Chapter 1 homework Q&A

eteris paribus, which of the following will cause an inward shift of the production possibilities curve? A. A decrease in the size of the labor force. B. An increase in population. C. An increase in knowledge. D. An improvement in technology.

ANSWER: A-A decrease in the size of the labor force

If government intervention fails to improve economic outcomes, the result is known as: A. Government failure. B. Market failure. C. Mixed economy failure. D. Laissez faire.

ANSWER: A-Government failure

Which of the following best describes the "invisible hand?" A. Price signals drive the market mechanism. B. Government regulations influence the allocation of society's scarce resources. C. The Internal Revenue Service enforces the nation's tax laws. D. Lobbyists influence which laws are passed by Congress.

ANSWER: A-Price signals drive the market mechanism

Which of the following statements about production possibilities is true? A. Production possibilities are limited for all countries because resources are scarce. B. The production of food does not involve opportunity costs since people must eat. C. Production possibilities will expand if the level of inefficiency is reduced. D. Production possibilities are only limited for a country if prices are too high.

ANSWER: A-Production possibilities are limited for all countries because resources are scarce.

Which of the following is associated with macroeconomics? A. The level of economic growth for the nation. B. The unemployment rate for a small town in Texas. C. The sales figures for a particular fast food restaurant. D. A higher price for cigarettes in New York City.

ANSWER: A-The level of economic growth for the nation

Welfare programs are designed to address the: A. "HOW" question. B. "FOR WHOM" question. C. Issue of scarce resources. D. "WHAT" question.

ANSWER: B-"FOR WHOM" question.

In economics, which of the following is the best example of capital? A. Money held in a checking account. B. A computer used by a lawyer to prepare legal documents. C. Investment in training for employees in an accounting firm. D. The executive producer of a new adventure movie.

ANSWER: B-A computer used by a lawyer to prepare legal documents.

The most desirable and attainable mix of output for society: A. Consists of the entire production possibilities curve. B. Consists of a point on the production possibilities curve. C. Consists of a point outside the production possibilities curve. D. Occurs at the origin of the x- and y-axes on which the production possibilities curve is graphed.

ANSWER: B-Consists of a point on the production possibilities curve

Which of the following are available in limited quantity and contribute to the problem of scarcity? A. Supply of and demand for goods and services. B. Land, labor, capital, and entrepreneurship. C. Net exports. D. Welfare of individuals and business firms.

ANSWER: B-Land, labor, capital, and entrepreneurship

Which of the following is absolutely necessary for economic growth to occur? A. An increase in the amount of labor. B. The allocation of some resources to investment rather than consumption. C. More efficient usage of the nation's land. D. The allocation of some resources to consumption rather than entrepreneurship.

ANSWER: B-The allocation of some resources to investment rather than consumption

Scarcity means: A. Retail stores always run out of popular products. B. The desire for goods exceeds our capacity to produce them. C. Society will run out of the factors of production in the near future. D. A surplus of unsold goods in a specific market will not occur.

ANSWER: B-The desire for goods exceeds our capacity to produce them

Market failure means: A. Government solutions fail to improve economic outcomes. B. The market mechanism does not produce the best mix of output. C. The market allocates goods more efficiently than does the government. D. The market is responsive to consumer demand.

ANSWER: B-The market mechanism does not produce the best mix of output

Which of the following is an example of labor as a factor of production? A. People who bring together the skills necessary for creating products and services. B. The skills and abilities of workers. C. People who are paid an hourly wage but not those paid a salary. D. A college or university that educates people.

ANSWER: B-The skills and abilities of workers

The primary concern of economics is the study of: A. Why human wants exist and what motivates them. B. How to distribute goods and services according to human needs. C. How best to allocate scarce resources among competing uses. D. Who holds the most political power in a particular country.

ANSWER: C- how best to allocate scarce resources among competing uses

Which of the following is associated with microeconomics? A. An economy's overall output level. B. The country's unemployment rate. C. A specific U.S. industry's sales figures. D. The economy's rate of growth.

ANSWER: C-A specific U.S. industry's sales figures

Economic growth is represented by: A. An inward shift of the production possibilities curve. B. A point inside the production possibilities curve. C. An outward shift of the production possibilities curve. D. A movement along the production possibilities curve.

ANSWER: C-An outward shift of the production possibilities curve

The opportunity cost of playing tennis with your friend is: A. Negative since it's good exercise. B. Zero since you already own the tennis racket and play on a public court. C. The next-best alternative use of your time that is forgone. D. The cost of the tennis lessons you took last year.

ANSWER: C-The next-best alternative use of your time that is forgone

When economists talk about a tradeoff between "guns and butter," they mean: A. Society can produce more military goods without giving up any consumer goods. B. Military goods are an inefficient use of resources. C. The production of more military goods may require fewer consumer goods. D. Consumer goods are always more costly than military goods.

ANSWER: C-The production of more military goods may require fewer consumer goods

hich of the following is not an example of land? A. Coal. B. A river. C. Natural gas. D. A homebuilder.

ANSWER: D-A homebuilder

According to the Latin phrase ceteris paribus: A. Resources are limited. B. Things do not remain equal. C. There is no government intervention. D. Nothing else changes.

ANSWER: D-Nothing else changes

The concept of opportunity cost would become irrelevant if: A. The market mechanism functioned to allocate resources. B. The government allocated resources. C. The production possibilities curve bowed outward. D. Resources were no longer scarce.

ANSWER: D-Resources were no longer scarce

Which of the following represents a scarce resource? A. Why human wants exist and what motivates them. B. How to distribute goods and services according to human needs. C. How best to allocate scarce resources among competing uses. D. Who holds the most political power in a particular country.

ANSWER: D-food, clothing, gasoline and skilled workers