Question 1

According to the law of increasing costs,as a textile company spends more money to eliminate dust particles from the workplace to increase worker safety

Accepted Answer

The law of increasing costs states that as more resources are allocated to producing a good or service, the opportunity cost of producing that good or service increases. In this case, as the textile company spends more money to reduce dust particles, the cost of reducing each additional percentage of dust will increase. Therefore, the cost of reducing 70 percent of the dust in the factory will be greater than the cost of reducing the first 50 percent of the dust in the factory.

Question 2

As we move along a production possibilities curve and acquire larger and larger amounts of one good (e.g. ,guns),the sacrifices of the alternative good (e.g. ,butter)become larger and larger.This is an illustration of

Accepted Answer

This scenario best illustrates the concept of increasing opportunity costs, as obtaining more of one good (guns) requires sacrificing more and more of the alternative good (butter).

Question 3

Which of the following is the most accurate statement?

Accepted Answer

While progress has been made in reducing employment discrimination, it still exists in various forms. Laws have been put in place to protect against discrimination, but it is not yet completely eradicated. Option B is incorrect as federal laws do restrict child labor. Option C is incorrect as there has been progress towards reducing underemployment for marginalized groups. Option D is an inaccurate statement as employment discrimination still exists in various ways.

Question 4

Unemployment means

Accepted Answer

Unemployment means that not all resources, mainly human resources, are being fully utilized. This refers to people who are able and willing to work but are unable to find suitable employment opportunities. Underemployment, on the other hand, refers to individuals who work part-time or have jobs that do not fully utilize their skills and qualifications. Therefore, option D is the correct choice. A, B, and C are incorrect as they do not fully define the meaning of unemployment.

Question 5

The law of increasing costs is based on each of the following,except

Accepted Answer

The law of increasing costs primarily relates to the law of diminishing returns and factor suitability, where resources become less efficient as production increases. It also involves diseconomies of scale, where costs increase as a firm becomes too large. The law of scarcity, while fundamental to economics, does not directly explain the law of increasing costs, which is more about how costs rise with increased production due to factors like inefficiencies and resource limitations.

Question 6

The opportunity cost of spending four hours at a movie theater watching a double feature the night before a final exam would be

Accepted Answer

The opportunity cost of spending four hours at a movie theater the night before a final exam would be the higher grade on the exam that could have been achieved by studying during those four hours instead. Option A, B, and C are all considered out-of-pocket costs and do not reflect the opportunity cost of this decision.

Question 7

According to the law of increasing costs,as the United States expends more of its resources on reducing air pollution,

Accepted Answer

According to the law of increasing costs, as the United States expends more resources on reducing air pollution, the resources which are not ideally suited for this purpose will be used for this activity. This will lead to a decrease in the production of other goods that those resources could have been used for. As a result, the opportunity cost of reducing air pollution will increase, i.e., more and more of other goods that could have been produced must be given up to obtain further reductions in air pollution. Therefore, the quantity of other goods that must be given up for further reductions in air pollution will increase.

Question 8

An economy operating its plant and equipment at full capacity implies a capacity utilization rate of

Accepted Answer

The answer of An economy operating its plant and equipment...

Question 9

Suppose you had $1,000 to spend.You choose to spend the money on new clothes rather than on a new surfboard,your second choice or 1,000 lottery tickets,your third choice.

Accepted Answer

Opportunity cost is the value of the next best alternative foregone. In this case, if you choose to spend $1,000 on clothes, the opportunity cost is not buying the surfboard, which was your second best alternative. Therefore, the correct answer is B.

Question 10

A small Caribbean island-country produces only pineapples and rum.If resources are used efficiently in the economy,

Accepted Answer

If resources are used efficiently, the economy operates on its production possibilities curve, meaning it cannot increase the production of one good without decreasing the production of another.

Question 11

The United States was able to produce temporarily outside its production possibilities curve for several years during World War II by doing which of the following?

Accepted Answer

All of the choices given are true and contributed to the ability of the United States to produce outside its production possibilities curve during World War II. Recruiting women to work in industries traditionally held by men and convincing older workers to delay retirement increased the labor force, while pressing older equipment into use and expanding the work week increased the amount of output that could be produced.

Question 12

Each of the following is an example of capital,except

Accepted Answer

Gold in a gold mine is a natural resource, not capital. The other choices are all examples of capital.

Question 13

Which of the following statements about the concept of opportunity cost is true?

Accepted Answer

The concept of opportunity cost is about the cost of choosing one option over another. Therefore, option C correctly identifies the opportunity cost of studying for the economics exam as the time that could have been spent studying for the history exam. Option A is incorrect because it is too broad- the opportunity cost is only related to the alternatives of the good produced, not all possible alternatives. Option B is incorrect because all decisions involve an opportunity cost- the cost of the next best alternative that is foregone. Option D is incorrect because it describes a cost related to obtaining the college education, not the cost of choosing to attend that specific school over other options.

Question 14

The law of increasing costs states that

Accepted Answer

The law of increasing costs states that as the production of one good increases, the opportunity cost of producing additional units of that good will also increase. This is because resources are not perfectly adaptable to the production of different goods, and as more resources are allocated to one good, the opportunity cost of producing the other good increases. Therefore, choice C is the correct option.

Question 15

The increasing cost in the law of increasing cost is a(n)____________ cost.

Accepted Answer

The law of increasing cost states that as production increases, the opportunity cost of producing each additional unit increases. Therefore, the cost is an opportunity cost rather than an average or fixed cost. It is also not a declining cost because the more units produced, the higher the cost of producing each additional unit.

Question 16

If we are operating inside our production possibilities frontier,

Accepted Answer

Operating inside the production possibilities frontier indicates that an economy is not utilizing all its resources efficiently, which can happen during a recession, a depression, or even outside these conditions if there are other inefficiencies present.

Question 17

The closer we are to the production possibilities frontier and the farther away we are from the origin,

Accepted Answer

The answer of The closer we are to the production...

Question 18

During 2009 and 2010,______ of Americans under 25 were unemployed.

Accepted Answer

During 2009 and 2010, one-quarter of Americans under 25 were unemployed. This was a significant impact of the global financial crisis that began in 2008, leading to high unemployment rates across various age groups, with young Americans being notably affected.

Question 19

If the production possibilities frontier were a straight line,

Accepted Answer

If the production possibilities frontier were a straight line, it would mean that the resources are perfectly adaptable for producing either of the two goods. Therefore, the opportunity cost of producing one good would remain the same as more of another good is produced. The Law of Increasing Cost applies only when the PPF is bowed out (concave). The statement in option B is incorrect because the opportunity cost of producing one good would not decrease with more of the other good because the resources are not specialized for either of the goods.

Question 20

An increase in the unemployment rate would be shown on a production possibilities curve by

Accepted Answer

The answer of An increase in the unemployment rate would...

Quiz 2: Resource Utilization