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ULM / Macro Economics / Econ 2001 / a friend says, "i really, really need a new car." as an economist, you

a friend says, "i really, really need a new car." as an economist, you

a friend says, "i really, really need a new car." as an economist, you

Description

School: University of Louisiana at Monroe
Department: Macro Economics
Course: Macroeconomic Principles
Professor: .tammy johnston
Term: Spring 2017
Tags:
Cost: 50
Description: Economics Today, 17e (Miller) Chapter 2 Scarcity and the World of Trade-Offs 2
Uploaded: 05/30/2017
145 Pages 903 Views 0 Unlocks
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3) Why is it that all of our wants cannot be satisfied?




What economic factors are involved in production?




90) What is production?



Economics Today, 17e (Miller) Chapter 2 Scarcity and the World of Trade-Offs 2.1 Scarcity 1) Scarcity arises because A) resources are finite and are inadequate to meet all human wants and needs. B) import taxes depress the rate of growth of goods and services production. C) international companies are slow to explore for new resourceDon't forget about the age old question of a monoprotic acid in a 0.1 m solution ionises to 0.001
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s. D) many countries waste goods because of inefficient political systems. Answer: A Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 2) Scarcity refers to A) the ability of society to employ all of its resources. B) the ability of society to consume all that it produces. C) the inability of society to satisfy all human wants because of limited resources. D) the inability of society to eliminate poverty. Answer: C Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 3) Which of the following statements is TRUE about scarcity? A) Both rich and poor people face the problem of scarcity. B) Scarcity exists only when supply is insufficient to meet demand. C) Scarcity exists only when a shortage exists. D) Scarcity can be eliminated when a country becomes richer. Answer: A Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 1 ScholarStock4) The problem of economic scarcity applies A) only in industrially developed countries, because resources are scarce in these nations. B) only in underdeveloped countries, because there are no productive resources in these nations. C) only in economic systems that are just beginning to develop, because specialized resources  are scarce in developing nations. D) to economic systems in all nations, regardless of their level of development. Answer: D Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Reflective thinking skills Question Status: Previous Edition 5) In every economic system, choices must be made because resources A) are unlimited, but human desires and wants are limited. B) are limited, but human desires and wants are unlimited. C) are unlimited, and so are human desires and wants. D) are limited, and so are human desires and wants. Answer: B Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 6) In the production of goods and services, trade-offs exist because A) not all production is efficient. B) society has only a limited amount of productive resources. C) buyers and sellers often must negotiate prices. D) human wants and needs are limited at a particular point in time. Answer: B Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 2 ScholarStock7) Which of the following statements about economic scarcity is FALSE? A) Scarcity occurs among the poor and the rich. B) Scarcity only occurs if there are shortages and people wait in line to buy things. C) Scarcity results from not having enough resources to produce all the things we want. D) Scarcity results in the necessity to make choices. Answer: B Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Reflective thinking skills Question Status: Previous Edition 8) Which of the following statements is FALSE? A) Economic goods are available in desired quantities at a zero price. B) A good is anything that gives satisfaction or happiness to individuals. C) Services are intangible goods such as dry cleaning, hospital care, and restaurant meal  preparation. D) Wants are unlimited and include all material and nonmaterial desires. Answer: A Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Reflective thinking skills Question Status: Previous Edition 9) Which of the following statements about scarcity is TRUE? A) Scarcity is no longer a problem for industrialized countries. B) Scarcity exists in all societies. C) Scarcity is a problem only for greedy people. D) Scarcity is a problem only in countries that do not use markets to organize economic activity. Answer: B Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Reflective thinking skills Question Status: Previous Edition 3 ScholarStock10) In 2006, hurricanes damaged many parts of Texas, destroying homes, businesses, schools,  and infrastructure. In strictly economic terminology, these hurricanes are said to have caused A) scarcity, because the damages made food and shelter scarce. B) scarcity, because some goods were difficult to get. C) shortages, because supplies were cut off and goods were destroyed. D) tradeoffs, because some areas of the country were damaged when others were not. Answer: C Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Reflective thinking skills Question Status: Previous Edition 11) Scarcity implies that people must A) be miserable. B) be selfish. C) make choices. D) not be selfish. Answer: C Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 12) Scarcity A) does not exist in the United States. B) applies only to developing countries. C) is caused by production problems. D) is not a shortage. Answer: D Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist Question Status: Previous Edition 4 ScholarStock13) The difference between scarcity and a shortage is that A) scarcity is caused by poverty and shortages are caused by natural disasters. B) shortages are a type of scarcity caused by natural disasters while scarcity is caused by human  errors. C) scarcity always is a part of human life while shortages usually are temporary. D) shortages are always part of human life while scarcity is usually temporary. Answer: C Diff: 3 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 14) Which of the following is the best example of scarcity? A) The Talking Teddy is a surprise holiday hit, resulting in long lines of consumers trying to  purchase the limited number of available Teddies. B) Fred only gets a 10-hour lunch break and each day must decide between working out at the  gym or socializing with his colleagues. C) The local market's buy-one-get-one-free sale on strawberries results in more people wanting  the berries than producers are able and willing to supply. D) There is a bumper crop of strawberries, and stores have more berries than they can sell. Answer: B Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Reflective thinking skills Question Status: Previous Edition 15) Scarcity is caused by A) unlimited wants running up against limited economic resources. B) lazy workers. C) mechanical breakdowns at factories. D) shortages. Answer: A Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 5 ScholarStock16) Human resources that perform the functions of organizing, managing, and assembling the  other factors of production are called A) physical capital. B) venture capital. C) entrepreneurs. D) productive capital. Answer: C Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 17) In economic terminology, when a resource is used to produce output it is referred to as A) an intangible. B) a factor of production. C) a service. D) a fifth element. Answer: B Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 18) All of the following are examples of physical capital EXCEPT A) buildings. B) machinery. C) company stocks and bonds. D) a hydroelectric power plant. Answer: C Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 6 ScholarStock19) Entrepreneurs are important to market economies because A) they engage in risk taking and innovation. B) they make up a large portion of low-skilled labor. C) they take few risks and thereby, suffer fewer bankruptcies. D) they represent the bulk of employment at large corporations. Answer: A Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Reflective thinking skills Question Status: Previous Edition 20) Which of the following are considered factors of production? I. Land II. Labor III. Physical capital IV. Entrepreneurship A) I and II only B) I and III only C) I, II and III only D) I, II, III and IV Answer: D Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 21) All of the following are economic resources, or factors of production EXCEPT A) land. B) physical capital. C) money. D) entrepreneurship. Answer: C Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 7 ScholarStock22) In economic terminology, the accumulated training and education that workers receive to  increase their productivity is referred to as A) entrepreneurship. B) human capital. C) labor. D) physical capital. Answer: B Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 23) Physical capital is distinguished from human capital because A) physical capital refers to trained people. B) physical capital refers to equipment and machinery, whereas human capital refers to trained  people. C) human capital refers only to day laborers. D) physical capital refers to trained people, whereas human capital refers to equipment and  machinery. Answer: B Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 24) In economics, the term physical capital A) refers to funds used by businesses to acquire goods and services. B) refers to all manufactured resources used for production. C) refers to the process of raising funds through the stock market. D) defines the stock of merchandise already produced. Answer: B Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist Question Status: Previous Edition 8 ScholarStock25) Human capital is  A) what people get from physical capital. B) the accumulation of skills, training and education of workers. C) the value obtained from selling stocks and bonds. D) the human resources that perform the function of raising capital. Answer: B Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist Question Status: Previous Edition 26) The conversion of resources into consumer goods or services is called A) human capital. B) production. C) opportunity cost. D) absolute advantage. Answer: B Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist Question Status: Previous Edition 27) Services can be thought of as A) unvalued goods. B) unwanted goods. C) free goods. D) intangible goods. Answer: D Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist Question Status: Previous Edition 28) Economic goods are defined as A) tangible items only. B) services only. C) anything from which an individual derives satisfaction. D) any item which is available in sufficient quantity at zero price. Answer: C Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist Question Status: Previous Edition 9 ScholarStock29) If the quantity desired of something exceeds the amount available at zero price, that item is  called A) a service. B) an economic good. C) an intangible good. D) a bad. Answer: B Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 30) Which is the best example of an intangible good? A) The car you dream of owning but cannot afford. B) The suit you hope will make a good impression when you go on job interviews. C) The textbook study guide you hope will prepare you to perform well on examinations. D) The advice and expertise provided by the music store clerk who sold you that CD. Answer: D Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Reflective thinking skills Question Status: Previous Edition 31) At a zero price, which of the following conditions is TRUE for an economic good? A) Its quantity supplied exceeds its quantity demanded. B) Its quantity demanded exceeds its quantity supplied. C) Its quantity demanded equals its quantity supplied. D) Scarcity disappears. Answer: B Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 10 ScholarStock32) The most basic concept in economics is A) wealth. B) income. C) scarcity. D) spending. Answer: C Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 33) Scarcity A) exists in all human societies. B) is a problem for less-developed nations only. C) used to be a problem, but is not an issue for modern industrial nations. D) afflicts greedy people only. Answer: A Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Reflective thinking skills Question Status: Previous Edition 34) Scarcity affects A) only rich people. B) only poor people. C) only middle income people. D) all people. Answer: D Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Reflective thinking skills Question Status: Previous Edition 11 ScholarStock35) Scarcity is A) a shortage of goods and services. B) poverty and misery. C) a situation in which the resources for producing the goods and services that people desire are  sufficient to satisfy people's desires. D) a situation in which the resources required to produce the goods and services that people  desire are insufficient to satisfy all wants.  Answer: D Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 36) Scarcity implies that A) people should limit their wants, since shortages exist. B) firms should be more efficient when producing goods. C) people must make choices. D) nonrenewable resources should never be used. Answer: C Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 37) Economic goods are A) abundant goods, about which we must constantly make decisions about their best use. B) all imaginable items from which individuals derive satisfaction or happiness. C) goods that are scarce, for which the quantity demanded exceeds the quantity supplied at a  zero price. D) goods that are scarce, for which the quantity demanded exceeds the quantity supplied at any  price. Answer: C Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 12 ScholarStock38) Scarcity exists because A) the majority of people in the world are poor. B) people are too greedy and refuse to share what they have with others. C) human wants exceed what can be produced with the limited resources available. D) not enough new technology is being used to eliminate scarcity. Answer: C Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 39) Extremely cold winter weather has destroyed oranges in Florida. The freeze has caused A) scarcity because there are less oranges now than people want. B) scarcity because people have to switch to other types of citrus fruits. C) a shortage because people cannot obtain as many oranges as they wish to buy at the pre-freeze price. D) a shortage because the orange growers will have less income. Answer: C Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Reflective thinking skills Question Status: Previous Edition 40) The existence of scarcity means that A) there are not enough resources to satisfy unlimited human wants. B) firms will increase their production to eliminate the scarcity. C) the government will step in to eliminate the scarcity. D) firms working with the government will allocate resources to eliminate the scarcity. Answer: A Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 13 ScholarStock41) Jane is a top-level executive and is very rich. Jane just ordered a car only to be told that she  will have to wait three weeks for it to be delivered. Which of the following statements is true? A) The car is not a scarce good. B) The car is a scarce good. C) Because Jane has unlimited funds, she incurs no opportunity cost in buying the car. D) Jane paid too much for a car that wasn't ready on time. Answer: B Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Reflective thinking skills Question Status: Previous Edition 42) Scarcity and shortages differ in that A) scarcity is caused by natural disasters and shortages are caused by mistakes people make. B) scarcity is a condition of human life while shortages are usually temporary phenomena related to an imbalance between the amount desired and the amount produced. C) scarcity is a type of shortage but shortage is a broader concept. D) shortages apply to resource markets while scarcity applies to product markets. Answer: B Diff: 3 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 43) There are not enough of four goods to satisfy the wants of people. For good A, this is true  when the price is $100. This is true for good B at a price of $10, for good C at a price of $1, and  for good D at a price of zero. Which situation reflects scarcity rather than shortage? A) A B) B C) C D) D Answer: D Diff: 3 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Revised 14 ScholarStock44) Production refers to A) physically producing material goods only. B) any activity carried on by a firm, whether a corporation, partnership, or sole proprietorship. C) any activity that results in the conversion of resources into goods and services that can be  consumed. D) any activity that causes a material conversion of manufactured goods. Answer: C Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist Question Status: Previous Edition 45) Which of the following activities are production? A) Combining flour, milk, and eggs to make cookies. B) Moving coal from southern Illinois to an electrical power plant in northern Illinois. C) Taking ice cubes from a tray to put in a drink. D) All of the above are production. Answer: D Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 46) Resources are also known as A) minerals. B) factories. C) factors of production. D) stocks, bonds, and other financial instruments. Answer: C Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist Question Status: Previous Edition 15 ScholarStock47) By going to school an individual will obtain which resource? A) Money B) Physical capital C) Knowledge D) Human capital Answer: D Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 48) A tractor used to prepare land for planting is called A) land. B) labor. C) physical capital. D) human capital. Answer: C Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 49) Naturally occurring diamonds are an example of A) land. B) labor. C) physical capital. D) human capital. Answer: A Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 16 ScholarStock50) A man-made resource such as a building or a machine is an example of which resource? A) Entrepreneurial ability B) Labor C) Physical capital D) Human capital Answer: C Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 51) Which of the following is NOT an economic resource? A) Money B) Low-skilled labor C) Coal D) An engineer Answer: A Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 52) Bonnie volunteers to help make floral arrangements at a flower shop. She is an example of A) Entrepreneurial ability. B) Labor. C) Physical capital. D) Human capital. Answer: B Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 17 ScholarStock53) Bonnie is a self employed. She makes floral arrangements in a building she rents. She owns the delivery vehicle and has hired a delivery driver. She is an example of A) Entrepreneurial ability. B) Labor. C) Physical capital. D) Human capital. Answer: A Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 54) A person goes to college to become an engineer. This is an example of an A) investment in physical capital. B) investment in human capital. C) increase in entrepreneurship. D) increase in labor. Answer: B Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 55) An irrigation system is installed on a farm in North Dakota. This is an example of which  factor of production? A) Labor B) Land C) Human capital D) Physical capital Answer: D Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 18 ScholarStock56) Which of the following is NOT an example of investment in human capital? A) A medical student's internship B) The purchase of a personal computer for playing games C) A mechanic attends a training workshop on a new type of engine D) Johnny learns how to read Answer: B Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 57) Juanita has just opened a new business selling pet supplies through the Internet. A) Juanita is an entrepreneur. B) Juanita is not providing economic goods since people purchase the goods. C) Juanita is not providing economic goods since pet supplies are not being sold in a store. D) Juanita is not an entrepreneur since there are other businesses that sell pet supplies. Answer: A Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 58) Which of the following is a true statement? A) All goods are economic goods. B) All economic goods are goods, but not all goods are economic goods. C) Economic goods and goods mean the same thing. D) Economic goods do not include services while goods do include services. Answer: B Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 19 ScholarStock59) Which of the following is NOT an economic good? A) a haircut B) broccoli C) a sunset D) education Answer: C Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 60) John has decided to view the solar eclipse tomorrow. The eclipse is an example of A) a good. B) an economic good. C) a service. D) entrepreneurship. Answer: A Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 61) A typical economic good has which one of the following characteristics? A) The desired quantity exceeds the quantity available at a zero price. B) The quantity available exceeds the desired quantity at a zero price. C) It uses no resources to produce. D) It is never scarce. Answer: A Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 20 ScholarStock62) A waitress brings a free glass of wine when you sit down in a restaurant. This glass of wine is A) a service because the waitress carried it instead of making it. B) a good, but not an economic good because there is no price charged for the wine. C) a nongood because there is no price charged for the wine. D) an economic good because wine is produced with scarce resources, even if it is free to you. Answer: D Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 63) Which of the following is NOT a service? A) Physical labor purchased by a producer B) Things purchased by a consumer that do not have physical characteristics C) A diamond used in an engagement ring D) Tasks performed by someone else Answer: C Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 64) When an employee at a grocery store scans the price of your items, bags the groceries, and  collects your paper, the individual has provided A) physical capital. B) entrepreneurship. C) a service. D) land. Answer: C Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 21 ScholarStock65) The most basic concept of economics is A) self-interest. B) scarcity. C) demand. D) rationality. Answer: B Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 66) Scarcity exists because A) there is a disruption in the distribution of goods caused by bad weather. B) there is a shortage of goods caused by war. C) there are not enough resources available to produce all the goods that people want. D) there is a shortage of qualified workers throughout the world. Answer: C Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 67) Which of the following is the LEAST scarce? A) college education  B) medicine C) housing D) air Answer: D Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 22 ScholarStock68) The fact that our wants are unlimited but our resources are limited implies that A) we should limit our wants. B) entrepreneurship has failed as an economic system.  C) we have to make choices.  D) the only way to make someone better off is to make someone else worse off. Answer: C Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 69) Which of the following items would be considered scarce? A) water B) diamonds C) potato chips D) All of the above are scarce. Answer: D Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 70) The basic problem in economics is A) unlimited needs. B) scarcity. C) demand. D) limited resources. Answer: B Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 23 ScholarStock71) Scarcity implies that A) the satisfaction of one person's want means another person's want can also be satisfied. B) the satisfaction of one person's want means another person will be more than satisfied. C) the satisfaction of one person's want means another person's want cannot be satisfied. D) no person's wants can be satisfied. Answer: C Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 72) Which of the following is NOT a factor of production? A) land B) labor C) a product D) entrepreneurship Answer: C Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 73) Which of the following would be categorized as "land"? A) timber B) human capital C) buildings D) entrepreneurship Answer: A Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 24 ScholarStock74) Education and training of workers would best be categorized as A) land. B) labor. C) physical capital. D) human capital. Answer: D Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 75) Which factor of production includes water? A) physical capital B) human capital C) land D) entrepreneurship Answer: C Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 76) Education increases the stock of which factor of production? A) physical capital B) human capital C) land D) entrepreneurship Answer: B Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 25 ScholarStock77) In economics, physical capital includes A) money. B) bank accounts. C) machinery. D) shares of stock. Answer: C Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 78) Which of the following is NOT considered to be an economic resource? A) your economics professor B) the telephone company repair truck C) the local gas station D) a view of the stars on a clear night Answer: D Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 79) Oil found in Alaska is an example of A) physical capital. B) land or natural resource. C) human capital. D) labor. Answer: B Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 26 ScholarStock80) An example of an entrepreneur would be A) the owner of a new Indian food restaurant. B) the cafeteria employee who won the employee of the month award. C) a Greyhound bus driver. D) the cashier at your local supermarket. Answer: A Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 81) Economic goods are items that A) are used only by economists. B) provide satisfaction to users. C) cannot be sold at any price in the market. D) individuals would pay to get rid off. Answer: B Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 82) The term "labor" for an economist includes A) all skilled workers, but not the unskilled workers. B) all productive contributions of humankind. C) only the value of the work done by scientists. D) all employees who have high school diplomas. Answer: B Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 27 ScholarStock83) Scarcity is A) a situation of shortage after a hurricane. B) a permanent human condition relative to the nearly limitless nature of human desires. C) represented by long lines at stores. D) the same thing as poverty. Answer: B Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 84) The accumulated training and education that you have is A) physical capital. B) entrepreneurship. C) economic goods. D) human capital. Answer: D Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 85) The tasks performed by the chef at your favorite restaurant could be categorized as A) a good. B) an economic good. C) a service or intangible good. D) All of the above are correct. Answer: D Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 28 ScholarStock86) Economic bads are items A) for which the produced quantity is less than the amount desired at a positive price. B) for which the desired quantity is less than what nature provides at a zero price. C) that individuals desire but which receive social disapproval. D) that receive social approval but which governments dislike. Answer: B Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 87) Activities designed to convert resources into goods and services is known as A) supply. B) consumption. C) production. D) scarcity. Answer: C Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 88) All of the following are resources EXCEPT A) doctors because they perform services. B) the land the Statue of Liberty sits on. C) the computer in the student computer lab. D) money. Answer: D Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Reflective thinking skills Question Status: Previous Edition 29 ScholarStock89) A factory can be thought of as  A) a land and labor combination. B) a trade-off with land. C) physical capital. D) a type of entrepreneurship. Answer: C Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 90) What is production? What economic factors are involved in production? Answer: Production involves any activity that converts resources into goods and services that  can be consumed. Production requires the use of all kinds of resources—natural resources,  capital, and human resources, so the owners of all these resources are involved with production. Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Communication abilities Question Status: Previous Edition 91) Briefly explain the difference between the concepts of scarcity and shortage. Answer: Scarcity is not a shortage. Scarcity occurs when we cannot obtain all that we want at a  zero price. We can eliminate a shortage but we cannot eliminate scarcity because it always exists as a result of limited resources relative to our unlimited wants. Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 30 ScholarStock92) Briefly explain the factors of production and give an example of each. Answer: The resources, which are the inputs used in the production of the things that we  want,used in production are called factors of production. There are five factors of production.  Land encompasses all the nonhuman gifts of nature, including timber,water, fish, minerals, and  the original fertility of land. It is often called the natural resource. Labor is the human resource, which includes productive contributions made by individuals who work, such as Web page  designers, ballet dancers, and professional football players. Physical capital consists of the  factories and equipment used in production. It also includes improvements to natural resources,  such as irrigation ditches. Human capital is the economic characterization of the education and  training of workers. An example is a worker's skills. Entrepreneurship is the component of  human resources that performs the functions of organizing, managing, and assembling the other  factors of production to create and operate business ventures. Diff: 3 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Communication abilities Question Status: Previous Edition 93) Explain why even the most affluent people, businesses and counties never solve the problem  of scarcity. Answer: Scarcity is a problem that is never completely solved. Scarcity means that we do not  ever have enough of everything, including time, to satisfy our every desire. Thus even the most  affluent have limited resources and unlimited wants even though they may have solved more of  their wants with their larger amount of resources. Diff: 3 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 94) Labor, human capital, and entrepreneurship are resources related to human beings.  Distinguish among the three resources. Answer: Labor is the work done by human beings. Human capital refers to the worker education and training that makes human beings more productive. Whenever a worker's skills increase,  there has been an improvement of human capital. Entrepreneurship refers to the use of human  beings in organizing, managing, and assembling the other factors of production to make business ventures. Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 31 ScholarStock95) Distinguish between scarcity and shortages. Answer: Scarcity exists because the wants of human beings are unlimited while resources are  limited. The meaning of a shortage is not the same as scarcity. A shortage exists when people  have to wait in line for things, especially on a temporary basis. Scarcity relates to the poor but  also to the rich; scarcity is a fact of life that affects everyone. A shortage occurs when the  quantity of a good desired exceeds the quantity available at a positive price. Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 96) Are all goods economic goods? Are all economic goods also goods? Explain. Answer: Not all goods are economic goods. Economic goods are a subset of all goods, and are  produced from scarce resources. Sunlight is an example of a good that is not an economic good.  Hence, the answer to the second question is "yes." Diff: 1 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 97) "Economics is the study of how people eliminate scarcity." Do you agree or disagree? Why? Answer: Disagree. Economics is the study of how people make choices because of scarcity.  Scarcity cannot be eliminated because people do not ever have enough of everything to satisfy  their every desire. Scarcity is a fact of life for both rich and poor. Diff: 2 Topic: 2.1 Scarcity Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 32 ScholarStock2.2 Wants and Needs 1) From the economist's point of view, A) wants and needs are exactly the same. B) a want is a lifesaving necessity. C) needs are objectively undefinable. D) we all have wants but only very poor people have needs. Answer: C Diff: 1 Topic: 2.2 Wants and Needs Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 2) A friend says, "I really, really need a new car." As an economist, you're thinking A) Right! Everyone needs a new car. B) This is an example of how objectively undefinable needs are. Many would argue that this  friend could get along just fine with a reliable used car. C) If this friend says she needs a new car, then we must all agree that a new car is a need and not  just a want. D) that a new car can only be considered a need if at least 51% of the public agrees. Answer: B Diff: 2 Topic: 2.2 Wants and Needs Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 3) Why is it that all of our wants cannot be satisfied? A) Because of shortages. B) Because we cannot seem to decide what we really want. C) Because other people try to change your mind about what you want. D) Because limited resources mean all the goods we want cannot be obtained. Answer: D Diff: 1 Topic: 2.2 Wants and Needs Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 33 ScholarStock4) Wants A) is another term for needs. B) refer to services while needs refer to goods. C) is the term used by economists instead of needs because needs are not objectively definable. D) are used by economists and refer to the same thing as needs when used by psychologists. Answer: C Diff: 1 Topic: 2.2 Wants and Needs Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 5) Human beings A) have unlimited wants. B) think they have unlimited wants, but really have limited needs. C) have limited wants, but unlimited needs. D) know what their needs are, but do not know what their wants are. Answer: A Diff: 2 Topic: 2.2 Wants and Needs Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 6) Economists are concerned with an individual's A) needs because needs represent the most important goods to an individual. B) needs because economists define needs to be the goods people need to survive. C) wants because, unlike needs, wants lead to shortages in the economy. D) wants because the existence of wants leads to scarcity. Answer: D Diff: 2 Topic: 2.2 Wants and Needs Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 34 ScholarStock7) To an economist, the term "needs" A) means the purchase of necessary goods. B) is objectively undefinable. C) identifies the purchases of basic goods and services.  D) refers to the purchase of goods by the poor. Answer: B Diff: 1 Topic: 2.2 Wants and Needs Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 8) "Wants" as an economic concept includes A) both material and nonmaterial desires. B) only the purchase of necessary basic goods. C) only the desire for luxury goods. D) only those goods that can be purchased with one's paycheck. Answer: A Diff: 1 Topic: 2.2 Wants and Needs Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 9) "Economics deals with human needs." Do you agree or disagree? Why? Answer: Disagree. The concept of needs is difficult to define objectively for each person, so  that economists consider people's unlimited wants instead of their needs. Diff: 1 Topic: 2.2 Wants and Needs Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 35 ScholarStock10) Explain the difference between human needs and wants. Answer: Needs are objectively undefinable. Needs are the essentials of life: food, clothing,  water and shelter. The are basics of life you can't live without. Needs are things you have to  have, items you can't do without. Wants are things you desire to increase your level of happiness. They are not absolutely necessary. Humans have unlimited wants, and so they cannot have all of them given limited resources. Diff: 1 Topic: 2.2 Wants and Needs Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to  think like an economist AACSB: Analytic skills Question Status: Previous Edition 2.3 Scarcity, Choice, and Opportunity Cost 1) The opportunity cost of attending college might best be described as A) the money that must be paid in order to attend college. B) the lowest-valued alternative use of the student's time. C) the highest-valued alternative use of the student's time. D) the value that the student attaches to not working. Answer: C Diff: 1 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 2) The value of the best alternative sacrificed to obtain something you want is referred to as A) explicit cost. B) opportunity cost. C) marginal cost. D) sunk cost. Answer: B Diff: 1 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 36 ScholarStock3) Opportunity cost A) can only be measured as a paid cost. B) is always the value of the next best forgone opportunity. C) does not exist since there are no receipts. D) is always the lowest valued alternative. Answer: B Diff: 2 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 4) Opportunity cost is defined as A) the value of the next-best alternative that must be sacrificed to attain a want. B) the least-costly means to produce output. C) the value of the output currently received by an individual or a corporation. D) the return from a given unit of labor. Answer: A Diff: 1 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 5) One opportunity cost associated with going to college is A) purchasing text books. B) paying tuition. C) giving up employment possibilities while in college. D) paying for room, board, and other living expenses. Answer: C Diff: 1 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 37 ScholarStock6) Bill Bonecrusher graduates from college with a choice of playing professional football at $2  million a year or coaching for $50,000 a year. He decides to play football, but eight years later he quits football to make movies for $3 million a year. His opportunity cost at graduation was  ________ and eight years later was ________. A) $50,000; $2 million B) $2 million; $2 million C) $2 million; $3 million D) $50,000; $50,000 Answer: A Diff: 2 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 7) Fred and Ann both decide to see the same movie when they are given free movie tickets. We  know that A) both bear an opportunity cost since they could have done other things instead of see the  movie. B) both bear the same opportunity cost since they are doing the same thing. C) the cost of going to the movie is greater for the one who had more choices to do other things. D) neither bears an opportunity cost because the tickets were free. Answer: A Diff: 2 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 8) Opportunity cost is A) the intrinsic value of an economic good. B) the total value of all the alternatives given up when a choice is made. C) the value of the opportunity selected when a need is satisfied. D) the value of the next highest ranked alternative that must be sacrificed to obtain a want. Answer: D Diff: 1 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Revised 38 ScholarStock9) Suppose you have four choices—go to a movie, read a book, watch television, or go to a  concert. You choose to go to a movie. The opportunity cost of the movie is A) the value of the book not read. B) the value of the television program not watched. C) the value of the concert that you didn't attend. D) the value of the activity that you would have selected if you hadn't gone to the movie. Answer: D Diff: 2 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 10) For every choice a person makes it can be assumed that A) the chooser has full knowledge of the situation. B) some opportunity cost was involved. C) there is a fifty-fifty chance the choice was the wrong one. D) a good is involved and satisfaction is gained. Answer: B Diff: 1 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 11) The opportunity cost of going to college for a student receiving a scholarship  A) is the income that she would have earned if she did not go to college. B) is the risk of dropping out. C) is the food and living expenses that she has to purchase while in college. D) is zero because she does not have to pay tuition. Answer: A Diff: 1 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 39 ScholarStock12) The concept of opportunity cost exists because A) of scarcity. B) goods have different prices. C) of shortages. D) the value of services is hard to determine. Answer: A Diff: 1 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 13) Opportunity cost is A) the cost of producing all goods and services in the United States. B) the value of the next-best alternative that must be sacrificed to satisfy a want.  C) the fixed cost of production. D) the value of the most useful alternative that must be sacrificed to obtain something or satisfy a want. Answer: B Diff: 1 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 14) Which of the following statements is FALSE about opportunity cost? A) Cost is always foregone opportunity. B) Opportunity cost is the next best alternative. C) John wants a burger and fries. The concept of opportunity cost applies even though he has  enough funds to buy both. D) Opportunity cost exists only for goods with monetary values. Answer: D Diff: 2 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 40 ScholarStock15) Opportunity cost is A) the combined value of all the alternatives not selected. B) the same thing as the money price of a good. C) the value of the next best alternative which was given up. D) based on the intrinsic value of the good itself. Answer: C Diff: 1 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 16) Steve and Karen decide to attend the same concert when they are each given free tickets to it. We know that A) both bear the same opportunity cost because they are seeing the same thing. B) both bear the same opportunity cost because the tickets have the same face value. C) both bear an opportunity cost that depends on what each person is giving up to attend the  concert. D) neither bears an opportunity cost since the tickets were given free to them. Answer: C Diff: 2 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 17) Samia has decided that with the two hours in between classes she can do one of 3 things. She has ranked her choices, from highest to lowest as, (1) chat with her friends, (2) study economics  or (3) take a nap. The opportunity cost of chatting with her friends is A) the combined value of studying economics and taking a nap. B) the value of studying economics, the next best use of time. C) the value of chatting with her friends. D) zero since she does not pay her friends to talk to her. Answer: B Diff: 2 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 41 ScholarStock18) Stephanie has decided to eat lunch between classes. She has ranked her choices, from highest to lowest as, (1) turkey sandwich, (2) tuna sandwich, (3) slice of cheese pizza, (4) cheeseburger.  The opportunity cost of the eating turkey sandwich is A) the combined value of the tuna sandwich, slice of cheese pizza and cheeseburger. B) the value of tuna sandwich, the next best choice. C) the value of the cheeseburger. D) zero since she has satisfied a want. Answer: B Diff: 2 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 19) Which of the following is a true statement? A) Cost is always measured in the nation's currency. B) Opportunity cost is an objective measure since the cost of an activity is the same for  everyone. C) The less alternatives there are the greater the cost. D) Opportunity cost is always a foregone opportunity. Answer: D Diff: 2 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 20) Opportunity cost exists because A) of scarcity. B) prices must adjust to eliminate shortages. C) production could not occur without the opportunity cost of using resources. D) the value of economic goods is positive while the value of goods is zero. Answer: A Diff: 1 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 42 ScholarStock21) The opportunity cost of a decision is the A) value of the best alternative not chosen.  B) value of all the alternatives not chosen.  C) cost of making the wrong choice.  D) cost incurred by others who are unhappy with your decision. Answer: A Diff: 2 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 22) The saying that "You cannot have your cake and eat it too" illustrates the economic concept  of A) a positive statement. B) a normative statement. C) physical capital. D) opportunity cost. Answer: D Diff: 2 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 23) On an afternoon that a class meets, you could alternatively study for an exam that will take  place in another class the next morning, go to a movie with a friend, or, most desirable to you at  present, take a nap. The opportunity cost of attending the afternoon class is A) forgoing the nap. B) missing seeing the movie with your friend. C) giving up the time to study for the next morning's exam. D) being unable to engage in all three of the above activities. Answer: A Diff: 1 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 43 ScholarStock24) Opportunity cost is best defined as A) the sum of the dollar values of all alternatives given up when choices are made. B) the cost of producing the purchased goods. C) the next highest valued alternative when a choice is made. D) the dollar price of the purchased item. Answer: C Diff: 1 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 25) You have the option of consuming one cup of coffee or two donuts or three oranges. You  picked the cup of coffee. Therefore the opportunity cost of this cup of coffee is A) the price of the cup of coffee. B) the difference in the prices of these three products. C) the price of the donuts as they are usually consumed with coffee. D) either the donuts or the oranges, whichever you like more. Answer: D Diff: 2 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 26) The opportunity cost of going to college full time away from home is A) the income you could have earned from a full-time job. B) the funds you would have saved if you had not paid the tuition. C) the time you could have spent with friends back home. D) All of the above are correct. Answer: D Diff: 2 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 44 ScholarStock27) A student has a job that pays a wage rate of $10 per hour. The night before an economics  exam, the student has set aside four hours to study for the exam, estimating that for each hour  spent studying, her grade will rise by 5 points. That night, she gets a call from her employer to  come to work for a wage rate of $15 per hour for that night. She decides to work for three hours  and earn an extra $45.00. The next day she takes the test and gets a grade of 75. The opportunity  cost for her work is A) the $45.00 she earned. B) the 15 extra points she estimates that she could have earned on the exam if she had studied the extra three hours. C) the three hours she did not study. D) the entire four hours she set aside for studying. Answer: B Diff: 2 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 28) Opportunity cost can best be defined as A) the interest cost of financing a business loan at the bank. B) the value of all of the alternatives sacrificed. C) the value of the next-highest-ranked alternative. D) There is no real definition for opportunity cost. Answer: C Diff: 1 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 29) If Joey goes surfing for four hours instead of earning $10 per hour for those four hours, his  opportunity cost is A) the good time spent surfing. B) the cost of gasoline used to get to the beach. C) the travel time to the beach. D) $40. Answer: D Diff: 1 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 45 ScholarStock30) Opportunity cost exists because of A) poverty.  B) scarcity.  C) greed.  D) self-interest. Answer: B Diff: 1 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 31) You like to sleep until 11:00 am during the semester. What is the opportunity cost of  attending an 8:00 am class? A) nothing, since you can go back to bed later B) sleep C) obtaining the notes from the 8:00 am class D) the money you spend on coffee to stay awake Answer: B Diff: 2 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 32) Opportunity costs arise from A) choices.  B) taxes.  C) mistakes.  D) regrets. Answer: A Diff: 1 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 46 ScholarStock33) The high opportunity cost of voting in the United States is due to A) the value of time devoted to casting a ballot. B) the inability of candidates to differentiate themselves from one another. C) the inability of the typical voter to change the election outcome by voting. D) the confusion generated by the voting machines. Answer: A Diff: 2 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 34) Which of the following sets of terms describes the problem of scarcity in economics? A) Goods, land, and needs B) Labor, needs, and opportunity costs C) Choices, opportunity costs, and trade-offs D) Production, consumption, and wants Answer: C Diff: 3 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 35) Briefly explain why people make choices. Answer: People make choices because of scarcity. Scarcity exists because resources are  insufficient to satisfy people's every desire. Diff: 1 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 47 ScholarStock36) Briefly explain the concept of opportunity cost. What is the opportunity cost of attending  college? Answer: The opportunity cost of an action is the value of the next best alternative that a person  has to give up when making a choice. The opportunity cost of attending college is what the  college student would give up by going to school, such as the income she could have earned if  she did not go to school. Diff: 1 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 37) How are scarcity, choice, and opportunity cost related? Answer: Since resources are scarce, we cannot have everything we want. This implies that we  must make choices. We can't have everything we want, but we can have some of the things we  want, and must choose. But when we choose one thing, we're prevented from choosing one or  more other things. The highest-valued alternative good that we don't choose is the opportunity  cost of the good we did select. Diff: 2 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 38) Suppose that nuclear power plants are banned. What are examples of the opportunity costs of this decision? Answer: Electricity must be produced by some method, so if there are fewer nuclear plants,  there will be more plants that use fossil fuels. There will be an increase in coal mining and  petroleum production. Coal mining is hazardous and will increase the number of injuries and  deaths, and the increased use of oil may generate more oil spills. Diff: 3 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 48 ScholarStock39) Suppose you order a slice of pepperoni pizza and a soda at a shopping mall food court. What are examples of the opportunity costs of this decision? Answer: The opportunity cost of an action is the value of the next best alternative that a person  has to give up when making a choice. The opportunity cost of the pizza and soda is what you  would give up by consuming these things, such an alternative food choice like a hamburger and a bottle of water could have consumed if you did not consume the pizza and soda. Diff: 3 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 40) It is not uncommon for people to say something like, "If we can put someone on the moon  we should be able to . . . ," followed by the person's favorite project. What response can an  economist make to this person? Answer: Society must make choices, and when it chooses one thing, it must give up something  else. Resources were used to get people to the moon, and these resources are not available to do  other useful things. The fact that we put someone on the moon means that there are some other  things we cannot do. Diff: 3 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 41) Both an NBA basketball player and a fast-food cook are going to graduate school. Who has  a higher opportunity cost? Explain. Answer: The opportunity cost is the income lost while going to graduate school. An NBA  basketball player typically earns much more than does a fast-food cook so that the opportunity  cost of going to graduate school is likely to be higher for the NBA basketball player than for the  fast-food cook. Diff: 2 Topic: 2.3 Scarcity, Choice, and Opportunity Cost Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 49 ScholarStock2.4 The World of Trade-Offs 1) In the above figure, the opportunity cost of moving from producing 75 guitars and 25 ukuleles to producing 50 guitars and 50 ukuleles is A) 25 ukuleles. B) 50 guitars. C) 100 guitars. D) 25 guitars. Answer: D Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 2) In the above figure, the opportunity cost of moving from producing 50 guitars and 50 ukuleles to producing 25 guitars and 75 ukuleles is A) 25 guitars. B) 75 ukuleles. C) 25 ukuleles. D) 50 guitars. Answer: A Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 50 ScholarStock3) In the above figure, as more ukuleles are produced, the opportunity cost in terms of guitars is A) decreasing. B) increasing. C) constant. D) zero. Answer: C Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 4) In the above figure, moving from producing 50 guitars and 50 ukuleles to producing 25  guitars and 75 ukuleles, the opportunity cost of one ukulele is A) 25 guitars. B) 75 ukuleles. C) 25 ukuleles. D) 1 guitar. Answer: D Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 5) In the above figure, the opportunity cost of moving from producing 75 guitars and 25 ukuleles to producing 25 guitars and 75 ukuleles is A) 25 guitars. B) 75 ukuleles. C) 25 ukuleles. D) 50 guitars. Answer: D Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 51 ScholarStock6) Opportunity cost is illustrated on the production possibilities curve by a A) bowed-out shape of the curve. B) shift to the right of the curve. C) shift to the left of the curve. D) movement along the curve. Answer: D Diff: 3 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 7) A farmer has 100 acres of land on which he can grow soybeans or corn. An acre of land yields  200 bushels of soybeans or 100 bushels of corn. The above figure refers to the farmer's A) production possibilities curve. B) substitution options curve. C) demand curve. D) opportunity cost curve. Answer: A Diff: 1 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 52 ScholarStock8) In the above figure, how many bushels of corn are produced at point "a"? A) 10,000 B) 2,500 C) 1,000 D) 0 Answer: B Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 9) In the above figure, what is the opportunity cost of one bushel of soybeans? A) 1 bushel of corn B) 0.5 bushels of corn C) 2 bushels of corn D) unable to determine Answer: B Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 10) In the above figure, what is the opportunity cost of one bushel of corn? A) 1 bushel of soybeans B) 0.5 bushel of soybeans C) 2 bushels of soybeans D) unable to determine Answer: C Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 53 ScholarStock11) If opportunity costs are constant, then A) the production possibilities curve does not exist. B) the production possibilities curve bows outward. C) the production possibilities curve is a negatively sloped straight line. D) factors of production must not be fully employed. Answer: C Diff: 1 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 12) The production possibilities curve represents the maximum feasible production combinations resulting from A) the mix of current resources that utilizes all available inputs using current technology. B) a fixed amount of demand by consumers. C) the lack of trade-offs in production. D) the lack of technology used in production. Answer: A Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 13) The production possibilities curve represents A) the maximum amount of labor and capital available to society. B) the combinations of goods and services among which consumers are indifferent. C) the maximum combination of goods and services that can be produced with fixed resources  and technology, given efficient use of the resources. D) the maximum rate of growth of capital and labor in a country. Answer: C Diff: 1 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions Question Status: Previous Edition 54 ScholarStock14) If all resources were perfectly adaptable for alternative uses, the production possibilities  curve would A) be bowed out. B) be bowed in. C) be a straight line. D) not exist. Answer: C Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 15) A straight-line production possibilities curve takes this shape because A) the opportunity cost of producing a good is constant. B) the opportunity cost of producing more of a good is decreasing. C) resources are better suited for producing one output than another. D) resources are fixed. Answer: A Diff: 1 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition The above table shows the daily production possibilities for a bakery.  Currently the bakery bakes 60 pizzas and 180 loaves of bread, that is-it is at alternative C. 16) Using the above table, what is the opportunity cost of moving from alternative C to  alternative D? A) 60 loaves of bread B) 2 loaves of bread C) 30 loaves of bread D) 1/2 loaf of bread Answer: A Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 55 ScholarStock17) Using the above table, what is the opportunity cost of moving from alternative C to  alternative B? A) 1/2 a pizza pie B) 60 pizza pies C) 90 pizza pies D) 30 pizza pies Answer: D Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 18) Using the above table, moving from alternative C to alternative B, what is the opportunity  cost of one loaf of bread? A) 1 pizza pie B) 30 pizza pies C) 2 pizza pies D) 0.5 pizza pie Answer: D Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 19) Using the above table but now the bakery bakes 30 pizzas and 240 loaves of bread  (alternative B), moving from alternative B to alternative D, what is the opportunity cost of one pizza pie? A) 2.5 loaves of bread B) 2 loaves of bread C) 0.5 loaf of bread D) 150 loaves of bread Answer: B Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 56 ScholarStock20) People always face trade-offs because A) they always have more than one use for their time and money. B) they buy goods with money. C) trading takes place in a market economy. D) they can make themselves better off through trade. Answer: A Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 21) Which of the following statements indicates the idea of trade-offs? A) "I chose the road less traveled." B) "The devil made me do it." C) "You've got me under your spell." D) "Always give it the best that you can." Answer: A Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 22) The production possibilities curve represents A) the total amount of stocks and bonds that exist in the economy. B) the trade-off between human capital and physical capital that exists. C) all possible combinations of total output that can be produced. D) society's needs. Answer: C Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 57 ScholarStock23) The curve that represents all possible combinations of goods that can be produced is called A) the production possibilities curve. B) the resource allocation curve. C) the efficiency curve. D) the supply curve. Answer: A Diff: 1 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions Question Status: Previous Edition 24) Refer to the above figure. A farmer has 50 acres of land on which to grow wheat or beans. An acre of land yields 400 bushels of beans or 800 bushels of wheat. Which of the following is a  possible combination of beans and wheat that can be grown, assuming the land is farmed  efficiently? A) 30,000 bushels of each B) 20,000 bushels of beans and 40,000 bushels of wheat C) 5,000 bushels of beans and 5,000 bushels of wheat D) 16,000 bushels of beans and 8,000 bushels of wheat Answer: D Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 58 ScholarStock25) Refer to the above figure. A farmer has 50 acres of land on which to grow wheat or beans. An acre of land yields 400 bushels of beans or 800 bushels of wheat. Which of the following is a  possible combination of beans and wheat that can be grown, assuming the land is farmed  efficiently? A) 30,000 bushels of each B) 15,000 bushels of beans and 10,000 bushels of wheat C) 25,000 bushels of beans and 25,000 bushels of wheat D) 20,000 bushels of beans and 40,000 bushels of wheat Answer: B Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 26) In the above figure, the farmer faces a trade-off between beans and wheat equal to A) one-to-one. B) three-to-one. C) one-to-two. D) one-to-four. Answer: C Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 27) The above figure is referred to as a(n) A) trade-off curve. B) opportunity curve. C) production possibilities curve. D) scarcity-shortage curve. Answer: C Diff: 1 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 59 ScholarStock28) Refer to the above figure. If the farmer has 50 acres of land, the farmer is producing at point  a, and an acre of land yields 400 bushels of beans or 800 bushels of wheat, how much land is  devoted to the production of wheat? A) 8.5 acres B) 10 acres C) 12.5 acres D) 15 acres Answer: C Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 29) The production possibilities curve demonstrate which of the following concepts? A) scarcity B) choice C) trade-offs D) all of the above Answer: D Diff: 1 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 30) The production possibilities curve shows all possible combinations of A) two goods that are desired by society. B) two goods that can be efficiently produced with a given set of resources. C) two goods that can be purchased given the prices of the goods. D) two goods that two countries can trade with each other. Answer: B Diff: 1 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 60 ScholarStock31) A straight-line production possibilities curve has A) an increasing opportunity cost between the two goods. B) a decreasing opportunity cost between the two goods. C) a constant opportunity cost between the two goods. D) no opportunity cost between the two goods. Answer: C Diff: 1 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 32) Which of the following would result in a movement along the production possibilities curve? A) A fall in the unemployment rate B) Growth in the capital stock C) Population growth D) A change in the outputs of two goods that a society chooses to produce Answer: D Diff: 1 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 33) A movement along the production possibilities curve would imply that A) the labor force has grown. B) productivity has increased. C) society has chosen a different set of outputs. D) productivity has declined because workers are demanding more leisure. Answer: C Diff: 1 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 61 ScholarStock34) Which of the following statements about a movement along the production possibilities  curve in the above figure is FALSE? A) An additional computer can be produced only if fewer televisions are produced. B) The trade-off between computers and televisions is not constant. C) Society cannot have more of both goods at the same time. D) There are no opportunity costs involved in choosing one point on the curve over all other  points. Answer: D Diff: 1 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 35) If the production possibilities curve is a downward sloping straight line, then A) resources are highly specialized, making it difficult to use them for alternative uses. B) technological change has increased. C) production is efficient only when producing at the mid-point. D) all resources must be perfectly adaptable for alternative uses. Answer: D Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 62 ScholarStock36) A graphical representation which shows the trade-off that occurs when more of one output is  obtained at the sacrifice of another is called A) a Laffer Curve. B) a production possibilities curve. C) a bell curve. D) a supply curve. Answer: B Diff: 1 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 37) Suppose an acre of land yields 100 bushels of corn and that one bushel of corn provides  enough seed for one-quarter of an acre of land. The opportunity cost of consuming another 100  bushels of corn today is A) 100 bushels of corn next year. B) 25 bushels of corn next year. C) 10 bushels of corn next year. D) 2.5 bushels of corn next year. Answer: B Diff: 3 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 38) What does the slope of the production possibilities curve represent? Explain. Answer: It represents the trade-off between two goods from two points on the PPC.  Specifically, as we move from one point to another, in order to produce more of one good, we  must trade-off or give up the other good. If the trade-off is constant, then the slope is constant  along the PPC and the PPC is a straight line. If the trade-off increases, then the slope is  increasing along the PPC and the PPC is bowed outward. Diff: 1 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 63 ScholarStock39) What does a production possibilities curve show? Answer: A production possibilities curve shows the combinations of maximum outputs that can  be produced with a fixed amount of resources. Diff: 1 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions Question Status: Previous Edition 40) How can the concepts of opportunity costs, scarcity and choice by illustrated by the  production possibilities curve? Answer: The concept of opportunity cost is illustrated by movements along the production  possibilities curve, meaning that producing more of one good necessarily means less production  of another good. Scarcity represents a point on the PPC, but being unable to reach points beyond the PPC due to limited resources. Choice is represented by the actual point chosen on the PPC  from all the possible production points on the PPC. Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 64 ScholarStock2.5 The Choices Society Faces 1) If the farmer is producing 5000 bushels of soybeans at point "b" in the above figure, we know  that A) the farmer is not using his resources efficiently. B) the farmer is using his land to produce a crop other than soybeans or corn. C) the farmer must be using more land than was used in constructing the production possibilities  curve. D) the farmer is using his resources efficiently. Answer: A Diff: 2 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 65 ScholarStock2) In the above figure, which of the following points indicates the efficient use of resources? A) a B) f C) g D) h Answer: A Diff: 2 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 3) Which of the following would NOT allow society to move to point "h" in the above figure? A) An improvement in technology B) More efficient use of current resources C) An increase in quantity of labor D) An increase in quantity of capital Answer: B Diff: 2 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions Question Status: Previous Edition 66 ScholarStock4) The shape of the production possibilities curve in the above figure indicates that A) production of corn is characterized by increasing costs while the production of cloth is  characterized by decreasing costs. B) production of both corn and cloth is characterized by increasing costs. C) production of both corn and cloth is characterized by constant costs. D) production of corn is characterized by constant costs and the production of cloth is  characterized by increasing costs. Answer: B Diff: 2 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 5) Between points "b" and "c" in the above figure, the opportunity cost of 250 more bushels of  corn is A) 200 yards of cloth. B) 250 yards of cloth. C) 600 yards of cloth. D) 800 yards of cloth. Answer: A Diff: 2 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 6) If an economy is operating at a point inside the production possibilities curve, then A) society's resources are being inefficiently utilized. B) the curve will move to the left. C) society's resources are being used to produce too many consumer goods. D) economic policy must implemented to slow growth of the economy further. Answer: A Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 67 ScholarStock7) A country operates inside its production possibilities curve; this may be caused by A) unemployed resources. B) total efficiency in industry. C) a new resource being discovered. D) a lack of modern products being produced. Answer: A Diff: 2 Topic: 2.4 The World of Trade-Offs Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 8) The production possibilities curve bows out because A) production is efficient. B) of the law of increasing additional cost. C) production is inefficient. D) resources are not being fully utilized. Answer: B Diff: 2 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 9) When deriving the production possibilities curve, it is assumed that A) the amount of each good that is to be produced is fixed. B) the prices of resources are fixed along the curve. C) most resources can be used to produce only one good. D) resources are efficiently used. Answer: D Diff: 2 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 68 ScholarStock10) All points inside the production possibilities curve indicate A) a lack of sufficient supply. B) inefficiency in production. C) the law of increasing relative cost. D) the law of decreasing relative cost. Answer: B Diff: 2 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 11) Refer to the above figure. If the farmer is growing 8,000 bushels of beans and 8,000 bushels  of wheat, then we know that A) the farmer is not using resources efficiently. B) the farmer is using more land for wheat than for beans. C) the farmer should increase the amount of wheat grown and reduce the amount of beans. D) the farmer cannot be using the amount of land that was used to construct the curve. Answer: A Diff: 3 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 69 ScholarStock12) Refer to the above figure. If the farmer is producing 4,000 bushels of beans and 38,000  bushels of wheat, then we know the farmer A) is using resources efficiently. B) is producing too much wheat. C) is inefficient because point a is the most efficient point on the curve. D) must be using more resources than were assumed available in constructing the graph. Answer: D Diff: 3 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 13) How does an economy represented by a straight-line production possibilities curve differ  from one represented by a traditional production possibilities curve with a bowed shape? A) In the economy represented by a straight-line production possibilities curve, there is no  opportunity cost.  B) In the economy represented by a straight-line production possibilities curve, neither good is  scarce.  C) In the economy represented by a straight-line production possibilities curve, the law of  increasing relative cost does not apply.  D) In the economy represented by a straight-line production possibilities curve, changing the  amount of resources devoted to the production of each good will not alter the amount of each  good actually produced. Answer: C Diff: 2 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 70 ScholarStock14) Look at the following production possibilities table for smartphones and tablets. The table  shows the maximum combination of smartphones and tablets of corn that can be produced, when all resources are fully employed.  Production Possibilities Good A B C D E Based on the above information, A) there is no trade-off between smartphones and tablets. B) the opportunity cost of producing 30 instead of 20 smartphones is 120 tablets. C) the opportunity cost of producing 40 instead of 30 smartphones is 30 tablets. D) the opportunity cost of producing 90 instead of 50 tablets is 50 smartphones. Answer: C Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Revised 15) A bowed Production Possibilities Curve (PPC) indicates A) inefficient production. B) that the trade-off between the 2 goods is not constant. C) changing technology. D) only 1 good is always being produced. Answer: B Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 16) A production point that lies outside the Production Possibilities Curve (PPC) A) denotes inefficiency. B) indicates unemployment. C) is currently not attainable. D) can never be reached, even in future periods. Answer: C Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 71 ScholarStock17) Which of the following will most likely happen when better technology is used in  production?  A) an upward movement along the production possibilities curve B) an outward shift of the production possibilities curve C) an inward shift of the production possibilities curve D) a downward movement along the production possibilities curve Answer: B Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 18) One of the assumptions underlying the production possibilities curve is that A) at least one of the factors of production is a free good. B) the quantity of the resources available for the production of economic goods is fixed over a  given time period. C) there is at least one factor of production that is employed inefficiently. D) some of the factors of production are not being used. Answer: B Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 19) Which of the following statements is NOT an assumption underlying the production  possibilities curve? A) Resources are fully and efficiently employed. B) Technology is fixed. C) Production occurs over some specified time period. D) The amount of resources available for production can be changed quickly. Answer: D Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 72 ScholarStock20) A production possibilities curve with quantities of clothing and food on the axes shows  which of the following? I. A society cannot have an unlimited amount of each good. II. For an efficient society, an increase in clothing production will necessitate a decrease in food  production. III. A society will always produce the maximum amount of both clothing and food. A) I only B) II only C) III only D) Both I and II Answer: D Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 21) It is correct to state that a society which is on its production possibilities curve is A) underutilizing is resources. B) technologically inefficient. C) consuming too much output. D) fully utilizing its productive resources. Answer: D Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 22) Technology is best defined as A) society's pool of applied knowledge concerning the production of goods and services. B) the maximum output that can be obtained from a stock of physical capital. C) output inside the production possibilities curve. D) the utilization of more resources for the same amount of production. Answer: A Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions Question Status: Previous Edition 73 ScholarStock23) A technological improvement can cause the production possibilities curve to shift outward  because A) it increases costs and contributes to lower production rates. B) maximum feasible outputs of both goods increase. C) production will fall, but jobs will be saved. D) it causes increases in unemployment. Answer: B Diff: 2 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 24) Suppose the current unemployment rate is 15 percent. If it rises to 20 percent, A) the economy will move up along the production possibilities curve. B) the economy will move closer to the production possibilities curve. C) the production possibilities curve will shift inward. D) the economy will operate farther inside the production possibilities curve. Answer: D Diff: 2 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Reflective thinking skills Question Status: Previous Edition 25) Which of the following would cause an economy to produce at a point inside its production  possibilities curve? A) The efficient allocation of all factors of production B) Population growth C) Unemployment and an inefficient use of available resources D) Capital accumulation Answer: C Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 74 ScholarStock26) In the above figure, the combination of computers and televisions shown by point x A) is not attainable at the point in time for which the graph is drawn. B) can be attained only if some of society's resources are unemployed. C) suggests that the law of increasing relative costs does not hold. D) results only because society allocates its resources inefficiently. Answer: A Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 27) In the above figure, the combination of personal computers and televisions shown by point w A) is an efficient use of society's resources because it is below the production possibilities curve. B) is more desirable than point x because producing at point w does not put a strain on society's  resources. C) is attainable but involves the inefficient use of some of society's resources. D) is beyond the capacity of society to produce. Answer: C Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 75 ScholarStock28) In the above figure, points u, v, y, and z show A) an inefficient allocation of society's scarce resources. B) possible combinations of televisions and personal computers. C) a constant trade-off between televisions and personal computers. D) that society prefers more televisions than computers. Answer: B Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 29) The president of the United States promises that the nation's economy will simultaneously  produce more defense goods without any decreases in the production of other goods. Under  which of the following conditions could such a promise be valid? A) If the United States were producing at a point on its production possibilities curve B) If the United States were producing inside its production possibilities curve C) If the United States were producing to the right of its production possibilities curve D) None of the above; the production possibilities curve must shift to the right. Answer: B Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Reflective thinking skills Question Status: Previous Edition 30) A point outside a society's production possibilities curve is one that is A) unattainable given the resources of the society. B) technologically inefficient. C) undesirable given the implied underemployment of resources. D) desirable since it satisfies the desires of the population. Answer: A Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 76 ScholarStock31) A point inside a society's production possibilities curve represents A) an unattainable combination of outputs. B) an output combination that satisfies the needs of the population. C) an underutilization of productive resources. D) a technically superior output combination. Answer: C Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 32) A point outside a production possibilities curve indicates A) that resources are not being used efficiently. B) an output combination that society cannot attain given its current level of resources and  technology. C) that resources are being used very efficiently. D) that both goods are characterized by increasing costs. Answer: B Diff: 2 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 33) Efficiency can correctly be defined as A) producing outside the production possibilities boundary. B) minimizing opportunity cost. C) producing the maximum output with given technology and resources. D) providing for the immediate needs of the greatest proportion of the population. Answer: C Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 77 ScholarStock34) When an economy is operating efficiently, which is true? A) All resources are fully employed. B) It would be possible to increase the output of 1 good without decreasing the output of the  other. C) Resources are not fully employed or current technology is not being fully utilized. D) This economy is operating to the right of its production possibilities curve (PPC). Answer: A Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 35) Typically, the greater the specialization of resources, A) the less production that takes place. B) the greater the bow of the production possibilities curve. C) the poorer the country becomes. D) the greater the unemployment in the country. Answer: B Diff: 2 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 36) The production possibilities curve bows outward because A) opportunity costs are decreasing as the production of a good increases. B) opportunity costs are increasing as the production of a good increases. C) opportunity costs are fixed as the production of a good increases. D) resources are of uniform quality. Answer: B Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 78 ScholarStock37) When the economy moves from point D to E in the above table, the opportunity cost of a  computer in terms of televisions is A) 3. B) 4. C) 2. D) 5. Answer: B Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 38) According to the above table, the opportunity cost of each additional computer in terms of  televisions A) remains constant. B) falls as more computers are produced. C) increases as more computers are produced. D) is meaningless because the cost of computers cannot be expressed in terms of televisions. Answer: C Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 39) Given the production possibilities schedule in the above table, a combination of 9 televisions  and 4 personal computers A) is attainable but involves an inefficient use of society's resources. B) would be attainable only if a new technology of producing televisions or computers were  introduced. C) is not attainable because it is not listed in the schedule. D) is not attainable because society does not have enough resources to produce this combination. Answer: A Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 79 ScholarStock40) Given the production possibilities schedule in the above table, a combination of 23  televisions and 6 personal computers A) is attainable but involves the unemployment of some of society's resources. B) clearly illustrates the trade-off between televisions and computers. C) cannot be produced by society, given its current level of resources and production technology. D) can be produced only if society is willing to have some of its resources used inefficiently. Answer: C Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 41) A bowed production possibilities curve is consistent with A) an unchanged opportunity cost. B) a technologically inefficient society. C) the underutilization of productive resources. D) highly specialized resources. Answer: D Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 42) A bowed outward production possibilities curve occurs when A) opportunity costs are constant. B) resources are not scarce. C) additional units of output of one good necessitate greater reductions in the other good. D) there are shortages in the goods being produced. Answer: C Diff: 1 Topic: 2.5 The Choices Society Faces Learning Outcome: Micro-20: Apply the concepts of opportunity cost, marginal analysis, and  present value to make decisions AACSB: Analytic skills Question Status: Previous Edition 80 ScholarStock

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