Question 1

In Figure 1.3, a shift of the production possibilities curve from PP1 to PP2 could be caused by

Accepted Answer

A)   A decrease in the quantity of raw materials available.
B)   A decline in the production skills of workers.
C)   The use of improved production technology.
D)   All of the choices are correct.

Question 2

A technological advance would best be represented by

Accepted Answer

A)   A shift outward of the production possibilities curve.
B)   A shift inward of the production possibilities curve.
C)   A movement from inside the production possibilities curve to a point on the production possibilities curve.
D)   A movement from the production possibilities curve to a point inside the production possibilities curve.

Question 3

The "guns versus butter" dilemma that all nations confront is that

Accepted Answer

A)   Guns and butter can be produced using the same resources at the same time.
B)   An increase in national defense implies more sacrifices of civilian goods and services.
C)   An increase in national defense is possible only if we produce more butter.
D)   All of the choices are correct.

Question 4

The invisible hand refers to

Accepted Answer

A)   Intervention in the economy by the government bureaucrats we do not see and over whom we have no control.
B)   Undiscovered natural resources.
C)   The allocation of resources by market forces.
D)   The person who has the responsibility to coordinate all the markets in a market economy.

Question 5

At which point is society producing the most output possible with the available resources and technology? (See Figure 1.1.)

Accepted Answer

A)  A.
B)  B.
C)  C.
D)  D.

Question 6

Which of the following is an example of government failure?

Accepted Answer

A)   Bureaucratic delays.
B)   Required use of pollution control technology that is obsolete.
C)   Inefficient incentives.
D)   All of the choices are correct.

Question 7

The market mechanism may best be defined as

Accepted Answer

A)   The use of market prices and sales to signal desired output.
B)   The use of market signals and government directives to select economic outcomes.
C)   The process by which the production possibilities curve shifts inward.
D)   Price regulation by government.

Question 8

Refer to Figure 1.7. If this economy is currently producing at point F, then by employing more resources this economy F. Inefficient production results when resources are not being fully used. Using more resources moves us toward-in this case, onto-the production possibilities curve.

Accepted Answer

A)   Can move to point D, but not points G or J.
B)   Can move to points D, G, or J.
C)   Can move to point G, but not points D or J.
D)   Will remain at point

Question 9

The fundamental problem of economics is

Accepted Answer

A)   The law of increasing opportunity costs.
B)   The scarcity of resources relative to human wants.
C)   How to get government to operate efficiently.
D)   How to create employment for everyone.

Question 10

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.  The highest opportunity cost anywhere in Table 1.1 for B-1 bombers in terms of Stealth bombers is

Accepted Answer

A)   1 Stealth bomber per B-1 bomber.
B)   3 Stealth bombers per B-1 bomber.
C)   2 Stealth bombers per B-1 bomber.
D)   0.5 Stealth bomber per B-1 bomber.

Question 11

Using Figure 1.5, if an economy is currently producing on PP2, which of the following would shift the production possibilities curve toward PP1?

Accepted Answer

A)   An increase in the quantity of labor available.
B)   A decrease in the amount of capital available.
C)   An increase in the level of unemployment above the normal level.
D)   An advancement in technology.

Question 12

Describe the shape of the typical production possibilities curve and explain why it has this shape.

Accepted Answer

The typical production possibilities cur...

Question 13

Which of the following can be used to correct market failure?

Accepted Answer

A)   The market mechanism.
B)   Laws and regulations.
C)   Laissez faire price policies.
D)   Government failure.

Question 14

The production possibilities curve illustrates which two of the following essential principles?

Accepted Answer

A)   Factors of production and price signals.
B)   Scarce resources and opportunity cost.
C)   Market mechanisms and laissez faire.
D)   Economic growth and market failure.

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.  The highest opportunity cost anywhere in Table 1.1 for Stealth bombers in terms of B-1 bombers is

Accepted Answer

A)   1 B-1 bomber per Stealth bomber.
B)   3 B-1 bombers per Stealth bomber.
C)   2 B-1 bombers per Stealth bomber.
D)   0.5 B-1 bomber per Stealth bomber.

Question 16

In Figure 1.6, at which of the following points would the opportunity cost of producing one more car be the lowest?

Accepted Answer

A)  A.
B)  B.
C)  C.
D)  D.

Question 17

If North Korea is currently producing at efficiency, and it proceeds to increase the size of its military, then, as long as nothing else changes, its

Accepted Answer

A)   Production possibilities curve will shift outward.
B)   Production possibilities curve will shift inward.
C)   Production of nonmilitary goods will increase.
D)   Production of nonmilitary goods will decrease.

Question 18

According to the law of increasing opportunity costs,

Accepted Answer

A)   Greater production leads to greater inefficiency.
B)   Greater production means factor prices rise.
C)   Greater production of one good requires increasingly larger sacrifices of other goods.
D)   Higher opportunity costs induce higher output per unit of input.

Question 19

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.

Question 20

A movement from point F to point D in Figure 1.3 results in

Accepted Answer

A)   A reallocation of resources from mop production to broom production.
B)   Permanent unemployment of workers producing brooms.
C)   A reallocation of resources from broom production to mop production.
D)   More efficient production.

Exam 1: Economics: the Core Issues

Correct Answer
verified

A movement from point F to point D in Figure 1.3 results in

Correct Answer
verified

Which of the following can be used to correct market failure?

Correct Answer
verified

In Figure 1.6, at which of the following points would the opportunity cost of producing one more car be the lowest?

Correct Answer
verified

The production possibilities curve illustrates which two of the following essential principles?

Correct Answer
verified

Correct Answer
verified

According to the law of increasing opportunity costs,

Correct Answer
verified

Refer to Figure 1.7. If this economy is currently producing at point F, then by employing more resources this economy F. Inefficient production results when resources are not being fully used. Using more resources moves us toward-in this case, onto-the production possibilities curve.

Correct Answer
verified

Describe the shape of the typical production possibilities curve and explain why it has this shape.

Correct Answer
verified
The typical production possibilities cur...
View Answer

The invisible hand refers to

Correct Answer
verified

The market mechanism may best be defined as

Correct Answer
verified

Which of the following is an example of government failure?

Correct Answer
verified

At which point is society producing the most output possible with the available resources and technology? (See Figure 1.1.)

Correct Answer
verified

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

Correct Answer
verified

The "guns versus butter" dilemma that all nations confront is that

Correct Answer
verified

Using Figure 1.5, if an economy is currently producing on PP2, which of the following would shift the production possibilities curve toward PP1?

Correct Answer
verified

In Figure 1.3, a shift of the production possibilities curve from PP1 to PP2 could be caused by

Correct Answer
verified

If North Korea is currently producing at efficiency, and it proceeds to increase the size of its military, then, as long as nothing else changes, its

Correct Answer
verified

The fundamental problem of economics is

Correct Answer
verified

A technological advance would best be represented by

Correct Answer
verified

Exam 1: Economics: the Core Issues

Correct AnswerverifiedShow Answer

A movement from point F to point D in Figure 1.3 results in

Correct AnswerverifiedShow Answer

Which of the following can be used to correct market failure?

Correct AnswerverifiedShow Answer

In Figure 1.6, at which of the following points would the opportunity cost of producing one more car be the lowest?

Correct AnswerverifiedShow Answer

The production possibilities curve illustrates which two of the following essential principles?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

According to the law of increasing opportunity costs,

Correct AnswerverifiedShow Answer

Refer to Figure 1.7. If this economy is currently producing at point F, then by employing more resources this economy F. Inefficient production results when resources are not being fully used. Using more resources moves us toward-in this case, onto-the production possibilities curve.

Correct AnswerverifiedShow Answer

Describe the shape of the typical production possibilities curve and explain why it has this shape.

Correct AnswerverifiedThe typical production possibilities cur...View AnswerShow Answer

The invisible hand refers to

Correct AnswerverifiedShow Answer

The market mechanism may best be defined as

Correct AnswerverifiedShow Answer

Which of the following is an example of government failure?

Correct AnswerverifiedShow Answer

At which point is society producing the most output possible with the available resources and technology? (See Figure 1.1.)

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The "guns versus butter" dilemma that all nations confront is that

Correct AnswerverifiedShow Answer

Using Figure 1.5, if an economy is currently producing on PP2, which of the following would shift the production possibilities curve toward PP1?

Correct AnswerverifiedShow Answer

In Figure 1.3, a shift of the production possibilities curve from PP1 to PP2 could be caused by

Correct AnswerverifiedShow Answer

If North Korea is currently producing at efficiency, and it proceeds to increase the size of its military, then, as long as nothing else changes, its

Correct AnswerverifiedShow Answer

The fundamental problem of economics is

Correct AnswerverifiedShow Answer

A technological advance would best be represented by

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The typical production possibilities cur...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified