Macro Potter chapter 3 quiz UNG
A technological advance that increases the productivity of all inputs is best illustrated as: a. an outward shift of the production possibilities curve. b. a movement along the production possibilities curve. c. a flattening of the production possibilities curve. d. an inward shift of the production possibilities curve.
A
A system of economic organization in which the ownership and control of productive capital assets rests with the state and resources are allocated through central planning and political decision making is called: a. a command economy. b. a market economy. c. a corporate economy. d. capitalism.
A
An improvement in technology will tend to cause a society's production possibilities curve to shift outward. a. True b. False
A
Approximately two decades after a "baby boom," one could expect: a. an outward shift of the production possibilities curve along both axes. b. a movement along the production possibilities curve from one point to another. c. an inward shift of the production possibilities curve. d. production to change from an interior point to a point along the production possibilities curve.
A
Refer to Exhibit 3-9. In order to move from Point B to Point C, the economy will have to: a. give up 200 bushels of wheat. b. give up 300 bushels of wheat. c. give up 100 bushels of soybeans. d. give up 200 bushels of soybeans.
A
The degree of government involvement in the economy is greatest in a. a command economy. b. a mixed economy. c. a market economy. d. a traditional economy.
A
The law of increasing opportunity costs implies that: a. a production possibilities curve will be bowed outward away from the origin. b. a production possibilities curve will be a straight line. c. a production possibilities curve will be bowed inward toward the origin. d. a production possibilities curve will be upward sloping.
A
The production possibilities curve for an economy that experiences a constant opportunity cost of production is linear (a straight line). a. True b. False
A
Practice quiz Refer to Exhibit 3-4. Based on the production possibilities curve above, which of the following points are inefficient? a. A, B, and G only b. A and B only c. B only d. A only
B
The economic system of which of the following countries can be treated as an example of a command economy? a. Canada b. Cuba c. United States d. United Kingdom
B
Countries with high labor costs tend to: a. be relatively poor countries. b. use more capital rather than labor in the production process. c. rely on only one method for the production of goods. d. use more labor rather than capital in the production process.
B
Countries with high labor costs tend to: a. rely on only one method for the production of goods. b. use more capital rather than labor in the production process. c. be relatively poor countries. d. use more labor rather than capital in the production process.
B
Excessive unemployment of resources is illustrated using a production possibilities curve by: a. an outward shift of the curve. b. a point inside the curve. c. a movement along the curve in a northwest direction. d. an inward shift of the curve.
B
In a command economy, decisions about how to allocate resources are made: a. by a lottery system. b. by a central planning board. c. based upon tradition. d. by individuals and firms interacting in markets coordinated by a price system.
B
In a market economy, prices help determine the distribution of goods and services but not the allocation of resources. a. True b. False
B
Movement from one point on the production possibilities curve to another leads to more of both goods being produced. a. True b. False
B
Refer to Exhibit 3-13. A movement from Point D to Point F: a. increases the level of unemployment. b. is not possible given the available resources and technology. c. requires the sacrifice of cakes in order to acquire more cupcakes. d. requires the sacrifice of cupcakes in order to acquire more cakes.
B
Refer to Exhibit 3-3. The most inefficient point depicted is: a. Point A. b. Point G. c. Point C. d. Point D.
B
When more resources in an economy are devoted to the production of capital goods: a. the production possibilities curve in the current period shifts inward, but shifts outward in the future. b. the production possibilities curve shifts outward next in the future. c. the production possibilities curve is unchanged from period to period. d. the production possibilities curve shifts inward.
B
Refer to Exhibit 3-13. The opportunity cost of producing an additional cake equals: a. 40 cupcakes. b. 10 cupcakes. c. 4 cupcakes. d. 1/4 of a cupcake.
C
A point beyond the boundary of an economy's production possibilities curve is: a. inefficient. b. attainable. c. unattainable. d. efficient.
C
On a production possibilities diagram, points inside the frontier are: a. efficient. b. unattainable given existing technology and resources. c. inefficient. d. efficient but not necessarily desirable.
C
Refer to Exhibit 3-6. In the diagram, Point A is: a. preferable to Point D. b. efficient. c. inefficient. d. unattainable.
C
Which of the following will shift the production possibilities curve outward? a. an increase in the unemployment rate b. a hurricane that destroys buildings throughout Florida c. a decrease in the market price of both goods d. an increase in the capacity utilization of existing factories
C* (* means got it wrong and had to fix)
A decrease in the unemployment rate from 21 percent to 17 percent can be illustrated as: a. a movement down and to the right along the production possibilities curve. b. an outward shift of the production possibilities curve. c. an inward shift of the production possibilities curve. d. a movement from a point inside the production possibilities curve to a point closer to the production possibilities curve.
D
If additional units of output could be produced at constant opportunity cost, the production possibilities curve would be: a. positively sloped. b. bowed outward away from the origin. c. bowed inward toward the origin. d. a straight line with a negative slope.
D
An economy is producing two goods, ice cream and cookies, and is currently operating efficiently. This economy can produce more cookies if: a. more of the economy's resources become idle. b. it increases the price of ice cream. c. it increases the price of cookies. d. it produces less ice cream.
D
Economic growth can be illustrated by: a. a movement from a point on the production possibilities curve to a point inside the production possibilities curve. b. an inward shift of the production possibilities curve. c. a movement along the production possibilities curve. d. an outward shift of the production possibilities curve.
D
Given its production possibilities curve, the optimal combination of outputs for a society: a. is beyond the production possibilities curve. b. is inside the production possibilities curve. c. is at the midpoint of the production possibilities curve. d. depends on the preferences of that society.
D
Refer to Exhibit 3-9. In order to move from Point D to Point C, the economy will have to give up: a. 100 bushels of wheat. b. 200 bushels of wheat. c. 200 bushels of soybeans. d. nothing.
D
Which of the following best distinguishes a "command economy" from a "market economy?" a. There is scarcity in command economies, but not in market economies. b. Command economies are less prone to inflation than are market economies. c. A command economy is more efficient than a market economy because decision making is centralized. d. Production and distribution decisions are made by central planners in a command economy, but not in a market economy.
D
Which of the following will not shift the production possibilities curve outward? a. the discovery of significant oil reserves in Alaska b. additions to the stock of physical capital c. an improvement in technology, which increases the efficiency of inputs d. a decrease in capacity utilization of existing factories
D
Which of the following would mostly likely shift the production possibilities curve in an outward direction? a. a movement along the curve sacrificing capital goods for consumption goods b. an increase in the price of goods and services c. a decrease in the current rate of unemployment d. advances in medicine that reduce the incidence of disease and lengthen productive life spans
D
Assume the economy moves from a situation with full employment to one in which the unemployment rate is higher. This can be portrayed as: a. an outward shift of the production possibilities curve. b. a movement from a point on the production possibilities curve to a point inside the production possibilities curve. c. a movement from a point inside the production possibilities curve to a point closer to the production possibilities curve. d. an inward shift of the production possibilities curve.
D*
Points located on or inside the production possibilities curve represent attainable output combinations. Therefore, both inefficient output combinations and efficient output combinations are attainable, but not all attainable points are efficient.
inside attainable
page 80 (#5 on grade-it-now) Points located inside the production possibilities curve, such as A and B, represent inefficient output combinations. At these points, it is possible to increase the production of both goods because some resources are unemployed. For example, point A is inefficient because it is possible for Bulgaria to produce at point F instead, where the economy is producing both more wheat and more cars.
inside inefficient
Points located on the production possibilities curve, such as E and F, represent efficient output combinations. At these points, it is impossible to increase the production of one good without producing less of the other. For instance, if Bulgaria is currently producing at point F and decides that it wants to produce more wheat, it must produce fewer cars.
on efficient
Points located outside the production possibilities curve, such as C and D, represent output combinations that are not attainable, given current resources and technology. Recall that each point on the production possibilities curve shows the maximum quantity of wheat Bulgaria can produce if it also wants to produce the given quantity of cars. For example, compare point F (41 million cars and 41 million bushels of wheat) with point D (41 million cars and 75 million bushels of wheat). Because point F is on Bulgaria's production possibilities curve, you can see that if Bulgaria is producing 41 million cars, it can produce—at most—41 million bushels of wheat; therefore, point D must be not attainable, given current resources and technology.
outside not attainable