Question 1

Inefficient production or unemployment exists when the economy is ________ the production possibilities curve.

Accepted Answer

Inefficient production or unemployment occurs when the economy is operating inside the production possibilities curve. This means that the economy is not using all of its resources efficiently and is producing less than it is capable of producing.

Question 2

Use the following to answer questions  
 
-(Exhibit: Production Possibilities Curve-Military and Civilian Goods)A movement from point G to H on Curve 1 would:

Accepted Answer

The answer of Use the following to answer questions ...

Question 3

Efficient production exists when the economy is:

Accepted Answer

Efficient production occurs when an economy is operating on its production possibilities curve. This means that the economy is using all of its resources to produce the maximum amount of goods and services possible without sacrificing the production of other goods and services. Operating inside the production possibilities curve indicates that the economy is not using all of its resources, while operating outside the production possibilities curve is not possible given the current resources available. Moving beyond the production possibilities curve is not possible without an increase in resources or technological advancements.

Question 4

Use the following to answer questions  
-(Exhibit: Strawberries and Submarines)The downward slope of the production possibilities curve implies that resources:

Accepted Answer

The downward slope of the production possibilities curve implies that resources are scarce, meaning there are not enough resources to produce every possible combination of goods.

Question 5

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-(Exhibit: Production Possibilities Curve-Military and Civilian Goods)The movement from point G on Curve 1 to point E on Curve 2 means that the:

Accepted Answer

The movement from point G on Curve 1 to point E on Curve 2 indicates that the production possibilities curve has shifted outward, which typically signifies economic growth due to an increase in resources or improvements in technology.

Question 6

Use the following to answer questions  
-(Exhibit: Strawberries and Submarines)Suppose the economy is now operating at point A.The first submarine, which is achieved at point B, would have an opportunity cost of _______ million tons of strawberries.

Accepted Answer

The answer of Use the following to answer questions ...

Question 7

Use the following to answer questions  
 
-(Exhibit: Production Possibilities Curve-Military and Civilian Goods)If an economy is at point U, and its production possibilities curve is Curve 1, this would indicate that:

Accepted Answer

Point U, located inside the production possibilities curve (Curve 1), indicates that not all resources are being used efficiently. This could be due to unemployment or inefficiency in the economy, meaning that the economy could produce more of either or both goods without sacrificing anything.

Question 8

In general, production possibilities curves are "bowed out" because:

Accepted Answer

The production possibilities curve is bowed out because of the law of increasing opportunity cost, which states that as we produce more of a good, the opportunity cost of producing an additional unit of that good increases. This is because resources are not perfectly adaptable or substitutable, meaning that they are better suited for producing one good over another. Therefore, as we produce more of a good, we must sacrifice increasing amounts of the other good, resulting in increasing opportunity costs, which leads to a bowed-out shape of the production possibilities curve.

Question 9

Use the following to answer questions  
-(Exhibit: Strawberries and Submarines)As the economy moves from point A towards, say, point D, it will find that the opportunity cost of each additional submarine:

Accepted Answer

According to the exhibit, as we move from point A to point D, there is an increasing opportunity cost of producing submarines. This means that the economy has to give up more and more units of strawberries in order to produce an additional unit of submarine. Therefore, the opportunity cost of each additional submarine rises.

Question 10

If an economy is producing a combination of goods that places it on the production possibilities curve, then it has:

Accepted Answer

When an economy is producing on the production possibilities curve, it means it is efficiently utilizing all its available resources and hence it is at full employment. Option A is incorrect because economic growth refers to an increase in the production possibilities curve. Option C is incorrect because inefficiency occurs when an economy is not utilizing all its available resources. Option D is incorrect because if an economy is producing on the production possibilities curve, it means all its factors of production are being utilized and none are idle.

Question 11

Assume an economy is operating on its production possibilities curve, which shows the production of military and civilian goods.If the output of military goods is increased, the output of civilian goods:

Accepted Answer

Since the economy is operating on its production possibilities curve, resources are fully allocated and any increase in the production of military goods requires shifting resources away from the production of civilian goods. Therefore, the output of civilian goods must decrease.

Question 12

If an economy is operating efficiently and with full employment, the production of more of one commodity will necessarily lead to less of something else being produced because of:

Accepted Answer

The concept of scarcity states that resources are limited and cannot fulfill all the wants and needs of society. This means that if more of one commodity is produced, resources will have to be diverted away from the production of another commodity, leading to less of that commodity being produced. This is the fundamental economic problem that all economies face, regardless of their level of efficiency or employment. Therefore, the best choice is C, scarcity.

Question 13

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-(Exhibit: Strawberries and Submarines)Suppose the economy is now operating at pointC.Achieving production at point F would require:

Accepted Answer

Achieving production at point F requires an increase in the overall production capacity of the economy, which can be achieved through either improving technology or increasing the quantities of factors of production. It does not require a reduction in production of strawberries or submarines, and achieving full employment and efficient resource allocation may not necessarily lead to an increase in overall production capacity.

Question 14

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-(Exhibit: Sugar and Freight Trains)Suppose the economy is operating at point C.The opportunity cost of producing the fourth freight train would be:

Accepted Answer

At point C, the economy is producing 3 freight trains and 60 tons of sugar. In order to produce an additional freight train, 20 tons of sugar must be sacrificed. Therefore, the opportunity cost of producing the fourth freight train would be 80 tons of sugar (20 tons x 4 freight trains = 80 tons).

Question 15

If all factors of production that are available for use under current market conditions are being utilized, then the economy has:

Accepted Answer

Full employment refers to the maximum utilization of available factors of production, which implies that all resources are being utilized efficiently.

Question 16

Use the following to answer questions  
 
-(Exhibit: Production Possibilities Curve-Military and Civilian Goods)A movement from point G to point U could be a representation of what happened during:

Accepted Answer

The answer of Use the following to answer questions ...

Question 17

If an economy is producing a combination of goods that places it inside the production possibilities curve, then it has:

Accepted Answer

If an economy is producing a combination of goods that places it inside the production possibilities curve, it means that it is not using all of its available resources efficiently, resulting in idle factors of production or inefficient use of resources. Economic growth and full employment would occur if the economy were producing outside the production possibilities curve, whereas efficiency would be achieved if the economy were producing on the curve itself.

Question 18

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-(Exhibit: Production Possibilities Curve-Military and Civilian Goods)If the economy is represented by Curve 1, then:

Accepted Answer

Point E is located outside the production possibilities curve, indicating that it is unattainable given the current resources and technology.

Question 19

If an economy is producing a level of output that is on its production possibilities curve, the economy

Accepted Answer

If an economy is producing a level of output that is on its production possibilities curve, it means it is using all its resources efficiently and there are no idle resources. So, the correct choice is D.

Question 20

Use the following to answer questions  
-(Exhibit: Strawberries and Submarines)Suppose the economy is now operating at point G.This implies that:

Accepted Answer

Point G is inside the production possibilities curve, which means that the economy is not using all of its resources and is experiencing unemployment and/or inefficient allocation of resources.

Quiz 2: Confronting Scarcity: Choices in Production

Inefficient production or unemployment exists when the economy is ________ the production possibilities curve.

Use the following to answer questions -(Exhibit: Production Possibilities Curve-Military and Civilian Goods) A movement from point G to H on Curve 1 would:

Efficient production exists when the economy is:

Use the following to answer questions -(Exhibit: Strawberries and Submarines) The downward slope of the production possibilities curve implies that resources:

Use the following to answer questions -(Exhibit: Production Possibilities Curve-Military and Civilian Goods) The movement from point G on Curve 1 to point E on Curve 2 means that the:

Use the following to answer questions -(Exhibit: Strawberries and Submarines) Suppose the economy is now operating at point A.The first submarine, which is achieved at point B, would have an opportunity cost of _______ million tons of strawberries.

Use the following to answer questions -(Exhibit: Production Possibilities Curve-Military and Civilian Goods) If an economy is at point U, and its production possibilities curve is Curve 1, this would indicate that:

In general, production possibilities curves are "bowed out" because:

Use the following to answer questions -(Exhibit: Strawberries and Submarines) As the economy moves from point A towards, say, point D, it will find that the opportunity cost of each additional submarine:

If an economy is producing a combination of goods that places it on the production possibilities curve, then it has:

Assume an economy is operating on its production possibilities curve, which shows the production of military and civilian goods.If the output of military goods is increased, the output of civilian goods:

If an economy is operating efficiently and with full employment, the production of more of one commodity will necessarily lead to less of something else being produced because of:

Use the following to answer questions -(Exhibit: Strawberries and Submarines) Suppose the economy is now operating at pointC.Achieving production at point F would require:

Use the following to answer questions -(Exhibit: Sugar and Freight Trains) Suppose the economy is operating at point C.The opportunity cost of producing the fourth freight train would be:

If all factors of production that are available for use under current market conditions are being utilized, then the economy has:

Use the following to answer questions -(Exhibit: Production Possibilities Curve-Military and Civilian Goods) A movement from point G to point U could be a representation of what happened during:

If an economy is producing a combination of goods that places it inside the production possibilities curve, then it has:

Use the following to answer questions -(Exhibit: Production Possibilities Curve-Military and Civilian Goods) If the economy is represented by Curve 1, then:

If an economy is producing a level of output that is on its production possibilities curve, the economy

Use the following to answer questions -(Exhibit: Strawberries and Submarines) Suppose the economy is now operating at point G.This implies that: