Question 1

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

Economic growth can occur when a society acquires new resources, as this can increase the capacity to produce goods and services.

Question 2

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 outward shift in the production possibility frontier, indicating an economy can produce more of both goods with the same amount of resources.

Question 3

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 expands an economy's capacity to produce goods and services, thereby shifting the production possibility frontier outward, indicating potential for greater production levels.

Question 4

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, which is a key factor of production, would reduce an economy's ability to produce goods and services. This would be represented by a shift of the production possibility frontier (PPF) inward, indicating a reduction in the maximum possible output of two goods or services that an economy can achieve when all its resources are fully and efficiently utilized.

Question 5

Related to the Economics in Practice on p. 36: 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

The correct answer is B because in rich countries versus poor countries, there are large differences in the kinds of trade-offs individuals face due to varying levels of resource availability, economic structures, and societal needs.

Question 6

Related to the Economics in Practice on p. 36: 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 survey by Esther Duflo and Abhijit Banerjee found that the extremely poor allocate almost 10 percent of their budgets to weddings, funerals, and other festivals.

Question 7

Related to the Economics in Practice on p. 26: Based on the increase in the number of women in the labor force over the past 60 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 over the past 60 years has led to an increase in the opportunity cost of preparing a home-cooked meal. This is because as more women work outside the home, the time that could be spent on cooking could alternatively be used to earn income, making the cost of time spent on cooking higher.

Question 8

From 1935 to 2017, 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

From 1935 to 2017, the yield per acre for corn in the United States has increased more than 6-fold, reflecting significant advancements in agricultural practices, technology, and genetics.

Question 9

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 10

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, also known as the basic or central economic problem, is about how societies decide what to produce, how to produce it, and for whom to produce given their limited resources. This encompasses the core of economic theory and practice, dealing with the allocation of scarce resources to meet the unlimited wants of individuals and societies.

Question 11

From 1935 to 2017, 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

The yield per acre for wheat in the United States has more than tripled from 1935 to 2017, reflecting significant advancements in agricultural practices, technology, and plant breeding.

Question 12

Related to the Economics in Practice on p. 26: One reason for the increase in sales of frozen foods from $1 billion in 1950 to $53 billion in 2016 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 increase in sales of frozen foods can be attributed to the increased opportunity cost of preparing home-cooked meals. As more people, particularly women, entered the workforce, the time available for cooking decreased, making the convenience of frozen meals more appealing.

Question 13

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 14

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

Estonia devoting more resources to capital suggests it is investing in growth, leading to a faster outward shift of its production possibility frontier compared to Ukraine.

Question 15

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

A "bowed outward" production possibility frontier indicates increasing opportunity costs as more of a good is produced, due to the law of increasing opportunity costs. This law states that as you produce more of one good, the opportunity cost (in terms of foregone production of another good) increases.

Question 16

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

Accepted Answer

In economics, capital refers not only to money but also to other assets that can be used for production, such as machinery, buildings, and tools.

Question 17

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 principle of increasing opportunity costs states that as production of a good increases, the opportunity cost of producing an additional unit of that good will increase. This is because resources are not equally efficient in producing all goods, so as more of a good is produced, less suitable resources are used, increasing the cost in terms of foregone production of other goods.

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

A "rich" country can afford to allocate more resources to capital goods, which can lead to future growth and development, even if it means producing fewer consumer goods in the short term.

Question 19

Among the resources used in production are labor and capital.

Accepted Answer

Labor and capital are two primary factors of production used in the creation of goods and services. Labor refers to human effort, while capital includes tools, machinery, and buildings.

Question 20

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 bumper crop would increase the overall productive capacity in the agricultural sector, which is best represented by an outward shift of the production possibility frontier (PPF). This indicates that the economy can now produce more of both oranges and other goods, assuming resources are efficiently reallocated.

Quiz 2: The Economic Problem: Scarcity and Choice

Economic growth may occur when

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

An increase in the stock of capital will cause the

A decrease in the stock of capital will cause the

Related to the Economics in Practice on p. 36: In all societies, resources are limited relative to people's demands, and there are ________ trade-offs individuals face in rich countries versus poor countries.

Related to the Economics in Practice on p. 36: 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.

Related to the Economics in Practice on p. 26: Based on the increase in the number of women in the labor force over the past 60 years, the opportunity cost of preparing a home-cooked meal

From 1935 to 2017, the yield per acre for corn has ________ in the United States.

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

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

From 1935 to 2017, the yield per acre for wheat has ________ in the United States.

Related to the Economics in Practice on p. 26: One reason for the increase in sales of frozen foods from $1 billion in 1950 to $53 billion in 2016 is the

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?

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

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

Because resources are not equally well suited to producing all goods,

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

Among the resources used in production are labor and capital.

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