d. What to produce? How to produce? For whom to produce?

Transcription

1 1. Whih of the following best esribes the three funamental eonomi questions? a. What to proue, when to proue, an where to proue. b. What time to proue, what plae to proue, an how to proue.. What to proue, when to proue, an for whom to proue.. What to proue, how to proue, an for whom to proue. LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Three Funamental Eonomi Questions 2. Whih of the following is not one of the three funamental eonomi questions? a. What happens when you a to or subtrat from a urrent situation? b. For whom to proue?. How to proue?. What to proue? a LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Three Funamental Eonomi Questions 3. Whih of the following is orretly lists the three funamental eonomi questions? a. If to proue? Why to proue? When to proue? b. If to proue? What to proue? How to proue?. Why to proue? What to proue? How to proue?. What to proue? How to proue? For whom to proue? LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Three Funamental Eonomi Questions 4. Three basi eisions must be mae by all eonomies. What are they? a. How muh will be proue, when it will be proue, an how muh it will ost. b. What the prie of eah goo will be, who will proue eah goo, an who will onsume eah goo.. What will be proue, how goos will be proue, an for whom goos will be proue.. How the opportunity ost priniple will be applie, if an how the law of omparative avantage will be

2 utilize, an whether the proution possibilities onstraint will apply. LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Three Funamental Eonomi Questions 5. Beause of the problem of sarity, eah eonomi system must make whih of the following hoies? a. How to proue? b. What to proue?. For whom to proue?. All of the above. LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Three Funamental Eonomi Questions 6. Whih funamental eonomi question is most losely relate to the issues of inome istribution an poverty? a. The What to Proue question. b. The Why to Proue question.. The How to Proue question.. The For Whom to Proue question. LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Three Funamental Eonomi Questions 7. Whih funamental eonomi question requires soiety to hoose the tehnologial an resoure mix use to proue goos? a. The What to Proue question. b. The Why to Proue question.. The How to Proue question.. The For Whom to Proue question.

3 LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Three Funamental Eonomi Questions 8. Opportunity ost: a. represents the best alternative sarifie for a hosen alternative. b. has no relationship to the various alternatives that must be given up when a hoie is mae in the ontext of sarity.. represents the worst alternative sarifie for a hosen alternative.. Represents all possible alternatives sarifie for a hosen alternative. a LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Opportunity Cost 9. The opportunity ost of an ation is: a. the monetary payment the ation require. b. the total time spent by all parties in arrying out the ation.. the value of the best opportunity that must be sarifie in orer to take the ation.. the ost of all alternative ations that oul have been taken, ae together. LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Opportunity Cost 10. The highest value alternative that must be given up in orer to hoose an option is alle the: a. opportunity ost. b. utility ost.. sarity expense.. isutility option. a LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation.

4 Opportunity Cost 11. Whih of the following sayings best reflets the onept of opportunity ost? a. "You an't teah an ol og new triks." b. "There is no suh thing as a free lunh.". "I have a baker's ozen.". "There's no business like show business." b LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Opportunity Cost 12. The opportunity ost to a ity for using loal tax revenues to onstrut a new park is the: a. best alternative foregone by builing the park. b. ollar ost of onstruting the new park.. ollar ost of the ol park.. inrease taxes neessary to pay for maintenane of the new park. a LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Opportunity Cost 13. A goo or servie that is forgone by hoosing one alternative over another is alle a(n): a. expliit ost. b. opportunity ost.. historial ost.. aounting ost. b LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Opportunity Cost

5 14. Opportunity ost is the: a. ost inurre when one fails to take avantage of an opportunity. b. prie pai for goos an servies.. ost of the best option forgone as a result of hoosing an alternative option.. unesirable aspets of an option. LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Opportunity Cost 15. The opportunity ost of a purhase is: a. the selling prie of the goo or servie. b. zero if the goo or servie satisfies a nee.. greater for persons who are rih.. the goo or servie given up for the goo or servie purhase. LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Opportunity Cost 16. The opportunity ost of wathing television is: a. all of the alternative programs that appear on other stations. b. zero beause there is no money expeniture involve.. the alternative use of the time foregone by wathing the program.. zero if it benefits you. LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Opportunity Cost 17. Whih of the following oes not illustrate opportunity ost? a. If I stuy, I must give up going to the football game. b. If I buy a omputer, I must o without a 35" television.. More onsumer spening now means more spening in the future.

6 . If I spen more on lothes, I must spen less on foo. LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Opportunity Cost 18. Whih of the following oes not illustrate opportunity ost? a. If I stuy, I must give up going to the football game. b. If I buy a omputer, I must o without a 35" television.. If I spen more on lothes, I must spen less on foo.. All of the above illustrate opportunity ost. LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Opportunity Cost 19. The opportunity ost of an eonomi eision is: a. the best alternative that was sarifie. b. the amount of money neee to implement the eision.. any lan, labor, an apital that are waste.. all options that were lost ue to sarity. a LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Opportunity Cost 20. Bill has $10 to spen on a Superman, Batman, or an X-Men T-shirt. Bill buys the Superman T-shirt an the Batman shirt was a lose seon hoie. What is the opportunity ost? a. The amount he spent, $10. b. Nothing, sine he got his preferre hoie.. The Batman T-shirt.. The X-Men T-shirt.

7 LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Opportunity Cost 21. On a proution possibilities urve, the opportunity ost of goo X, in terms of goo Y, is represente by the: a. istane to the urve from the vertial axis. b. istane to the urve from the horizontal axis.. movement along the urve.. all of the above. LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities. 22. Whih of the following statements is true? a. An opportunity ost is what must be given up in orer to get something else. b. The three funamental eonomi questions refer to What to proue? How to proue? an When to proue?. The term "investment" refers to the purhase of stoks an bons an other finanial seurities.. The law of inreasing opportunity ost implies that as proution of one type of goo is expane then fewer an fewer of other goos must be given up. a LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Opportunity Cost 23. The amount of a goo that must be given up to proue another goo is the onept of: a. sarity. b. speialization.. trae.. effiieny. e. opportunity ost. e

8 LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Opportunity Cost 24. The opportunity ost of an ativity means the: a. amount of money the ativity osts. b. number of hours that is require to engage in this ativity.. expete gains by engaging in the ativity.. amount of other things that must be sarifie in orer to engage in the ativity. e. expete gains minus the expete osts of engaging in the ativity. LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Opportunity Cost 25. In the ontext of the proution possibilities urve, opportunity ost is measure in: a. ollars pai for the goos. b. the quantity of other goos given up.. the value of the resoures use.. hanging tehnology. e. units of satisfation. b LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, etermine the opportunity ost for prouing eah ommoity. 26. Mikki eies to work five hours the night before her eonomis exam. She earns an extra $75, but her exam sore is 10 points lower than it woul have been ha she staye home an stuie. Her opportunity ost is the: a. five hours she worke. b. $75 she earne.. 10 points she lost on her exam.. time she oul have spent wathing television. e. guilt she feels about negleting her eonomis stuies.

9 LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Opportunity Cost 27. When the opportunity ost of prouing arrots inreases as more arrots are proue, then: a. no more arrots will be proue. b. resoures are equally suite to the proution of arrots an to other goos.. the proution possibilities urve is a straight line.. the proution possibilities urve beomes positively slope. e. the law of inreasing osts is present. e LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, etermine the opportunity ost for prouing eah ommoity. The Law of Inreasing Opportunity Costs 28. The opportunity ost of your ollege euation is: a. an. b. an e.. the atual ollar ost of your ollege euation.. your best alternative use of the money you spen for a ollege euation. e. money you oul have earne working instea of going to ollege. b LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Opportunity Cost 29. Suppose that the alternative uses of an hour of your time in the evening, ranke from best to worst, are (1) stuy eonomis, (2i) wath two half-hour TV sitoms, (3) play pool, an (4) jog aroun town. You an only hoose one ativity. What is the opportunity ost of stuying eonomis for one hour, given this information? a. Jogging aroun town. b. Wathing two half-hour TV sitoms.. Playing pool.. The sum of wathing two half-hour TV sitoms, playing pool, an oing your launry. b

10 LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Opportunity Cost 30. The law of inreasing osts iniates that the opportunity ost of prouing a goo: a. is proportional to the proution of the goo. b. is onstant to the proution of the goo.. inreases as more of the goo is proue.. ereases as more of the goo is proue. e. inreases as less of the goo is proue. LEARNING OBJECTIVES: ECON Explain why the slope of a proution possibilities frontier is not onstant. The Law of Inreasing Opportunity Costs 31. The amount of a goo that is given up to proue another goo is: a. its ollar ost. b. its opportunity ost.. its relative ost.. its absolute ost. e. all of the above. b LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Opportunity Cost Exhibit 2-1 Proution possibilities urve ata Consumption Goos Capital Goos In Exhibit 2-1, aoring to the information, the opportunity ost of prouing 3 units of apital is:

11 a. 3 units of onsumption goos. b. 4 units of onsumption goos.. 6 units of onsumption goos.. 7 units of onsumption goos. a LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Opportunity Cost 33. In Exhibit 2-1, the opportunity ost of prouing the fourth unit of apital is: a. 0. b. 1 unit of onsumption goos.. 2 units of onsumption goos.. 4 units of onsumption goos. e. there is not enough information to estimate the opportunity ost. LEARNING OBJECTIVES: ECON Ientify the opportunity ost of an ation. Opportunity Cost Exhibit 2-2 Proution possibilities urve 34. The proution possibilities in Exhibit 2-2 iniates that the opportunity ost of orn is: a. inreasing. b. ereasing.

12 . zero.. onstant. e. ineterminate. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, etermine the opportunity ost for prouing eah ommoity. 35. In Exhibit 2-2, the slope of the proution possibilities urve iniates that the opportunity ost of: a. offee is onstant. b. offee is inreasing.. offee is ereasing.. orn is inreasing. e. orn is ereasing, a LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, etermine the opportunity ost for prouing eah ommoity. 36. In Exhibit 2-2, the opportunity ost of offee when moving from A to B is: a. 2 million bushels of orn. b. 6 million bushels of orn.. 8 million bushels of orn.. 14 million bushels of orn. e. it is not possible to etermine. a LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, etermine the opportunity ost for prouing eah ommoity. 37. In Exhibit 2-2, the opportunity ost of offee when moving from A to B is:

13 a. the same as moving from A to C. b. the same as moving from A to D.. the same as moving from B to D.. the same as moving from B to C. e. it is not possible to etermine. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, etermine the opportunity ost for prouing eah ommoity. 38. Whih wor best ompletes the following sentene? A rational eision maker always hooses the option for whih marginal benefit is marginal ost. a. less than b. equal to. unrelate to. more than LEARNING OBJECTIVES: ECON Desribe what it means to think at the margin. Marginal Analysis 39. A farmer is eiing whether or not to a fertilizer to his or her rops. If the farmer as 1 poun of fertilizer per are, the value of the resulting rops rises from $80 to $100 per are. Aoring to marginal analysis, the farmer shoul a fertilizer if it osts less than: a. $12.50 per poun. b. $20 per poun.. $80 per poun.. $100 per poun. b LEARNING OBJECTIVES: ECON Desribe what it means to think at the margin. Marginal Analysis

14 40. In eonomis, the term marginal refers to: a. the hange or ifferene from a urrent situation. b. man-mae resoures as oppose to natural resoures.. the satisfation a onsumer reeives from a goo.. holing everything else onstant in the analysis. a LEARNING OBJECTIVES: ECON Desribe what it means to think at the margin. Marginal Analysis 41. When eiing whether to buy a seon ar, marginal analysis iniates that the purhaser shoul ompare the: a. benefits expete from two ars with the ost of both. b. aitional benefits expete from a seon ar with the ost of the two ars.. ollar ost of the two ars with the potential inome that the ars will generate.. aitional benefits of the seon ar with the aitional ost of the seon ar. LEARNING OBJECTIVES: ECON Desribe what it means to think at the margin. Marginal Analysis 42. Whih of the following is an example of an organization using marginal analysis? a. A hotel manager alulating the average ost per guest for the past year. b. A farmer hoping for rain.. A government offiial onsiering what effet an inrease in military goos proution will have on the proution of onsumer goos.. A business alulating eonomi profits. LEARNING OBJECTIVES: ECON Desribe what it means to think at the margin. Marginal Analysis 43. While waiting in line to buy two taos at 80 ents eah an a meium rink for 90 ents, Joran noties that the restaurant has a value meal ontaining three taos an a meium rink all for $3. For Joran, the marginal ost of the thir tao woul be: a. zero.

15 b. 50 ents.. 80 ents.. $1. b LEARNING OBJECTIVES: ECON Desribe what it means to think at the margin. Marginal Analysis 44. While waiting in line to buy a heeseburger for $2 an a rink for 75 ents, Aaron noties that the restaurant has a value meal ontaining a heeseburger, rink, an Frenh fries for $3. For Aaron, the marginal ost of purhasing the Frenh fries: a. woul be zero. b. woul be 25 ents.. woul be 50 ents.. annot be etermine beause the information about the prie of the Frenh fries is not provie. b LEARNING OBJECTIVES: ECON Desribe what it means to think at the margin. Marginal Analysis 45. While waiting in line to buy one heeseburger for $1.50 an a meium rink for $1.00, Sally noties that she oul get a value meal that ontains both the heeseburger an meium rink an also a meium orer of fries for $2.75. She thinks to herself, "Is it worth the extra 25 ents to get the meium fries?" To an eonomist, Sally's eision is an example of: a. marginal analysis. b. basing eisions on total, rather than marginal, value.. an unintene onsequene.. the fallay of omposition. a LEARNING OBJECTIVES: ECON Desribe what it means to think at the margin. Marginal Analysis 46. Just before lass, Jim tells Stuart, "Stuart, you shouln't skip lass toay beause you have pai tuition to enroll in the lass." Stuart ignores Jim's avie, an instea makes the eision of whether to atten base on the importane to his grae that he feels he' be missing that ay in lass relative to his value of the extra time he oul have to finish the vieo

16 game he is playing. To an eonomist, Stuart is: a. using marginal analysis. b. ignoring the total value of attening lass.. ignoring the onept of opportunity ost.. irresponsible. a LEARNING OBJECTIVES: ECON Desribe what it means to think at the margin. Marginal Analysis 47. Susan wishes to buy gasoline an have her ar washe. She fins that if she buys 9 gallons of gasoline at $1.50 per gallon, the ar wash osts $1, but if she buys 10 gallons of gasoline, the ar wash is free. For Susan, the marginal ost of the tenth gallon of gasoline is: a. zero. b. 50 ents.. $1.. $1.50. b LEARNING OBJECTIVES: ECON Desribe what it means to think at the margin. Marginal Analysis 48. Ralph wants to buy some milk an a box of ereal. If Ralph buys 2 quarts of milk at $1 per quart, the box of ereal osts 75 ents. If he buys 3 quarts of milk at $1 per quart, the box of ereal is free. For Ralph, the marginal ost of the thir quart of milk is: a. zero. b. 25 ents.. 75 ents.. $1. b LEARNING OBJECTIVES: ECON Desribe what it means to think at the margin. Marginal Analysis 49. A loal restaurant offers an "all you an eat" Sunay brunh for $12. Susan eats four servings, but leaves half of a fifth

17 helping uneaten. Why? a. Her marginal value of a serving of brunh has fallen below $12. b. Her marginal value of a serving has fallen below $2.36 ($12 ivie by 5 servings).. Her marginal value of foo has fallen to zero.. The total value she plaes on brunh toay exatly equals $12. LEARNING OBJECTIVES: ECON Desribe what it means to think at the margin. Marginal Analysis 50. Aoring to marginal analysis, you shoul spen more time stuying eonomis if the extra benefit from an aitional hour of stuy: a. is positive. b. outweighs the extra ost.. exees the benefits of the previous hour of stuy.. will raise your exam sore. b LEARNING OBJECTIVES: ECON Desribe what it means to think at the margin. Marginal Analysis 51. Whih wor or phrase best ompletes the following sentene? Marginal analysis means evaluating hanges from a urrent situation. a. positive or negative. b. infinite.. alternating.. maximum. a LEARNING OBJECTIVES: ECON Desribe what it means to think at the margin. Marginal Analysis 52. The priniple that the opportunity ost inreases as the proution of one output expans along the proution possibilities urve is the: a. law of inreasing opportunity osts.

18 b. law of eman.. law of supply.. law of iminishing returns. a LEARNING OBJECTIVES: ECON Explain why the slope of a proution possibilities frontier is not onstant. The Law of Inreasing Opportunity Costs 53. Suppose that an eonomy an proue various ombinations of fish an brea. If more people with strong fishing skills beame employe in this eonomy, how woul the proution possibilities urve (PPC) hange? a. The PPC woul shift outwar on the fish axis, but woul not hange on the brea axis. b. The PPC woul shift outwar equally along both the fish an the brea axes.. The PPC woul shift inwar on the brea axis, but woul not hange on the fish axis.. The PPC woul shift inwar equally along both the fish an the brea axes. a LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible. 54. If an eonomy is operating at a point insie the proution possibilities urve, a. its resoures are not being use effiiently. b. the urve will begin to shift inwar.. the urve will begin to shift outwar.. This is a trik question beause an eonomy annot proue at a point insie the urve. a LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible. 55. Whih of the following most aurately iniates the impliations of an eonomy's proution possibilities urve? a. If all the resoures of an eonomy are being use effiiently, more of one goo an be proue only if less of another goo is proue.

19 b. If all the resoures of an eonomy are being use effiiently, it is generally possible to proue more of one goo without having to sarifie the proution of other goos.. Over time, it is generally impossible for a ountry to expan its proution of goos.. An eonomy will automatially move towar a point that lies outsie of the proution possibilities onstraint unless proper government poliy onstrains proution. a LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible. 56. Whih of the following is true of the proution possibilities urve? a. It assumes a fixe level of tehnology. b. It assumes resoures are fixe.. It assumes resoures are fully employe.. All of the above are orret. LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities. 57. After the terrorist attaks on September 11, 2001, the Unite States began evoting substantial resoures towar the War on Terrorism, homelan seurity, an relief efforts. As long as our resoures were being use effiiently, the proution possibilities urve woul suggest that: a. we will have to give up the proution of other goos that oul have been proue with these resoures. b. we will be able to proue the same amount of other goos as before.. the military spening will result in an outwar shift in the proution possibilities urve but that the relief effort will result in an offsetting inwar shift.. we will be unable to evote the resoures neessary towar these efforts unless there is an improvement in tehnology. a M LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, etermine the opportunity ost for prouing eah ommoity.

20 58. A point outsie the proution possibilities urve represents a ombination of goos that is: a. ineffiient. b. effiient.. unattainable.. attainable. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible. 59. Whih of the following will be most likely to ause the proution possibilities urve for a ountry to shift inwar? a. an inrease in the labor fore b. an inrease in unemployment. evelopment of an improve tehnologial metho of proution. a erease in the stok of physial apital LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities. Soures of Eonomi Growth 60. In Europe uring the 14th entury, the Blak Plague kille 24 million people or lose to 37 perent of the population. How woul this affet the proution possibilities urves for the ountries of Europe at that time? a. The proution possibilities urves for these ountries woul have shifte outwar. b. The proution possibilities urves for these ountries woul have shifte inwar.. The proution possibilities urves for these ountries woul have been unaffete.. This woul have been illustrate by a movement along the proution possibilities urves for these ountries, but it woul not have shifte them. b LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities. Soures of Eonomi Growth

21 61. Whih of the following woul be least likely to ause the proution possibilities urve to shift outwar? a. a erease esire for leisure by workers in the eonomy. b. an invention that requires fewer resoures to proue a goo.. a shift in onsumer preferenes that auses expansion in the output of one prout an a eline in output of other prouts.. an expansion in the man-mae proutive resoures available to the eonomy as the result of a high rate of investment. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible. Soures of Eonomi Growth 62. Using a proution possibilities urve, a tehnologial avane that inreases the amount of output for the same amount of inputs woul be illustrate as a(n): a. flattening of the urve. b. movement from one point to another point along the urve.. outwar shift of the urve.. movement from a point on the urve to a point insie the urve. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible. Soures of Eonomi Growth 63. The proution possibilities urve shows that: a. some of one goo must be given up to get more of another goo in an eonomy that is operating effiiently. b. no output ombination is impossible.. an eonomy that is operating effiiently an have more of one goo without giving up some of another goo.. sarity an be eliminate. a LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities.

22 64. Any point on the proution possibilities urve illustrates: a. minimum proution ombinations. b. maximum proution ombinations.. eonomi growth.. a nonfeasible proution ombination. b LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities. NOTES: 65. Proution possibilities urve analysis inlues the iea of: a. opportunity ost. b. sarity.. maximum proution hoies.. all of the above. LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities. 66. An effiient eonomy: a. uses available resoures fully. b. uses the best ivision of labor.. proues an output ombination at some point along the proution possibility urve.. all of the above. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible.

23 67. A proution possibility graph slopes own beause of: a. the law of inreasing osts. b. nonhomogeneous resoures.. ineffiieny.. improper output mix. e. unemployment. b LEARNING OBJECTIVES: ECON Explain why the slope of a proution possibilities frontier is not onstant. 68. The proution possibility urve is bowe outwar from the origin beause of: a. the law of inreasing opportunity osts. b. the finite nature of the resoure base.. ineffiieny.. improper output mix. e. unemployment. a LEARNING OBJECTIVES: ECON Explain why the slope of a proution possibilities frontier is not onstant. The Law of Inreasing Opportunity Costs 69. The proution possibilities urve emonstrates the basi eonomi priniple that: a. market-base eonomies are more effiient. b. supply will etermine eman in the eonomy.. the proution of more apital goos this year will ause the eonomy to proue less onsumption goos next year.. to proue more of any one thing, assuming full employment, the eonomy must proue less of something else. e. to proue more onsumption goos this year requires the proution of more apital goos this year. LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities.

24 70. A proution possibilities urve shows the various: a. pries that an be harge for apital an onsumption goos. b. ombinations of pries an outputs that an be proue.. ombinations of goos the eonomy has the apaity to proue.. ombinations of resoures an pries that the eonomy an proue. LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities. 71. A proution possibilities urve has "goo X" on the horizontal axis an "goo Y" on the vertial axis. On this iagram, the opportunity ost of goo X, in terms of goo Y, is represente by the: a. istane to the urve from the horizontal axis. b. istane to the urve from the vertial axis.. istane from the origin to the urve.. hange in Y for eah hange in X along the urve. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, etermine the opportunity ost for prouing eah ommoity. 72. Of fators whih affet any eonomy's proution potential, the best two liste below are: a. resoures an tehnology. b. pries an outputs.. wages an pries.. taxes an pries. e. resoures an pries. a LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible.

25 Soures of Eonomi Growth 73. The various ombinations of goos an servies that an be proue, when an eonomy uses its available resoures an tehnology effiiently, is alle: a. sarity. b. opportunity ost.. unlimite proution.. apital aumulation. e. proution possibilities. e LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities. 74. A proution possibilities urve shows the: a. ollar osts of prouing two ifferent goos. b. amounts of labor an apital neee to proue one goo.. various ombinations of goos that an be proue.. pries of ifferent goos that are proue in an eonomy. e. ineffiient use of available resoures an tehnology. LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities. 75. What shape is the proution possibilities urve usually expete to exhibit? a. Upwar-sloping. b. Bowe out.. Bowe in.. Straight line. e. U-shape. b

26 LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities. 76. When the proution possibilities urve is bowe out, resoures are: a. equally well-suite to proution of both goos. b. not being use effiiently.. not equally suite to the proution of both types of goos.. inreasing as more of one goo is proue. e. of an inferior quality. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, etermine the opportunity ost for prouing eah ommoity. The Law of Inreasing Opportunity Costs 77. When an eonomy's resoures are not fully employe, then it must be true that the: a. proution point is loate outsie an to the right of the proution possibilities urve. b. proution point is loate along the proution possibilities urve.. proution point is loate insie an to the left of the proution possibilities urve.. proution possibilities urve shifts to the right. e. proution possibilities urve shifts to the left. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible. 78. The proution possibilities urve shows ifferent ombinations of goos that: a. an be onsume by househols. b. an be onsume by firms.. an be proue with the available tehnology.. are proue an onsume by firms. e. are bought an sol in the market.

27 LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities. 79. The proution possibilities urve illustrates all of the following onepts exept: a. the law of inreasing osts. b. unlimite wants.. sarity.. opportunity ost. e. availability of resoures. b LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities. 80. The proution possibilities urve epits the various ombinations of two goos that an be: a. interhange among two ountries. b. proue with a given tehnology.. onsume with a given quantity of resoures.. proue with inrements in resoures an hanges in tehnology. e. onsume as the resoures inrease. b LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities. 81. Effiient proution means prouing: a. less than feasible output for a given amount of resoures. b. more than feasible output for a given amount of resoures.. the maximum feasible output for a given amount of resoures.

28 . no more than what is neee. e. in exess of what is neee. LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities. 82. The law of inreasing osts hols that the opportunity ost: a. of a goo ereases as the quantity of the goo proue inreases. b. of a goo is proportional to the resoures use in its proution.. of a goo inreases as more of the goo is proue.. of a goo oes not hange with the resoures use its proution. e. hanges as more of the goo is proue. LEARNING OBJECTIVES: ECON Explain why the slope of a proution possibilities frontier is not onstant. The Law of Inreasing Opportunity Costs 83. If an eonomy is prouing at full employment, it means that: a. there are ile resoures in this eonomy. b. the proution is not effiient.. the eonomy is prouing along its proution possibilities urve.. the eonomy is prouing at a point that is to the left of the proution possibilities urve. e. the eonomy is prouing at a point that is to the right of the proution possibilities urve. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible. 84. Whih of the following is not true about a proution possibilities urve? The urve: a. iniates the ombinations of goos an servies that an be proue with given tehnology. b. iniates the effiient proution points.

29 . iniates the non-effiient proution points.. iniates the feasible (attainable) an non-feasible proution points. e. iniates whih proution point will be hosen. e LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities. 85. Whih of the following is true about the proution possibilities urve when a tehnologial progress ours? The urve: a. shifts inwars to the left. b. beomes flatter at one en an steeper at the other en.. beomes steeper.. shifts outwar to the right. e. oes not hange. LEARNING OBJECTIVES: ECON Explain why a nation's eision to invest an proue more apital goos now will inrease the nation's rate of eonomi growth over time. Soures of Eonomi Growth 86. A point insie a proution possibilities urve reflets: a. the law of inreasing osts. b. tehnologial innovation.. less than full use of resoures an tehnology.. eonomi effiieny. e. a way to inrease future eonomi growth. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible.

30 87. A point outsie a proution possibilities urve reflets: a. effiieny. b. speialization.. ineffiieny.. unemployment. e. an impossible hoie. e LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible. 88. Any point insie the proution possibility urve is: a. effiient. b. nonfeasible.. ineffiient.. optimal. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible. 89. Using a proution possibilities urve, an eonomy that proues an output ombination less than the maximum possible is epite by a point loate: a. at the top orner of the urve. b. near the mile of the urve.. at the bottom orner of the urve.. outsie the urve. e. insie the urve. e LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible.

31 90. One of the assumptions unerlying the proution possibilities urve for any given eonomy is that: a. the state of tehnology hanges. b. there is an unlimite supply of resoures.. there is full employment of resoures when the eonomy is on the urve.. goos an be proue outsie the urve. LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities. 91. Whih of the following woul be most likely to ause the proution possibilities urve for omputers an euation to shift outwar? a. A hoie of more omputers an less euation. b. A hoie of more euation an less omputers.. A reution in the labor fore.. An inrease in the quantity of resoures. LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities. Soures of Eonomi Growth 92. Given a proution possibilities urve, a point: a. insie the urve represents unemployment. b. on the urve represents full employment.. outsie the urve is urrently unattainable.. all of the above. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible.

32 93. All points on the proution possibilities urve are: a. unattainable. b. fair.. effiient.. optimal. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible. NOTES: 94. As proution of a goo inreases, opportunity osts rise beause: a. there will be more ineffiieny. b. people always prefer having more goos.. of inflationary pressures.. workers are not equally suite to all tasks. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, etermine the opportunity ost for prouing eah ommoity. 95. If soiety leaves some of its resoures unemploye, then it will be operating at a point: a. beneath its proution possibilities urve. b. at a orner of its proution possibilities urve.. anywhere along its proution possibilities urve.. outsie of its proution possibilities urve. a LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible. 96. The law of inreasing opportunity osts auses the proution possibilities urve to:

33 a. be a straight line. b. slope upwars.. have a bowe-out shape.. shift inwar. LEARNING OBJECTIVES: ECON Explain why the slope of a proution possibilities frontier is not onstant. The Law of Inreasing Opportunity Costs 97. Along a proution possibilities urve showing apital an onsumption goos proution, whih of the following pairs are being hel fixe? a. Unemployment an apital goos proution. b. Number of resoures an onsumption goos proution.. Composition of the eonomy's output an number of resoures.. Capital an onsumption goos proution. e. Tehnology an number of resoures. e LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities. Exhibit 2-3 Proution possibilities urve ata A B C D E Capital goos Consumer goos Aoring to the ata given in Exhibit 2-3, the proution of 1 unit of apital goos an 14 units of onsumer goos: a. is possible but woul be ineffiient. b. may be a result of unemployment.. may be a result of unuse natural resoures.. all of the above. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible.

34 Exhibit 2-4 Proution possibilities urve ata A B C D E Capital goos Consumer goos Aoring to the ata given in Exhibit 2-4, the proution of 140 units of onsumer goos an 10 units of apital goos: a. is possible but woul be ineffiient. b. may be a result of unemployment.. may be a result of unuse natural resoures.. all of the above. e. none of the above. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible Aoring to the ata in Exhibit 2-4, a total output of 140 units of onsumer goos an 10 units of apital goos woul: a. be unobtainable in this eonomy. b. be an effiient way of using the eonomy's sare resoures.. result in the maximum use of the eonomy's labor fore.. result in a less than maximum rate of growth for this eonomy. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible. Exhibit 2-5 Proution possibilities urve

35 101. In Exhibit 2-5, movement between whih of the following points represents an inrease in eonomi effiieny? a. A to C. b. C to D.. D to B.. A to B. e. A to D. b LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible. Exhibit 2-6 Proution possibilities urve ata A B C D E F Capital goos Consumer goos In Exhibit 2-6, the onept of inreasing opportunity osts is represente by the fat that: a. the quantity of apital goos proue must be less than 150. b. the quantity of onsumer goos is onstant for eah hange in the quantity of apital goos proue.. greater amounts of apital goos must be sarifie to proue eah aitional unit of onsumer goos.. the amount of onsumer goos proue must be greater than zero. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, etermine the opportunity ost for prouing eah ommoity.

36 Exhibit 2-7 Proution possibilities urve 103. For the eonomy shown in Exhibit 2-7, whih of the following is true when the eonomy is at point A? a. More ars are being proue than are neee. b. There must be resoures that are not being use fully.. Some ar proution must be forgone in orer to proue more grain in the same perio.. Inrease grain proution woul be impossible. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible For the eonomy shown in Exhibit 2-7 to operate at point C, it must: a. be willing to lower the prie of grain. b. use its given resoures more effiiently than it woul at point A.. experiene resoure unemployment.. experiene an inrease in its resoures an/or an improvement in its tehnology. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible. Soures of Eonomi Growth

37 Exhibit 2-8 Proution possibilities urve ata A B C D E F Capital goos Consumer goos As shown in Exhibit 2-8, the onept of inreasing opportunity osts is reflete in the fat that: a. the quantity of onsumer goos proue an never be zero. b. the labor fore in the eonomy is homogeneous.. greater amounts of apital goos must be sarifie to proue an aitional 2 units of onsumer goos.. a graph of the proution ata is a ownwar-sloping straight line. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, etermine the opportunity ost for prouing eah ommoity. The Law of Inreasing Opportunity Costs 106. As shown in Exhibit 2-8, a total output of 0 units of apital goos an 10 units of onsumer goos is: a. the maximum rate of output for this eonomy. b. an ineffiient way of using the eonomy's sare resoures.. the result of maximum use of the eonomy's labor fore.. unobtainable in this eonomy. LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities As shown in Exhibit 2-8, a total output of 14 units of onsumer goos an 1 unit of apital goos is: a. the result of maximum use of the eonomy's labor fore. b. an effiient way of using the eonomy's sare resoures.. unobtainable in this eonomy.. less than the maximum rate of output for this eonomy. LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities.

38 Exhibit 2-9 Proution possibilities urve 108. If the eonomy represente in Exhibit 2-9 is operating at Point W: a. no trator prout must be forgone to proue more foo in the urrent perio. b. resoures are not fully use.. some trator proution must be forgone to proue more foo in the urrent perio.. inrease foo proution woul be impossible. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible Whih of the following moves from one point to another in Exhibit 2-9 woul represent an inrease in eonomi effiieny? a. Z to W. b. W to Y.. W to X.. X to Y. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible.

39 110. Movement along this proution possibilities urve shown in Exhibit 2-9 iniates: a. that labor is not equally proutive or homogeneous (nonhomogeneous). b. ereasing opportunity osts.. all inputs are homogeneous.. all of the above. a LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities. Exhibit 2-10 Proution possibilities urve ata A B C D E Capital goos Consumption goos Suppose an eonomy is fae with the proution possibilities table shown in Exhibit If this eonomy hooses the ombination of goos at point A, a. only apital goos are being proue. b. every resoure in the eonomy is utilize in the proution of apital goos.. no apital goos are being use as fators of proution.. every resoure in the eonomy is being use in the proution of onsumption goos. e. no onsumption goos are being proue. LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities Suppose an eonomy is fae with the proution possibilities table shown in Exhibit The first unit of apital goos will ost the eonomy units of onsumption goos. a. 25 b. 2. 1

40 . 23 e. 11 b LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities Suppose an eonomy is fae with the proution possibilities table shown in Exhibit As aitional units of apital goos are being proue, the number of onsumption goos proue must, beause. a. inrease; the proution possibility table shows only the maximum effiieny points b. inrease; of the law of inreasing osts. erease; of the law of inreasing osts. erease; of the finite nature of the resoure base e. inrease; apital goos will assist in the proution of onsumer goos LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities Suppose an eonomy is fae with the proution possibilities table shown in Exhibit The seon unit of apital goos proution will ost units of onsumption goos, an the thir unit of apital goos proution will ost units of onsumption goos. a. 4; 6 b. 25; ; 19. 1; 23 e. 2; 19 a LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities.

41 115. Suppose an eonomy is fae with the proution possibilities table shown in Exhibit As aitional units of apital goos are proue, the opportunity ost in terms of sarifie units of onsumption goos beause of. a. ereases; greater effiieny in proution b. inreases; ereasing opportunity ost. inreases; the law of inreasing osts. inreases; greater effiieny in proution e. ereases; the law of inreasing osts LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, etermine the opportunity ost for prouing eah ommoity. The Law of Inreasing Opportunity Costs Exhibit 2-11 Proution possibilities urves 116. In Exhibit 2-11, whih of the following oul have ause the proution possibilities urve of an eonomy to shift from the one labele A to the one labele B? a. A major natural isaster b. An inrease in onsumption goos proution this year. An avane in tehnology. An inrease in unemployment e. A erease in onsumption goos proution this year LEARNING OBJECTIVES: ECON Generate the graph of a proution possibility frontier for any two ommoities. Soures of Eonomi Growth

42 117. In Exhibit 2-11, whih of the following oul have ause the proution possibilities urve to shift from the one labele B to the one labele A? a. A major natural isaster. b. An inrease in resoures.. An avane in tehnology.. A erease in unemployment. e. An improvement in literay. a LEARNING OBJECTIVES: ECON Explain why a nation's eision to invest an proue more apital goos now will inrease the nation's rate of eonomi growth over time. Soures of Eonomi Growth Exhibit 2-12 Proution possibilities urve 118. In Exhibit 2-12, suppose an eonomy with the given proution possibilities urve is urrently loate at point A in the figure. Whih of the following statements is false? a. This eonomy oul proue more of both apital an onsumption goos. b. This eonomy is experiening full employment.. This eonomy oul proue more apital goos while holing fixe the number of onsumption goos proue.. This eonomy oul proue more onsumption goos while holing fixe the number of apital goos proue. e. Not every resoure in this eonomy is being utilize b LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible.

43 Exhibit 2-13 Proution possibilities urve 119. In Exhibit 2-13, in terms of effiieny: a. point A is preferre to point B. b. point A is preferre to point E.. point A is preferre to point D.. point B is preferre to point A. e. point B is preferre to point C. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible In Exhibit 2-13, if the eonomy eies to loate at point E, then: a. this is the best hoie for this eonomy. b. the maximum number of onsumption goos is being proue.. the eonomy has not ahieve full employment.. the eonomy oul not survive beause no foo is being proue. e. the eonomy has not ahieve maximum effiieny. LEARNING OBJECTIVES: ECON Given a graph of a proution possibilities frontier, ientify a bunle as ineffiient, effiient, feasible, or infeasible In Exhibit 2-13, the ombination of goos given by point H oul: