Econ Ch. 2

If all available resources and technology are used to produce hats, then it is possible to produce of a maximum of __hats. If all available resources and technology are used to produce scarves, then it is possible to produce a maximum of __scarves. (view image 2.1-6) a. 12; 6 b. 12; 0 c. 6; 12 d. 6; 0

a. 12; 6

The opportunity cost of moving from combination C to combination D is: (see image 2.3-2) a. 6 refrigerators. b. 18 refrigerators. c. 1 school bus. d. 2 school buses.

a. 6 refrigerators.

A bowed-out PPF indicates increasing opportunity cost. a. The above statement is true. b. The above statement is false.

a. The above statement is true.

A straight-line PPF indicates constant opportunity cost. a. The above statement is true. b. The above statement is false.

a. The above statement is true.

Combinations of outputs on the PPF represent the maximum amount the economy can produce, ceteris paribus. a. The above statement is true. b. The above statement is false.

a. The above statement is true.

If an economy is operating at a point on its PPF, the resources available to use in production are fully employed. a. The above statement is true. b. The above statement is false.

a. The above statement is true.

Points outside a PPF are unattainable, ceteris paribus. a. The above statement is true. b. The above statement is false.

a. The above statement is true.

The Production Possibilities Model assumes that the amount of resources available to use in production is fixed. a. The above statement is true. b. The above statement is false.

a. The above statement is true.

Government's role in the economy is limited to activities such as providing national defense and a legal system in: a. capitalist economic systems. b. socialist economic systems. c. planned economic systems. d. command economic systems.

a. capitalist economic systems.

Government control of resources and centralized decision-making are characteristics of: a. command economies. b. capitalist economies. c. laissez-faire economies. d. free market economies.

a. command economies.

The role of an economic system is to: a. coordinate the decisions of economic agents under conditions of scarcity. b. identify the mix of outputs that yield the maximum opportunity cost for society. c. find the least-cost production method for all types of outputs. d. enable economic agents to equate satisfaction, or utility, with profit.

a. coordinate the decisions of economic agents under conditions of scarcity.

The U.S. economy is a: a. mixed economy because it has elements of both a planned and a market system. b. laissez-faire economy because individuals can do whatever they please with their privately owned resources. c. communist economy because it allows for community property. d. socialist economy because government controls most of the factors of production.

a. mixed economy because it has elements of both a planned and a market system.

According to this production possibilities schedule, producing a combination of 30 bananas and 30 coconuts is: (see image 2.1-4) a. not possible given the resources and technology currently available for producing bananas and coconuts. b. attainable but is an inefficient use of resources. c. shown as a point on the PPF if the information in the table is converted to a graph. d. only one of many possible combinations of bananas and coconuts that can be produced from the available resources and technology.

a. not possible given the resources and technology currently available for producing bananas and coconuts.

The economy represented by this graph is using resources and technology efficiently when it produces at: (see image 2.1-8) a. point A, B, or C. b. point D. c. point D or E. d. any point on or inside the PPF.

a. point A, B, or C.

According to this production possibilities schedule, the opportunity cost of moving from combination A to combination B is: (see image 2.1-2) a. 60 bananas. b. 30 bananas. c. 0 coconuts. d. 10 coconuts.

b. 30 bananas.

If this economy's production possibilities are represented by PPF2, production is inefficient at point(s): (view image 2.3-7) a. A only. b. A, B, C, and D. c. B and E. d. E and F.

b. A, B, C, and D.

All points on and inside a PPF represent combinations of two outputs that are attainable and efficient. a. The above statement is true. b. The above statement is false.

b. The above statement is false.

In the Production Possibilities Model, economic growth is illustrated by moving from a point inside a PPF to a point on a PPF. a. The above statement is true. b. The above statement is false.

b. The above statement is false.

Movements from point to point along the PPF indicate changes in the technology used in production. a. The above statement is true. b. The above statement is false.

b. The above statement is false.

Production is more efficient at points on the upper left portion of the PPF than on the lower right portion of the PPF. a. The above statement is true. b. The above statement is false.

b. The above statement is false.

The shift from PPF1 to PPF2 might come about due to: (view image 2.3-9) a. an increase in the technology used to produce both dining sets and laptop computers. b. an increase in the technology used to produce laptops but not dining sets. c. an increase in the resources used to produce both laptops and dining sets. d. an increase in the resources used to produce dining sets.

b. an increase in the technology used to produce laptops but not dining sets.

For the economy depicted in this graph, economic growth is shown by: (see image 2.1-9) a. a movement down along the PPF from point A to point B to point C. b. an outward shift of the PPF toward point E. c. a movement from point D to point A, B, or C. d. a flattening of the PPF to a straight line.

b. an outward shift of the PPF toward point E.

For this economy to move from PPF1 to PPF2 requires: (view image 2.3-6) a. a more efficient allocation of existing resources. b. economic growth due technological innovation or an increase in resources. c. a reduction in the economy's current rate of unemployment. d. an increase in current consumption to reduce government military spending.

b. economic growth due technological innovation or an increase in resources.

Capitalist economies are characterized by all of the following except: a. incentives for exchange. b. government ownership of capital. c. decentralized decision-making. d. private ownership of the factors of production.

b. government ownership of capital.

Most economic systems: a. have one mechanism that decides what to produce and who gets to consume the output produced. b. have many mechanisms that address the problem of scarcity. c. are either capitalist or socialist. d. are controlled by government for the benefit of all citizens.

b. have many mechanisms that address the problem of scarcity.

The combination of 2 school buses and 10 refrigerators: (view image 2.3-4) a. is unattainable given current resources and technology. b. represents an inefficient use of resources. c. is the optimal way of using current resources and technology. d. fully employs the resources and technology available.

b. represents an inefficient use of resources.

Which of the following is not a macroeconomic policy goal of a market economy? a. Full employment b. Price stability c. Equal income distribution d. Economic growth

c. Equal income distribution

Which statement below is false? a. Scarcity forces all societies to decide how best to use available resources. b. Capitalism requires private ownership of inputs and outputs. c. Government directs resources to their highest valued use in a market economy. d. Planned, or command, economies rely heavily on government direction of production and central planning.

c. Government directs resources to their highest valued use in a market economy.

Graphing a Production Possibilities Frontier assumes all of the following except: a. a fixed amount of resources. b. production is efficient. c. a changing level of technology. d. resources are fully employed.

c. a changing level of technology.

When government allows economic problems to take their own course and fix themselves, it is taking a: a. minimalist approach to an economic problem. b. socialist approach to an economic problem. c. laissez-faire approach to an economic problem. d. communist approach to an economic problem.

c. laissez-faire approach to an economic problem.

A Production Possibilities Frontier: a. simplifies the real world by assuming scarcity does not exist. b. provides insight as to why some consumers prefer one of the outputs over the other output. c. shows the maximum amount of two outputs that can be produced in a given time period, ceteris paribus. d. illustrates the difference between the fallacy of false cause and the fallacy of division.

c. shows the maximum amount of two outputs that can be produced in a given time period, ceteris paribus.

A production possibilities frontier for two outputs is drawn assuming that: a. opportunity cost is fixed, but the quantity and quality of resources change. b. both outputs use the same quantity of each resource, but not the same technology. c. the amount of resources currently available for production is fixed. d. the technology available can only be applied to producing one of the outputs.

c. the amount of resources currently available for production is fixed.

Points on a production possibilities frontier imply that: a. resources are producing outputs that benefit all members of society. b. resources are inefficiently allocated or unemployed. c. the maximum amount of goods is being produced, given the available resources and technology. d. the economy is not capable of future economic growth.

c. the maximum amount of goods is being produced, given the available resources and technology.

The opportunity cost of 1 hat is __, and the opportunity cost of 1 scarf is ___. (2.1-7) a. 2 scarves; 1 hat b. 1 scarf; ½ hat c. ½ scarf; 2 hats d. 1 scarf; 2 hats

c. ½ scarf; 2 hats

According to this production possibilities schedule: (see image 2.1-3) a. 10 coconuts must be given up to gain 30 bananas. b. 30 bananas must be given up to gain 10 coconuts. c. the opportunity cost of coconuts in terms of bananas is constant. d. All of the above are true according to the production possibilities schedule.

d. All of the above are true according to the production possibilities schedule.

The PPF that results from this production possibilities schedule: (view image 2.3-3) a. is a straight line, indicating constant opportunity cost. b. is a straight line, indicating increasing opportunity cost. c. bows outward, indicating constant opportunity cost. d. bows outward, indicating increasing opportunity cost.

d. bows outward, indicating increasing opportunity cost.

This PPF indicates that the opportunity cost of military goods in terms of consumer goods: (see image 2.1-10) a. fluctuates. b. is decreasing. c. is constant. d. is increasing.

d. is increasing.

In a capitalist market economy, economic activity is mainly guided by: a. the government. b. corporations c. central planners. d. self-interest.

d. self-interest.

The shift from PPF1 to PPF2 implies all of the following EXCEPT: (view image 2.3-10) a. the maximum amount of dining sets that can be produced did not change. b. the maximum amount of laptop computers that can be produced increased. c. the maximum amount of both outputs that can be consumed increased. d. the maximum amount of each output that can be produced increased.

d. the maximum amount of each output that can be produced increased.

If this economy's production possibilities are represented by PPF2, the combination of civilian goods and military goods that is best, or optimal, for society is combination: (view image 2.3-8) a. E because this economy prefers civilian goods. b. G because this economy prefers military goods. c. all combinations on PPF2 make society equally well-off so there is not a "best" combination. d. the production possibilities model does not identify which combination is optimal for society; it identifies the combinations that are possible.

d. the production possibilities model does not identify which combination is optimal for society; it identifies the combinations that are possible.