Question 1

What would be the opportunity cost of a child using a coupon for a free ice cream cone?

Accepted Answer

A)  the dollar cost of the cone she selected
B)  the other types of ice cream she could have selected
C)  zero - because the good was not a durable good
D)  zero - because the good was freeE) All of the above
F) A) and D)

Question 2

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

Accepted Answer

a.Resources are the instruments provided...

Question 3

The concept of opportunity cost in a fully employed economy with technology and resources held constant tells us that

Accepted Answer

A)  expansion of output in one industry means expansion cannot occur in another industry.
B)  expansion of output in one industry means output in another industry must contract.
C)  output cannot be increased in any industry.
D)  output of all industries must contract until more resources are found.E) A) and B)
F) All of the above

Question 4

Table 3-1
 
-Suppose a farmer produces 50 bushels of corn and 10 bushels of peanuts.According to Table 3-1, the opportunity cost of 10 more bushels of peanuts is

Accepted Answer

A)  8 bushels of corn.
B)  42 bushels of corn.
C)  50 bushels of corn.
D)  impossible to determine from the information given.E) A) and B)
F) A) and C)

Question 5

Economics is often described as a science of constrained choice.How do you justify this argument?

Accepted Answer

Economics deals with the allocation of l...

Question 6

Figure 3-2 
-In Figure 3-2, at point B

Accepted Answer

A)  it is impossible to increase production of consumer goods.
B)  it is impossible to increase production of capital goods.
C)  it is possible to increase production of both capital goods and consumer goods simultaneously.
D)  it is impossible to increase production of both capital goods and consumer goods simultaneously.E) C) and D)
F) A) and D)

Question 7

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

Accepted Answer

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

Question 8

Specialization in production

Accepted Answer

A)  raises productivity.
B)  requires money.
C)  stimulates exchange.
D)  All of the above are correct.E) None of the above
F) C) and D)

Question 9

Economics is the study of the logic of

Accepted Answer

A)  rational decisions.
B)  decision-making activities.
C)  ends and means.
D)  choosing options from those available.
E)  All of the above are correct.F) A) and B)
G) None of the above

Question 10

The term "satisficing" indicates an optimal choice.

Accepted Answer

A) True 
 B)False

Question 11

Adam Smith noted that people are adept at pursuing their own self-interests, and that ____ harnesses this self-interest remarkably well.

Accepted Answer

A)  a totalitarian regime
B)  a market system
C)  a democratic government
D)  a closed systemE) None of the above
F) A) and B)

Question 12

A market society will always protect the natural environment.

Accepted Answer

A) True 
 B)False

Question 13

Adam Smith noted that people are adept at which of the following?

Accepted Answer

A)  Confusing themselves if given the chance.
B)  Proving the truth of "Murphy's Law."
C)  Denying themselves for the sake of others.
D)  Pursuing their own self-interest.
E)  All of the above are correct.F) A) and B)
G) C) and D)

Question 14

Opportunity cost can always be measured in money terms.

Accepted Answer

A) True 
 B)False

Question 15

The divergence between money costs and opportunity costs will be greatest in which of the following situations?

Accepted Answer

A)  A university purchases 100 computers.
B)  A university employs people from town in the commissary (people prefer this job to working in the paper factory) .
C)  A university employs otherwise unemployed teenagers to paint crosswalks and curbs.
D)  A university replaces the roof of the fine arts building.E) A) and B)
F) A) and C)

Question 16

If the U.S.government decides to increase military spending, one opportunity cost will be lower spending on education.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

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

Question 18

Both conservatives and liberals tend to approve of markets because

Accepted Answer

A)  markets are effective in solving many of society's problems.
B)  markets work well in all cases, and can be relied upon to solve problems.
C)  their goals are similar enough that they can rely on the same means.
D)  production is the most important goal, and market systems are very productive.
E)  of all of the above.F) C) and D)
G) All of the above

Question 19

Although specialization of labor increases efficiency of production, it can lead to another major problem:

Accepted Answer

A)  the need to exchange goods among producers.
B)  the need to remain fully employed.
C)  the depletion of natural resources.
D)  assuring that exchange leads to mutual gains.
E)  All of the above are correct.F) A) and D)
G) A) and B)

Question 20

The major coordination tasks can be summarized with the questions

Accepted Answer

A)  who, what, when, where?
B)  how, what, for whom?
C)  how, what, why?
D)  how, why, for whom?
E)  who, how, what?F) B) and C)
G) A) and B)

Exam 3: The Fundamental Economic Problem Scarcity and Choice

Economics is often described as a science of constrained choice.How do you justify this argument?

Correct AnswerverifiedEconomics deals with the allocation of l...View AnswerShow Answer

Economics is the study of the logic of

Correct AnswerverifiedShow Answer

Adam Smith noted that people are adept at pursuing their own self-interests, and that ____ harnesses this self-interest remarkably well.

Correct AnswerverifiedShow Answer

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

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

The divergence between money costs and opportunity costs will be greatest in which of the following situations?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The major coordination tasks can be summarized with the questions

Correct AnswerverifiedShow Answer

A market society will always protect the natural environment.

Correct AnswerverifiedShow Answer

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

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

Adam Smith noted that people are adept at which of the following?

Correct AnswerverifiedShow Answer

Specialization in production

Correct AnswerverifiedShow Answer

Opportunity cost can always be measured in money terms.

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Figure 3-2 -In Figure 3-2, at point B

Correct AnswerverifiedShow Answer

Table 3-1 -Suppose a farmer produces 50 bushels of corn and 10 bushels of peanuts.According to Table 3-1, the opportunity cost of 10 more bushels of peanuts is

Correct AnswerverifiedShow Answer

The term "satisficing" indicates an optimal choice.

Correct AnswerverifiedShow Answer

If the U.S.government decides to increase military spending, one opportunity cost will be lower spending on education.

Correct AnswerverifiedShow Answer

Although specialization of labor increases efficiency of production, it can lead to another major problem:

Correct AnswerverifiedShow Answer

Both conservatives and liberals tend to approve of markets because

Correct AnswerverifiedShow Answer

What would be the opportunity cost of a child using a coupon for a free ice cream cone?

Correct AnswerverifiedShow Answer

The concept of opportunity cost in a fully employed economy with technology and resources held constant tells us that

Correct AnswerverifiedShow Answer

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Economics deals with the allocation of l...
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a.Resources are the instruments provided...
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No.Although the rate of return on colleg...
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