Question 1

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

Accepted Answer

A)   the operation of the forces of supply and demand.
B)   policy authorities in Washington, D.C.
C)   budget planners in state capitals.
D)   committees from a variety of economic interest groups.
E)   All of the responses are correct.

Question 2

The most important way in which inefficiency occurs is

Accepted Answer

A)   producing more military goods instead of civilian goods.
B)   limiting economic growth by limiting capital spending.
C)   unemployment of labor and other resources.
D)   producing outside the production possibilities frontier.
E)   All of the responses are correct.

Question 3

The opportunity cost of any decision is the forgone value of the next best alternative that is not chosen.

Accepted Answer

A) True 
 B)False

Question 4

If Japan and the United States engage in trade, and Japan gains as a result of the trade, does that mean the United States has lost in some manner?

Accepted Answer

If economic agents engage in voluntary t...

Question 5

Voluntary exchange

Accepted Answer

A)   is usually beneficial to one party, but not the other.
B)   is always beneficial to both parties.
C)   is occasionally beneficial to both parties.
D)   occurs only between nations, not between individuals.

Question 6

A market system works very well in solving some basic problems of the economy but it fails in some cases. Provide examples.

Accepted Answer

The market deals with efficiency in prod...

Question 7

Figure 3-7

What is the opportunity cost of moving from point B to point A in Figure 3-7?

Accepted Answer

A)   20 units of X
B)   50 units of X
C)   25 units of X
D)   75 units of X

Question 8

An optimal choice can be characterized as a decision made by someone who is satisficing.

Accepted Answer

A) True 
 B)False

Question 9

Scarcity is a concept that does not apply to

Accepted Answer

A)   human wants.
B)   natural resources.
C)   land.
D)   machinery.

Question 10

You have invested $1,000 in a stock whose price is increasing at 10 percent a year. Your stock broker, who is never wrong, recommends a stock rising at 20 percent a year. Assuming the broker earns 4 percent of the stock's value on any purchase or sale of the stock, should you take his or her recommendation?

Accepted Answer

You will earn $200 a year if you take th...

Question 11

The money cost of a particular good will approximate its opportunity cost if

Accepted Answer

A)   there are serious distortions in the market.
B)   the market functions well.
C)   there is much specialization in the market.
D)   nations are exploiting the law of comparative advantage.

Question 12

Millionaires do not face the problem of scarcity.

Accepted Answer

A) True 
 B)False

Question 13

In his concept of "the invisible hand," Adam Smith explains that

Accepted Answer

A)   if each person looks out for himself or herself, then chaos will inevitably ensue.
B)   the pursuit of self-interest promotes economic well-being for society as a whole.
C)   governmental rule actually results in greater good than is apparent at the time.
D)   traditional religion is an appropriate guide for human behavior.
E)   All of the responses are correct.

Question 14

In Figure 3-2, a move from a point like B to a point such as D

Accepted Answer

A)   is not possible.
B)   can be attained with a more efficient allocation of resources.
C)   can be attained if there is an improvement in technology.
D)   can be attained if unused resources are put into production.

Question 15

The opportunity cost of a college education does not include any income that is foregone while enrolled in school, since this is not measured using monetary costs.

Accepted Answer

A) True 
 B)False

Question 16

In a market system, ____ distributes goods among consumers in accord with their tastes and preferences, using voluntary exchange to determine who gets what.

Accepted Answer

A)   a price system
B)   a regulatory framework
C)   a democratic government
D)   a closed system

Question 17

As a general rule, an increase in the capital available to a society

Accepted Answer

A)   reduces the slope of the production possibilities frontier, making it shallower.
B)   increases the slope of the production possibilities frontier, making it steeper.
C)   shifts the production possibilities frontier outward, away from the origin.
D)   shifts the production possibilities frontier inward, toward the origin.
E)   makes the production possibilities frontier more bowed out.

Question 18

Specialization in production

Accepted Answer

A)   raises productivity.
B)   requires money.
C)   stimulates exchange.
D)   All of the responses are correct.

Question 19

High opportunity costs go hand in hand with high money costs in a properly functioning economy.

Accepted Answer

A) True 
 B)False

Question 20

Free markets promote all of society's goals.

Accepted Answer

A) True 
 B)False

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

An optimal choice can be characterized as a decision made by someone who is satisficing.

Correct Answer
verified

A market system works very well in solving some basic problems of the economy but it fails in some cases. Provide examples.

Correct Answer
verified
The market deals with efficiency in prod...
View Answer

Scarcity is a concept that does not apply to

Correct Answer
verified

Millionaires do not face the problem of scarcity.

Correct Answer
verified

Correct Answer
verified
You will earn $200 a year if you take th...
View Answer

Voluntary exchange

Correct Answer
verified

Specialization in production

Correct Answer
verified

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

Correct Answer
verified

In a market system, ____ distributes goods among consumers in accord with their tastes and preferences, using voluntary exchange to determine who gets what.

Correct Answer
verified

The opportunity cost of a college education does not include any income that is foregone while enrolled in school, since this is not measured using monetary costs.

Correct Answer
verified

High opportunity costs go hand in hand with high money costs in a properly functioning economy.

Correct Answer
verified

In Figure 3-2, a move from a point like B to a point such as D

Correct Answer
verified

The opportunity cost of any decision is the forgone value of the next best alternative that is not chosen.

Correct Answer
verified

Figure 3-7 What is the opportunity cost of moving from point B to point A in Figure 3-7?

Correct Answer
verified

The most important way in which inefficiency occurs is

Correct Answer
verified

If Japan and the United States engage in trade, and Japan gains as a result of the trade, does that mean the United States has lost in some manner?

Correct Answer
verified
If economic agents engage in voluntary t...
View Answer

The money cost of a particular good will approximate its opportunity cost if

Correct Answer
verified

As a general rule, an increase in the capital available to a society

Correct Answer
verified

Free markets promote all of society's goals.

Correct Answer
verified

In his concept of "the invisible hand," Adam Smith explains that

Correct Answer
verified

Exam 3: The Fundamental Economic Problem: Scarcity and Choice

An optimal choice can be characterized as a decision made by someone who is satisficing.

Correct AnswerverifiedShow Answer

A market system works very well in solving some basic problems of the economy but it fails in some cases. Provide examples.

Correct AnswerverifiedThe market deals with efficiency in prod...View AnswerShow Answer

Scarcity is a concept that does not apply to

Correct AnswerverifiedShow Answer

Millionaires do not face the problem of scarcity.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedYou will earn $200 a year if you take th...View AnswerShow Answer

Voluntary exchange

Correct AnswerverifiedShow Answer

Specialization in production

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In a market system, ____ distributes goods among consumers in accord with their tastes and preferences, using voluntary exchange to determine who gets what.

Correct AnswerverifiedShow Answer

The opportunity cost of a college education does not include any income that is foregone while enrolled in school, since this is not measured using monetary costs.

Correct AnswerverifiedShow Answer

High opportunity costs go hand in hand with high money costs in a properly functioning economy.

Correct AnswerverifiedShow Answer

In Figure 3-2, a move from a point like B to a point such as D

Correct AnswerverifiedShow Answer

The opportunity cost of any decision is the forgone value of the next best alternative that is not chosen.

Correct AnswerverifiedShow Answer

Figure 3-7 What is the opportunity cost of moving from point B to point A in Figure 3-7?

Correct AnswerverifiedShow Answer

The most important way in which inefficiency occurs is

Correct AnswerverifiedShow Answer

If Japan and the United States engage in trade, and Japan gains as a result of the trade, does that mean the United States has lost in some manner?

Correct AnswerverifiedIf economic agents engage in voluntary t...View AnswerShow Answer

The money cost of a particular good will approximate its opportunity cost if

Correct AnswerverifiedShow Answer

As a general rule, an increase in the capital available to a society

Correct AnswerverifiedShow Answer

Free markets promote all of society's goals.

Correct AnswerverifiedShow Answer

In his concept of "the invisible hand," Adam Smith explains that

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
The market deals with efficiency in prod...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
You will earn $200 a year if you take th...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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If economic agents engage in voluntary t...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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