Question 1

The political party that is in power determines the position and shape of the production possibilities frontier that constrains the choices of the economy.

Accepted Answer

A) True 
 B)False

Question 2

If an economy is producing inefficiently,it is

Accepted Answer

A)   possible to increase production of all goods simultaneously.
B)   possible to increase production of one good at the expense of another.
C)   not possible to increase production of any good.
D)   not possible to increase economic growth.
E)   possible to increase production with no effort.

Question 3

What is division of labor? How does it raise efficiency and productivity?

Accepted Answer

Division of labor means breaking up a ta...

Question 4

If two persons trade,one must gain at the expense of the other.

Accepted Answer

A) True 
 B)False

Question 5

Hutch Technology makes computer monitors,which sell for $100 each.What is the opportunity cost of ten monitors?

Accepted Answer

A)   $1,000.
B)   the other goods that could be produced with the resources that produce the ten monitors
C)   the profits that Hutch earns when it sells the ten monitors
D)   the profits that Hutch loses if it does not produce the monitors
E)   All of the above are correct.

Question 6

According to the law of comparative advantage,a doctor who is also a talented auto mechanic should

Accepted Answer

A)   get a part-time job at a gas station.
B)   do her own auto repairs and those of her neighbors.
C)   hire a professional mechanic to repair her car.
D)   only repair the cars of other doctors.

Question 7

Some college students have claimed that because their incomes will be higher as a result of attending college,there is no opportunity cost of attending college.Do you agree? Explain.

Accepted Answer

No.Although the rate of return on colleg...

Question 8

Economists define efficiency as

Accepted Answer

A)   output maximization.
B)   the absence of waste.
C)   input maximization.
D)   the presence of surplus.

Question 9

Generally,the opportunity cost and the money cost of a good

Accepted Answer

A)   are identical only if the good sells in a free market.
B)   are different.
C)   matter only to the purchaser of the good.
D)   are not reflected in its price.

Question 10

Opportunity cost cannot be measured in money terms,only in conceptual terms.

Accepted Answer

A) True 
 B)False

Question 11

A production possibilities curve always slopes downward to the right because resources

Accepted Answer

A)   are not scarce.
B)   have no opportunity cost.
C)   are freely available.
D)   are limited.
E)   are not related to outputs.

Question 12

What determines the position and shape of a society's production possibilities frontier?

Accepted Answer

A)   the physical resources of that society
B)   the skills of the workforce
C)   the level of technology of the society
D)   the amount of factories in the society
E)   All of the above are correct.

Question 13

Why would it be a mistake to treat opportunity costs and explicit monetary costs as identical?

Accepted Answer

A)   Because sometimes the market does not function well.
B)   Because opportunity costs are different for different goods.
C)   Because there are trade-offs involved in any decision.
D)   Because of existence of efficient markets.

Question 14

Opportunity cost can always be measured in money terms.

Accepted Answer

A) True 
 B)False

Question 15

Adam Smith noted that people are adept at which of the following?

Accepted Answer

A)   Confusing themselves if given the chance.
B)   Proving the truth of "Murphy's Law."
C)   Denying themselves for the sake of others.
D)   Pursuing their own self-interest.
E)   All of the above are correct.

Question 16

If the PPF for guns and butter is bowed outward from the origin,this indicates constant opportunity cost between the two goods.

Accepted Answer

A) True 
 B)False

Question 17

What are the three coordination tasks which markets resolve?

Accepted Answer

They are (1)how to produce any...

Question 18

The most important way in which inefficiency occurs is

Accepted Answer

A)   producing more military goods instead of civilian goods.
B)   limiting economic growth by limiting capital spending.
C)   unemployment of labor and other resources.
D)   producing outside the production possibilities frontier.
E)   All of the above are correct.

Question 19

The division of labor usually refers to splitting

Accepted Answer

A)   the three coordination decisions among different sets of planners.
B)   the parts of a complex task among different workers.
C)   the production of consumption goods and capital goods among different workers.
D)   political leaders into radical and conservative camps each year.

Question 20

List the three coordination decisions made by every economy.

Accepted Answer

A)   Where? When? How?
B)   How? What? To whom?
C)   Why? Where? What?
D)   When? To Whom? Where?

Exam 3: The Fundamental Economic Problem Scarcity and Choice

If an economy is producing inefficiently,it is

Correct AnswerverifiedShow Answer

Economists define efficiency as

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According to the law of comparative advantage,a doctor who is also a talented auto mechanic should

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What is division of labor? How does it raise efficiency and productivity?

Correct AnswerverifiedDivision of labor means breaking up a ta...View AnswerShow Answer

The division of labor usually refers to splitting

Correct AnswerverifiedShow Answer

The most important way in which inefficiency occurs is

Correct AnswerverifiedShow Answer

Generally,the opportunity cost and the money cost of a good

Correct AnswerverifiedShow Answer

Opportunity cost cannot be measured in money terms,only in conceptual terms.

Correct AnswerverifiedShow Answer

If the PPF for guns and butter is bowed outward from the origin,this indicates constant opportunity cost between the two goods.

Correct AnswerverifiedShow Answer

Opportunity cost can always be measured in money terms.

Correct AnswerverifiedShow Answer

Adam Smith noted that people are adept at which of the following?

Correct AnswerverifiedShow Answer

What are the three coordination tasks which markets resolve?

Correct AnswerverifiedThey are (1)how to produce any...View AnswerShow Answer

If two persons trade,one must gain at the expense of the other.

Correct AnswerverifiedShow Answer

A production possibilities curve always slopes downward to the right because resources

Correct AnswerverifiedShow Answer

List the three coordination decisions made by every economy.

Correct AnswerverifiedShow Answer

Why would it be a mistake to treat opportunity costs and explicit monetary costs as identical?

Correct AnswerverifiedShow Answer

Some college students have claimed that because their incomes will be higher as a result of attending college,there is no opportunity cost of attending college.Do you agree? Explain.

Correct AnswerverifiedNo.Although the rate of return on colleg...View AnswerShow Answer

What determines the position and shape of a society's production possibilities frontier?

Correct AnswerverifiedShow Answer

Hutch Technology makes computer monitors,which sell for $100 each.What is the opportunity cost of ten monitors?

Correct AnswerverifiedShow Answer

The political party that is in power determines the position and shape of the production possibilities frontier that constrains the choices of the economy.

Correct AnswerverifiedShow Answer

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Division of labor means breaking up a ta...
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They are (1)how to produce any...
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No.Although the rate of return on colleg...
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