Question 1

The idea that labor productivity depends on the degree of labor specialization is attributed to

Accepted Answer

A)   Hiro Yakamaya
B)   Stanley Jevons
C)   J. S. Mill
D)   Adam Smith
E)   Robinson Crusoe

Question 2

The two human factors of production are

Accepted Answer

A)   labor and mental exertion
B)   labor and entrepreneurship
C)   entrepreneurship and physical exertion
D)   labor and physical exertion
E)   entrepreneurship and mental exertion

Question 3

In economic terms associated with employment and unemployment, what would cause an economy to operate inside its production possibilities curve? What would have to change to move it to a point on its production possibilities curve?

Accepted Answer

Unemployment or underemployment would ke...

Question 4

-Which of the following statements is true of Exhibit B-11? Using domestic resources, one bread in Xenia costs

Accepted Answer

A)   2 coffee
B)   2 bread
C)   10 coffee
D)   5 coffee
E)   one-half coffee

Question 5

The production of more capital goods this year means we must sacrifice the production of consumption goods in the future.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following would be an example of an unemployed resource?

Accepted Answer

A)   John has been laid off from his job as an auto mechanic.
B)   Betty, a computer specialist, takes a job as a hotel maid.
C)   Mary, a senior citizen, receives a social security check.
D)   Sam, 10 years old, is in the fifth grade.
E)   a 10-year-old computer is now only used as a word processor.

Question 7

An example of an underemployed resource is a(n)

Accepted Answer

A)   farmer in Illinois who plants corn instead of wheat
B)   auto mechanic who is laid off from his job
C)   welfare recipient who doesn't work
D)   retired senior citizen who doesn't work
E)   person with a Ph.D. in chemistry who drives a taxi as a full-time job

Question 8

The law of increasing costs states that the opportunity cost of producing a good increases as more of the good is produced.

Accepted Answer

A) True 
 B)False

Question 9

When economists talk about innovation, they refer to

Accepted Answer

A)   the relationship between growth and employment
B)   one of the basic problems in economics
C)   the relationship between technology and scarcity
D)   the relationship between growth and scarcity
E)   ideas that eventually take the form of new applied technology

Question 10

The production possibilities curve shifts to the left when resources in the economy increase.

Accepted Answer

A) True 
 B)False

Question 11

-If the economy of Exhibit B-10 was located at point E but has moved to point F, we would know that

Accepted Answer

A)   it was impossible because it hasn't sufficient resources to make that move
B)   the rate of unemployment increased
C)   consumption goods production increased, but capital goods production decreased
D)   its unemployment decreased, but at the expense of either capital or consumption goods production
E)   it has achieved full employment

Question 12

Poor economies may have difficulty growing because

Accepted Answer

A)   their production possibilities curves slope upward instead of downward
B)   they cannot cut back on their production of consumption goods to increase their production of capital goods
C)   they have a solid consumption base already in place
D)   their resource bases are fully developed
E)   the law of increasing costs makes it hard to produce more goods

Question 13

When economists use the term "factors of production,"they mean

Accepted Answer

A)   labor, capital, and money
B)   labor, capital, land and money
C)   labor, capital, land and entrepreneurship
D)   labor, land, money and entrepreneurship
E)   money and entrepreneurship

Question 14

The activity involved in managing a firm is considered by economists to be

Accepted Answer

A)   land activity
B)   labor activity
C)   human capital activity
D)   entrepreneurial activity
E)   nonproductive activity

Question 15

-In year 2003 the country of Exhibit B-6 was located at point A on its year 2003 production possibilities curve. In 2004 this country was located at point B on its 2004 production possibilities curve. Which of the following could have caused this shift in its production possibilities curve?

Accepted Answer

A)   more efficient production in 2003
B)   greater use of resources in 2003
C)   a natural disaster in 2003 which led to a destruction of resources
D)   higher unemployment in 2003
E)   the production of capital goods in 2003 increased its resource base for 2004

Question 16

The opportunity cost associated with increasing U.S. national security is complicated by the fact that

Accepted Answer

A)   national security is not a good
B)   there is no trade-off between national security and other goods
C)   national security cannot be produced
D)   U.S. national security depends upon national security expenditures of other nations
E)   war is an inherent human activity

Question 17

If the Mexican economy is using all of its available resources to produce goods, it means that the Mexican economy is producing at a point

Accepted Answer

A)   located at one of the endpoints of the production possibilities curve
B)   beyond (exterior to)  its production possibilities curve
C)   on its production possibilities curve
D)   inside (interior to)  its production possibilities curve
E)   closer to the origin than its production possibilities curve

Question 18

-Starting from point B in Exhibit B-2 (on the next page) , the opportunity cost of 4 more swimming helmets is

Accepted Answer

A)   20 nose bands
B)   5 nose bands
C)   15 nose bands
D)   3.75 nose bands
E)   indeterminate

Question 19

Labor specialization can increase production primarily because workers

Accepted Answer

A)   are now supervised more and so have to work harder
B)   become proficient when they specialize in what they do best
C)   have to work more hours to buy the things they want
D)   engage in competitive, rather than cooperative, production
E)   have to learn how to do every production-related task well

Question 20

Food in the pantry of a household is a resource.

Accepted Answer

A) True 
 B)False

Exam 2: Production Possibilities and Opportunity Costs

An example of an underemployed resource is a(n)

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Poor economies may have difficulty growing because

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The production of more capital goods this year means we must sacrifice the production of consumption goods in the future.

Correct AnswerverifiedShow Answer

-Starting from point B in Exhibit B-2 (on the next page) , the opportunity cost of 4 more swimming helmets is

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The two human factors of production are

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The production possibilities curve shifts to the left when resources in the economy increase.

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-If the economy of Exhibit B-10 was located at point E but has moved to point F, we would know that

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Food in the pantry of a household is a resource.

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The idea that labor productivity depends on the degree of labor specialization is attributed to

Correct AnswerverifiedShow Answer

The law of increasing costs states that the opportunity cost of producing a good increases as more of the good is produced.

Correct AnswerverifiedShow Answer

Labor specialization can increase production primarily because workers

Correct AnswerverifiedShow Answer

-In year 2003 the country of Exhibit B-6 was located at point A on its year 2003 production possibilities curve. In 2004 this country was located at point B on its 2004 production possibilities curve. Which of the following could have caused this shift in its production possibilities curve?

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When economists talk about innovation, they refer to

Correct AnswerverifiedShow Answer

The activity involved in managing a firm is considered by economists to be

Correct AnswerverifiedShow Answer

-Which of the following statements is true of Exhibit B-11? Using domestic resources, one bread in Xenia costs

Correct AnswerverifiedShow Answer

The opportunity cost associated with increasing U.S. national security is complicated by the fact that

Correct AnswerverifiedShow Answer

If the Mexican economy is using all of its available resources to produce goods, it means that the Mexican economy is producing at a point

Correct AnswerverifiedShow Answer

Which of the following would be an example of an unemployed resource?

Correct AnswerverifiedShow Answer

In economic terms associated with employment and unemployment, what would cause an economy to operate inside its production possibilities curve? What would have to change to move it to a point on its production possibilities curve?

Correct AnswerverifiedUnemployment or underemployment would ke...View AnswerShow Answer

When economists use the term "factors of production,"they mean

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Unemployment or underemployment would ke...
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