Question 1

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 outward shift of the U.S. production possibility frontier away from the origin represents an increase in the production capacity of an economy due to factors such as improved technology, increased resources, or better skills. A bumper crop of oranges in Florida represents an increase in resources or better skills. Therefore, the most appropriate representation of this would be an outward shift of the U.S. production possibility frontier.

Question 2

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

Accepted Answer

In economics, the term capital refers to any asset or resource that is used to generate income or produce goods and services. This can include money, but also includes physical capital (such as machinery and equipment), human capital (such as knowledge and skills), and natural capital (such as land and resources).

Question 3

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 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, highlighting the significant cultural and social importance of these events despite their economic constraints.

Question 4

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 concept of opportunity cost states that as more of a good is produced, the opportunity cost of producing that good increases. This is because resources are not equally well suited to producing all goods, so as production of a good increases, resources that are less well suited to producing that good must be used, thus increasing the opportunity cost.

Question 5

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 due to increasing opportunity costs, indicating that as more of one good is produced, larger quantities of the other good must be given up.

Question 6

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 country operating at a point on its production possibility frontier associated with a large amount of capital goods and a small amount of consumer goods is likely a "rich" country. This is because a rich country has the resources and technology to produce more capital goods, which are necessary for the long-term economic growth of the country, even if it means sacrificing some production of consumer goods in the short-term.

Question 7

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 capital stock would allow for more efficient production, allowing for the production possibility frontier to shift outward. The other options would not necessarily result in a shift of the production possibility frontier.

Question 8

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 allows for greater productivity and efficiency in the economy, which leads to an increase in potential output. This causes the production possibility frontier to shift outward, indicating that the economy can produce more goods and services with the same amount of resources.

Question 9

Among the resources used in production are labor and capital.

Accepted Answer

Labor and capital are both commonly used resources in the process of production. Labor refers to the physical and mental effort that workers put into production, while capital encompasses the physical tools, machinery, and other equipment used to produce goods and services.

Question 10

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

As the number of women in the labor force has increased, the opportunity cost of preparing a home-cooked meal has increased as well. This is because women now have more options for how they spend their time, including working outside the home. Therefore, the opportunity cost of choosing to prepare a home-cooked meal (i.e. forgoing the potential income from working outside the home) has increased.

Question 11

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 challenge of allocating resources in order to satisfy unlimited human wants and needs. This requires societies to make decisions about what goods and services to produce, how to produce them, and who will receive them, given that resources are finite.

Question 12

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

Increased opportunity cost of preparing home-cooked meals means that people have more valuable ways to spend their time than preparing meals from scratch, making frozen meals a more convenient and time-saving option. This is a significant factor in the increase in sales of frozen foods over time.

Question 13

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

The sentence implies that there are indeed trade-offs individuals face in both rich and poor countries, but the difference lies in the kinds of trade-offs due to the difference in resources and demands. Therefore, option B, "large differences in the kinds of," is the best choice.

Question 14

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 potential output, which means that the production possibility frontier will shift inward. This is because the economy will not be able to produce as much with the limited resources available. The other options are incorrect because a decrease in the capital stock will not lead to an outward shift in the production possibility frontier, nor will it necessarily cause the economy to move down or closer to its production possibility frontier.

Question 15

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 16

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

The yield per acre for corn in the United States has increased more than 6-fold from 1935 to 2009, reflecting significant advancements in agricultural practices, technology, and genetics.

Question 17

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 18

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-out PPF means that the opportunity cost of producing a good increases as more of that good is produced. This is because resources are not equally efficient in producing both goods, and as more of a specific good is produced, the opportunity cost of producing an additional unit of that good increases.

Question 19

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) increases in absolute value as you move up the production possibility frontier (PPF) due to the law of increasing opportunity costs, which states that to produce more of one good, increasingly larger amounts of the other good must be sacrificed.

Question 20

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

Since Estonia devotes a larger portion of its production to capital, it is likely to have a higher productivity and can produce more output in the long run. This will cause Estonia's production possibility frontier to shift up and out farther and faster than Ukraine's.

Quiz 2: The Economic Problem: Scarcity and Choice

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

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

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.

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

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

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

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

Among the resources used in production are labor and capital.

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

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

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 decrease in the stock of capital will cause the

Economic growth may occur when

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

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

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

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?