Question 1

The first economist to point out the importance of specialization of labor was

Accepted Answer

A)   Leonardo da Vinci.
B)   Adam Smith.
C)   David Ricardo.
D)   John Maynard Keynes.
E)   Enrico Caruso.F) D) and E)
G) A) and E)

Question 2

Adam Smith's book, one of the first systematic treatments of economics, was entitled

Accepted Answer

A)   The Plan of the Ages.
B)   The General Theory of Money, Taxes, and Income.
C)   The Wealth of Nations.
D)   Principles of Economics.
E)   Concepts in Moral Philosophy.F) B) and C)
G) C) and E)

Question 3

A recent study found that it was cheaper to buy a chicken dinner from Kentucky Fried Chicken than it was to prepare it at home.The researcher included all costs including the imputed value of time involved to prepare the meal at home.This study illustrates the

Accepted Answer

A)   value of marginal analysis.
B)   law of increasing costs.
C)   difference between real costs and money costs.
D)   cost disease of the service sector.E) A) and D)
F) A) and C)

Question 4

A market system solves the

Accepted Answer

A)   "what" and "how" decisions but not the "to whom."
B)   "what" and "to whom" decisions but not the "how."
C)   "how" and "to whom" decisions but not the "what."
D)   "what," "how," and "to whom" decisions.E) B) and C)
F) A) and D)

Question 5

Monetary costs and opportunity costs are always identical.

Accepted Answer

A) True 
 B)False

Question 6

Economists define "efficiency" as the absence of waste.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following events create an outward shift of the production possibilities curve?

Accepted Answer

A)   The United States moves resources from the production of goods for domestic production to the production of goods for export.
B)   Tax reductions reduce the cost and increase the volume of investment in factories, machinery, and research and development.
C)   There is an exodus of young people to another country where there is more political freedom.
D)   The unemployment rate falls from 33 percent to 12 percent.E) A) and B)
F) A) and C)

Question 8

During World War II, Hitler would often order his army to hold a particular town or river "at all costs." Was this rational? If so, explain.If not, indicate which economic idea it violated.

Accepted Answer

The orders were irrational, as they igno...

Question 9

Opportunity costs exist for

Accepted Answer

A)   households but not businesses or governments.
B)   businesses but not households or governments.
C)   businesses and households but not governments.
D)   households, businesses, and governments.E) All of the above
F) B) and C)

Question 10

Carefully define the following terms and explain their importance to the study of economics.
a.resources
b.rational decision
c.scarcity
d.opportunity cost

Accepted Answer

a.Resources are the instruments provided...

Question 11

Goods that are actually produced by firms are not really limited in supply, because the firms can always produce more of them.

Accepted Answer

A) True 
 B)False

Question 12

Some authors claim that any point not on the frontier cannot be best.What is their reasoning to support this?

Accepted Answer

A)   A point inside the frontier implies that society is not facing up to the problem of scarcity.
B)   A point inside the frontier limits growth, and growth is always a goal worth pursuing.
C)   A point inside the frontier represents inflation, and inflation is a dangerous situation.
D)   A point inside the frontier results in fewer goods, and more is always better.
E)   A point inside the frontier is inefficient, and represents wasted resources.F) A) and C)
G) C) and E)

Question 13

What is the opportunity cost of economic growth?

Accepted Answer

A)   investment in the current time period
B)   improved technology in the current time period
C)   capital goods in the current time period
D)   consumption in the current time periodE) B) and D)
F) A) and B)

Question 14

In a market economy, the decision regarding allocation of resources is made by

Accepted Answer

A)   automatic forces of supply and demand.
B)   authorities in Washington, D.C.
C)   planners in state capitals.
D)   committees from a variety of economic interest groups.
E)   All of the above are correct.F) None of the above
G) A) and B)

Question 15

Economics examines the options open to households and business firms, but ignores the options of governments and entire societies.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following observations is true?

Accepted Answer

A)   Free markets will achieve all of society's goals.
B)   The ability to buy goods is divided equally among consumers.
C)   The market deals with efficiency in production through the profit motive.
D)   The market system encourages firms to use inputs wastefully.E) A) and D)
F) A) and B)

Question 17

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 18

A production possibilities curve always slopes downward to the right because resources

Accepted Answer

A)   are not scarce.
B)   have no opportunity cost.
C)   are freely available.
D)   are limited.
E)   are not related to outputs.F) C) and D)
G) B) and D)

Question 19

Figure 3-5
 
-At present, faculty in the Economics Department teach introductory and upper-level courses.Which graph in Figure 3-5 represents the change in the production possibilities of the Economics Department after a policy of using graduate students in addition to faculty to teach introductory sections was implemented?

Accepted Answer

A)   1
B)   2
C)   3
D)   4E) B) and D)
F) A) and B)

Question 20

A typical economy produces thousands of different goods.Is it accurate to say that society faces a production possibilities frontier?

Accepted Answer

A)   No, because two dimensions cannot capture the complexity of a full economy.
B)   No, although a graph with several thousand dimensions would be appropriate.
C)   Yes, although society does not face opportunity cost and the model does not apply.
D)   Yes, because scarcity always imposes opportunity costs.
E)   Uncertain-economic theory has no answer to this question.F) None of the above
G) A) and E)

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

A production possibilities curve always slopes downward to the right because resources

Correct Answer
verified

Which of the following observations is true?

Correct Answer
verified

Economics examines the options open to households and business firms, but ignores the options of governments and entire societies.

Correct Answer
verified

Carefully define the following terms and explain their importance to the study of economics. a.resources b.rational decision c.scarcity d.opportunity cost

Correct Answer
verified
a.Resources are the instruments provided...
View Answer

Opportunity costs exist for

Correct Answer
verified

The first economist to point out the importance of specialization of labor was

Correct Answer
verified

What is the opportunity cost of economic growth?

Correct Answer
verified

Which of the following events create an outward shift of the production possibilities curve?

Correct Answer
verified

A typical economy produces thousands of different goods.Is it accurate to say that society faces a production possibilities frontier?

Correct Answer
verified

During World War II, Hitler would often order his army to hold a particular town or river "at all costs." Was this rational? If so, explain.If not, indicate which economic idea it violated.

Correct Answer
verified
The orders were irrational, as they igno...
View Answer

A recent study found that it was cheaper to buy a chicken dinner from Kentucky Fried Chicken than it was to prepare it at home.The researcher included all costs including the imputed value of time involved to prepare the meal at home.This study illustrates the

Correct Answer
verified

Correct Answer
verified

Some authors claim that any point not on the frontier cannot be best.What is their reasoning to support this?

Correct Answer
verified

Adam Smith's book, one of the first systematic treatments of economics, was entitled

Correct Answer
verified

Monetary costs and opportunity costs are always identical.

Correct Answer
verified

In a market economy, the decision regarding allocation of resources is made by

Correct Answer
verified

A market system solves the

Correct Answer
verified

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

Correct Answer
verified

Goods that are actually produced by firms are not really limited in supply, because the firms can always produce more of them.

Correct Answer
verified

Economists define "efficiency" as the absence of waste.

Correct Answer
verified

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

A production possibilities curve always slopes downward to the right because resources

Correct AnswerverifiedShow Answer

Which of the following observations is true?

Correct AnswerverifiedShow Answer

Economics examines the options open to households and business firms, but ignores the options of governments and entire societies.

Correct AnswerverifiedShow Answer

Carefully define the following terms and explain their importance to the study of economics. a.resources b.rational decision c.scarcity d.opportunity cost

Correct Answerverifieda.Resources are the instruments provided...View AnswerShow Answer

Opportunity costs exist for

Correct AnswerverifiedShow Answer

The first economist to point out the importance of specialization of labor was

Correct AnswerverifiedShow Answer

What is the opportunity cost of economic growth?

Correct AnswerverifiedShow Answer

Which of the following events create an outward shift of the production possibilities curve?

Correct AnswerverifiedShow Answer

A typical economy produces thousands of different goods.Is it accurate to say that society faces a production possibilities frontier?

Correct AnswerverifiedShow Answer

During World War II, Hitler would often order his army to hold a particular town or river "at all costs." Was this rational? If so, explain.If not, indicate which economic idea it violated.

Correct AnswerverifiedThe orders were irrational, as they igno...View AnswerShow Answer

A recent study found that it was cheaper to buy a chicken dinner from Kentucky Fried Chicken than it was to prepare it at home.The researcher included all costs including the imputed value of time involved to prepare the meal at home.This study illustrates the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Some authors claim that any point not on the frontier cannot be best.What is their reasoning to support this?

Correct AnswerverifiedShow Answer

Adam Smith's book, one of the first systematic treatments of economics, was entitled

Correct AnswerverifiedShow Answer

Monetary costs and opportunity costs are always identical.

Correct AnswerverifiedShow Answer

In a market economy, the decision regarding allocation of resources is made by

Correct AnswerverifiedShow Answer

A market system solves the

Correct AnswerverifiedShow 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

Goods that are actually produced by firms are not really limited in supply, because the firms can always produce more of them.

Correct AnswerverifiedShow Answer

Economists define "efficiency" as the absence of waste.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a.Resources are the instruments provided...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The orders were irrational, as they igno...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified