Question 1

The saying "Time is money" refers to:
A) capitalism.
B) direct costs.
C) opportunity costs.
D) socialism.

Accepted Answer

The saying "Time is money" refers to opportunity costs, which is the idea that time spent on one activity could have been spent earning money or doing something else valuable.

Question 2

A country that uses all its resources efficiently is presently producing 150 cars and 500 telephones. If it switches to producing 250 cars and 200 telephones, then the opportunity cost of the extra 100 cars produced is:
A) impossible to determine from the information given.
B) 300 telephones.
C) 200 telephones.
D) 500 telephones.

Accepted Answer

The opportunity cost is the number of telephones forgone to produce the additional 100 cars, which is 500 - 200 = 300 telephones.

Question 3

The opportunity cost of attending a Friday afternoon economics class is:
A) nothing.
B) the cost of tuition divided by the number of individual classes.
C) another activity that you could otherwise participate in.
D) the cost of your economics textbook.

Accepted Answer

Opportunity cost refers to the value of the next best alternative that is foregone when making a decision. In this case, it is the other activity you could have done instead of attending the class.

Question 4

Combinations of goods that are to the left of the production-possibilities curve:
A) will be attainable if people work harder.
B) can be obtained with an increase in resources.
C) indicate that resources are fully employed.
D) are possible combinations for society to produce.

Accepted Answer

Combinations of goods to the left of the production-possibilities curve represent underutilization of resources, meaning they are attainable and possible for society to produce without needing additional resources or effort.

Question 5

A country's production-possibilities curve:
A) shows the maximum amount of two goods that can be produced at this time.
B) shows all possible combinations of two goods that can be produced.
C) is normally depicted on a graph as a straight line.
D) shows the combinations of two goods that the country is currently producing.

Accepted Answer

The answer of A country's production-possibilities curve:
A) shows the maximum...

Question 6

In order to draw a production-possibilities curve, we need to assume:
A) full employment of resources.
B) that only goods and not services are produced.
C) a free market economic system.
D) full employment, but not necessarily efficient use, of resources.

Accepted Answer

A production-possibilities curve (PPC) assumes full employment of resources to show the maximum possible output combinations of two goods or services that an economy can achieve when all resources are fully utilized.

Question 7

Given a production possibilities curve for consumer goods (on the x-axis) and capital goods (on the y-axis), the opportunity cost of increasing the production of consumer goods is greatest
When the slope of the production possibilities curve is:
A) 3
B) 5/2
C) -5/2
D) -3

Accepted Answer

The opportunity cost is greatest when the slope of the production possibilities curve is steepest in the negative direction, which is -3 in this case.

Question 8

A shift in the production-possibilities curve will occur if:
A) factories are not used to capacity.
B) the population changes.
C) technological change fails to take place.
D) workers become unemployed.

Accepted Answer

A shift in the production-possibilities curve occurs due to changes in resources or technology. A change in population affects the labor resource, potentially shifting the curve.

Question 9

A straight-line production-possibilities curve:
A) shows increasing opportunity costs as the production of one commodity increases.
B) is impossible in the real world.
C) assumes that the law of diminishing returns does not apply in this case.
D) is drawn when identical products are labeled on each axis.

Accepted Answer

A straight-line production-possibilities curve indicates constant opportunity costs, which implies that the law of diminishing returns does not apply in this scenario.

Question 10

Assuming that consumption goods are on the y-axis and capital goods are on the x-axis, a technological improvement in producing capital goods will:
A) shift the production function outward.
B) shift the production function out on the y-axis but it will stay the same on the y-axis.
C) shift the production function inward.
D) shift the production function out on the x-axis but it will stay the same on the y-axis.

Accepted Answer

A technological improvement in producing capital goods will increase the production capacity for capital goods, shifting the production possibility frontier outward on the x-axis, while the capacity for consumption goods remains unchanged.

Question 11

An unemployment rate of 9 percent in Canada means:
A) that Canada is at a point to the right of its production-possibilities curve.
B) that population increases are necessary in order to reach maximum production.
C) that Canada can only be producing at a point on its production-possibilities curve if technological change occurs.
D) that Canada is producing at a point to the left of its production-possibilities curve.

Accepted Answer

An unemployment rate of 9 percent indicates that not all resources, specifically labor, are being fully utilized. This means Canada is producing inside its production-possibilities curve, or to the left, indicating inefficiency.

Question 12

Which of the following economic concepts is not represented by a production-possibilities curve?
A) direct costs
B) scarcity
C) law of diminishing returns
D) opportunity costs

Accepted Answer

A production-possibilities curve represents scarcity, opportunity costs, and the law of diminishing returns, but it does not directly represent direct costs.

Question 13

Which of the following will not cause a shift to the right in the production-possibilities curve?
A) the acquisition of more capital goods such as factories
B) the introduction of a training program that improves worker productivity
C) reducing the unemployment rate of the labour force
D) an advance in technology

Accepted Answer

Reducing the unemployment rate utilizes existing resources more efficiently but does not increase the overall capacity of the economy, so it does not shift the production-possibilities curve to the right.

Question 14

Which of the following would be most likely to cause a shift to the right in the production-possibilities curve?
A) an increase in the unemployment rate of the labour force
B) the introduction of skill-training courses to labour-force participants
C) a shift in production from corn to spears
D) a shift in consumer desires away from durable goods to services

Accepted Answer

The introduction of skill-training courses to labor-force participants would likely increase the productivity and efficiency of the workforce, leading to an increase in the economy's overall production capacity, thus shifting the production-possibilities curve to the right.

Question 15

Which of the following does not affect a country's production-possibilities curve?
A) the country's natural resources
B) the country's population
C) the country's capital resources
D) the country's demand for certain products

Accepted Answer

The production-possibilities curve is determined by factors like natural resources, population, and capital resources, which affect the capacity to produce. Demand for products does not affect the curve itself, as it represents potential output, not actual market conditions.

Question 16

Assume that a country can only produce two products: corn and spears. A technological advance in spear production will:
A) permit the production of both more spears and more corn.
B) will not influence the production of spears or corn unless there is an accompanying increase in resources.
C) permit the production of more spears but less corn.
D) permit only the production of more spears.

Accepted Answer

A technological advance in spear production increases efficiency, allowing more spears to be produced with the same resources, potentially freeing up resources to produce more corn as well.

Question 17

If a country is operating at a point on its production-possibilities curve, more of one good can be produced only if less of another good is produced because:
A) the resources used to produce each good are not identical.
B) resources are available only in limited amounts.
C) of the law of diminishing returns.
D) most resources are specialized and can only be used to produce certain goods.

Accepted Answer

The production-possibilities curve represents the trade-offs in production volume between two choices. Operating on the curve means all resources are fully utilized, so producing more of one good requires reallocating resources from another good, reflecting their limited availability.

Question 18

The production possibilities curve of a socialist country that suddenly switches to a free-market economy is likely going to:
A) shift to the right and then to the left.
B) shift to the left and then to the right.
C) shift to the right.
D) shift to the left.

Accepted Answer

The answer of The production possibilities curve of a socialist...

Question 19

Which of the following statements is incorrect?
A) it is not possible for economists to use the laboratory methods of research practised in the physical sciences
B) opportunity cost must be considered when making decisions regarding the use of scarce resources
C) the law of diminishing returns influences the shape of the production-possibilities curve
D) the free market approach to economic decision-making allows for some government decisions in important economic matters

Accepted Answer

The free market approach to economic decision-making does not allow for government decisions in important economic matters.

Question 20

If Canada's population were to decline:
A) the production-possibilities curve for Canada would shift to the right.
B) Canada would need to shift production to another point on its production-possibilities curve.
C) the production-possibilities curve for Canada would shift to the left.
D) there would be an increase in unemployment.

Accepted Answer

A decline in population would reduce the labor force, leading to a decrease in the potential output of the economy, thus shifting the production-possibilities curve to the left.

Quiz 1: Introductory Concepts

The saying "Time is money" refers to:

A country that uses all its resources efficiently is presently producing 150 cars and 500 telephones. If it switches to producing 250 cars and 200 telephones, then the opportunity cost of the extra 100 cars produced is:

The opportunity cost of attending a Friday afternoon economics class is:

Combinations of goods that are to the left of the production-possibilities curve:

A country's production-possibilities curve:

In order to draw a production-possibilities curve, we need to assume:

Given a production possibilities curve for consumer goods (on the x-axis) and capital goods (on the y-axis) , the opportunity cost of increasing the production of consumer goods is greatest When the slope of the production possibilities curve is:

A shift in the production-possibilities curve will occur if:

A straight-line production-possibilities curve:

Assuming that consumption goods are on the y-axis and capital goods are on the x-axis, a technological improvement in producing capital goods will:

An unemployment rate of 9 percent in Canada means:

Which of the following economic concepts is not represented by a production-possibilities curve?

Which of the following will not cause a shift to the right in the production-possibilities curve?

Which of the following would be most likely to cause a shift to the right in the production-possibilities curve?

Which of the following does not affect a country's production-possibilities curve?

Assume that a country can only produce two products: corn and spears. A technological advance in spear production will:

If a country is operating at a point on its production-possibilities curve, more of one good can be produced only if less of another good is produced because:

The production possibilities curve of a socialist country that suddenly switches to a free-market economy is likely going to:

Which of the following statements is incorrect?

If Canada's population were to decline: