 	ext { Number of } & 	ext { Opportunity Cost of B- } \&	ext { Stealth } & 	ext { Terms of B-1 } & 	ext { B-1 } & 1 	ext { Bombers in Terms of } \&	ext { Bombers } & 	ext { Bombers } & 	ext { Bombers } & 	ext { Stealth Bombers } \\hline \mathrm{A} & 195 & & 20 \\hline \mathrm{B} & 180 & & 35 \\hline \mathrm{C} & 150 & & 45 \\hline \mathrm{D} & 100 & & 50 \\hline\end{array} Combination ABCD​ Number of  Stealth  Bombers 195180150100​ Opportunity Cost of  Stealth Bombers in ​ Terms of B-1  Bombers ​ Number of  B-1  Bombers 20354550​ Opportunity Cost of B- 1 Bombers in Terms of  Stealth Bombers ​

Table 1.2
Production Possibilities for Bombers Refer to Table 1.2.In the production range of 20 to 35 B-1 bombers,the opportunity cost of producing 1 more B-1 bomber is

Accepted Answer

A)  195/20 of Stealth bombers.
B)  35/20 of Stealth bombers.
C)  15 Stealth bombers.
D)  1 Stealth bomber. E) A) and D)
F) C) and D)

Question 7

Which of the following events would allow the production possibilities curve to shift outward?

Accepted Answer

A)  The economy's capital stock declines.
B)  More teenagers enter the labor force.
C)  Technology is lost.
D)  People begin to retire at earlier ages.E) A) and B)
F) B) and C)

Question 8

The role of the entrepreneur in an economy is to

Accepted Answer

A)  Bring the factors of production together and assume the risk of production.
B)  Work with government planners to determine what goods are produced.
C)  Arrange bank financing for the owners of new businesses.
D)  Ensure full employment of labor.E) None of the above
F) B) and D)

Question 9

Which of the following is the best example of land?

Accepted Answer

A)  The ethanol refined from corn.
B)  A factory that produces new goods and services.
C)  The water used to make a soft drink.
D)  A barber's chair.E) None of the above
F) B) and D)

Question 10

When the relationship between two variables changes,

Accepted Answer

A)  There is movement from one point on the curve to another point on the curve.
B)  The curve becomes linear.
C)  The entire curve shifts.
D)  All of the choices are correct.E) None of the above
F) A) and B)

Question 11

Economic models are used by economists to

Accepted Answer

A)  Predict economic behavior.
B)  Develop economic policies.
C)  Explain economic behavior.
D)  All of the choices are correct.E) All of the above
F) A) and D)

Question 12

Which economist argued that free markets unleashed the "animal spirits" of entrepreneurs,propelling innovation,technology,and growth?

Accepted Answer

A)  Lord Kelvin.
B)  Kenneth Olsen.
C)  Irving Fisher.
D)  John Maynard Keynes.E) A) and B)
F) A) and C)

Question 13

In economics,scarcity means that

Accepted Answer

A)  A shortage of a particular good will cause the price to fall.
B)  A production possibilities curve cannot accurately represent the trade-off between two goods.
C)  Society's desires exceed the want-satisfying capability of the resources available to satisfy those desires.
D)  The market mechanism has faileD.We cannot produce everything with fixed resources.E) All of the above
F) A) and D)

Question 14

All economies must make decisions concerning what to produce,how to produce it,and for whom to produce.
These are the basic questions of how an economy will be organized.

Accepted Answer

A) True 
 B)False

Question 15

Refer to Figure 1.7.The cost of producing at point G rather than point D is

Accepted Answer

A)  OA units of food.
B)  KL units of clothing.
C)  AB units of food.
D)  OL units of clothing.E) A) and D)
F) None of the above

Question 16

When a curve shifts,the underlying relationship between the two variables has changed.
A shift in the curve reflects a change in the relationship between the two variables.

Accepted Answer

A) True 
 B)False

Question 17

Opportunity cost is a theoretical concept with no practical application.
Any activity requires that something be given up-an opportunity cost.

Accepted Answer

A) True 
 B)False

Question 18

In Figure 1.4,a shift of the production possibilities curve from PP1 to PP2 could be caused by

Accepted Answer

A)  An increase in the unemployment rate.
B)  Implementation of training programs that improve the skills of workers.
C)  A flu epidemic that makes many workers sick.
D)  Tougher pollution controls for the producers of plasma televisions and MP3 players.E) B) and C)
F) A) and C)

Question 19

A mixed economy

Accepted Answer

A)  Is justified by the superiority of laissez faire over government intervention.
B)  Utilizes both market and nonmarket signals to allocate goods and services.
C)  Relies on the use of central planning by private firms rather than the government.
D)  Is one that allows trade with other countries.E) None of the above
F) C) and D)

Question 20

Government failure occurs when government intervention fails to improve economic outcomes or makes them worse.
In such a case,the market outcome would be preferred to government intervention.

Accepted Answer

A) True 
 B)False

Exam 1: Economics: The Core Issues

Correct Answer
verified

One World View article is titled "Chronic Food Shortage Shows Despite Efforts by North Korea to Hide It." If North Korea reduces the size of its military and produces more food,this is most consistent with

Correct Answer
verified

In Figure 1.4,a shift of the production possibilities curve from PP1 to PP2 could be caused by

Correct Answer
verified

A mixed economy

Correct Answer
verified

Opportunity cost may be defined as the

Correct Answer
verified

All economies must make decisions concerning what to produce,how to produce it,and for whom to produce. These are the basic questions of how an economy will be organized.

Correct Answer
verified

Government failure occurs when government intervention fails to improve economic outcomes or makes them worse. In such a case,the market outcome would be preferred to government intervention.

Correct Answer
verified

Refer to Figure 1.7.The cost of producing at point G rather than point D is

Correct Answer
verified

Which of the following events would allow the production possibilities curve to shift outward?

Correct Answer
verified

Opportunity cost is a theoretical concept with no practical application. Any activity requires that something be given up-an opportunity cost.

Correct Answer
verified

When a curve shifts,the underlying relationship between the two variables has changed. A shift in the curve reflects a change in the relationship between the two variables.

Correct Answer
verified

The role of the entrepreneur in an economy is to

Correct Answer
verified

A line that slopes downward from left to right has a

Correct Answer
verified

Economic models are used by economists to

Correct Answer
verified

Correct Answer
verified

Which economist argued that free markets unleashed the "animal spirits" of entrepreneurs,propelling innovation,technology,and growth?

Correct Answer
verified

Which of the following is the best example of land?

Correct Answer
verified

In economics,scarcity means that

Correct Answer
verified

In terms of the production possibilities curve,inefficiency is represented by

Correct Answer
verified

When the relationship between two variables changes,

Correct Answer
verified

Exam 1: Economics: The Core Issues

Correct AnswerverifiedShow Answer

One World View article is titled "Chronic Food Shortage Shows Despite Efforts by North Korea to Hide It." If North Korea reduces the size of its military and produces more food,this is most consistent with

Correct AnswerverifiedShow Answer

In Figure 1.4,a shift of the production possibilities curve from PP1 to PP2 could be caused by

Correct AnswerverifiedShow Answer

A mixed economy

Correct AnswerverifiedShow Answer

Opportunity cost may be defined as the

Correct AnswerverifiedShow Answer

All economies must make decisions concerning what to produce,how to produce it,and for whom to produce. These are the basic questions of how an economy will be organized.

Correct AnswerverifiedShow Answer

Government failure occurs when government intervention fails to improve economic outcomes or makes them worse. In such a case,the market outcome would be preferred to government intervention.

Correct AnswerverifiedShow Answer

Refer to Figure 1.7.The cost of producing at point G rather than point D is

Correct AnswerverifiedShow Answer

Which of the following events would allow the production possibilities curve to shift outward?

Correct AnswerverifiedShow Answer

Opportunity cost is a theoretical concept with no practical application. Any activity requires that something be given up-an opportunity cost.

Correct AnswerverifiedShow Answer

When a curve shifts,the underlying relationship between the two variables has changed. A shift in the curve reflects a change in the relationship between the two variables.

Correct AnswerverifiedShow Answer

The role of the entrepreneur in an economy is to

Correct AnswerverifiedShow Answer

A line that slopes downward from left to right has a

Correct AnswerverifiedShow Answer

Economic models are used by economists to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which economist argued that free markets unleashed the "animal spirits" of entrepreneurs,propelling innovation,technology,and growth?

Correct AnswerverifiedShow Answer

Which of the following is the best example of land?

Correct AnswerverifiedShow Answer

In economics,scarcity means that

Correct AnswerverifiedShow Answer

In terms of the production possibilities curve,inefficiency is represented by

Correct AnswerverifiedShow Answer

When the relationship between two variables changes,

Correct AnswerverifiedShow Answer

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