Question 1

A society can produce two goods: green tea and vitamin water. As this society moves down its production possibility frontier, producing more and more units of vitamin water, the opportunity cost of producing vitamin water increases. The society's production possibilities frontier will be
A) positively sloped and bowed outward.
B) positively sloped and bowed inward.
C) negatively sloped and bowed outward.
D) negatively sloped and bowed inward.

Accepted Answer

The society's production possibilities frontier (PPF) is negatively sloped because producing more of one good requires sacrificing some of the other. It is bowed outward (concave to the origin) due to increasing opportunity costs, indicating that as more vitamin water is produced, the society must give up increasingly larger amounts of green tea, reflecting the principle of increasing opportunity cost.

Question 2

From 1935 to 2009, the yield per acre for wheat has ________ in the United States.
A) slightly declined
B) roughly doubled
C) more than tripled
D) increased more than 6-fold

Accepted Answer

From 1935 to 2009, the yield per acre for wheat in the United States has more than tripled, reflecting significant advancements in agricultural practices, technology, and plant breeding.

Question 3

In economics, the term capital refers only to some form of money.

Accepted Answer

In economics, the term capital refers not only to money but also to physical assets, such as equipment and machinery, and human resources, such as skilled labor.

Question 4

In terms of the production possibility frontier, ________ would best be shown by the production possibility frontier shifting outward.
A) an increase in productivity attributable to an increase in the capital stock
B) a decrease in the unemployment rate
C) a shift in resources from capital goods to consumer goods
D) a change in consumer tastes

Accepted Answer

An increase in productivity attributable to an increase in the capital stock would lead to an increase in the economy's capacity to produce both consumer and capital goods, causing the production possibility frontier to shift outward.

Question 5

From 1935 to 2009, the yield per acre for corn has ________ in the United States.
A) slightly declined
B) roughly doubled
C) almost tripled
D) increased more than 6-fold

Accepted Answer

According to the USDA, the yield per acre for corn in the United States has increased from 24.5 bushels in 1935 to 153.4 bushels in 2009, which is more than 6-fold increase.

Question 6

Related to the Economics in Practice on p. 35: In the survey conducted by Esther Duflo and Abhijit Banerjee, the extremely poor were found to consume ________ of their budgets on weddings, funerals, and other festivals.
A) virtually none
B) less than 5 percent
C) almost 10 percent
D) over half

Accepted Answer

The answer of Related to the Economics in Practice on...

Question 7

Economic growth may occur when
A) a society acquires new resources.
B) a society decides to produce less using existing resources.
C) the society begins to produce the combination of goods society wants most.
D) technology remains unchanged but unemployment increases.

Accepted Answer

The answer of Economic growth may occur when
A) a society...

Question 8

As you move up 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.

Accepted Answer

The marginal rate of transformation (MRT) represents the rate at which one good must be sacrificed to produce an additional unit of another good. As you move up the production possibility frontier (PPF), which typically has a concave shape to represent increasing opportunity costs, the absolute value of the MRT increases because more of one good must be given up to produce additional units of the other good, reflecting the law of increasing opportunity costs.

Question 9

Consider two countries, Estonia and Ukraine. Estonia devotes a larger portion of its production to capital. All other things equal, which of the following statements is most likely true?
A) Estonia is a poorer country than Ukraine.
B) Estonia will move up its production possibility curve faster than Ukraine.
C) Estonia's production possibility frontier will shift up and out farther and faster than Ukraine's.
D) Ukraine is producing inside its production possibility frontier, whereas Estonia is producing at a point on its production possibility frontier.

Accepted Answer

By devoting a larger portion of its production to capital, Estonia is likely to experience greater technological advancements and productivity gains over time, allowing for faster and larger shifts in its production possibility frontier. Therefore, C is the most likely statement to be true.

Question 10

Related to the Economics in Practice on p. 25: One reason for the increase in sales of frozen foods from $1 billion in 1950 to $44 billion in 2012 is the
A) increased opportunity cost of cooking frozen meals.
B) decrease in the number of women in the labor force.
C) increased opportunity cost of preparing home-cooked meals.
D) decrease in popularity of the microwave oven.

Accepted Answer

The increased opportunity cost of preparing home-cooked meals (due to more women working outside the home and having less time for meal preparation) has led to an increase in sales of frozen foods, which provide a convenient and quick meal option.

Question 11

A decrease in the stock of capital will cause the
A) production possibility frontier to shift outward.
B) production possibility frontier to shift inward.
C) economy to move down the production possibility frontier.
D) economy to move closer to its production possibility frontier.

Accepted Answer

A decrease in the stock of capital will result in a decrease in the economy's productive capacity, and therefore lead to a shift inward along the production possibility frontier.

Question 12

Among the resources used in production are labor and capital.

Accepted Answer

Labor and capital are two of the main factors of production. Labor refers to the human effort used in production while capital refers to the physical and financial resources used in production such as machinery, technology, and buildings.

Question 13

Because resources are not equally well suited to producing all goods
A) as more of a good is produced the inputs used to produce that good will increase in price.
B) the opportunity costs of producing a good will increase as more of that good is produced.
C) the opportunity costs of producing a good will decrease as more of that good is produced.
D) as more of a good is produced the quality of that good declines and therefore the costs of production increase.

Accepted Answer

The idea of opportunity cost implies that there are trade-offs in production. As more of a good is produced, resources which may not be as productive in that particular area will be used, causing the opportunity cost of producing that good to increase.

Question 14

If an economy's production possibility frontier is negatively sloped and "bowed outward" from the origin, then the opportunity cost of producing a good
A) increases as more of that good is produced.
B) decreases as more of that good is produced.
C) remains constant as more of that good is produced.
D) remains constant as less of that good is produced.

Accepted Answer

The fact that the production possibility frontier is "bowed outward" from the origin indicates that the opportunity cost of producing a good increases as the economy produces more of it. This is because as the economy moves along the production possibility frontier, it must give up increasingly larger amounts of other goods in order to produce additional units of the same good.

Question 15

Given scarce resources, how societies go about deciding what to produce, how to produce it, and for whom to produce best describes
A) decreasing opportunity costs.
B) the fallacy of composition.
C) Ockham's razor.
D) the economic problem.

Accepted Answer

The economic problem refers to the fundamental problem of scarcity, wherein resources are limited while human wants and needs are unlimited. Societies must decide how to allocate these scarce resources to produce goods and services, determine the most efficient way to produce them, and ultimately decide who will benefit from their production. This is the core issue that economics seeks to address.

Question 16

Related to the Economics in Practice on p. 35: In all societies, resources are limited relative to people's demands, and there are ________ trade-offs individuals face in rich countries versus poor countries.
A) fewer
B) large differences in the kinds of
C) virtually no differences in the types of
D) more important

Accepted Answer

There are large differences in the kinds of trade-offs individuals face in rich countries versus poor countries. In rich countries, individuals may face trade-offs related to luxury goods and services, whereas in poor countries individuals may face trade-offs related to basic necessities such as food and healthcare.

Question 17

Due to a mild winter, Florida experienced a bumper crop of oranges. This would best be represented by a(n)
A) movement down the U.S. production possibility frontier.
B) movement off the U.S. production possibility frontier to some point inside the frontier.
C) movement up the U.S. production possibility frontier.
D) outward shift of the U.S. production possibility frontier away from the origin.

Accepted Answer

An increase in the production of oranges due to a mild winter in Florida would lead to an outward shift of the U.S. production possibility frontier, as the economy is now able to produce more of both oranges and other goods and services than it was before the increase in orange production.

Question 18

An economy produces capital goods and consumer goods. This economy is operating at a point on its production possibility frontier associated with a large amount of capital goods and a small amount of consumer goods. This is most likely to be a
A) "poor" country because such a nation has difficulty devoting many resources to the production of consumer goods.
B) "rich" country because such a nation can afford to sacrifice.
C) country with a free market.
D) country with a command economy.

Accepted Answer

The economy producing a large amount of capital goods and a small amount of consumer goods is indicative of a country that is sacrificing current consumption in favor of investing in capital goods for future economic growth. This is a common strategy employed by wealthy countries that have the resources to do so. Poorer countries often struggle to produce enough consumer goods to meet basic needs and therefore prioritize their production. The mention of a production possibility frontier suggests that the economy is efficient in its production, which is more likely in a market-based economy rather than a command economy.

Question 19

An increase in the stock of capital will cause the
A) production possibility frontier to shift outward.
B) production possibility frontier to shift inward.
C) economy to move down the production possibility frontier.
D) economy to move closer to its production possibility frontier.

Accepted Answer

An increase in the stock of capital will lead to an increase in productivity and efficiency, allowing for more goods and services to be produced with the same amount of resources. As a result, the production possibility frontier will shift outward, allowing the economy to produce more goods and services than before.

Question 20

Related to the Economics in Practice on p. 25: Based on the increase in the number of women in the labor force over the past 50 years, the opportunity cost of preparing a home-cooked meal
A) decreased.
B) increased.
C) remained constant.
D) dropped to zero.

Accepted Answer

The increase in the number of women in the labor force means that more women are working outside their homes, and therefore have less time to prepare home-cooked meals. This increase in opportunity cost of time spent preparing meals has led to a rise in the popularity of pre-made or fast food meals, indicating that the opportunity cost of preparing a home-cooked meal has increased.

Quiz 2: The Economic Problem: Scarcity and Choice

A society can produce two goods: green tea and vitamin water. As this society moves down its production possibility frontier, producing more and more units of vitamin water, the opportunity cost of producing vitamin water increases. The society's production possibilities frontier will be

From 1935 to 2009, the yield per acre for wheat has ________ in the United States.

In economics, the term capital refers only to some form of money.

In terms of the production possibility frontier, ________ would best be shown by the production possibility frontier shifting outward.

From 1935 to 2009, the yield per acre for corn has ________ in the United States.

Related to the Economics in Practice on p. 35: In the survey conducted by Esther Duflo and Abhijit Banerjee, the extremely poor were found to consume ________ of their budgets on weddings, funerals, and other festivals.

Economic growth may occur when

As you move up the production possibility frontier, the absolute value of the marginal rate of transformation

Consider two countries, Estonia and Ukraine. Estonia devotes a larger portion of its production to capital. All other things equal, which of the following statements is most likely true?

Related to the Economics in Practice on p. 25: One reason for the increase in sales of frozen foods from $1 billion in 1950 to $44 billion in 2012 is the

A decrease in the stock of capital will cause the

Among the resources used in production are labor and capital.

Because resources are not equally well suited to producing all goods

If an economy's production possibility frontier is negatively sloped and "bowed outward" from the origin, then the opportunity cost of producing a good

Given scarce resources, how societies go about deciding what to produce, how to produce it, and for whom to produce best describes

Related to the Economics in Practice on p. 35: In all societies, resources are limited relative to people's demands, and there are ________ trade-offs individuals face in rich countries versus poor countries.

Due to a mild winter, Florida experienced a bumper crop of oranges. This would best be represented by a(n)

An economy produces capital goods and consumer goods. This economy is operating at a point on its production possibility frontier associated with a large amount of capital goods and a small amount of consumer goods. This is most likely to be a

An increase in the stock of capital will cause the

Related to the Economics in Practice on p. 25: Based on the increase in the number of women in the labor force over the past 50 years, the opportunity cost of preparing a home-cooked meal