Question 1

Probably the most important source of efficiency in production is

Accepted Answer

A)   investing in more capital goods.
B)   consuming rationally.
C)   expanding the production possibilities frontier.
D)   increasing inputs of energy and raw materials.
E)   the specialization of labor.F) A) and C)
G) A) and E)

Question 2

A decrease in the unemployment rate will shift the PPF outward from the origin.

Accepted Answer

A) True 
 B)False

Question 3

In a market system,the major coordination tasks are carried out

Accepted Answer

A)   with the approval of central planners.
B)   as part of the regular appropriation process of Congress.
C)   irregularly by the major corporations.
D)   automatically by the market mechanism.E) A) and B)
F) A) and C)

Question 4

Monetary costs and opportunity costs are always identical.

Accepted Answer

A) True 
 B)False

Question 5

Adam Smith's book,one of the first systematic treatments of economics,was entitled

Accepted Answer

A)   The Plan of the Ages.
B)   The General Theory of Money, Taxes, and Income.
C)   The Wealth of Nations.
D)   Principles of Economics.
E)   Concepts in Moral Philosophy.F) A) and E)
G) C) and D)

Question 6

The division of labor benefits society only if

Accepted Answer

A)   a system of exchange exists.
B)   society uses all of its resources efficiently.
C)   society has no specialized resources.
D)   labor resources are not scarce.E) A) and B)
F) All of the above

Question 7

Which of the following must cope with scarcity?

Accepted Answer

A)   individuals
B)   companies
C)   governments
D)   families
E)   All of the above are correct.F) A) and D)
G) A) and E)

Question 8

The production possibilities curve illustrates the basic principle that

Accepted Answer

A)   an economy's capacity to produce increases in proportion to its population.
B)   if all resources of an economy are in use, more of one good can be produced only if less of another is produced.
C)   an economy will automatically seek that output at which all of its resources are employed.
D)   no opportunity cost exists in production.E) All of the above
F) None of the above

Question 9

Market system works very well in solving some basic problems of the economy but it fails in some cases.Provide examples.

Accepted Answer

The market deals with efficiency in prod...

Question 10

If production involves constant opportunity cost,the production possibilities curve

Accepted Answer

A)   is "bowed inward."
B)   is a straight line.
C)   is "bowed outward."
D)   is a wavy line.
E)   has an unpredictable shape.F) All of the above
G) C) and D)

Question 11

The law of comparative advantage explains why

Accepted Answer

A)   individuals choose specialized careers.
B)   firms specialize in the production of certain goods.
C)   nations develop strengths in certain industries.
D)   All of the above are correct.E) None of the above
F) A) and B)

Question 12

The U.S.government spent over $3.6 trillion in budget year 2010.

Accepted Answer

A) True 
 B)False

Question 13

If a society uses the market system,it must rely solely on markets to solve all of its problems.

Accepted Answer

A) True 
 B)False

Question 14

What would be the opportunity cost of a child using a coupon for a free ice cream cone?

Accepted Answer

A)   the dollar cost of the cone she selected
B)   the other types of ice cream she could have selected
C)   zero - because the good was not a durable good
D)   zero - because the good was freeE) All of the above
F) None of the above

Question 15

In a market system,____ distributes goods among consumers in accord with their tastes and preferences,using voluntary exchange to determine who gets what.

Accepted Answer

A)   a price system
B)   a regulatory framework
C)   a democratic government
D)   a closed systemE) A) and D)
F) B) and C)

Question 16

The first economist to point out the importance of specialization of labor was

Accepted Answer

A)   Leonardo da Vinci.
B)   Adam Smith.
C)   David Ricardo.
D)   John Maynard Keynes.
E)   Enrico Caruso.F) C) and D)
G) D) and E)

Question 17

The major coordination tasks can be summarized with the questions

Accepted Answer

A)   who, what, when, where?
B)   how, what, for whom?
C)   how, what, why?
D)   how, why, for whom?
E)   who, how, what?F) A) and B)
G) None of the above

Question 18

The term "satisficing" indicates an optimal choice.

Accepted Answer

A) True 
 B)False

Question 19

The production possibilities frontier for a country is usually drawn

Accepted Answer

A)   as a straight line, sloping downward.
B)   as a straight line, sloping upward.
C)   bowed outward from the origin.
D)   bowed inward toward the origin.
E)   as a dotted line when sloping downward and as a full line when sloping upward.F) A) and B)
G) B) and C)

Question 20

Specialization in production

Accepted Answer

A)   raises productivity.
B)   requires money.
C)   stimulates exchange.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

Adam Smith's book,one of the first systematic treatments of economics,was entitled

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In a market system,the major coordination tasks are carried out

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A decrease in the unemployment rate will shift the PPF outward from the origin.

Correct AnswerverifiedShow Answer

The production possibilities frontier for a country is usually drawn

Correct AnswerverifiedShow Answer

The production possibilities curve illustrates the basic principle that

Correct AnswerverifiedShow Answer

The major coordination tasks can be summarized with the questions

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The term "satisficing" indicates an optimal choice.

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Monetary costs and opportunity costs are always identical.

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The first economist to point out the importance of specialization of labor was

Correct AnswerverifiedShow Answer

In a market system,____ distributes goods among consumers in accord with their tastes and preferences,using voluntary exchange to determine who gets what.

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The law of comparative advantage explains why

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If a society uses the market system,it must rely solely on markets to solve all of its problems.

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Which of the following must cope with scarcity?

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If production involves constant opportunity cost,the production possibilities curve

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What would be the opportunity cost of a child using a coupon for a free ice cream cone?

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Market system works very well in solving some basic problems of the economy but it fails in some cases.Provide examples.

Correct AnswerverifiedThe market deals with efficiency in prod...View AnswerShow Answer

Probably the most important source of efficiency in production is

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The U.S.government spent over $3.6 trillion in budget year 2010.

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The division of labor benefits society only if

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Specialization in production

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The market deals with efficiency in prod...
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