Chat with AI
Deck 2: The Economic Problem: Scarcity and Choice
Full screen (f)
Question
Refer to the information provided in Table 2.1 below to answer the following questions.
Table 2.1
Refer to Table 2.1. For Krystal, the opportunity cost of writing one TV commercial is
A) 1/4 of a poem.
B) 2 poems.
C) 4 poems.
D) 6 poems.
Table 2.1
Refer to Table 2.1. For Krystal, the opportunity cost of writing one TV commercial is
A) 1/4 of a poem.
B) 2 poems.
C) 4 poems.
D) 6 poems.
Question
Question
Refer to the information provided in Table 2.1 below to answer the following questions.
Table 2.1
Refer to Table 2.1. For Krystal, the opportunity cost of writing four TV commercials is ________ poems.
A) 2
B) 8
C) 16
D) 32
Table 2.1
Refer to Table 2.1. For Krystal, the opportunity cost of writing four TV commercials is ________ poems.
A) 2
B) 8
C) 16
D) 32
Question
Question
Question
Refer to the information provided in Table 2.1 below to answer the following questions.
Table 2.1
Refer to Table 2.1. For Mark, the opportunity cost of writing six TV commercials is ________ poems.
A) 2
B) 18
C) 24
D) an indeterminate number of
Table 2.1
Refer to Table 2.1. For Mark, the opportunity cost of writing six TV commercials is ________ poems.
A) 2
B) 18
C) 24
D) an indeterminate number of
Question
Question
Question
Question
Question
Question
Refer to the information provided in Table 2.1 below to answer the following questions.
Table 2.1
Refer to Table 2.1. For Mark, the opportunity cost of writing one TV commercial is
A) 1/3 of a poem.
B) 2 poems.
C) 3 poems.
D) 8 poems.
Table 2.1
Refer to Table 2.1. For Mark, the opportunity cost of writing one TV commercial is
A) 1/3 of a poem.
B) 2 poems.
C) 3 poems.
D) 8 poems.
Question
Question
Question
Refer to the information provided in Table 2.1 below to answer the following questions.
Table 2.1
Refer to Table 2.1. Which of the following statements is true?
A) Krystal has a comparative advantage in both writing TV commercials and writing poems.
B) Mark has a comparative advantage in both writing TV commercials and writing poems.
C) Krystal has a comparative advantage in writing TV commercials, and Mark has a comparative advantage in writing poems.
D) Mark has a comparative advantage in writing TV commercials, and Krystal has a comparative advantage in writing poems.
Table 2.1
Refer to Table 2.1. Which of the following statements is true?
A) Krystal has a comparative advantage in both writing TV commercials and writing poems.
B) Mark has a comparative advantage in both writing TV commercials and writing poems.
C) Krystal has a comparative advantage in writing TV commercials, and Mark has a comparative advantage in writing poems.
D) Mark has a comparative advantage in writing TV commercials, and Krystal has a comparative advantage in writing poems.
Question
Refer to the information provided in Table 2.1 below to answer the following questions.
Table 2.1
Refer to Table 2.1. To maximize total production,
A) Krystal should specialize in writing TV commercials, and Mark should specialize in writing poems.
B) Mark should specialize in writing TV commercials, and Krystal should specialize in writing poems.
C) Krystal and Mark should both split their time between writing poems and writing TV commercials.
D) Krystal should write poems and write TV commercials, but Mark should only write poems.
Table 2.1
Refer to Table 2.1. To maximize total production,
A) Krystal should specialize in writing TV commercials, and Mark should specialize in writing poems.
B) Mark should specialize in writing TV commercials, and Krystal should specialize in writing poems.
C) Krystal and Mark should both split their time between writing poems and writing TV commercials.
D) Krystal should write poems and write TV commercials, but Mark should only write poems.
Question
Question
Question
Question
Question
Question
Question
Refer to the information provided in Figure 2.1 below for the economy of Macroland to answer the questions that follow. 
Figure 2.1
Refer to Figure 2.1. Macroland's production possibility frontier is bowed out from the origin due to
A) decreasing opportunity costs.
B) trade.
C) unemployment.
D) specialized resources.
Figure 2.1Refer to Figure 2.1. Macroland's production possibility frontier is bowed out from the origin due to
A) decreasing opportunity costs.
B) trade.
C) unemployment.
D) specialized resources.
Question
Refer to the information provided in Figure 2.2 below for the economy of Microland to answer the questions that follow. 
Figure 2.2
Refer to Figure 2.2. Microland is currently operating at Point B. You correctly deduce that
A) in Microland, all resources are fully employed and there are no production inefficiencies.
B) Microland has achieved a position of inefficiency.
C) Microland has recently experienced some type of technological breakthrough.
D) Microland has overcome the problem of scarcity.
Figure 2.2Refer to Figure 2.2. Microland is currently operating at Point B. You correctly deduce that
A) in Microland, all resources are fully employed and there are no production inefficiencies.
B) Microland has achieved a position of inefficiency.
C) Microland has recently experienced some type of technological breakthrough.
D) Microland has overcome the problem of scarcity.
Question
Refer to the information provided in Figure 2.2 below for the economy of Microland to answer the questions that follow. Figure 2.2
Refer to Figure 2.2. You correctly deduce that all resources are fully employed and there are no production inefficiencies if this economy is currently operating at a point
A) inside the production possibility frontier.
B) along the production possibility frontier.
C) outside the production possibility frontier.
D) either inside or along the production possibility frontier.
Figure 2.2Refer to Figure 2.2. You correctly deduce that all resources are fully employed and there are no production inefficiencies if this economy is currently operating at a point
A) inside the production possibility frontier.
B) along the production possibility frontier.
C) outside the production possibility frontier.
D) either inside or along the production possibility frontier.
Question
Refer to the information provided in Figure 2.1 below for the economy of Macroland to answer the questions that follow. Figure 2.1
Refer to Figure 2.1. If Macroland's economy is at Point A, it could produce more capital goods
A) without sacrificing any consumer goods.
B) only by sacrificing some consumer goods.
C) only with technological improvements.
D) only with additional resources.
Figure 2.1Refer to Figure 2.1. If Macroland's economy is at Point A, it could produce more capital goods
A) without sacrificing any consumer goods.
B) only by sacrificing some consumer goods.
C) only with technological improvements.
D) only with additional resources.
Question
Question
Question
Refer to the information provided in Figure 2.1 below for the economy of Macroland to answer the questions that follow. Figure 2.1
Refer to Figure 2.1. If Macroland's economy is at Point A, it could produce more consumer goods
A) without sacrificing any capital goods.
B) only by sacrificing some capital goods.
C) only with technological improvements.
D) only with additional resources.
Figure 2.1Refer to Figure 2.1. If Macroland's economy is at Point A, it could produce more consumer goods
A) without sacrificing any capital goods.
B) only by sacrificing some capital goods.
C) only with technological improvements.
D) only with additional resources.
Question
Question
Refer to the information provided in Figure 2.2 below for the economy of Microland to answer the questions that follow. Figure 2.2
Refer to Figure 2.2. If Microland's economy is at Point A, it could produce more capital goods
A) without sacrificing any consumer goods.
B) by sacrificing some consumer goods.
C) only with technological improvements.
D) only with additional resources.
Figure 2.2Refer to Figure 2.2. If Microland's economy is at Point A, it could produce more capital goods
A) without sacrificing any consumer goods.
B) by sacrificing some consumer goods.
C) only with technological improvements.
D) only with additional resources.
Question
Question
Question
Refer to the information provided in Figure 2.2 below for the economy of Microland to answer the questions that follow. Figure 2.2
Refer to Figure 2.2. Full resource employment and production efficiency is represented by a point
A) inside the production possibility frontier.
B) along the production possibility frontier.
C) outside the production possibility frontier.
D) either inside or along the production possibility frontier.
Figure 2.2Refer to Figure 2.2. Full resource employment and production efficiency is represented by a point
A) inside the production possibility frontier.
B) along the production possibility frontier.
C) outside the production possibility frontier.
D) either inside or along the production possibility frontier.
Question
Refer to the information provided in Figure 2.2 below for the economy of Microland to answer the questions that follow. Figure 2.2
Refer to Figure 2.2. If Microland's economy is at Point A, it could produce more consumer goods
A) without sacrificing any capital goods.
B) by sacrificing some capital goods.
C) only with technological improvements.
D) only with additional resources.
Figure 2.2Refer to Figure 2.2. If Microland's economy is at Point A, it could produce more consumer goods
A) without sacrificing any capital goods.
B) by sacrificing some capital goods.
C) only with technological improvements.
D) only with additional resources.
Question
Refer to the information provided in Figure 2.2 below for the economy of Microland to answer the questions that follow. Figure 2.2
Refer to Figure 2.2. Point B represents a situation of
A) full employment but production inefficiency.
B) less than full employment but production efficiency.
C) both full resource employment and production efficiency.
D) less than full employment and production inefficiency.
Figure 2.2Refer to Figure 2.2. Point B represents a situation of
A) full employment but production inefficiency.
B) less than full employment but production efficiency.
C) both full resource employment and production efficiency.
D) less than full employment and production inefficiency.
Question
Refer to the information provided in Figure 2.1 below for the economy of Macroland to answer the questions that follow. Figure 2.1
Refer to Figure 2.1. Macroland is currently operating at Point A. The best explanation for this is that
A) the economy has very poor technology.
B) the economy's resources are being used inefficiently.
C) the economy has very few resources.
D) the economy operates as an efficient market.
Figure 2.1Refer to Figure 2.1. Macroland is currently operating at Point A. The best explanation for this is that
A) the economy has very poor technology.
B) the economy's resources are being used inefficiently.
C) the economy has very few resources.
D) the economy operates as an efficient market.
Question
Refer to the information provided in Figure 2.1 below for the economy of Macroland to answer the questions that follow. Figure 2.1
Refer to Figure 2.1. The shape of Macroland's production possibility frontier shows
A) increasing opportunity costs.
B) constant opportunity costs.
C) decreasing opportunity costs.
D) random opportunity costs.
Figure 2.1Refer to Figure 2.1. The shape of Macroland's production possibility frontier shows
A) increasing opportunity costs.
B) constant opportunity costs.
C) decreasing opportunity costs.
D) random opportunity costs.
Question
Question
Question
Refer to the information provided in Figure 2.4 below to answer the questions that follow. 
Figure 2.4
According to Figure 2.4, the point where only hybrid cars are produced is
A) A.
B) B.
C) C.
D) D.
Figure 2.4According to Figure 2.4, the point where only hybrid cars are produced is
A) A.
B) B.
C) C.
D) D.
Question
Refer to the information provided in Figure 2.3 below to answer the questions that follow. 
Figure 2.3
Refer to Figure 2.3. The law of ________ opportunity costs is best depicted by the production possibilities frontier in Panel A.
A) increasing
B) constant
C) decreasing
D) zero
Figure 2.3Refer to Figure 2.3. The law of ________ opportunity costs is best depicted by the production possibilities frontier in Panel A.
A) increasing
B) constant
C) decreasing
D) zero
Question
Question
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, as the economy moves from Point A to Point E, the opportunity cost of motorcycles, measured in terms of hybrid cars,
A) decreases.
B) increases.
C) remains constant.
D) initially increases, then decreases.
Figure 2.4According to Figure 2.4, as the economy moves from Point A to Point E, the opportunity cost of motorcycles, measured in terms of hybrid cars,
A) decreases.
B) increases.
C) remains constant.
D) initially increases, then decreases.
Question
Question
Question
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, the optimal point for the economy is
A) A.
B) B.
C) F.
D) indeterminate from the information given.
Figure 2.4According to Figure 2.4, the optimal point for the economy is
A) A.
B) B.
C) F.
D) indeterminate from the information given.
Question
Refer to the information provided in Figure 2.3 below to answer the questions that follow. Figure 2.3
Refer to Figure 2.3. Assume that this society's production possibility frontier is represented by Panel C. The opportunity cost of sailboats in terms of surfboards is
A) constant.
B) increasing.
C) decreasing.
D) infinite.
Figure 2.3Refer to Figure 2.3. Assume that this society's production possibility frontier is represented by Panel C. The opportunity cost of sailboats in terms of surfboards is
A) constant.
B) increasing.
C) decreasing.
D) infinite.
Question
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, a decrease in unemployment may be represented by the movement from
A) B to A.
B) B to D.
C) C to D.
D) A to C.
Figure 2.4According to Figure 2.4, a decrease in unemployment may be represented by the movement from
A) B to A.
B) B to D.
C) C to D.
D) A to C.
Question
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, the point where only motorcycles are produced is
A) A.
B) B.
C) C.
D) E.
Figure 2.4According to Figure 2.4, the point where only motorcycles are produced is
A) A.
B) B.
C) C.
D) E.
Question
Question
Refer to the information provided in Figure 2.3 below to answer the questions that follow. Figure 2.3
Refer to Figure 2.3. Assume that in this society the marginal rate of transformation of sailboats for surfboards is constant and equal to -10. A graph of this society's production possibility frontier will be represented by Panel
A) A.
B) B.
C) C.
D) D.
Figure 2.3Refer to Figure 2.3. Assume that in this society the marginal rate of transformation of sailboats for surfboards is constant and equal to -10. A graph of this society's production possibility frontier will be represented by Panel
A) A.
B) B.
C) C.
D) D.
Question
Refer to the information provided in Figure 2.3 below to answer the questions that follow. Figure 2.3
Refer to Figure 2.3. Assume that in this society the opportunity cost of sailboats in terms of surfboards is increasing. A graph of this society's production possibility frontier will be represented by Panel
A) A.
B) B.
C) C.
D) D.
Figure 2.3Refer to Figure 2.3. Assume that in this society the opportunity cost of sailboats in terms of surfboards is increasing. A graph of this society's production possibility frontier will be represented by Panel
A) A.
B) B.
C) C.
D) D.
Question
Refer to the information provided in Figure 2.3 below to answer the questions that follow. Figure 2.3
Refer to Figure 2.3. Assume that this society's production possibility frontier is represented by Panel C. The marginal rate of transformation of sailboats for surfboards is
A) 1/10.
B) -1/10.
C) 10.
D) -10.
Figure 2.3Refer to Figure 2.3. Assume that this society's production possibility frontier is represented by Panel C. The marginal rate of transformation of sailboats for surfboards is
A) 1/10.
B) -1/10.
C) 10.
D) -10.
Question
Question
Question
Refer to the information provided in Figure 2.3 below to answer the questions that follow. Figure 2.3
Refer to Figure 2.3. Increasing opportunity costs are best depicted by the production possibility frontier in Panel
A) A.
B) B.
C) C.
D) D.
Figure 2.3Refer to Figure 2.3. Increasing opportunity costs are best depicted by the production possibility frontier in Panel
A) A.
B) B.
C) C.
D) D.
Question
Question
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, which point cannot be produced with the current state of technology?
A) A
B) B
C) C
D) F
Figure 2.4According to Figure 2.4, which point cannot be produced with the current state of technology?
A) A
B) B
C) C
D) F
Question
Question
Refer to the information provided in Figure 2.5 below to answer the questions that follow. 
Figure 2.5
Refer to Figure 2.5. For this economy to move from Point A to Point B, ________ additional plasma TVs could be produced when the production of LCD TVs is reduced by 30.
A) exactly 20
B) fewer than 20
C) more than 20
D) exactly 90
Figure 2.5Refer to Figure 2.5. For this economy to move from Point A to Point B, ________ additional plasma TVs could be produced when the production of LCD TVs is reduced by 30.
A) exactly 20
B) fewer than 20
C) more than 20
D) exactly 90
Question
Refer to the information provided in Figure 2.5 below to answer the questions that follow. Figure 2.5
Refer to Figure 2.5. The best point for society would be
A) Point C, as at this point there are approximately equal amounts of LCD and plasma televisions being produced.
B) either Point B or Point C, as the total amount being produced at either of these points is approximately the same.
C) at any of the labeled points, as all of the points represent an efficient allocation of resources.
D) indeterminate from this information, as we don't have any information about the society's desires.
Figure 2.5Refer to Figure 2.5. The best point for society would be
A) Point C, as at this point there are approximately equal amounts of LCD and plasma televisions being produced.
B) either Point B or Point C, as the total amount being produced at either of these points is approximately the same.
C) at any of the labeled points, as all of the points represent an efficient allocation of resources.
D) indeterminate from this information, as we don't have any information about the society's desires.
Question
Refer to the information provided in Figure 2.5 below to answer the questions that follow. Figure 2.5
Refer to Figure 2.5. The marginal rate of transformation in moving from Point A to Point B is
A) -2/3.
B) -1.5.
C) -3.
D) -30.
Figure 2.5Refer to Figure 2.5. The marginal rate of transformation in moving from Point A to Point B is
A) -2/3.
B) -1.5.
C) -3.
D) -30.
Question
Question
Refer to the information provided in Figure 2.5 below to answer the questions that follow. Figure 2.5
Refer to Figure 2.5. The economy is currently at Point B. The opportunity cost of moving from Point B to Point A is the
A) 40 plasma TVs that must be forgone to produce 120 additional LCD TVs.
B) 20 plasma TVs that must be forgone to produce 30 additional LCD TVs.
C) 30 LCD TVs that must be forgone to produce 40 additional plasma TVs.
D) 120 LCD TVs that must be forgone to produce 20 additional plasma TVs.
Figure 2.5Refer to Figure 2.5. The economy is currently at Point B. The opportunity cost of moving from Point B to Point A is the
A) 40 plasma TVs that must be forgone to produce 120 additional LCD TVs.
B) 20 plasma TVs that must be forgone to produce 30 additional LCD TVs.
C) 30 LCD TVs that must be forgone to produce 40 additional plasma TVs.
D) 120 LCD TVs that must be forgone to produce 20 additional plasma TVs.
Question
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, as the economy moves from Point E to Point A, the opportunity cost of hybrid cars, measured in terms of motorcycles,
A) increases.
B) decreases.
C) remains constant.
D) initially increases, then decreases.
Figure 2.4According to Figure 2.4, as the economy moves from Point E to Point A, the opportunity cost of hybrid cars, measured in terms of motorcycles,
A) increases.
B) decreases.
C) remains constant.
D) initially increases, then decreases.
Question
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
Refer to Figure 2.4. The economy moves from Point E to Point B. This could be explained by
A) an increase in unemployment.
B) a reduction in unemployment.
C) a change in society's preferences for hybrid cars versus motorcycles.
D) an increase in economic growth.
Figure 2.4Refer to Figure 2.4. The economy moves from Point E to Point B. This could be explained by
A) an increase in unemployment.
B) a reduction in unemployment.
C) a change in society's preferences for hybrid cars versus motorcycles.
D) an increase in economic growth.
Question
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, Point F
A) is efficient and attainable.
B) represents underallocation of resources.
C) represents what the people want.
D) cannot be produced with the current state of technology.
Figure 2.4According to Figure 2.4, Point F
A) is efficient and attainable.
B) represents underallocation of resources.
C) represents what the people want.
D) cannot be produced with the current state of technology.
Question
Refer to the information provided in Figure 2.5 below to answer the questions that follow. Figure 2.5
Refer to Figure 2.5. For this economy to move from Point B to Point C so that an additional 20 plasma televisions could be produced, production of LCD televisions would have to be reduced by
A) exactly 30.
B) fewer than 30.
C) more than 30.
D) exactly 60.
Figure 2.5Refer to Figure 2.5. For this economy to move from Point B to Point C so that an additional 20 plasma televisions could be produced, production of LCD televisions would have to be reduced by
A) exactly 30.
B) fewer than 30.
C) more than 30.
D) exactly 60.
Question
Question
Refer to the information provided in Figure 2.5 below to answer the questions that follow. Figure 2.5
Refer to Figure 2.5. The marginal rate of transformation in moving from Point B to Point A is
A) -2/3.
B) -3/4.
C) -1.5.
D) -20.
Figure 2.5Refer to Figure 2.5. The marginal rate of transformation in moving from Point B to Point A is
A) -2/3.
B) -3/4.
C) -1.5.
D) -20.
Question
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, Point E necessarily represents
A) an impossible production point.
B) technological advancement.
C) overallocation of resources.
D) only motorcycles being produced.
Figure 2.4According to Figure 2.4, Point E necessarily represents
A) an impossible production point.
B) technological advancement.
C) overallocation of resources.
D) only motorcycles being produced.
Question
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, as the economy moves from Point D to Point B, the opportunity cost of hybrid cars, measured in terms of motorcycles
A) remains constant.
B) decreases.
C) increases.
D) initially increases, then decreases.
Figure 2.4According to Figure 2.4, as the economy moves from Point D to Point B, the opportunity cost of hybrid cars, measured in terms of motorcycles
A) remains constant.
B) decreases.
C) increases.
D) initially increases, then decreases.
Question
Question
Refer to the information provided in Figure 2.5 below to answer the questions that follow. Figure 2.5
Refer to Figure 2.5. The economy is currently at Point A. The opportunity cost of moving from Point A to Point B is the
A) 90 LCD televisions that must be forgone to produce 20 additional plasma televisions.
B) 30 LCD televisions that must be forgone to produce 60 additional plasma televisions.
C) 120 LCD televisions that must be forgone to produce 40 additional plasma televisions.
D) 30 LCD televisions that must be forgone to produce 20 additional plasma televisions.
Figure 2.5Refer to Figure 2.5. The economy is currently at Point A. The opportunity cost of moving from Point A to Point B is the
A) 90 LCD televisions that must be forgone to produce 20 additional plasma televisions.
B) 30 LCD televisions that must be forgone to produce 60 additional plasma televisions.
C) 120 LCD televisions that must be forgone to produce 40 additional plasma televisions.
D) 30 LCD televisions that must be forgone to produce 20 additional plasma televisions.
Question
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, an increase in unemployment may be represented by the movement from
A) B to A.
B) B to D.
C) C to D.
D) A to C.
Figure 2.4According to Figure 2.4, an increase in unemployment may be represented by the movement from
A) B to A.
B) B to D.
C) C to D.
D) A to C.
Question
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, as the economy moves from Point B to Point D, the opportunity cost of motorcycles, measured in terms of hybrid cars
A) remains constant.
B) decreases.
C) increases
D) initially increases, then decreases.
Figure 2.4According to Figure 2.4, as the economy moves from Point B to Point D, the opportunity cost of motorcycles, measured in terms of hybrid cars
A) remains constant.
B) decreases.
C) increases
D) initially increases, then decreases.
Question
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
Refer to Figure 2.4. The economy moves from Point A to Point D. This could be explained by
A) a reduction in unemployment.
B) an improvement in technology.
C) an increase in economic growth.
D) a change in society's preferences for motorcycles versus hybrid cars.
Figure 2.4Refer to Figure 2.4. The economy moves from Point A to Point D. This could be explained by
A) a reduction in unemployment.
B) an improvement in technology.
C) an increase in economic growth.
D) a change in society's preferences for motorcycles versus hybrid cars.
Question
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, Point A necessarily represents
A) an unattainable production point.
B) only hybrid cars being produced.
C) the economy's optimal production point.
D) what society wants.
Figure 2.4According to Figure 2.4, Point A necessarily represents
A) an unattainable production point.
B) only hybrid cars being produced.
C) the economy's optimal production point.
D) what society wants.
Question
Refer to the information provided in Figure 2.5 below to answer the questions that follow. Figure 2.5
Refer to Figure 2.5. For this economy to move from Point C to Point B, ________ additional LCD TVs could be produced when the production of plasma TVs is reduced by 20.
A) exactly 30
B) fewer than 30
C) more than 30
D) exactly 60
Figure 2.5Refer to Figure 2.5. For this economy to move from Point C to Point B, ________ additional LCD TVs could be produced when the production of plasma TVs is reduced by 20.
A) exactly 30
B) fewer than 30
C) more than 30
D) exactly 60
Unlock Deck
Sign up to unlock the cards in this deck!
Unlock Deck
Unlock Deck
1/220
Play
Full screen (f)
Deck 2: The Economic Problem: Scarcity and Choice
1
Refer to the information provided in Table 2.1 below to answer the following questions.
Table 2.1
Refer to Table 2.1. For Krystal, the opportunity cost of writing one TV commercial is
A) 1/4 of a poem.
B) 2 poems.
C) 4 poems.
D) 6 poems.
Table 2.1
Refer to Table 2.1. For Krystal, the opportunity cost of writing one TV commercial is
A) 1/4 of a poem.
B) 2 poems.
C) 4 poems.
D) 6 poems.
C
2
The concept of opportunity cost is based on the principle of
A) need.
B) consumption.
C) scarcity.
D) profit.
A) need.
B) consumption.
C) scarcity.
D) profit.
C
3
Refer to the information provided in Table 2.1 below to answer the following questions.
Table 2.1
Refer to Table 2.1. For Krystal, the opportunity cost of writing four TV commercials is ________ poems.
A) 2
B) 8
C) 16
D) 32
Table 2.1
Refer to Table 2.1. For Krystal, the opportunity cost of writing four TV commercials is ________ poems.
A) 2
B) 8
C) 16
D) 32
C
4
According to the theory of comparative advantage, specialization and free trade will benefit
A) only that trading party that has both an absolute advantage and a comparative advantage in the production of all goods.
B) all trading parties, even when some are absolutely more efficient producers than others.
C) only that trading party that has an absolute advantage in the production of all goods.
D) only that trading party that has a comparative advantage in the production of all goods.
A) only that trading party that has both an absolute advantage and a comparative advantage in the production of all goods.
B) all trading parties, even when some are absolutely more efficient producers than others.
C) only that trading party that has an absolute advantage in the production of all goods.
D) only that trading party that has a comparative advantage in the production of all goods.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
5
When two people trade,
A) both of them expect to be made worse off by the exchange.
B) they are trying to help out each other.
C) they know one of them will get the better of the other.
D) they both expect to be made better off by the exchange.
A) both of them expect to be made worse off by the exchange.
B) they are trying to help out each other.
C) they know one of them will get the better of the other.
D) they both expect to be made better off by the exchange.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
6
Refer to the information provided in Table 2.1 below to answer the following questions.
Table 2.1
Refer to Table 2.1. For Mark, the opportunity cost of writing six TV commercials is ________ poems.
A) 2
B) 18
C) 24
D) an indeterminate number of
Table 2.1
Refer to Table 2.1. For Mark, the opportunity cost of writing six TV commercials is ________ poems.
A) 2
B) 18
C) 24
D) an indeterminate number of
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
7
Suppose you are deciding whether to spend your tax rebate check on a new iPod or a new digital camera. You are dealing with the concept of
A) equity.
B) comparative advantage.
C) opportunity costs.
D) the fallacy of composition.
A) equity.
B) comparative advantage.
C) opportunity costs.
D) the fallacy of composition.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
8
The concept of trade-offs would become irrelevant if
A) we were dealing with a very simple, one-person economy.
B) poverty were eliminated.
C) scarcity were eliminated.
D) capital were eliminated.
A) we were dealing with a very simple, one-person economy.
B) poverty were eliminated.
C) scarcity were eliminated.
D) capital were eliminated.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
9
The process by which resources are transformed into useful forms is
A) capitalization.
B) consumption.
C) production.
D) allocation.
A) capitalization.
B) consumption.
C) production.
D) allocation.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
10
Which of the following does not constitute an act of "investment" as economists use the term?
A) The city council authorizes the construction of a new fire station.
B) A retiree buys 50 shares of stock at $10 a share and then sells the stock at a profit for $20 a share.
C) An accountant attends a seminar on changes in the federal tax code.
D) A department store increases its inventory of football jerseys before the Super Bowl.
A) The city council authorizes the construction of a new fire station.
B) A retiree buys 50 shares of stock at $10 a share and then sells the stock at a profit for $20 a share.
C) An accountant attends a seminar on changes in the federal tax code.
D) A department store increases its inventory of football jerseys before the Super Bowl.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
11
Which of the following is not a resource as the term is used by economists?
A) land
B) labor
C) buildings
D) money
A) land
B) labor
C) buildings
D) money
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
12
Refer to the information provided in Table 2.1 below to answer the following questions.
Table 2.1
Refer to Table 2.1. For Mark, the opportunity cost of writing one TV commercial is
A) 1/3 of a poem.
B) 2 poems.
C) 3 poems.
D) 8 poems.
Table 2.1
Refer to Table 2.1. For Mark, the opportunity cost of writing one TV commercial is
A) 1/3 of a poem.
B) 2 poems.
C) 3 poems.
D) 8 poems.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
13
Someone has a comparative advantage in producing a good if she can produce that good
A) in greater quantities.
B) at a lower opportunity cost.
C) using more capital and less labor.
D) using more labor and less capital.
A) in greater quantities.
B) at a lower opportunity cost.
C) using more capital and less labor.
D) using more labor and less capital.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
14
If someone has a comparative advantage in growing pineapples,
A) she can grow pineapples at a lower opportunity cost than other pineapple growers.
B) she also has an absolute advantage in growing pineapples.
C) she can grow more pineapples using the same resources than other pineapple growers.
D) pineapples are the only product she can grow.
A) she can grow pineapples at a lower opportunity cost than other pineapple growers.
B) she also has an absolute advantage in growing pineapples.
C) she can grow more pineapples using the same resources than other pineapple growers.
D) pineapples are the only product she can grow.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
15
Refer to the information provided in Table 2.1 below to answer the following questions.
Table 2.1
Refer to Table 2.1. Which of the following statements is true?
A) Krystal has a comparative advantage in both writing TV commercials and writing poems.
B) Mark has a comparative advantage in both writing TV commercials and writing poems.
C) Krystal has a comparative advantage in writing TV commercials, and Mark has a comparative advantage in writing poems.
D) Mark has a comparative advantage in writing TV commercials, and Krystal has a comparative advantage in writing poems.
Table 2.1
Refer to Table 2.1. Which of the following statements is true?
A) Krystal has a comparative advantage in both writing TV commercials and writing poems.
B) Mark has a comparative advantage in both writing TV commercials and writing poems.
C) Krystal has a comparative advantage in writing TV commercials, and Mark has a comparative advantage in writing poems.
D) Mark has a comparative advantage in writing TV commercials, and Krystal has a comparative advantage in writing poems.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
16
Refer to the information provided in Table 2.1 below to answer the following questions.
Table 2.1
Refer to Table 2.1. To maximize total production,
A) Krystal should specialize in writing TV commercials, and Mark should specialize in writing poems.
B) Mark should specialize in writing TV commercials, and Krystal should specialize in writing poems.
C) Krystal and Mark should both split their time between writing poems and writing TV commercials.
D) Krystal should write poems and write TV commercials, but Mark should only write poems.
Table 2.1
Refer to Table 2.1. To maximize total production,
A) Krystal should specialize in writing TV commercials, and Mark should specialize in writing poems.
B) Mark should specialize in writing TV commercials, and Krystal should specialize in writing poems.
C) Krystal and Mark should both split their time between writing poems and writing TV commercials.
D) Krystal should write poems and write TV commercials, but Mark should only write poems.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
17
Capital, as economists use the term,
A) is the money the firm spends to hire resources.
B) is money the firm raises from selling stock.
C) refers to the process by which resources are transformed into useful forms.
D) refers to things that have already been produced that are in turn used to produce other goods and services.
A) is the money the firm spends to hire resources.
B) is money the firm raises from selling stock.
C) refers to the process by which resources are transformed into useful forms.
D) refers to things that have already been produced that are in turn used to produce other goods and services.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
18
Outputs in the production process are
A) pollution.
B) money.
C) goods and services of value to households.
D) resources.
A) pollution.
B) money.
C) goods and services of value to households.
D) resources.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
19
According to the theory of comparative advantage, ________ raise(s) productivity by lowering opportunity costs.
A) trade and specialization
B) investment in capital goods
C) economic growth
D) exchange and consumption
A) trade and specialization
B) investment in capital goods
C) economic growth
D) exchange and consumption
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
20
Which of the following would an economist classify as capital?
A) a $50 bill
B) a corporate bond
C) a post office employee
D) a guitar used by a musician
A) a $50 bill
B) a corporate bond
C) a post office employee
D) a guitar used by a musician
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
21
Periods of less than full employment correspond to
A) points outside the ppf.
B) points underneath the ppf.
C) points on the ppf.
D) either points inside or outside the ppf.
A) points outside the ppf.
B) points underneath the ppf.
C) points on the ppf.
D) either points inside or outside the ppf.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
22
The opportunity cost of investment in capital is forgone present consumption because
A) capital takes a long time to produce.
B) capital increases the productivity of labor.
C) resources are scarce.
D) capital is an intangible good.
A) capital takes a long time to produce.
B) capital increases the productivity of labor.
C) resources are scarce.
D) capital is an intangible good.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
23
Refer to the information provided in Figure 2.1 below for the economy of Macroland to answer the questions that follow. Figure 2.1
Refer to Figure 2.1. Macroland's production possibility frontier is bowed out from the origin due to
A) decreasing opportunity costs.
B) trade.
C) unemployment.
D) specialized resources.
Figure 2.1Refer to Figure 2.1. Macroland's production possibility frontier is bowed out from the origin due to
A) decreasing opportunity costs.
B) trade.
C) unemployment.
D) specialized resources.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
24
Refer to the information provided in Figure 2.2 below for the economy of Microland to answer the questions that follow. Figure 2.2
Refer to Figure 2.2. Microland is currently operating at Point B. You correctly deduce that
A) in Microland, all resources are fully employed and there are no production inefficiencies.
B) Microland has achieved a position of inefficiency.
C) Microland has recently experienced some type of technological breakthrough.
D) Microland has overcome the problem of scarcity.
Figure 2.2Refer to Figure 2.2. Microland is currently operating at Point B. You correctly deduce that
A) in Microland, all resources are fully employed and there are no production inefficiencies.
B) Microland has achieved a position of inefficiency.
C) Microland has recently experienced some type of technological breakthrough.
D) Microland has overcome the problem of scarcity.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
25
Refer to the information provided in Figure 2.2 below for the economy of Microland to answer the questions that follow. Figure 2.2
Refer to Figure 2.2. You correctly deduce that all resources are fully employed and there are no production inefficiencies if this economy is currently operating at a point
A) inside the production possibility frontier.
B) along the production possibility frontier.
C) outside the production possibility frontier.
D) either inside or along the production possibility frontier.
Figure 2.2Refer to Figure 2.2. You correctly deduce that all resources are fully employed and there are no production inefficiencies if this economy is currently operating at a point
A) inside the production possibility frontier.
B) along the production possibility frontier.
C) outside the production possibility frontier.
D) either inside or along the production possibility frontier.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
26
Refer to the information provided in Figure 2.1 below for the economy of Macroland to answer the questions that follow. Figure 2.1
Refer to Figure 2.1. If Macroland's economy is at Point A, it could produce more capital goods
A) without sacrificing any consumer goods.
B) only by sacrificing some consumer goods.
C) only with technological improvements.
D) only with additional resources.
Figure 2.1Refer to Figure 2.1. If Macroland's economy is at Point A, it could produce more capital goods
A) without sacrificing any consumer goods.
B) only by sacrificing some consumer goods.
C) only with technological improvements.
D) only with additional resources.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
27
An example of an investment is
A) the purchase of a share of Google stock.
B) the purchase of an Exxon Mobil bond.
C) the purchase of a Hewlett Packard laser printer for use by a business.
D) all of the above.
A) the purchase of a share of Google stock.
B) the purchase of an Exxon Mobil bond.
C) the purchase of a Hewlett Packard laser printer for use by a business.
D) all of the above.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
28
The process of using resources to produce new capital is
A) research and development.
B) investment.
C) consumption.
D) economic growth.
A) research and development.
B) investment.
C) consumption.
D) economic growth.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
29
Refer to the information provided in Figure 2.1 below for the economy of Macroland to answer the questions that follow. Figure 2.1
Refer to Figure 2.1. If Macroland's economy is at Point A, it could produce more consumer goods
A) without sacrificing any capital goods.
B) only by sacrificing some capital goods.
C) only with technological improvements.
D) only with additional resources.
Figure 2.1Refer to Figure 2.1. If Macroland's economy is at Point A, it could produce more consumer goods
A) without sacrificing any capital goods.
B) only by sacrificing some capital goods.
C) only with technological improvements.
D) only with additional resources.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
30
In economics, investment always refers to
A) the act of buying stocks or bonds.
B) the creation of capital.
C) increasing the quantity of labor.
D) an increase in per capita output.
A) the act of buying stocks or bonds.
B) the creation of capital.
C) increasing the quantity of labor.
D) an increase in per capita output.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
31
Refer to the information provided in Figure 2.2 below for the economy of Microland to answer the questions that follow. Figure 2.2
Refer to Figure 2.2. If Microland's economy is at Point A, it could produce more capital goods
A) without sacrificing any consumer goods.
B) by sacrificing some consumer goods.
C) only with technological improvements.
D) only with additional resources.
Figure 2.2Refer to Figure 2.2. If Microland's economy is at Point A, it could produce more capital goods
A) without sacrificing any consumer goods.
B) by sacrificing some consumer goods.
C) only with technological improvements.
D) only with additional resources.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
32
If the unemployment rate increases from 10% to 14%, the economy will
A) move closer to a point on the ppf.
B) move away from the ppf toward the origin.
C) remain on the ppf.
D) remain on the origin.
A) move closer to a point on the ppf.
B) move away from the ppf toward the origin.
C) remain on the ppf.
D) remain on the origin.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
33
Because resources are scarce, the opportunity cost of investment in capital is
A) zero.
B) forgone future consumption.
C) forgone present consumption.
D) infinite.
A) zero.
B) forgone future consumption.
C) forgone present consumption.
D) infinite.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
34
Refer to the information provided in Figure 2.2 below for the economy of Microland to answer the questions that follow. Figure 2.2
Refer to Figure 2.2. Full resource employment and production efficiency is represented by a point
A) inside the production possibility frontier.
B) along the production possibility frontier.
C) outside the production possibility frontier.
D) either inside or along the production possibility frontier.
Figure 2.2Refer to Figure 2.2. Full resource employment and production efficiency is represented by a point
A) inside the production possibility frontier.
B) along the production possibility frontier.
C) outside the production possibility frontier.
D) either inside or along the production possibility frontier.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
35
Refer to the information provided in Figure 2.2 below for the economy of Microland to answer the questions that follow. Figure 2.2
Refer to Figure 2.2. If Microland's economy is at Point A, it could produce more consumer goods
A) without sacrificing any capital goods.
B) by sacrificing some capital goods.
C) only with technological improvements.
D) only with additional resources.
Figure 2.2Refer to Figure 2.2. If Microland's economy is at Point A, it could produce more consumer goods
A) without sacrificing any capital goods.
B) by sacrificing some capital goods.
C) only with technological improvements.
D) only with additional resources.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
36
Refer to the information provided in Figure 2.2 below for the economy of Microland to answer the questions that follow. Figure 2.2
Refer to Figure 2.2. Point B represents a situation of
A) full employment but production inefficiency.
B) less than full employment but production efficiency.
C) both full resource employment and production efficiency.
D) less than full employment and production inefficiency.
Figure 2.2Refer to Figure 2.2. Point B represents a situation of
A) full employment but production inefficiency.
B) less than full employment but production efficiency.
C) both full resource employment and production efficiency.
D) less than full employment and production inefficiency.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
37
Refer to the information provided in Figure 2.1 below for the economy of Macroland to answer the questions that follow. Figure 2.1
Refer to Figure 2.1. Macroland is currently operating at Point A. The best explanation for this is that
A) the economy has very poor technology.
B) the economy's resources are being used inefficiently.
C) the economy has very few resources.
D) the economy operates as an efficient market.
Figure 2.1Refer to Figure 2.1. Macroland is currently operating at Point A. The best explanation for this is that
A) the economy has very poor technology.
B) the economy's resources are being used inefficiently.
C) the economy has very few resources.
D) the economy operates as an efficient market.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
38
Refer to the information provided in Figure 2.1 below for the economy of Macroland to answer the questions that follow. Figure 2.1
Refer to Figure 2.1. The shape of Macroland's production possibility frontier shows
A) increasing opportunity costs.
B) constant opportunity costs.
C) decreasing opportunity costs.
D) random opportunity costs.
Figure 2.1Refer to Figure 2.1. The shape of Macroland's production possibility frontier shows
A) increasing opportunity costs.
B) constant opportunity costs.
C) decreasing opportunity costs.
D) random opportunity costs.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
39
The production possibility frontier is used to illustrate the concept of
A) the laissez-faire economy.
B) opportunity costs.
C) equilibrium.
D) aggregate demand.
A) the laissez-faire economy.
B) opportunity costs.
C) equilibrium.
D) aggregate demand.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
40
An example of forgoing present benefits in order to receive future benefits is
A) production.
B) saving.
C) consumption.
D) growth.
A) production.
B) saving.
C) consumption.
D) growth.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
41
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, the point where only hybrid cars are produced is
A) A.
B) B.
C) C.
D) D.
Figure 2.4According to Figure 2.4, the point where only hybrid cars are produced is
A) A.
B) B.
C) C.
D) D.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
42
Refer to the information provided in Figure 2.3 below to answer the questions that follow. Figure 2.3
Refer to Figure 2.3. The law of ________ opportunity costs is best depicted by the production possibilities frontier in Panel A.
A) increasing
B) constant
C) decreasing
D) zero
Figure 2.3Refer to Figure 2.3. The law of ________ opportunity costs is best depicted by the production possibilities frontier in Panel A.
A) increasing
B) constant
C) decreasing
D) zero
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
43
If an economy begins to use its resources more efficiently, it will move
A) closer to its ppf.
B) farther away from its ppf.
C) from a point along its ppf to a point outside its ppf.
D) from one point to another point along its ppf.
A) closer to its ppf.
B) farther away from its ppf.
C) from a point along its ppf to a point outside its ppf.
D) from one point to another point along its ppf.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
44
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, as the economy moves from Point A to Point E, the opportunity cost of motorcycles, measured in terms of hybrid cars,
A) decreases.
B) increases.
C) remains constant.
D) initially increases, then decreases.
Figure 2.4According to Figure 2.4, as the economy moves from Point A to Point E, the opportunity cost of motorcycles, measured in terms of hybrid cars,
A) decreases.
B) increases.
C) remains constant.
D) initially increases, then decreases.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
45
The marginal rate of transformation is the
A) slope of the production possibility frontier.
B) dollar value of the best forgone alternative.
C) process of using resources to produce new capital.
D) transformation of resources into a form that is useful to people.
A) slope of the production possibility frontier.
B) dollar value of the best forgone alternative.
C) process of using resources to produce new capital.
D) transformation of resources into a form that is useful to people.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
46
Production inefficiency occurs
A) only when an economy produces underneath its production possibility frontier.
B) only when an economy produces at the wrong point on the production possibility frontier.
C) either when an economy produces underneath the production possibility frontier or when the economy is producing the wrong combination of goods on the production possibility frontier.
D) only when the economy produces outside the production possibility frontier.
A) only when an economy produces underneath its production possibility frontier.
B) only when an economy produces at the wrong point on the production possibility frontier.
C) either when an economy produces underneath the production possibility frontier or when the economy is producing the wrong combination of goods on the production possibility frontier.
D) only when the economy produces outside the production possibility frontier.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
47
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, the optimal point for the economy is
A) A.
B) B.
C) F.
D) indeterminate from the information given.
Figure 2.4According to Figure 2.4, the optimal point for the economy is
A) A.
B) B.
C) F.
D) indeterminate from the information given.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
48
Refer to the information provided in Figure 2.3 below to answer the questions that follow. Figure 2.3
Refer to Figure 2.3. Assume that this society's production possibility frontier is represented by Panel C. The opportunity cost of sailboats in terms of surfboards is
A) constant.
B) increasing.
C) decreasing.
D) infinite.
Figure 2.3Refer to Figure 2.3. Assume that this society's production possibility frontier is represented by Panel C. The opportunity cost of sailboats in terms of surfboards is
A) constant.
B) increasing.
C) decreasing.
D) infinite.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
49
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, a decrease in unemployment may be represented by the movement from
A) B to A.
B) B to D.
C) C to D.
D) A to C.
Figure 2.4According to Figure 2.4, a decrease in unemployment may be represented by the movement from
A) B to A.
B) B to D.
C) C to D.
D) A to C.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
50
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, the point where only motorcycles are produced is
A) A.
B) B.
C) C.
D) E.
Figure 2.4According to Figure 2.4, the point where only motorcycles are produced is
A) A.
B) B.
C) C.
D) E.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
51
An economy that is producing on the production possibility frontier at some point other than the output of efficient allocation is
A) efficient, as it is on the production possibility frontier.
B) inefficient, as the combination of goods and services produced is not what people want.
C) efficient, as the economy is producing goods at the lowest possible cost.
D) inefficient, as that combination of goods could be produced at a lower cost if more efficient technology were employed.
A) efficient, as it is on the production possibility frontier.
B) inefficient, as the combination of goods and services produced is not what people want.
C) efficient, as the economy is producing goods at the lowest possible cost.
D) inefficient, as that combination of goods could be produced at a lower cost if more efficient technology were employed.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
52
Refer to the information provided in Figure 2.3 below to answer the questions that follow. Figure 2.3
Refer to Figure 2.3. Assume that in this society the marginal rate of transformation of sailboats for surfboards is constant and equal to -10. A graph of this society's production possibility frontier will be represented by Panel
A) A.
B) B.
C) C.
D) D.
Figure 2.3Refer to Figure 2.3. Assume that in this society the marginal rate of transformation of sailboats for surfboards is constant and equal to -10. A graph of this society's production possibility frontier will be represented by Panel
A) A.
B) B.
C) C.
D) D.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
53
Refer to the information provided in Figure 2.3 below to answer the questions that follow. Figure 2.3
Refer to Figure 2.3. Assume that in this society the opportunity cost of sailboats in terms of surfboards is increasing. A graph of this society's production possibility frontier will be represented by Panel
A) A.
B) B.
C) C.
D) D.
Figure 2.3Refer to Figure 2.3. Assume that in this society the opportunity cost of sailboats in terms of surfboards is increasing. A graph of this society's production possibility frontier will be represented by Panel
A) A.
B) B.
C) C.
D) D.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
54
Refer to the information provided in Figure 2.3 below to answer the questions that follow. Figure 2.3
Refer to Figure 2.3. Assume that this society's production possibility frontier is represented by Panel C. The marginal rate of transformation of sailboats for surfboards is
A) 1/10.
B) -1/10.
C) 10.
D) -10.
Figure 2.3Refer to Figure 2.3. Assume that this society's production possibility frontier is represented by Panel C. The marginal rate of transformation of sailboats for surfboards is
A) 1/10.
B) -1/10.
C) 10.
D) -10.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
55
If resources are combined efficiently in production, then the society
A) is producing at the most-desirable point on the production possibility frontier.
B) is producing at a point on the production possibility frontier but not necessarily at the most-desirable point.
C) is producing at a point outside the production possibility frontier.
D) is experiencing economic growth.
A) is producing at the most-desirable point on the production possibility frontier.
B) is producing at a point on the production possibility frontier but not necessarily at the most-desirable point.
C) is producing at a point outside the production possibility frontier.
D) is experiencing economic growth.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
56
The value of the slope of a society's production possibility frontier is called its
A) marginal rate of substitution.
B) inflation rate.
C) unemployment rate.
D) marginal rate of transformation.
A) marginal rate of substitution.
B) inflation rate.
C) unemployment rate.
D) marginal rate of transformation.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
57
Refer to the information provided in Figure 2.3 below to answer the questions that follow. Figure 2.3
Refer to Figure 2.3. Increasing opportunity costs are best depicted by the production possibility frontier in Panel
A) A.
B) B.
C) C.
D) D.
Figure 2.3Refer to Figure 2.3. Increasing opportunity costs are best depicted by the production possibility frontier in Panel
A) A.
B) B.
C) C.
D) D.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
58
The production possibility frontier is a graph that shows
A) all the combinations of goods and services that are consumed over time if all of society's resources are used efficiently.
B) the amount of goods and services consumed at various average price levels.
C) the rate at which an economy's output will grow over time if all resources are used efficiently.
D) all the combinations of goods and services that can be produced if all of society's resources are used efficiently.
A) all the combinations of goods and services that are consumed over time if all of society's resources are used efficiently.
B) the amount of goods and services consumed at various average price levels.
C) the rate at which an economy's output will grow over time if all resources are used efficiently.
D) all the combinations of goods and services that can be produced if all of society's resources are used efficiently.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
59
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, which point cannot be produced with the current state of technology?
A) A
B) B
C) C
D) F
Figure 2.4According to Figure 2.4, which point cannot be produced with the current state of technology?
A) A
B) B
C) C
D) F
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
60
A society can produce two goods: donuts and beer. The society's production possibility frontier is negatively sloped and "bowed outward" from the origin. As this society moves up its production possibility frontier, producing more and more units of donuts, the opportunity cost of producing beer
A) decreases.
B) remains constant.
C) increases.
D) could decrease or increase depending on the technology.
A) decreases.
B) remains constant.
C) increases.
D) could decrease or increase depending on the technology.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
61
Refer to the information provided in Figure 2.5 below to answer the questions that follow. Figure 2.5
Refer to Figure 2.5. For this economy to move from Point A to Point B, ________ additional plasma TVs could be produced when the production of LCD TVs is reduced by 30.
A) exactly 20
B) fewer than 20
C) more than 20
D) exactly 90
Figure 2.5Refer to Figure 2.5. For this economy to move from Point A to Point B, ________ additional plasma TVs could be produced when the production of LCD TVs is reduced by 30.
A) exactly 20
B) fewer than 20
C) more than 20
D) exactly 90
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
62
Refer to the information provided in Figure 2.5 below to answer the questions that follow. Figure 2.5
Refer to Figure 2.5. The best point for society would be
A) Point C, as at this point there are approximately equal amounts of LCD and plasma televisions being produced.
B) either Point B or Point C, as the total amount being produced at either of these points is approximately the same.
C) at any of the labeled points, as all of the points represent an efficient allocation of resources.
D) indeterminate from this information, as we don't have any information about the society's desires.
Figure 2.5Refer to Figure 2.5. The best point for society would be
A) Point C, as at this point there are approximately equal amounts of LCD and plasma televisions being produced.
B) either Point B or Point C, as the total amount being produced at either of these points is approximately the same.
C) at any of the labeled points, as all of the points represent an efficient allocation of resources.
D) indeterminate from this information, as we don't have any information about the society's desires.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
63
Refer to the information provided in Figure 2.5 below to answer the questions that follow. Figure 2.5
Refer to Figure 2.5. The marginal rate of transformation in moving from Point A to Point B is
A) -2/3.
B) -1.5.
C) -3.
D) -30.
Figure 2.5Refer to Figure 2.5. The marginal rate of transformation in moving from Point A to Point B is
A) -2/3.
B) -1.5.
C) -3.
D) -30.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
64
If the opportunity costs of producing a good increase as more of that good is produced, the economy's production possibility frontier will be
A) negatively sloped and "bowed inward" toward the origin.
B) negatively sloped and "bowed outward" from the origin.
C) a negatively sloped straight line.
D) a positively sloped straight line.
A) negatively sloped and "bowed inward" toward the origin.
B) negatively sloped and "bowed outward" from the origin.
C) a negatively sloped straight line.
D) a positively sloped straight line.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
65
Refer to the information provided in Figure 2.5 below to answer the questions that follow. Figure 2.5
Refer to Figure 2.5. The economy is currently at Point B. The opportunity cost of moving from Point B to Point A is the
A) 40 plasma TVs that must be forgone to produce 120 additional LCD TVs.
B) 20 plasma TVs that must be forgone to produce 30 additional LCD TVs.
C) 30 LCD TVs that must be forgone to produce 40 additional plasma TVs.
D) 120 LCD TVs that must be forgone to produce 20 additional plasma TVs.
Figure 2.5Refer to Figure 2.5. The economy is currently at Point B. The opportunity cost of moving from Point B to Point A is the
A) 40 plasma TVs that must be forgone to produce 120 additional LCD TVs.
B) 20 plasma TVs that must be forgone to produce 30 additional LCD TVs.
C) 30 LCD TVs that must be forgone to produce 40 additional plasma TVs.
D) 120 LCD TVs that must be forgone to produce 20 additional plasma TVs.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
66
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, as the economy moves from Point E to Point A, the opportunity cost of hybrid cars, measured in terms of motorcycles,
A) increases.
B) decreases.
C) remains constant.
D) initially increases, then decreases.
Figure 2.4According to Figure 2.4, as the economy moves from Point E to Point A, the opportunity cost of hybrid cars, measured in terms of motorcycles,
A) increases.
B) decreases.
C) remains constant.
D) initially increases, then decreases.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
67
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
Refer to Figure 2.4. The economy moves from Point E to Point B. This could be explained by
A) an increase in unemployment.
B) a reduction in unemployment.
C) a change in society's preferences for hybrid cars versus motorcycles.
D) an increase in economic growth.
Figure 2.4Refer to Figure 2.4. The economy moves from Point E to Point B. This could be explained by
A) an increase in unemployment.
B) a reduction in unemployment.
C) a change in society's preferences for hybrid cars versus motorcycles.
D) an increase in economic growth.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
68
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, Point F
A) is efficient and attainable.
B) represents underallocation of resources.
C) represents what the people want.
D) cannot be produced with the current state of technology.
Figure 2.4According to Figure 2.4, Point F
A) is efficient and attainable.
B) represents underallocation of resources.
C) represents what the people want.
D) cannot be produced with the current state of technology.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
69
Refer to the information provided in Figure 2.5 below to answer the questions that follow. Figure 2.5
Refer to Figure 2.5. For this economy to move from Point B to Point C so that an additional 20 plasma televisions could be produced, production of LCD televisions would have to be reduced by
A) exactly 30.
B) fewer than 30.
C) more than 30.
D) exactly 60.
Figure 2.5Refer to Figure 2.5. For this economy to move from Point B to Point C so that an additional 20 plasma televisions could be produced, production of LCD televisions would have to be reduced by
A) exactly 30.
B) fewer than 30.
C) more than 30.
D) exactly 60.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
70
As you move down the production possibility frontier, the absolute value of the marginal rate of transformation
A) increases.
B) decreases.
C) initially increases, then decreases.
D) initially decreases, then increases.
A) increases.
B) decreases.
C) initially increases, then decreases.
D) initially decreases, then increases.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
71
Refer to the information provided in Figure 2.5 below to answer the questions that follow. Figure 2.5
Refer to Figure 2.5. The marginal rate of transformation in moving from Point B to Point A is
A) -2/3.
B) -3/4.
C) -1.5.
D) -20.
Figure 2.5Refer to Figure 2.5. The marginal rate of transformation in moving from Point B to Point A is
A) -2/3.
B) -3/4.
C) -1.5.
D) -20.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
72
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, Point E necessarily represents
A) an impossible production point.
B) technological advancement.
C) overallocation of resources.
D) only motorcycles being produced.
Figure 2.4According to Figure 2.4, Point E necessarily represents
A) an impossible production point.
B) technological advancement.
C) overallocation of resources.
D) only motorcycles being produced.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
73
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, as the economy moves from Point D to Point B, the opportunity cost of hybrid cars, measured in terms of motorcycles
A) remains constant.
B) decreases.
C) increases.
D) initially increases, then decreases.
Figure 2.4According to Figure 2.4, as the economy moves from Point D to Point B, the opportunity cost of hybrid cars, measured in terms of motorcycles
A) remains constant.
B) decreases.
C) increases.
D) initially increases, then decreases.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
74
As more of a good, such as television sets, is produced, the opportunity costs of producing it increases. This most likely occurs because
A) as more of a good is produced, the inputs used to produce that good will increase in price.
B) consumers would be willing to pay higher prices for the good as more of the good is produced.
C) resources are not equally well suited to producing all goods, and as more of a good is produced, it is necessary to use resources less well suited to the production of that good.
D) as more of a good is produced, the quality of that good declines, and therefore the costs of production increase.
A) as more of a good is produced, the inputs used to produce that good will increase in price.
B) consumers would be willing to pay higher prices for the good as more of the good is produced.
C) resources are not equally well suited to producing all goods, and as more of a good is produced, it is necessary to use resources less well suited to the production of that good.
D) as more of a good is produced, the quality of that good declines, and therefore the costs of production increase.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
75
Refer to the information provided in Figure 2.5 below to answer the questions that follow. Figure 2.5
Refer to Figure 2.5. The economy is currently at Point A. The opportunity cost of moving from Point A to Point B is the
A) 90 LCD televisions that must be forgone to produce 20 additional plasma televisions.
B) 30 LCD televisions that must be forgone to produce 60 additional plasma televisions.
C) 120 LCD televisions that must be forgone to produce 40 additional plasma televisions.
D) 30 LCD televisions that must be forgone to produce 20 additional plasma televisions.
Figure 2.5Refer to Figure 2.5. The economy is currently at Point A. The opportunity cost of moving from Point A to Point B is the
A) 90 LCD televisions that must be forgone to produce 20 additional plasma televisions.
B) 30 LCD televisions that must be forgone to produce 60 additional plasma televisions.
C) 120 LCD televisions that must be forgone to produce 40 additional plasma televisions.
D) 30 LCD televisions that must be forgone to produce 20 additional plasma televisions.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
76
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, an increase in unemployment may be represented by the movement from
A) B to A.
B) B to D.
C) C to D.
D) A to C.
Figure 2.4According to Figure 2.4, an increase in unemployment may be represented by the movement from
A) B to A.
B) B to D.
C) C to D.
D) A to C.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
77
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, as the economy moves from Point B to Point D, the opportunity cost of motorcycles, measured in terms of hybrid cars
A) remains constant.
B) decreases.
C) increases
D) initially increases, then decreases.
Figure 2.4According to Figure 2.4, as the economy moves from Point B to Point D, the opportunity cost of motorcycles, measured in terms of hybrid cars
A) remains constant.
B) decreases.
C) increases
D) initially increases, then decreases.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
78
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
Refer to Figure 2.4. The economy moves from Point A to Point D. This could be explained by
A) a reduction in unemployment.
B) an improvement in technology.
C) an increase in economic growth.
D) a change in society's preferences for motorcycles versus hybrid cars.
Figure 2.4Refer to Figure 2.4. The economy moves from Point A to Point D. This could be explained by
A) a reduction in unemployment.
B) an improvement in technology.
C) an increase in economic growth.
D) a change in society's preferences for motorcycles versus hybrid cars.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
79
Refer to the information provided in Figure 2.4 below to answer the questions that follow. Figure 2.4
According to Figure 2.4, Point A necessarily represents
A) an unattainable production point.
B) only hybrid cars being produced.
C) the economy's optimal production point.
D) what society wants.
Figure 2.4According to Figure 2.4, Point A necessarily represents
A) an unattainable production point.
B) only hybrid cars being produced.
C) the economy's optimal production point.
D) what society wants.
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
80
Refer to the information provided in Figure 2.5 below to answer the questions that follow. Figure 2.5
Refer to Figure 2.5. For this economy to move from Point C to Point B, ________ additional LCD TVs could be produced when the production of plasma TVs is reduced by 20.
A) exactly 30
B) fewer than 30
C) more than 30
D) exactly 60
Figure 2.5Refer to Figure 2.5. For this economy to move from Point C to Point B, ________ additional LCD TVs could be produced when the production of plasma TVs is reduced by 20.
A) exactly 30
B) fewer than 30
C) more than 30
D) exactly 60
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
Unlock Deck
k this deck
Unlock Deck
Unlock for access to all 220 flashcards in this deck.
