Question 1

An increase in available resources will tend to cause a society's production possibilities curve to shift inward.

Accepted Answer

A) True 
 B)False

Question 2

A production possibilities curve is negatively sloped because:

Accepted Answer

A)  ​the price of a good falls as you move down along the curve.
B)  ​resources are wasted as you move along the curve.
C)  ​it is not possible to adjust production decisions at all once an economy operates on the curve.
D)  ​once on the frontier, it is only possible to increase production of one good by reducing production of the other.E) B) and D)
F) A) and D)

Question 3

In a market economy, the goods produced go to those who(m) :

Accepted Answer

A)  ​have sufficient income and are willing to pay the price asked for those goods.
B)  ​the government views as best suited for consumption.
C)  ​business firms choose to favor.
D)  ​desire the goods the least.E) A) and C)
F) A) and B)

Question 4

Which concept explains how individual consumers in market economies determine what is to be produced?

Accepted Answer

A)  ​competition
B)  ​consumer sovereignty
C)  ​decentralized decision-making
D)  ​free enterpriseE) None of the above
F) A) and D)

Question 5

​Exhibit 3-8 
-Refer to Exhibit 3-8. At Point A in the production possibilities graph shown, the economy:

Accepted Answer

A)  ​is not using its resources efficiently.
B)  ​is using its resources efficiently while producing clothing but no food.
C)  ​is using its resources efficiently while producing food but no clothing.
D)  ​is using its resources efficiently to produce both food and clothing.E) A) and D)
F) C) and D)

Question 6

An economy is producing two goods, ice cream and cookies, and is currently operating efficiently. This economy can produce more cookies if:

Accepted Answer

A)  ​it increases the price of ice cream.
B)  ​it increases the price of cookies.
C)  ​more of the economy's resources become idle.
D)  ​it produces less ice cream.E) C) and D)
F) B) and C)

Question 7

Which of the following is not a resource exchanged in the factor markets?

Accepted Answer

A)  ​land
B)  ​capital
C)  ​labor
D)  ​All of the above are traded in the factor market.E) A) and B)
F) All of the above

Question 8

​Exhibit 3-4 
-Refer to Exhibit 3-4. Which point corresponds to an economy experiencing significant unemployment and/or producing inefficiently?

Accepted Answer

A)  ​Point A
B)  ​Point C
C)  ​Point E
D)  ​Point FE) All of the above
F) B) and C)

Question 9

An increase in production of one good will have zero opportunity cost only if the economy initially existed at a point inside the production possibilities curve.

Accepted Answer

A) True 
 B)False

Question 10

The private ownership of property and the use of the market system to direct and coordinate economic activity is most characteristic of:

Accepted Answer

A)  ​a command economy.
B)  ​a mixed economy.
C)  ​a market economy.
D)  ​a traditional economy.E) A) and B)
F) A) and C)

Question 11

A market economy answers the question "how" will goods be produced by focusing on

Accepted Answer

A)  ​dollar votes.
B)  ​consumer sovereignty.
C)  ​least-cost method of production.
D)  ​who can afford these goods.E) A) and D)
F) All of the above

Question 12

​Exhibit 3-12 
-Refer to Exhibit 3-12. The statement "to get more apples we have to give up wheat" is best illustrated in the diagram by a movement from:

Accepted Answer

A)  ​Point A to Point E.
B)  ​Point A to Point C.
C)  ​Point B to Point C.
D)  ​Point C to Point D.E) C) and D)
F) A) and D)

Question 13

Any output combination outside the production possibilities curve is attainable in the current period only if prices decrease.

Accepted Answer

A) True 
 B)False

Question 14

Brittany must write a political science term paper and prepare for an economics exam. The production possibilities curve between political science and economics preparation is a straight line. As time spent studying economics increases, the opportunity cost of studying for economics:

Accepted Answer

A)  ​increases.
B)  ​remains the same.
C)  ​decreases.
D)  ​first increases then decreases.E) A) and B)
F) A) and C)

Question 15

Which of the following scenarios would cause an outward shift in the production possibilities curve?

Accepted Answer

A)  ​temporary shutdown of mines due to frequent accidents
B)  ​discovery of large mineral deposits
C)  ​tougher environmental legislation
D)  shortage of skilled labor ​E) A) and B)
F) C) and D)

Question 16

In a market economy, prices help determine the distribution of goods and services but not the allocation of resources.

Accepted Answer

A) True 
 B)False

Question 17

Inefficiency is best illustrated by which of the following?

Accepted Answer

A)  ​foregoing civilian goods in order to produce more military goods
B)  ​limiting economic growth by reducing capital spending
C)  ​high levels of unemployment of labor and other resources that could be productively employed
D)  ​producing outside the production possibilities frontierE) None of the above
F) A) and B)

Question 18

Which of the following is considered to be the best method of production?

Accepted Answer

A)  ​Capital-intensive method
B)  ​Least-cost method
C)  ​Labor-intensive method
D)  ​Scarce resource methodE) None of the above
F) C) and D)

Question 19

​Exhibit 3-13 
-Refer to Exhibit 3-13. The opportunity cost of producing an additional cake equals:​

Accepted Answer

A)  ​40 cupcakes.
B)  ​10 cupcakes.
C)  ​4 cupcakes.
D)  ​1/4 of a cupcake.E) B) and C)
F) A) and B)

Question 20

Illustrate a production possibilities curve for automobiles and breakfast cereal that is bowed outward. Show what is likely to happen to the production possibilities curve as a result of a devastating war on a country's home soil.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> The production possibilities ...

Exam 3: Scarcity, Trade-Offs, and Production Possibilities

A market economy answers the question "how" will goods be produced by focusing on

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Which of the following scenarios would cause an outward shift in the production possibilities curve?

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​Exhibit 3-4 -Refer to Exhibit 3-4. Which point corresponds to an economy experiencing significant unemployment and/or producing inefficiently?

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Any output combination outside the production possibilities curve is attainable in the current period only if prices decrease.

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Which concept explains how individual consumers in market economies determine what is to be produced?

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​Exhibit 3-13 -Refer to Exhibit 3-13. The opportunity cost of producing an additional cake equals:​

Correct AnswerverifiedShow Answer

In a market economy, the goods produced go to those who(m) :

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An increase in production of one good will have zero opportunity cost only if the economy initially existed at a point inside the production possibilities curve.

Correct AnswerverifiedShow Answer

A production possibilities curve is negatively sloped because:

Correct AnswerverifiedShow Answer

Brittany must write a political science term paper and prepare for an economics exam. The production possibilities curve between political science and economics preparation is a straight line. As time spent studying economics increases, the opportunity cost of studying for economics:

Correct AnswerverifiedShow Answer

In a market economy, prices help determine the distribution of goods and services but not the allocation of resources.

Correct AnswerverifiedShow Answer

Which of the following is considered to be the best method of production?

Correct AnswerverifiedShow Answer

Illustrate a production possibilities curve for automobiles and breakfast cereal that is bowed outward. Show what is likely to happen to the production possibilities curve as a result of a devastating war on a country's home soil.

Correct Answerverified The production possibilities ...View AnswerShow Answer

Which of the following is not a resource exchanged in the factor markets?

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An increase in available resources will tend to cause a society's production possibilities curve to shift inward.

Correct AnswerverifiedShow Answer

The private ownership of property and the use of the market system to direct and coordinate economic activity is most characteristic of:

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​Exhibit 3-8 -Refer to Exhibit 3-8. At Point A in the production possibilities graph shown, the economy:

Correct AnswerverifiedShow Answer

​Exhibit 3-12 -Refer to Exhibit 3-12. The statement "to get more apples we have to give up wheat" is best illustrated in the diagram by a movement from:

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An economy is producing two goods, ice cream and cookies, and is currently operating efficiently. This economy can produce more cookies if:

Correct AnswerverifiedShow Answer

Inefficiency is best illustrated by which of the following?

Correct AnswerverifiedShow Answer

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Exhibit 3-4 -Refer to Exhibit 3-4. Which point corresponds to an economy experiencing significant unemployment and/or producing inefficiently?

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Exhibit 3-13 -Refer to Exhibit 3-13. The opportunity cost of producing an additional cake equals:

Correct Answer
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The production possibilities ...
View Answer

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Exhibit 3-8 -Refer to Exhibit 3-8. At Point A in the production possibilities graph shown, the economy:

Correct Answer
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Exhibit 3-12 -Refer to Exhibit 3-12. The statement "to get more apples we have to give up wheat" is best illustrated in the diagram by a movement from:

Correct Answer
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Correct Answer
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Correct Answer
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