Question 1

Inefficient production or unemployment exists when the economy is ________ the production possibilities curve.
A) operating inside
B) operating on
C) operating outside
D) moving along

Accepted Answer

If an economy is operating inside the production possibilities curve, it is not efficiently utilizing all available resources and factors of production. This can lead to inefficient production or unemployment as some resources are not being fully utilized to their potential.

Question 2

Efficient production implies that it is:
A) possible to produce more of all goods and services.
B) it is possible to produce more of one good without producing less of another.
C) not possible to produce more of one good without producing less of another good.
D) producing at a combination of goods which lies between the production possibilities curve and the origin.

Accepted Answer

Efficient production means the economy is operating on its production possibilities frontier (PPF), where producing more of one good requires sacrificing some amount of another good due to limited resources. This is the concept of opportunity cost.

Question 3

Any point inside a production possibilities curve indicates:
A) unemployment and/or inefficiency.
B) that the law of increasing opportunity costs is no longer valid.
C) that society doesn't want more of either good.
D) that economic growth is no longer possible.

Accepted Answer

Points inside the production possibilities curve represent underutilization of resources, indicating unemployment or inefficiency, as the economy is not operating at its full potential.

Question 4

If all factors of production that are available for use under current market conditions are being utilized, then the economy has:
A) economic growth.
B) comparative advantage.
C) full employment.
D) inefficient production.

Accepted Answer

Full employment means that all available factors of production are being utilized, implying that there are no unemployed resources in the economy.

Question 5

Efficient production exists when the economy is:
A) operating inside its production possibilities curve.
B) operating on its production possibilities curve.
C) operating outside its production possibilities curve.
D) moving beyond its production possibilities curve.

Accepted Answer

Efficient production occurs when an economy is operating on its production possibilities curve. This means that it is producing the maximum possible output given its available resources and technology. Operating inside the curve indicates that the economy is not utilizing all of its available resources, while operating outside the curve suggests that it is producing beyond what is currently possible with its resources and technology. Moving beyond the curve is not possible as it represents the maximum attainable level of production.

Question 6

Use the following to answer question(s): 
Exhibit: Strawberries and Submarines
 
-(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:
A) falls.
B) rises.
C) remains unchanged.
D) none of the above

Accepted Answer

According to the exhibit, as the economy moves from point A towards point D, the opportunity cost of each additional submarine rises. This is because the production of submarines requires the diversion of resources from producing strawberries, which have a higher opportunity cost as the economy moves along the production possibility curve towards the production of more submarines.

Question 7

If an economy is producing a level of output that is on its production possibilities curve, the economy
A) has idle resources.
B) has idle resources but is using resources efficiently.
C) has no idle resources but is using them inefficiently.
D) has no idle resources and is using resources efficiently.

Accepted Answer

This is because if an economy is producing at a point on its production possibilities curve, it is producing the maximum possible output with the given resources and technology. Therefore, there are no idle resources and they are being used efficiently.

Question 8

Use the following to answer question(s): 
Exhibit: Production Possibilities Curve-Military and Civilian Goods
 
-(Exhibit: Production Possibilities Curve-Military and Civilian Goods) If the economy is represented by Curve 1, then:
A) point E is unattainable at the present time.
B) point G is superior to point H.
C) point H is superior to point G.
D) factors of production are not being used efficiently.

Accepted Answer

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

Question 9

When making a choice to do more of one activity, the highest-valued other choice society does not make is called _______ , and it is measured _______ .
A) opportunity cost; in terms of the money it costs
B) increasing cost; in terms of the amount of money spent doing so
C) constant cost; by the slope of the production possibilities curve at that level
D) opportunity cost; by the slope of the production possibilities curve at that level

Accepted Answer

The highest-valued other choice society does not make is called opportunity cost, and it is measured by the slope of the production possibilities curve at that level. Therefore, the best choice is D, which correctly identifies the concept of opportunity cost and how it is measured. Choice A is incorrect because opportunity cost is not necessarily measured in terms of money. Choice B is incorrect because increasing cost refers to the fact that as more of a good is produced, the cost of producing each additional unit increases. Choice C is incorrect because constant cost refers to the fact that the resources used to produce a good can be easily shifted between the production of that good and other goods, without much change in the cost of production.

Question 10

If an economy is producing a combination of goods that places it on the production possibilities curve, then it has:
A) economic growth.
B) full employment.
C) inefficiency.
D) idle factors of production.

Accepted Answer

If an economy is producing a combination of goods that places it on the production possibilities curve, then it is utilizing all of its resources and factors of production to produce goods efficiently. This means that the economy is at full employment, with no idle factors of production. However, it does not necessarily indicate economic growth, as the production possibilities curve represents the maximum output that the economy can produce with its existing resources and technology. It also does not suggest inefficiency, as the economy is operating on its production possibilities frontier, the most efficient point at which it can produce goods.

Question 11

Use the following to answer question(s): 
Exhibit: Production Possibilities Curve-Military and Civilian Goods
 
-(Exhibit: Production Possibilities Curve-Military and Civilian Goods) A movement from point G to point U could be a representation of what happened during:
A) World War II.
B) the Great Depression.
C) the postwar expansion following World War II.
D) a period of rapid economic growth.

Accepted Answer

The answer of Use the following to answer question(s): 
Exhibit:...

Question 12

Use the following to answer question(s): 
Exhibit: Production Possibilities Curve-Military and Civilian Goods
 
-(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:
A) economy has grown.
B) economy has become less efficient.
C) quality and/or the quantity of the factors of production has decreased.
D) demand for military goods has risen.

Accepted Answer

The movement from point G on Curve 1 to point E on Curve 2 shows an increase in the production of both military and civilian goods, indicating economic growth.

Question 13

If an economy is operating on its production possibilities curve, it is:
A) efficient and fully employed.
B) fully employed but not necessarily efficient.
C) efficiently producing but not necessarily fully employed.
D) inevitably going to grow in the future.

Accepted Answer

An economy operating on its production possibilities curve is producing goods and services at the maximum possible level given its resources and technology. This means that it is efficient, as all resources are being utilized in the best possible way, and fully employed, as all available labor is being used. Therefore, the correct answer is A, efficient and fully employed.

Question 14

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:
A) will increase too.
B) will not change.
C) must decrease.
D) may increase or decrease.

Accepted Answer

Since the economy is already operating on its production possibilities curve, increasing the output of military goods means shifting resources away from producing civilian goods. Therefore, the production of civilian goods must decrease.

Question 15

Use the following to answer question(s): 
Exhibit: Strawberries and Submarines
 
-(Exhibit: Strawberries and Submarines) Suppose the economy is now operating at point C. Achieving production at point F would require:
A) that the economy achieve full employment and an efficient allocation of resources.
B) that the economy reduce its production of strawberries.
C) that the economy reduce its production of submarines.
D) that the economy improve its technology or increase the quantities of factors of production it has.

Accepted Answer

Achieving production at point F would require an improvement in technology or an increase in the quantities of factors of production, as it is currently beyond the production possibilities curve (PPC) of the economy at its current state. It does not necessarily require a reduction in the production of strawberries or submarines, and full employment and efficient allocation of resources may not be enough to reach point F if the technological capabilities or factor inputs are insufficient.

Question 16

If an economy is producing a combination of goods that places it inside the production possibilities curve, then it has:
A) economic growth.
B) full employment.
C) efficiency.
D) idle factors of production or inefficient use of resources.

Accepted Answer

If an economy is producing a combination of goods that places it inside the production possibilities curve, then it means that it is not utilizing all of its resources efficiently. This could be due to idle factors of production or inefficient use of resources.

Question 17

Use the following to answer question(s): 
Exhibit: Production Possibilities Curve-Military and Civilian Goods
 
-(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:
A) resources are fully employed.
B) economic growth has taken place.
C) there is inefficiency and/or unemployment.
D) the economy is maximizing its economic objectives.

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 18

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:
A) the unlimited wants of people.
B) perfectly adaptability of resources in the production of various goods.
C) scarcity.
D) the lack of money capital.

Accepted Answer

When an economy is operating with full employment, it means that all available resources are being used to their maximum potential. However, resources are still limited in quantity, and therefore, producing more of one commodity means diverting resources from producing something else. This is known as scarcity, wherein the unlimited wants and needs of people cannot be fulfilled due to limited resources. Thus, option C is the correct answer. Option A is incorrect because unlimited wants do not necessarily lead to less production, and option B is incorrect as resources are not perfectly adaptable. Option D is not relevant to this scenario.

Question 19

Use the following to answer question(s): 
Exhibit: Production Possibilities Curve-Military and Civilian Goods
 
-(Exhibit: Production Possibilities Curve-Military and Civilian Goods) A movement from point G to H on Curve 1 would:
A) require giving up military goods in order to get more civilian goods.
B) indicate that, in this economy, there is no scarcity.
C) require giving up civilian goods to get more military goods.
D) require greater efficiency in the production of civilian goods.

Accepted Answer

A movement from point G to H on a production possibilities curve typically involves reallocating resources from the production of military goods to civilian goods, indicating a trade-off due to scarcity.

Question 20

Use the following to answer question(s): 
Exhibit: Strawberries and Submarines
 
-(Exhibit: Strawberries and Submarines) The downward slope of the production possibilities curve implies that resources:
A) must be used efficiently.
B) are scarce.
C) should not be wasted.
D) should be allocated so that approximately equal amounts of both goods are produced.

Accepted Answer

The downward slope of the production possibilities curve implies that resources are scarce, as the curve shows the trade-off between producing two goods with limited resources.

Quiz 2: Confronting Scarcity: Choices in Production

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

Efficient production implies that it is:

Any point inside a production possibilities curve indicates:

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

Efficient production exists when the economy is:

Use the following to answer question(s) : Exhibit: Strawberries and Submarines -(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 level of output that is on its production possibilities curve, the economy

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

When making a choice to do more of one activity, the highest-valued other choice society does not make is called _ , and it is measured _ .

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

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

Use the following to answer question(s) : Exhibit: Production Possibilities Curve-Military and Civilian Goods -(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:

If an economy is operating on its production possibilities curve, it is:

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:

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

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 question(s) : Exhibit: Production Possibilities Curve-Military and Civilian Goods -(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:

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 question(s) : Exhibit: Production Possibilities Curve-Military and Civilian Goods -(Exhibit: Production Possibilities Curve-Military and Civilian Goods) A movement from point G to H on Curve 1 would:

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