Question 1

Why is it inefficient for an economy to be inside the production possibilities frontier?

Accepted Answer

It is inefficient because the society ha...

Question 2

If it is not possible to increase the output of one good without decreasing the output of the other, when there are only two goods, then

Accepted Answer

A)  this situation would describe a point on a production possibilities frontier for the producer.
B)  the outcome can be described as efficient.
C)  there is no unemployment of resources.
D)  All of these outcomes are correct.

Question 3

Economic growth solves the problem of scarcity.

Accepted Answer

A) True 
 B)False

Question 4

Some economies have production possibilities frontiers that are bowed inward toward the origin.

Accepted Answer

A) True 
 B)False

Question 5

If the U.S.government decides to increase military spending, a possible opportunity cost could be lower spending on education.

Accepted Answer

A) True 
 B)False

Question 6

Table 3-2  ​
-If the producer is at combination B as shown in Table 3-2, the opportunity cost of increasing corn production by 1 unit is

Accepted Answer

A)  29 units of cotton.
B)  5 units of cotton.
C)  12 units of cotton.
D)  4 units of cotton.
E)  1 unit of cotton.

Question 7

The idea of opportunity cost is relevant

Accepted Answer

A)  only in consumption decisions.
B)  only in production decisions.
C)  only in financial decisions.
D)  in almost any kind of decision.

Question 8

Scarcity is the fundamental problem of the economy.

Accepted Answer

A) True 
 B)False

Question 9

A ticket to an Eric Clapton concert costs $45.If you have a ticket, you can "scalp" it (sell it illegally)  for $75.To a ticket holder, the opportunity cost of actually attending the concert is

Accepted Answer

A)  $45.
B)  $50.
C)  $75.
D)  $115.

Question 10

The central question in economics is how to

Accepted Answer

A)  make the best use of scarce resources.
B)  use government planning agencies.
C)  induce people to want less.
D)  increase human knowledge.

Question 11

Opportunity cost is best defined as the value of

Accepted Answer

A)  all of the other possible options that the decision maker could have chosen.
B)  the alternative which the decision maker would choose if more resources were available.
C)  what is gained from the alternative which is chosen.
D)  resources that are given up to attain the alternative that is chosen.
E)  the next best alternative that the decision forces one to give up.

Question 12

Monetary costs and opportunity costs are always identical.

Accepted Answer

A) True 
 B)False

Question 13

What is the basic task that economists expect the market to carry out?

Accepted Answer

A)  Deal with the fundamental problem of scarcity
B)  Balance the government's budget
C)  Lessen wants to the level of income available
D)  Meet all human wants

Question 14

Mick Jagger, a former student at the London School of Economics, once sang, "You can't always get what you want, but if you try sometime, you just might find you can get what you need." Another statement of the basic economic principle expressed in this lyric is that

Accepted Answer

A)  rational decisions are not always possible.
B)  you can allocate your resources to what gives you the highest value.
C)  you can create the supply to meet your own demand.
D)  you can maximize social welfare by making optimal decisions.

Question 15

Scarcity is a concept that applies to all of the following except

Accepted Answer

A)  time.
B)  natural resources.
C)  human wants.
D)  machinery.

Question 16

In a properly functioning economy, money costs approximate opportunity costs.

Accepted Answer

A) True 
 B)False

Question 17

In a market economy, government decides the answers to the three economic decisions.

Accepted Answer

A) True 
 B)False

Question 18

The opportunity cost of any decision is the forgone value of the next best alternative that is not chosen.

Accepted Answer

A) True 
 B)False

Question 19

All of the points inside a production possibilities frontier are ____; all of the points outside the production possibilities frontier are ____.

Accepted Answer

A)  efficient; inefficient
B)  optimal; irrational
C)  attainable; unattainable
D)  rational; zero-cost
E)  unattainable; efficient

Question 20

Opportunity cost can best be defined as the

Accepted Answer

A)  money cost of a good or service.
B)  money cost plus interest on money borrowed to buy a good or service.
C)  cost of the resources used to produce a good or service.
D)  value of the best alternative forgone when the alternative at hand is chosen.

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

Monetary costs and opportunity costs are always identical.

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Opportunity cost can best be defined as the

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Why is it inefficient for an economy to be inside the production possibilities frontier?

Correct AnswerverifiedIt is inefficient because the society ha...View AnswerShow Answer

If the U.S.government decides to increase military spending, a possible opportunity cost could be lower spending on education.

Correct AnswerverifiedShow Answer

Scarcity is a concept that applies to all of the following except

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In a market economy, government decides the answers to the three economic decisions.

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A ticket to an Eric Clapton concert costs $45.If you have a ticket, you can "scalp" it (sell it illegally) for $75.To a ticket holder, the opportunity cost of actually attending the concert is

Correct AnswerverifiedShow Answer

Table 3-2 ​ -If the producer is at combination B as shown in Table 3-2, the opportunity cost of increasing corn production by 1 unit is

Correct AnswerverifiedShow Answer

Opportunity cost is best defined as the value of

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All of the points inside a production possibilities frontier are ____; all of the points outside the production possibilities frontier are ____.

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Economic growth solves the problem of scarcity.

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Mick Jagger, a former student at the London School of Economics, once sang, "You can't always get what you want, but if you try sometime, you just might find you can get what you need." Another statement of the basic economic principle expressed in this lyric is that

Correct AnswerverifiedShow Answer

The idea of opportunity cost is relevant

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If it is not possible to increase the output of one good without decreasing the output of the other, when there are only two goods, then

Correct AnswerverifiedShow Answer

In a properly functioning economy, money costs approximate opportunity costs.

Correct AnswerverifiedShow Answer

The central question in economics is how to

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The opportunity cost of any decision is the forgone value of the next best alternative that is not chosen.

Correct AnswerverifiedShow Answer

Some economies have production possibilities frontiers that are bowed inward toward the origin.

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What is the basic task that economists expect the market to carry out?

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Scarcity is the fundamental problem of the economy.

Correct AnswerverifiedShow Answer

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It is inefficient because the society ha...
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Table 3-2 -If the producer is at combination B as shown in Table 3-2, the opportunity cost of increasing corn production by 1 unit is

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All of the points inside a production possibilities frontier are ; all of the points outside the production possibilities frontier are .

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