Quiz 1 Flashcards
The phenomenon of scarcity stems from the fact that
a. most economies’ production methods are not very good.
b. in most economies, wealthy people consume disproportionate quantities of goods and services.
c. governments restrict production of too many goods and services.
d. resources are limited.
ANS: D
A tradeoff exists between a clean environment and a higher level of income in that
a. studies show that individuals with higher levels of income pollute less than low-income individuals.
b. efforts to reduce pollution typically are not completely successful.
c. laws that reduce pollution raise costs of production and reduce incomes.
d. employing individuals to clean up pollution causes increases in employment and income.
ANS: C
Efficiency
a. and equality both refer to how much a society can produce with its resources.
b. and equality both refer to how fairly the benefits from using resources are distributed between members of a society.
c. refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from using resources are distributed among members of society.
d. refers to how evenly the benefits from using resources are distributed between members of society. Equality refers to how much a society can produce with its resources
ANS: C
Denise decides to spend three hours working overtime rather than watching a video with her friends. She earns $10 an hour. Her opportunity cost of working is
a. the $30 she earns working.
b. the $30 minus the enjoyment she would have received from watching the video.
c. the enjoyment she would have received had she watched the video.
d. nothing, since she would have received less than $30 of enjoyment from the video.
ANS: C
Caroline eats two apples during a particular day. The marginal benefit she enjoys from eating the second apple
a. can be thought of as the total benefit Caroline enjoys by eating two apples minus the total benefit she would have enjoyed by eating just the first apple.
b. determines Caroline’s marginal cost of the first and second apples.
c. does not depend on how many apples Caroline has already eaten.
d. All of the above are correct.
ANS: A
Economists make assumptions in order to
a. mimic the methodologies employed by other scientists.
b. minimize the number of experiments that yield no useful data.
c. minimize the likelihood that some aspect of the problem at hand is being overlooked.
d. focus their thinking on the essence of the problem at hand.
ANS: D
Any point on a country’s production possibilities frontier represents a combination of two goods that an economy
a. will never be able to produce.
b. can produce using all available resources and technology.
c. can produce using some portion, but not all, of its resources and technology.
d. may be able to produce in the future with more resources and/or superior technology.
ANS: B
Which of the following is a correct statement about production possibilities frontiers?
a. An economy can produce only on the production possibilities frontier.
b. An economy can produce at any point inside or outside a production possibilities frontier.
c. An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier.
d. An economy can produce at any point inside the production possibilities frontier, but not on or outside the frontier.
ANS: C
Pocoyo bakes cookies and Pato grows vegetables. In which of the following cases is it impossible for both Pocoyo and Pato to benefit from trade?
a. Pocoyo does not like vegetables and Pato does not like cookies.
b. Pocoyo is better than Pato at baking cookies and Pato is better than Pocoyo at growing vegetables.
c. Pato is better than Pocoyo at baking cookies and at growing vegetables.
d. Both Pocoyo and Pato can benefit from trade in all of the above cases.
ANS: A
Consider two individuals — Marquis and Serena — each of whom would like to wear sweaters and eat tasty food. The gains from trade between Marquis and Serena are most obvious in which of the following cases?
a. Marquis is very good at knitting sweaters and at cooking tasty food, but Serena’s skills in both of these activities are very poor.
b. Marquis and Serena both are very good at cooking tasty food, but neither has the necessary skills to knit a sweater.
c. Marquis’s cooking and knitting skills are very poor, and Serena’s cooking and knitting skills are also very poor.
d. Marquis’s skills are such that he can produce only sweaters, and Serena’s skills are such that she can produce only tasty food.
ANS: D
For a self-sufficient producer, the production possibilities frontier
a. is the same as the consumption possibilities frontier.
b. is greater than the consumption possibilities frontier.
c. is less than the consumption possibilities frontier.
d. is always a straight line.
ANS: A
Total output in an economy increases when each person specializes because
a. there is less competition for the same resources.
b. each person spends more time producing that product in which he or she has a comparative advantage.
c. a wider variety of products will be produced within each country due to specialization.
d. government necessarily plays a larger role in the economy due to specialization.
ANS: B
You have eaten two bowls of ice cream at Sundae School Ice Cream store. You consider eating a third. As a rational consumer you should make your choice by comparing
a. the benefits from eating all three bowls of ice cream to how much three bowls of ice cream costs.
b. the benefits from eating all three bowls of ice cream to how much one more bowl of ice cream costs.
c. the benefits from eating one more bowl of ice cream to how much three bowls of ice cream costs.
d. the benefits from eating one more bowl of ice cream to how much one more bowl of ice cream costs.
ANS: D
Suppose an economy produces two goods, food and machines. This economy always operates on its production possibilities frontier. Last year, it produced 1000 units of food and 47 machines. This year it experienced a technological advance in its machine-making industry. As a result, this year the society wants to produce 1050 units of food and 47 machines. Which of the following statements is correct?
a. Because the technological advance occurred in the machine-making industry, it will not be possible to increase food production without reducing machine production below 47.
b. Because the technological advance occurred in the machine-making industry, increases in output can only occur in the machine industry.
c. In order to increase food production in these circumstances without reducing machine production, the economy must reduce inefficiencies.
d. The technological advance reduced the amount of resources needed to produce 47 machines, so these resources could be used to produce more food.
ANS: D
Refer to Figure 2-5. If this economy devotes all of its resources to the production of sweaters, then it will produce
a. 0 sweaters and 200 soccer balls.
b. 180 sweaters and 125 soccer balls.
c. 300 sweaters and 0 soccer balls.
d. 300 sweaters and 200 soccer balls.
ANS: C
Refer to Figure 2-5. If this economy devotes one-half of its available resources to the production of soccer balls and the other half to the production of sweaters, it could produce
a. 150 sweaters and 100 soccer balls.
b. 150 sweaters and 150 soccer balls.
c. 300 sweaters and 200 soccer balls.
d. We would have to know the details of this economy’s technology in order to determine this.
ANS: A
Refer to Figure 2-5. A movement from point C to point D could be caused by
a. unemployment.
b. a decrease in society’s preference for sweaters.
c. fewer resources available for production of sweaters.
d. All of the above are correct.
ANS: A
Refer to Figure 2-5. If this economy moves from point A to point B, then which of the following statements is correct?
a. This economy has moved from a point of inefficient production to a point of efficient production.
b. This economy has experienced economic growth.
c. This economy has experienced an increase in employment.
d. None of the above is correct.
ANS: D
Refer to Figure 2-5. The opportunity cost of this economy moving from point A to point C is
a. 75 soccer balls.
b. 125 soccer balls.
c. 125 soccer balls and 240 sweaters.
d. 240 sweaters.
ANS: B
Refer to Figure 2-5. The opportunity cost of this economy moving from point D to point B is
a. zero.
b. 50 soccer balls.
c. 60 sweaters.
d. 50 soccer balls and 60 sweaters.
ANS: A
