Question 1

A key factor that leads to economic growth is
A) human capital accumulation.
B) avoiding the opportunity cost of investment.
C) increasing current consumption.
D) Both answers A and B are correct.

Accepted Answer

The answer of A key factor that leads to economic...

Question 2

-In the figure above, at the allocatively efficient level of computer production consumers are willing to give up
A) more than 3 televisions per computer.
B) between 0 and 3 televisions per computer.
C) 3 televisions per computer.
D) 0 televisions per computer.

Accepted Answer

At the allocatively efficient level of production, the marginal benefit equals the marginal cost. If consumers are willing to give up 3 televisions per computer, it indicates that the marginal benefit of a computer is equivalent to the cost of 3 televisions, achieving allocative efficiency.

Question 3

-In the figure above, at the allocatively efficient level of computer production the marginal cost of producing a computer is
A) between 0 and 3 televisions per computer.
B) 3 televisions per computer.
C) 0 televisions per computer.
D) more than 3 televisions per computer.

Accepted Answer

At the allocatively efficient level of production, the marginal cost of producing a computer is equal to the marginal benefit, which is represented by the opportunity cost in terms of televisions. Here, it is 3 televisions per computer.

Question 4

Economic growth is the result of all of the following EXCEPT A) capital accumulation. B) investment in human capital. C) technological change. D) opportunity cost.

Accepted Answer

Opportunity cost is not a factor that directly contributes to economic growth, but rather a concept that helps individuals and societies make decisions about how to allocate resources efficiently. The other three choices (capital accumulation, investment in human capital, technological change) are all factors that can lead to economic growth.

Question 5

Technological progress makes the production possibilities frontier
A) become more linear and less bowed.
B) shift inward toward the origin.
C) become less linear and more bowed.
D) shift outward from the origin.

Accepted Answer

Technological progress allows for more efficient production methods, leading to an increase in the quantity and quality of goods and services that can be produced. This results in the production possibilities frontier shifting outward from the origin.

Question 6

Economic growth comes from__________ .
A) people willing to increase their skills in which case, economic growth is free
B) capital accumulation and the avoidance of opportunity cost
C) producing more goods than people want to consume
D) capital accumulation and technological advance

Accepted Answer

Economic growth comes from the accumulation of capital and the adoption of new technologies that allow for greater efficiency and productivity in production. As more capital is accumulated and new technologies are developed and implemented, businesses are able to produce more and increase their profits, leading to overall economic growth.

Question 7

The production possibilities frontier shifts as
A) the unemployment rate changes.
B) tastes and preferences change.
C) technology changes.
D) the money supply grows or shrinks.

Accepted Answer

The production possibilities frontier shows the maximum combination of goods and services that a society can produce given its resources and technology. Therefore, if there is a change in technology, the production possibilities frontier shifts outward, allowing the society to produce more goods and services. Changes in unemployment rates, tastes and preferences, and the money supply do not directly affect the production possibilities frontier.

Question 8

Economic growth is shown on the production possibilities frontier as
A) an inward shift in the PPF.
B) a movement from one point on the PPF to another.
C) an outward shift in the PPF.
D) the curvature of the PPF.

Accepted Answer

Economic growth is shown on the production possibilities frontier as an outward shift in the PPF because it means that the economy can produce more goods and services with the same resources or the same amount of goods and services with fewer resources. This indicates an increase in the productive capacity of the economy, which is represented by an outward shift in the PPF.

Question 9

-In the above figure, if 2 million computers are produced per year then the____________ should be produced to achieve the allocatively efficient use of resources
A) marginal cost of a computer exceeds the marginal benefit of a computer, so fewer computers
B) marginal benefit of a computer exceeds the marginal cost of a computer, so fewer computers
C) marginal cost of a computer exceeds the marginal benefit of a computer, so more computers
D) marginal benefit of a computer exceeds the marginal cost of a computer, so more computers

Accepted Answer

Allocative efficiency is achieved when the marginal benefit equals the marginal cost. If the marginal benefit exceeds the marginal cost, more computers should be produced to reach allocative efficiency.

Question 10

-In the figure above, the allocatively efficient output of computers is
A) 2 million per year.
B) 4 million per year.
C) 3 million per year.
D) the largest amount possible.

Accepted Answer

Allocative efficiency occurs where the price equals the marginal cost of production. In the context of the question, this typically corresponds to the output level where the demand curve intersects the marginal cost curve, which is often given as 3 million per year in such scenarios.

Question 11

Economic growth can be represented by
A) a movement up the production possibilities frontier PPF).
B) an outward shift of the production possibilities frontier PPF).
C) an inward shift of the production possibilities frontier PPF).
D) a movement down the production possibilities frontier PPF).

Accepted Answer

Economic growth refers to an increase in the total output of goods and services produced in an economy over time. An outward shift of the PPF represents an increase in the economy's capacity to produce goods and services, which is indicative of economic growth.

Question 12

-In the figure above, if 4 million computers are produced per year then the ___________should be produced to achieve the allocatively efficient use of resources
A) marginal cost of a computer exceeds the marginal benefit of a computer, so more computers
B) marginal cost of a computer exceeds the marginal benefit of a computer, so fewer computers
C) marginal benefit of a computer exceeds the marginal cost of a computer, so fewer computers
D) marginal benefit of a computer exceeds the marginal cost of a computer, so more computers

Accepted Answer

Allocative efficiency is achieved when the marginal cost equals the marginal benefit. If the marginal cost exceeds the marginal benefit, fewer computers should be produced to reach allocative efficiency.

Question 13

The most anyone is willing to pay for another purse is $30. Currently the price of a purse is $40, and the cost of producing another purse is $50. The marginal benefit of a purse is
A) $50.
B) $30.
C) $40.
D) an amount not given in the answers above.

Accepted Answer

The marginal benefit of a purse is the maximum amount someone is willing to pay for it, which is $30 in this case. Therefore, the best choice is not to produce another purse since the cost of producing it is $50 and the maximum someone is willing to pay is only $30. This would result in a loss of $20 if produced.

Question 14

Using a production possibilities frontier, economic growth is illustrated by a
A) rightward shift of the curve.
B) point inside the curve.
C) movement from one point on the curve to another point on the curve.
D) point on the curve.

Accepted Answer

Economic growth is illustrated by an increase in the economy's ability to produce goods and services over time. This is represented by a rightward shift of the production possibilities frontier. It signifies an increase in the availability of resources, improvements in technology, and/or improvements in the efficiency of resource allocation, enabling more output to be produced with the same inputs, or the same output to be produced with fewer inputs.

Question 15

When economic growth occurs, the
A) economy moves along its production possibilities frontier
B) production possibilities frontier becomes steeper
C) production possibilities frontier shifts outward
D) production possibilities frontier shifts outward but no longer limits the amount that can be produced.

Accepted Answer

Economic growth is the increase in economic output or activity over a period of time. This increase in production is reflected in the expansion of the production possibilities frontier (PPF). A shift in the PPF outward indicates that the economy can produce more of all goods and services than before. Therefore, option C is correct as it explains the shift in the PPF due to economic growth.

Question 16

Economic growth can be pictured in a production possibilities frontier diagram by
A) shifting the production possibilities frontier outward.
B) shifting the production possibilities frontier inward.
C) making the production possibilities frontier more bowed out.
D) making the production possibilities frontier less bowed out.

Accepted Answer

Economic growth refers to an increase in potential output over time. This can be represented in a production possibilities frontier diagram by shifting the entire curve outward, which indicates an increase in the economy's capacity to produce goods and services. As a result of this shift, the economy is able to produce more of all goods and services, which signifies an increase in economic growth.

Question 17

After Hurricane Katrina devastated parts of Mississippi and New Orleans in 2005, we can be sure that the production possibilities frontier for that area temporarily
A) shifted outward, away from the origin.
B) became steeper.
C) shifted inward, toward the origin.
D) became flatter.

Accepted Answer

The production possibilities frontier represents the maximum amount of goods and services an economy can produce with its given resources and technology. After a natural disaster like Hurricane Katrina, resources become scarcer, and technology may become less effective. As a result, the production possibilities frontier typically shifts inward, toward the origin, because the economy can produce less than it could before the disaster.

Question 18

If the marginal benefit from another computer exceeds the marginal cost of the computer, then to use resources allocatively efficiently,
A) more resources should be used to produce computers.
B) if the marginal benefit exceeds the marginal cost by as much as possible, the efficient amount of resources are being used to produce computers.
C) fewer resources should be used to produce computers.
D) None of the above is correct because marginal benefit and marginal cost have nothing to do with using resources allocatively efficiently.

Accepted Answer

When the marginal benefit exceeds the marginal cost, it indicates that producing more computers will increase overall welfare, so more resources should be allocated to computer production to achieve allocative efficiency.

Question 19

An expansion of the production possibilities frontier is
A) a free gift of nature.
B) called economic growth.
C) proof that scarcity is not a binding constraint.
D) something that has occurred only rarely in history.

Accepted Answer

An expansion of the production possibilities frontier is called economic growth. This occurs when an economy increases its ability to produce goods and services over time through the use of technology, human capital, and resources.

Question 20

Capital accumulation definitely
A) makes the production possibilities frontier steeper.
B) shifts the production possibilities frontier outward.
C) has no impact on the production possibilities frontier.
D) shifts the production possibilities frontier inward.

Accepted Answer

Capital accumulation allows for more efficient production and therefore increases the productivity and output capacity of the economy, leading to an outward shift in the production possibilities frontier.

Quiz 2: The Economic Problem

A key factor that leads to economic growth is

-In the figure above, at the allocatively efficient level of computer production consumers are willing to give up

-In the figure above, at the allocatively efficient level of computer production the marginal cost of producing a computer is

Economic growth is the result of all of the following EXCEPT

Technological progress makes the production possibilities frontier

Economic growth comes from__________ .

The production possibilities frontier shifts as

Economic growth is shown on the production possibilities frontier as

-In the above figure, if 2 million computers are produced per year then the____________ should be produced to achieve the allocatively efficient use of resources

-In the figure above, the allocatively efficient output of computers is

Economic growth can be represented by

-In the figure above, if 4 million computers are produced per year then the ___________should be produced to achieve the allocatively efficient use of resources

The most anyone is willing to pay for another purse is $30. Currently the price of a purse is $40, and the cost of producing another purse is $50. The marginal benefit of a purse is

Using a production possibilities frontier, economic growth is illustrated by a

When economic growth occurs, the

Economic growth can be pictured in a production possibilities frontier diagram by

After Hurricane Katrina devastated parts of Mississippi and New Orleans in 2005, we can be sure that the production possibilities frontier for that area temporarily

If the marginal benefit from another computer exceeds the marginal cost of the computer, then to use resources allocatively efficiently,

An expansion of the production possibilities frontier is

Capital accumulation definitely