Econ 201 Ex1

If cable TV service and satellite TV service are substitutes, a. a decrease in the price of cable will decrease the demand for satellite TV. b. an increase in the price of cable will decrease the demand for satellite TV. c. an increase in the price of cable will generally have no effect on the demand for satellite TV. d. an increase in the price of cable will shift the demand curve for satellite TV to the left.

a .a decrease in the price of cable will decrease the demand for satellite TV.

Joe and Ed go to a diner that sells hamburgers for $5 and hot dogs for $3. They agree to split the lunch bill evenly. Ed chooses a hot dog. The marginal cost to Joe then of ordering a hamburger instead of a hot dog is a. $1. b. $2. c. $2.50. d. $3.

a. $1.

Which one of the following is a positive economic statement? a. An increase in the minimum wage will reduce employment. b. The minimum wage should be increased. c. Social justice will be served by increasing the minimum wage. d. Thoughtful people oppose an increase in the minimum wage.

a. An increase in the minimum wage will reduce employment.

Which of the following most accurately indicates the implications of an economy's production possibilities curve? a. If all the resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced. b. If all the resources of an economy are being used efficiently, it is generally possible to produce more of one good without having to sacrifice the production of other goods. c. Over time, it is generally impossible for a country to expand its production of goods. d. An economy will automatically move toward a point that lies outside of the production possibilities curve unless proper government policy constrains production.

a. If all the resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced.

Steve values his boat at $4,000, and Jennifer values it at $9,000. If Jennifer buys it from Steve for $7,000, which of the following is true? a. Steve gains $3,000 of value, and Jennifer gains $2,000 of value. b. Steve gains $7,000 of value, and Jennifer loses $7,000 of value. c. Steve gains $7,000 of value, and Jennifer gains $6,000 of value. d. Steve and Jennifer both gain $7,000 of value.

a. Steve gains $3,000 of value, and Jennifer gains $2,000 of value.

Which of the following would most likely increase the demand for peanut butter? a. a decrease in the price of jelly, a good that is often used with peanut butter b. the discovery that excessive consumption of peanut butter is harmful to one's health c. crop failures that raise the price of peanuts d. the invention of a new product that consumers think is a good substitute for peanut butter

a. a decrease in the price of jelly, a good that is often used with peanut butter

If cigars and cigarettes are substitute goods, an increase in the price of cigars would result in a. an increase in the demand for cigarettes. b. a decrease in the price of cigarettes. c. a decrease in the demand for cigarettes. d. a decrease in the demand for cigars.

a. an increase in the demand for cigarettes.

Which of the following would be most likely to cause the demand for Miller beer to increase? a. an increase in the price of Budweiser beer b. a decrease in consumer income c. a decrease in the price of barley used to make Miller beer d. a decrease in the price of Miller beer

a. an increase in the price of Budweiser beer

If Sean sells Tom a tennis racket for $50, we would expect a. both parties to gain from this transaction. b. Sean to gain from the transaction, while Tom loses. c. Tom to gain from the transaction, while Sean loses. d. the well-being of both parties to be unchanged.

a. both parties to gain from this transaction.

With voluntary exchange, a. both the buyer and seller will be made better off. b. the buyer will be made better off, while the seller will be made worse off. c. the seller will be made better off, while the buyer will be made worse off. d. both the buyer and the seller will be made worse off.

a. both the buyer and seller will be made better off.

The economic way of thinking suggests that if the government imposed a $500 tax on owners of red automobiles, a. fewer red automobiles would be produced and sold. b. more red automobiles would be produced and sold. c. there would be no change in the number of red automobiles produced and sold. d. red automobiles would cease to exist.

a. fewer red automobiles would be produced and sold.

"The economic wealth of this country is primarily the result of the profit made by some individuals at the expense of others." The person who made this statement a. has failed to comprehend that mutual gains result from specialization and exchange. b. has failed to comprehend the fallacy of composition. c. has failed to understand the significance of the production possibilities constraint. d. has utilized the economic way of thinking; the statement is essentially correct.

a. has failed to comprehend that mutual gains result from specialization and exchange.

Ifan economy is operating at a point inside the production possibilities curve, a. its resources are not being used efficiently. b. the curve will begin to shift inward. c. the curve will begin to shift outward. d. This is a trick question because an economy cannot produce at a point inside the curve.

a. its resources are not being used efficiently.

The basic difference between macroeconomics and microeconomics is that a. macroeconomics is concerned with the forest (aggregate markets), while microeconomics is concerned with the individual trees (subcomponents). b. macroeconomics is concerned with policy decisions, while microeconomics applies only to theory. c. microeconomics is concerned with the forest (aggregate markets), while macroeconomics is concerned with the trees (subcomponents). d. opportunity cost is applicable to macroeconomics, and the fallacy of composition relates to microeconomics.

a. macroeconomics is concerned with the forest (aggregate markets), while microeconomics is concerned with the individual trees (subcomponents).

If the citizens of a country were to work harder and take less leisure time, it would a. shift the production possibilities curve outward. b. cause an economy to operate inside its production possibilities curve. c. shift the production possibilities curve inward. d. This is a trick question, because work effort has nothing to do with the production possibilities curve.

a. shift the production possibilities curve outward.

When collective decision making is utilized to resolve economic questions regarding the allocation of resources, a. the role of markets will be replaced by political decision making. b. centralized decision making in all areas is inevitable. c. the preferences of individuals are of no importance. d. economic efficiency will be assured.

a. the role of markets will be replaced by political decision making.

Producers are willing to offer greater quantities for sale at higher prices because a. they have the incentive to pay the increasing opportunity cost of resources necessary to attract them from alternative uses b. they will decrease their profits by expanding production at higher prices c. the government orders them to do so d. lower prices attract new firms, which have higher costs of production e. they hire superior quality, higher-priced resources as production expands

a. they have the incentive to pay the increasing opportunity cost of resources necessary to attract them from alternative uses

Just before class, Jim tells Stuart, "Stuart, you shouldn't skip class today because you have paid tuition to enroll in the class." Stuart ignores Jim's advice, and instead makes the decision of whether to attend based on what he feels he'd be missing that day in class relative to his value of the extra time he could have to finish the video game he is playing. To an economist, Stuart is a. using marginal decision making. b. ignoring the total value of attending class. c. ignoring the concept of opportunity cost. d. committing the fallacy of composition.

a. using marginal decision making.

Which of the following sayings best reflects the concept of opportunity cost? a. "You can't teach an old dog new tricks" b. "Time is money." c. "I have a baker's dozen." d. "There's no business like show business

b. "Time is money."

While waiting in line to buy two tacos at 75 cents each, and a medium drink for 80 cents, Jordan notices that the restaurant has a value meal containing three tacos and a medium drink all for $2.50. For Jordan, the marginal cost of purchasing the third taco would be a. zero. b. 20 cents. c. 75 cents. d. 80 cents.

b. 20 cents.

While waiting in line to buy two tacos at 80 cents each and a medium drink for 90 cents, Jordan notices that the restaurant has a value meal containing three tacos and a medium drink all for $3. For Jordan, the marginal cost of the third taco would be a. zero. b. 50 cents. c. 80 cents. d. $1.

b. 50 cents.

Which one of the following states a central element of the economic way of thinking? a. Scarce goods are priceless. b. Incentives matter--human choice is influenced in predictable ways by changes in personal costs and benefits. c. The realism of the assumptions is the best test of an economic theory. d. When deciding how to allocate time, the concept of opportunity cost is meaningless.

b. Incentives matter--human choice is influenced in predictable ways by changes in personal costs and benefits.

In Europe during the 14th century, the Black Plague killed 24 million people or close to 37 percent of the population. How would this affect the production possibilities curves for the countries of Europe at that time? a. The production possibilities curves for these countries would have shifted outward. b. The production possibilities curves for these countries would have shifted inward. c. The production possibilities curves for these countries would have been unaffected. d. This would have been illustrated by a movement along the production possibilities curves for these countries, but it would not have shifted them.

b. The production possibilities curves for these countries would have shifted inward.

The primary benefit that results when a nation employs its resources in accordance with the principle of comparative advantage is a. an expansion in investment resulting from a reallocation of resources away from consumption. b. a larger output resulting from a more efficient use of resources. c. greater equality of income resulting from an increase in the number of workers. d. an increase in the profitability of business enterprises resulting from an increase in investment.

b. a larger output resulting from a more efficient use of resources.

In economics, the term for a person who reduces transaction costs by arranging trades is a. an exchange broker. b. a middleman. c. a transactions specialist. d. an opportunity finder.

b. a middleman.

"A reduction in gasoline prices caused the demand for gasoline to increase. The lower gas prices also led to an increase in demand for large cars, causing their prices to rise." These statements a. are essentially correct. b. contain one error; the lower gasoline prices would cause an increase in the quantity demanded of gasoline, not an increase in demand. c. contain one error; the lower gasoline prices would increase the quantity demanded of large cars, not the demand. d. contain two errors; the lower gasoline prices would cause the quantity of gasoline demanded (rather than the demand) to increase, and the lower gasoline price would cause an increase in quantity demanded (rather than the demand) for large cars.

b. contain one error; the lower gasoline prices would cause an increase in the quantity demanded of gasoline, not an increase in demand.

When property rights are clearly defined and enforced, private owners will a. use their property for selfish ends because they have little or no incentive to consider the desires of others. b. develop and direct their property toward uses that others value highly because the market will generally reward them for doing so. c. have little or no incentive to take care of their property or conserve it for the future. d. be unable to derive personal gain if they are sensitive to the desires of others when deciding how to use their property.

b. develop and direct their property toward uses that others value highly because the market

The invisible hand principle indicates that competitive markets can help promote the efficient use of resources a. only if buyers and sellers really care, personally, about economic efficiency. b. even when each market participant cares only about their own self interest rather than about the overall efficiency of resource use. c. even if business firms fail to produce goods efficiently. d. if, and only if, businesses recognize their social obligation to keep costs low and use resources wisely.

b. even when each market participant cares only about their own self interest rather than about the overall efficiency of resource use.

If a firm or a nation desires to maximize its output, each productive assignment should be carried out by those persons who a. have the highest opportunity cost. b. have a comparative advantage in the productive activity. c. can complete the productive activity most rapidly. d. least enjoy performing the productive activity.

b. have a comparative advantage in the productive activity.

Jim enjoys the feeling of wind in his hair enough to ride his motorcycle without a helmet, even though he fully realizes the potential for injury it creates by not wearing one in the unlikely event he is in an accident. To an economist, Jim is a. making an irrational choice. b. making a rational choice. c. not fully considering the personal costs and benefits of his decision. d. not responding to the incentives he faces.

b. making a rational choice.

"Here in East Abalone, we are proud of our ability to be self-sufficient. We do not trade with other nations." From an economic perspective, citizens of this (mythical) nation can be expected to a. gain materially from this policy because they can consume more goods over time than if they engaged in trade with foreigners. b. produce less total value than they could if they specialized and engaged in trade with other nations. c. gain from more rapid growth since home markets are reserved for home producers. d. be just as well off without trade since the value of what is sent to other nations in trade just equals the value of what is received in trade.

b. produce less total value than they could if they specialized and engaged in trade with other nations.

For a college student who wishes to calculate the true costs of going to college, the costs of room and board a. should be counted in full, regardless of the costs of eating and sleeping elsewhere. b. should be counted only to the extent that they are more expensive at college than elsewhere. c. usually exceed the opportunity cost of going to college. d. plus the cost of tuition, equals the opportunity cost of going to college.

b. should be counted only to the extent that they are more expensive at college than elsewhere.

Which of the following groups would most likely benefit from a law that is extremely tough on those who drink and drive? a. truck drivers b. taxi drivers c. bartenders d. doctors and nurses

b. taxi drivers

People are willing to pay more for a diamond than for a bottle of water because a. the marginal cost of producing an extra diamond far exceeds the marginal cost of producing an extra bottle of water. b. the marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water. c. producers of diamonds have a much greater ability to manipulate diamond prices than producers of water have to manipulate water prices. d. water prices are held artificially low by governments, since water is necessary for life.

b. the marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water.

The price of an airline ticket from Denver to Washington, D.C. costs $600. A bus ticket costs $150. Traveling by plane takes 6 hours compared with 51 hours by bus. Other things constant, an individual would gain by choosing air travel if, and only if, his time were valued at more than a. $6 per hour. b. $8 per hour. c. $10 per hour. d. $15 per hour.

c. $10 per hour.

When a conflict arises in a major oil-exporting area of the world, such as the Middle East, the price of gasoline already in the storage tanks at local gas stations usually increases. Which of the following best explains this occurrence? a. Gas station owners anticipate consumers will buy more gasoline as gasoline prices increase. b. Gas station owners are attempting to repeal the laws of supply and demand. c. Gas station owners anticipate higher replacement costs for their supply of gasoline and, therefore, raise their prices in response to this higher expected cost. d. A decline in consumer demand generally causes gas station owners to raise their prices.

c. Gas station owners anticipate higher replacement costs for their supply of gasoline and, therefore, raise their prices in response to this higher expected cost.

If Harry only pays $25,000 to purchase a new car even though he would have been willing to pay as much as $35,000 for the car, this indicates that a. Harry is an irrational consumer. b. The seller earned a $10,000 profit on the sale of the car. c. Harry reaped $10,000 of consumer surplus from the transaction. d. The seller received $10,000 worth of producer surplus on the transaction.

c. Harry reaped $10,000 of consumer surplus from the transaction.

Which of the following statements is correct? a. If the buyer of a good gains, the seller must lose an equal amount. b. The value of goods is objective; it is equal to the cost of supplying the good. c. Opportunity costs will always be incurred when scarce resources are used to produce a good. d. Changes in incentives generally have no effect on human behavior.

c. Opportunity costs will always be incurred when scarce resources are used to produce a good.

Which of the following is most clearly consistent with the basic postulate of economics regarding the reaction of people to a change in incentives. a. Farmers produce fewer bushels of wheat in response to an increase in the price of wheat. b. People will buy more milk at a price of $2 per gallon than at $1 per gallon. c. People will buy less gas if the price of gas increases by $.20 per gallon. d. People will consume more beef if the price increases from $1 to $2 per pound.

c. People will buy less gas if the price of gas increases by $.20 per gallon.

If the demand for a good increases, which of the following will generally occur in a market setting? a. The price of the good will decrease. b. The supply of the good will increase. c. The quantity supplied will increase. d. Producer profits will fall.

c. The quantity supplied will increase.

A cold spell in Florida extensively reduced the orange crop, and as a result, California oranges commanded a higher price. Which of the following statements best explains the situation? a. The supply of Florida oranges fell, causing the supply of California oranges to increase as well as their price. b. The supply of Florida oranges fell, causing the supply of California oranges to decrease and their price to increase. c. The supply of Florida oranges fell, causing their price to increase and the demand for California oranges to increase. d. The demand for Florida oranges was reduced by the freeze, causing an increase in the price of California oranges and a greater demand for them.

c. The supply of Florida oranges fell, causing their price to increase and the demand for California oranges to increase.

Under a system of private property, could a 60-year-old owner of a tree farm benefit by planting and caring for a crop of Douglas firs, most of which will not be ready to cut for 50 years? a. No, the farmer will be dead before the crop will be ready for harvest. b. No, the value of the farmer's land will decline since he is taking it out of production for the next 50 years. c. Yes, the farmer will benefit because this action will increase the value of the land if and when the farmer decides to sell. d. Yes, but only if the project is subsidized by the government or private conservation groups.

c. Yes, the farmer will benefit because this action will increase the value of the land if and when the farmer decides to sell.

The economic way of thinking is a. a set of historical generalizations that indicates what goods should be produced. b. a body of statistical data that indicates how an economy should be organized. c. a set of basic concepts that helps one understand human choices. d. a set of complex, highly abstract theories that provides persons skilled in statistics with the information necessary to tell others what choices they should make.

c. a set of basic concepts that helps one understand human choices.

When the market for a good is in equilibrium, a. consumer surplus will equal producer surplus. b. the total value created for consumers will equal the total cost of production for business firms. c. all units valued more highly than the opportunity cost of production will be supplied. d. all units that have value will be produced, regardless of their cost of production.

c. all units valued more highly than the opportunity cost of production will be supplied.

Assume that corn and soybeans are alternatives that could be grown by most farmers. An increase in the price of corn will a. increase the supply of corn. b. increase the supply of soybeans. c. decrease the supply of soybeans. d. decrease the supply of corn. e. have no effect on the supplies of corn and soybeans.

c. decrease the supply of soybeans.

When competition is present and property rights protected and enforced, market prices will a. discourage profit-seeking business firms from producing efficiently. b. direct entrepreneurs toward production of goods that are inferior in quality. c. encourage self-interested individuals to develop skills that are expected to be valuable in the future. d. always decrease.

c. encourage self-interested individuals to develop skills that are expected to be valuable in the future.

"If gasoline were taxed, the price of gasoline would rise. Consequently, the demand for gasoline would fall, causing the price to fall to the original level." This statement is a. essentially correct. b. incorrect--after the demand falls, the price would fall but to some level higher than the original level. c. incorrect--demand and quantity demanded are confused. The price increase would reduce quantity demanded, not demand. d. incorrect--after the demand falls, the price would fall but to some level lower than the original level.

c. incorrect--demand and quantity demanded are confused. The price increase would reduce quantity demanded, not demand.

A decrease in the supply of a good will a. decrease the demand for the good. b. cause the price of the good to fall. c. lead to an increase in the price of the good. d. increase the quantity of the good bought and sold.

c. lead to an increase in the price of the good.

The number of people willing to buy tickets to the Super Bowl is invariably greater than the number of tickets (and seats) available. This is evidence that the price of the tickets is a. higher than the equilibrium price. b. equal to the equilibrium price since the number of tickets bought equals the number sold. c. lower than the equilibrium price. d. higher than the equilibrium price when the demand is inelastic but lower when the demand is elastic.

c. lower than the equilibrium price.

The expression, "There's no such thing as a free lunch," implies that a. everyone has to pay for his own lunch. b. the person consuming a good must always pay for it. c. opportunity costs are incurred when resources are used to produce goods and services. d. no one has time for a good lunch anymore.

c. opportunity costs are incurred when resources are used to produce goods and services.

When experts first predicted major weather-related coffee crop failures in Central and South America in 1986, the price of coffee already on grocery shelves in the United States increased sharply. When coffee became temporarily more scarce, the usefulness to society of "coffee conservation" increased. The immediate sharp price increase (which soon leveled off) gave consumers an incentive to a. buy all the coffee they could at the higher prices and hoard it, since there was obviously a shortage. b. drink as much coffee as possible at the higher price. c. start conserving coffee immediately and switch to other beverages if it was easy to do so. d. ignore the price of coffee and drink it as they normally would.

c. start conserving coffee immediately and switch to other beverages if it was easy to do so.

"The money and resources currently being devoted to the War on Terrorism reduces the quantity of other goods that we are able to supply." This statement most clearly illustrates which of the following? a. the fallacy of composition. b. the idea that association is not causation. c. the concept of opportunity cost. d. the difference between positive and normative economics.

c. the concept of opportunity cost.

If the Internet makes it easier for sellers to find buyers and makes it easier for buyers to learn about the products that are available for sale, we would expect that a. the volume of trade will decline. b. transaction costs will rise. c. the gains from trade will increase. d. buyers and sellers will be worse off.

c. the gains from trade will increase.

"Now that Blake paints the broad surfaces and I do the trim work, we can paint a house in three-fourths the time that it took for each of us to do both." This statement most clearly reflects a. the importance of secondary effects. b. the fallacy of composition. c. the law of comparative advantage. d. behavior inconsistent with economizing.

c. the law of comparative advantage.

Three basic decisions must be made by all economies. What are they? a. how much will be produced, when it will be produced, and how much it will cost b. what the price of each good will be, who will produce each good, and who will consume each good c. what will be produced, how goods will be produced, and for whom goods will be produced d. how the opportunity cost principle will be applied, if and how the law of comparative advantage will be utilized, and whether the production possibilities constraint will apply

c. what will be produced, how goods will be produced, and for whom goods will be produced

Which of the following is an example of a rational decision? a. Jim enjoys the feeling of wind in his hair enough to ride his motorcycle without a helmet, even though he fully realizes the potential for injury it creates by not wearing one in the unlikely event he is in an accident. b. Doris, a burglar who breaks into houses, decides to break into the house at 265 Elm Street, rather than the house next door because the house next door has a sign in the yard that says "home protected by a security system." c. Brandon, a drug user, chooses to buy his cocaine from Pablo, because Pablo's cocaine is as good as the cocaine from other dealers, but Pablo has lower prices. d. All of the above are examples of rational choices.

d. All of the above are examples of rational choices.

Which of the following could be considered to be a secondary effect caused by making drugs such as cocaine illegal? a. The higher prices that result from making them illegal results in more property theft by users to afford the drugs. b. The usage of police and law enforcement resources to enforce drug laws leads to lower enforcement (and thus a higher amount) of other crimes. c. Without the ability to use the legal system to enforce contracts, violence often results when one party to a drug deal does not live up to their end of the bargain, thus the amount of violence increases by making drugs illegal. d. All of the above would be considered secondary effects of making drugs illegal.

d. All of the above would be considered secondary effects of making drugs illegal.

Which of the following will most likely occur under a system of clearly defined and enforced private property rights? a. Resource owners will fail to conserve vital resources, even if they expect their supply to be highly limited in the future. b. Resource owners will ignore the wishes of others, including others who would like to use the resource that is privately owned. c. Resource owners will fail to consider the wishes of potential future buyers when they decide how to employ privately owned resources. d. Resource owners will gain by discovering and employing their resources in ways that are highly valued by others.

d. Resource owners will gain by discovering and employing their resources in ways that are highly valued by others.

Harold, a delivery man, washes and irons his own shirts. Sarah, his boss, sends her clothes to a laundry. Which is the most plausible economic explanation for this difference? a. Harold must enjoy ironing more than Sarah does. b. Harold must be better at ironing than Sarah is. c. The opportunity cost of ironing is greater for Harold. d. Sarah has a higher opportunity cost of laundering her clothes than Harold does.

d. Sarah has a higher opportunity cost of laundering her clothes than Harold does.

What do economists mean when they state that a good is scarce? a. There is a shortage or insufficient supply of the good at the existing price. b. It is impossible to expand the availability of the good beyond the current amount. c. People will want to buy more of the good regardless of the price of the good. d. The amount of the good that people would like exceeds the supply freely available from nature

d. The amount of the good that people would like exceeds the supply freely available from nature

Does voluntary exchange create wealth (value)? a. No, exchange does not expand output. b. No, if one person gains, the other party must lose an equal amount. c. Uncertain: It does when it results in the creation of additional goods and services; otherwise, it does not. d. Yes, trade generally permits the trading partners to gain more of what they value; this is why they agree to the terms of the exchange.

d. Yes, trade generally permits the trading partners to gain more of what they value; this is why they agree to the terms of the exchange.

When individuals reap the benefits of choices that increase the value of their resources and bear the costs of choices that reduce the value of their resources, decision makers have a. little incentive to acquire information about potential uses of the resources. b. little incentive to use the resources wisely. c. a strong incentive to use the resources now rather than conserve them for the future. d. a strong incentive to search for more efficient ways of using the resources.

d. a strong incentive to search for more efficient ways of using the resources.

Private property rights involve a. the right to exclusive use of the property. b. legal protection against those who would seek to use or abuse the property without the owner's permission. c. the right to transfer, sell, exchange, or mortgage the property. d. all of the above.

d. all of the above.

A form of economic organization that relies primarily on private ownership of productive assets, freedom of exchange, and market prices to allocate goods and resources is often called a. national socialism. b. the welfare state. c. a corporate economy. d. capitalism.

d. capitalism.

Economic analysis assumes that a. individuals act only out of selfish motives. b. although individuals are at times selfish and at times unselfish, only their selfish actions may be predicted. c. people are basically humanitarian, and their actions are, therefore, impossible to predict. d. changes in the personal benefits and costs associated with a choice will exert a predictable influence on human behavior.

d. changes in the personal benefits and costs associated with a choice will exert a predictable influence on human behavior.

If an airline company has several empty seats on a flight and the full price of an air ticket is $500 and the marginal cost per passenger is $100, then it will be profitable for the airline to a. charge a stand-by passenger no less than the full fare of $500. b. charge a stand-by passenger less than $100. c. charge a stand-by passenger more than $500. d. charge a stand-by passenger more than $100. e. fill the seats at the last minute for any price.

d. charge a stand-by passenger more than $100.

If an economy operates at a point within its production possibilities curve, a. it lacks the resources necessary to reach the curve. b. it is utilizing all of its resources efficiently. c. it does not confront the problem of scarce goods relative to unlimited wants. d. it is not efficiently using all of its resources.

d. it is not efficiently using all of its resources.

The reason that the production possibilities curve is usually a bow-shaped curve instead of a straight line is that a. it makes it easier to illustrate the concepts of scarcity and prices with a bow-shaped curve than it is with a straight line b. early economists began drawing them in this way and the convention has continued throughout the years c. output eventually reaches a maximum and then declines d. resources are not perfectly adaptable to the production of all goods

d. resources are not perfectly adaptable to the production of all goods

Economic choice and competitive behavior are the result of a. basic human greed. b. poverty. c. private ownership of resources. d. scarcity.

d. scarcity

When economists say an individual displays economizing behavior, they simply mean that she is a. making a lot of money. b. buying only those products that are cheap and of low quality. c. learning how to run a business more effectively. d. seeking the lowest cost method to accomplish her objectives.

d. seeking the lowest cost method to accomplish her objectives.

The most important source of gain from the division of labor is a. the repeal of the law of comparative advantage. b. the reduction in work effort because incentives are adversely affected. c. the increase in the number of jobs since more labor is used to produce goods. d. the benefits that result from specialization, adoption of mass production techniques, andexchange.

d. the benefits that result from specialization, adoption of mass production techniques, andexchange.