Question 1

One assumption underlying the production possibilities curve is that

Accepted Answer

A)  the quantity of the resources available for the production of economic goods is fixed over a given time period.
B)  some of the factors of production are not being used.
C)  at least one of the factors of production is a free good.
D)  there is at least one factor of production that is employed inefficiently.E) None of the above
F) All of the above

Question 2

Explain the relationship between productive efficiency and allocative efficiency.

Accepted Answer

Productive efficiency means getting the ...

Question 3

When a society forgoes current consumption to invest in the production of capital goods,

Accepted Answer

A)  the less the society can consume in future.
B)  the less capital the society can produce in the future.
C)  the more the society can consume in the future.
D)  the easier it will be for the society to consume less in the future because people will become accustomed to less.E) A) and D)
F) C) and D)

Question 4

Which of the following is NOT one of the three basic economic questions?

Accepted Answer

A)  What amounts of which goods and services will be produced?
B)  How will goods are services be produced?
C)  What prices will be charged for the goods and services produced?
D)  For whom will goods and services be produced?E) A) and D)
F) B) and C)

Question 5

Figure 2-4 
-In Figure 2-4,the bowed-out shape of the production possibilities curve indicates that

Accepted Answer

A)  resources are being used efficiently.
B)  resources are being used inefficiently.
C)  production is efficient but the economy is experiencing allocative inefficiency.
D)  some resources are relatively better at producing corn and others are better at producing cloth.E) C) and D)
F) A) and D)

Question 6

Specialization and trade

Accepted Answer

A)  benefit rich countries and harm poor countries.
B)  benefit both rich countries and poor countries.
C)  benefit poor countries and harm rich countries.
D)  harm both rich countries and poor countries.E) C) and D)
F) B) and D)

Question 7

What are the three basic economic questions in every country?

Accepted Answer

1.What (and how much of it)wil...

Question 8

Figure 2-2 
-In Table 2-1,the opportunity cost of each additional television in terms of computers given up

Accepted Answer

A)  falls as more computers are produced.
B)  increases as more computers are produced.
C)  is meaningless because the cost of computers cannot be expressed in terms of televisions.
D)  remains constant.E) B) and C)
F) All of the above

Question 9

A person has a comparative advantage in an activity whenever she

Accepted Answer

A)  can perform the activity at a lower opportunity cost than another person.
B)  can do everything better than anyone else.
C)  has an absolute advantage in that activity.
D)  can do the activity in less time than anyone else.E) B) and C)
F) A) and C)

Question 10

Suppose a hectare of land yields 100 tonnes of corn and that one tonne of corn provides enough seed for one-quarter of a hectare of land.The opportunity cost of consuming another tonne of corn today is

Accepted Answer

A)  25 tonnes of corn next year.
B)  10 tonnes of corn next year.
C)  100 tonnes of corn next year.
D)  2) 5 tonnes of corn next year.E) A) and D)
F) A) and C)

Question 11

Define productive efficiency.Explain why being productively efficient does not necessarily mean using the latest in high-tech production methods.

Accepted Answer

Productive efficiency is achieved when a...

Question 12

International trade allows the world to

Accepted Answer

A)  move away from the global production possibilities curve.
B)  move from inside the global production possibilities curve towards the curve.
C)  move from outside the global production possibilities curve towards the curve.
D)  make no move within the global production possibilities curve.E) None of the above
F) B) and C)

Question 13

An inefficient factory is likely to close down under capitalism for which of the following reasons?

Accepted Answer

A)  government orders
B)  a central planner's decision
C)  adverse effects on income distribution
D)  low or negative profitsE) A) and C)
F) B) and C)

Question 14

Comparative advantage is always a(n) ________ concept.

Accepted Answer

A)  relative
B)  engineering
C)  monetary
D)  absoluteE) None of the above
F) B) and C)

Question 15

The organization of productive activities among persons and regions so that no one individual or area is totally self-sufficient is known as

Accepted Answer

A)  comparative value.
B)  advantage-taking.
C)  specialization.
D)  out-sourcing.E) A) and D)
F) All of the above

Question 16

Three Ps of capitalism are

Accepted Answer

A)  prices,performance,and progress.
B)  prices,privilege,and profits.
C)  privilege,production,and profits.
D)  prices,profits,and private property.E) All of the above
F) A) and C)

Question 17

In general,specialization allows

Accepted Answer

A)  constant opportunity costs.
B)  greater self-reliance.
C)  the production of fewer capital goods.
D)  greater productivity.E) C) and D)
F) A) and D)

Question 18

Figure 2-2 
-In Figure 2-2,points U,V,Y,and Z show

Accepted Answer

A)  a constant trade-off between televisions and computers.
B)  that society prefers more televisions than computers.
C)  an inefficient allocation of society's scarce resources.
D)  possible combinations of televisions and personal computers.E) B) and C)
F) A) and C)

Question 19

A society on its production possibilities curve is

Accepted Answer

A)  technologically inefficient but allocatively efficient.
B)  consuming too much output.
C)  fully utilizing its productive resources but may or may not be allocatively inefficient.
D)  under-utilizing its resources.E) A) and D)
F) All of the above

Question 20

Does the production of capital goods imply less current consumption? If it does,when is the reduction in consumption worthwhile? Explain.

Accepted Answer

Capital goods are goods used to produce ...

Exam 2: Production Possibilities and Economic Systems

The organization of productive activities among persons and regions so that no one individual or area is totally self-sufficient is known as

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Suppose a hectare of land yields 100 tonnes of corn and that one tonne of corn provides enough seed for one-quarter of a hectare of land.The opportunity cost of consuming another tonne of corn today is

Correct AnswerverifiedShow Answer

What are the three basic economic questions in every country?

Correct Answerverified1.What (and how much of it)wil...View AnswerShow Answer

International trade allows the world to

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Comparative advantage is always a(n) ________ concept.

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Define productive efficiency.Explain why being productively efficient does not necessarily mean using the latest in high-tech production methods.

Correct AnswerverifiedProductive efficiency is achieved when a...View AnswerShow Answer

An inefficient factory is likely to close down under capitalism for which of the following reasons?

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Specialization and trade

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Explain the relationship between productive efficiency and allocative efficiency.

Correct AnswerverifiedProductive efficiency means getting the ...View AnswerShow Answer

Figure 2-2 -In Table 2-1,the opportunity cost of each additional television in terms of computers given up

Correct AnswerverifiedShow Answer

Figure 2-2 -In Figure 2-2,points U,V,Y,and Z show

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In general,specialization allows

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A person has a comparative advantage in an activity whenever she

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When a society forgoes current consumption to invest in the production of capital goods,

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Figure 2-4 -In Figure 2-4,the bowed-out shape of the production possibilities curve indicates that

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One assumption underlying the production possibilities curve is that

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Which of the following is NOT one of the three basic economic questions?

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Does the production of capital goods imply less current consumption? If it does,when is the reduction in consumption worthwhile? Explain.

Correct AnswerverifiedCapital goods are goods used to produce ...View AnswerShow Answer

A society on its production possibilities curve is

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Three Ps of capitalism are

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1.What (and how much of it)wil...
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Productive efficiency is achieved when a...
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Productive efficiency means getting the ...
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Capital goods are goods used to produce ...
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