Question 1

You have invested $1,000 in a stock whose price is increasing at 10 percent a year.Your stock broker,who is never wrong,recommends a stock rising at 20 percent a year.Assuming the broker earns 4 percent of the stock's value on any purchase or sale of the stock,should you take her recommendation?

Accepted Answer

You will earn $200 a year if you take th...

Question 2

Draw a production possibilities frontier for an economy,with the axes labeled "military goods" and "peace goods." Indicate the region that is attainable and the region that is not.Explain the shape of the curve-what assumptions did you make in drawing it?

Accepted Answer

The curve should look like the figures i...

Question 3

At various time,the United States has undergone the painful process of reducing military spending.Military bases from the Carolinas to California pleaded to be spared,citing huge job losses if they close.How can one rationally decide which bases to shut down,given the necessity of jobs?

Accepted Answer

One must examine the opportunity cost of...

Question 4

All of the points inside a production possibilities frontier are ____; all of the points outside the production possibilities frontier are ____.

Accepted Answer

A)   efficient, inefficient
B)   optimal, irrational
C)   attainable, unattainable
D)   rational, zero-cost
E)   unattainable, efficientF) All of the above
G) A) and C)

Question 5

If an economy is producing inefficiently,it is

Accepted Answer

A)   possible to increase production of all goods simultaneously.
B)   possible to increase production of one good at the expense of another.
C)   not possible to increase production of any good.
D)   not possible to increase economic growth.
E)   possible to increase production with no effort.F) All of the above
G) D) and E)

Question 6

Economic growth solves the problem of scarcity.

Accepted Answer

A) True 
 B)False

Question 7

A market system (market economy) depends on the market to

Accepted Answer

A)   find the most efficient way of using resources.
B)   determine how large the budget deficit should be.
C)   decide how much government regulation there should be.
D)   provide minimum incomes for everyone.
E)   All of the above are correct.F) A) and B)
G) A) and C)

Question 8

Which of the following is not an example of a type of factor of production?

Accepted Answer

A)   land
B)   labor
C)   government
D)   capitalE) B) and C)
F) A) and B)

Question 9

If production involves decreasing opportunity cost,the production possibilities curve

Accepted Answer

A)   is "bowed inward."
B)   is a straight line.
C)   is "bowed outward."
D)   is a wavy line.
E)   has an unpredictable shape.F) B) and E)
G) C) and D)

Question 10

Market economies are not constrained by scarcity; only planned economies have that problem.

Accepted Answer

A) True 
 B)False

Question 11

Only a market economy must answer the questions of what goods to produce,how to produce them,and for whom to produce them.

Accepted Answer

A) True 
 B)False

Question 12

A society's decision to produce more tanks may require it to forgo production of some cars.

Accepted Answer

A) True 
 B)False

Question 13

If a farmer's opportunity cost of producing 50,000 bushels of wheat is 20,000 fewer bushels of soybeans,then her opportunity cost of producing 50,000 bushels of soybeans must also be 20,000 fewer bushels of wheat.

Accepted Answer

A) True 
 B)False

Question 14

A country can gain by importing a good from abroad even if that good can be produced more efficiently at home.Is this statement t?

Accepted Answer

This statement could be t.Such imports m...

Question 15

Do all valuable items have price tags?

Accepted Answer

A)   No, because some valuable items have no opportunity cost.
B)   Yes, because everything has its price.
C)   Yes, because price is the measure of opportunity cost.
D)   No, some have no explicit price on them.
E)   Yes, because only items that can be sold in markets have value.F) B) and E)
G) B) and D)

Question 16

Resources are used to create goods and services.

Accepted Answer

A) True 
 B)False

Question 17

If the PPF for guns and butter is bowed outward from the origin,this indicates constant opportunity cost between the two goods.

Accepted Answer

A) True 
 B)False

Question 18

What determines the position and shape of a society's production possibilities frontier?

Accepted Answer

A)   the physical resources of that society
B)   the skills of the workforce
C)   the level of technology of the society
D)   the amount of factories in the society
E)   All of the above are correct.F) C) and D)
G) A) and E)

Question 19

Some college students have claimed that because their incomes will be higher as a result of attending college,there is no opportunity cost of attending college.Do you agree? Explain.

Accepted Answer

No.Although the rate of return on colleg...

Question 20

A ticket to an Eric Clapton concert costs $45.If you have a ticket,you can "scalp" it (sell it illegally) for $75.To a ticket holder,the opportunity cost of actually attending the concert is

Accepted Answer

A)   $45.
B)   $50.
C)   $75.
D)   $115.E) C) and D)
F) B) and D)

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

A country can gain by importing a good from abroad even if that good can be produced more efficiently at home.Is this statement t?

Correct AnswerverifiedThis statement could be t.Such imports m...View AnswerShow Answer

If the PPF for guns and butter is bowed outward from the origin,this indicates constant opportunity cost between the two goods.

Correct AnswerverifiedShow Answer

A ticket to an Eric Clapton concert costs $45.If you have a ticket,you can "scalp" it (sell it illegally) for $75.To a ticket holder,the opportunity cost of actually attending the concert is

Correct AnswerverifiedShow Answer

A market system (market economy) depends on the market to

Correct AnswerverifiedShow Answer

All of the points inside a production possibilities frontier are ____; all of the points outside the production possibilities frontier are ____.

Correct AnswerverifiedShow Answer

Resources are used to create goods and services.

Correct AnswerverifiedShow Answer

If an economy is producing inefficiently,it is

Correct AnswerverifiedShow Answer

What determines the position and shape of a society's production possibilities frontier?

Correct AnswerverifiedShow Answer

Some college students have claimed that because their incomes will be higher as a result of attending college,there is no opportunity cost of attending college.Do you agree? Explain.

Correct AnswerverifiedNo.Although the rate of return on colleg...View AnswerShow Answer

Market economies are not constrained by scarcity; only planned economies have that problem.

Correct AnswerverifiedShow Answer

If production involves decreasing opportunity cost,the production possibilities curve

Correct AnswerverifiedShow Answer

A society's decision to produce more tanks may require it to forgo production of some cars.

Correct AnswerverifiedShow Answer

You have invested $1,000 in a stock whose price is increasing at 10 percent a year.Your stock broker,who is never wrong,recommends a stock rising at 20 percent a year.Assuming the broker earns 4 percent of the stock's value on any purchase or sale of the stock,should you take her recommendation?

Correct AnswerverifiedYou will earn $200 a year if you take th...View AnswerShow Answer

If a farmer's opportunity cost of producing 50,000 bushels of wheat is 20,000 fewer bushels of soybeans,then her opportunity cost of producing 50,000 bushels of soybeans must also be 20,000 fewer bushels of wheat.

Correct AnswerverifiedShow Answer

Economic growth solves the problem of scarcity.

Correct AnswerverifiedShow Answer

At various time,the United States has undergone the painful process of reducing military spending.Military bases from the Carolinas to California pleaded to be spared,citing huge job losses if they close.How can one rationally decide which bases to shut down,given the necessity of jobs?

Correct AnswerverifiedOne must examine the opportunity cost of...View AnswerShow Answer

Only a market economy must answer the questions of what goods to produce,how to produce them,and for whom to produce them.

Correct AnswerverifiedShow Answer

Do all valuable items have price tags?

Correct AnswerverifiedShow Answer

Draw a production possibilities frontier for an economy,with the axes labeled "military goods" and "peace goods." Indicate the region that is attainable and the region that is not.Explain the shape of the curve-what assumptions did you make in drawing it?

Correct AnswerverifiedThe curve should look like the figures i...View AnswerShow Answer

Which of the following is not an example of a type of factor of production?

Correct AnswerverifiedShow Answer

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This statement could be t.Such imports m...
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All of the points inside a production possibilities frontier are ; all of the points outside the production possibilities frontier are .

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No.Although the rate of return on colleg...
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You will earn $200 a year if you take th...
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One must examine the opportunity cost of...
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The curve should look like the figures i...
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