Test Bank The Macro Economy Today 15th Edition By Bradley Schiller A+

$35.00

Test Bank The Macro Economy Today 15th Edition By Bradley Schiller A+

Name: Test Bank The Macro Economy Today 15th Edition By Bradley Schiller A+
SKU: Test Bank The Macro Economy Today 15th Edition By Bradley Schiller A+
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SKU: Test Bank The Macro Economy Today 15th Edition By Bradley Schiller A+

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The Macro Economy Today, 15e (Schiller)
Chapter 1 Economics: The Core Issues

1) Which of the following is not one of the three core economic issues that must be resolved?
A) How to produce the goods and services we select.
B) What to produce with unlimited resources.
C) Who should get the goods and services we produce.
D) What to produce with limited resources.

Answer: B
Difficulty: 2 Medium
Topic: Scarcity: The Core Problem
Learning Objective: 01-04 The three core economic questions that every society must answer.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

2) The fundamental problem of economics is
A) The law of increasing opportunity costs.
B) The scarcity of resources relative to human wants.
C) How to get government to operate efficiently.
D) How to create employment for everyone.

Answer: B
Difficulty: 1 Easy
Topic: Scarcity: The Core Problem
Learning Objective: 01-01 What scarcity is.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

3) In economics, scarcity means that
A) A shortage of a particular good will cause the price to fall.
B) A production possibilities curve cannot accurately represent the trade-off between two goods.
C) Society's desires exceed resources available.
D) The market mechanism has failed.

Answer: C
Difficulty: 1 Easy
Topic: Scarcity: The Core Problem
Learning Objective: 01-01 What scarcity is.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

4) Given that resources are scarce,
A) A "free lunch" is possible, but only for a limited number of people.
B) Opportunity costs are experienced whenever choices are made.
C) Poor countries must make choices, but rich countries with abundant resources do not have to make choices.
D) Some choices involve opportunity costs while other choices do not.

5) A consequence of the economic problem of scarcity is that
A) Choices have to be made about how resources are used.
B) There is never too much of any good or service produced.
C) The production of goods and services must be controlled by the government.
D) The production possibilities curve is bowed outward.

Answer: A
Difficulty: 2 Medium
Topic: Scarcity: The Core Problem
Learning Objective: 01-02 How scarcity creates opportunity costs.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

6) The basic factors of production include
A) Land, labor, money, and capital.
B) Land, labor, money, and inputs.
C) Labor and money.
D) Land, labor, capital, and entrepreneurship.

Answer: D
Difficulty: 2 Medium
Topic: Scarcity: The Core Problem
Learning Objective: 01-01 What scarcity is.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

7) Factors of production are
A) Scarce in every society.
B) Scarce only in advanced countries.
C) Scarce only in the poorest countries of the world.
D) Unlimited in quantity.

Answer: A
Difficulty: 2 Medium
Topic: Scarcity: The Core Problem
Learning Objective: 01-01 What scarcity is.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

8) Which of the following is not a factor of production?
A) A psychiatrist.
B) $100,000 cash.
C) A bulldozer.
D) Six thousand acres of farmland.

Answer: B
Difficulty: 2 Medium
Topic: Scarcity: The Core Problem
Learning Objective: 01-01 What scarcity is.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

9) With respect to factors of production, which of the following statements is not true?
A) Factors of production are also known as resources.
B) In order to produce any good or service, it is necessary to have factors of production.
C) Factors of production include land, labor, capital, and entrepreneurship.
D) Only those resources that are privately owned are counted as factors of production.

Answer: D
Difficulty: 2 Medium
Topic: Scarcity: The Core Problem
Learning Objective: 01-01 What scarcity is.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

10) Which of the following is the best example of land?
A) The ethanol refined from corn.
B) A factory that produces new goods and services.
C) The water used to make a soft drink.
D) A barber's chair.

Answer: C
Difficulty: 2 Medium
Topic: Scarcity: The Core Problem
Learning Objective: 01-01 What scarcity is.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

11) Capital, as economists use the term, refers to
A) The cash needed to start a new business.
B) The costs of operating a business.
C) Shares of stock issued by businesses.
D) Final goods that are used to produce other goods and services.

Answer: D
Difficulty: 1 Easy
Topic: Scarcity: The Core Problem
Learning Objective: 01-01 What scarcity is.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

12) Which economist argued that free markets unleashed the "animal spirits" of entrepreneurs, propelling innovation, technology, and growth?
A) Lord Kelvin.
B) Kenneth Olsen.
C) Irving Fisher.
D) John Maynard Keynes.

Answer: D
Difficulty: 2 Medium
Topic: Scarcity: The Core Problem
Learning Objective: 01-01 What scarcity is.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

13) The role of the entrepreneur in an economy is to
A) Bring the factors of production together and assume the risk of production.
B) Work with government planners to determine what goods are produced.
C) Arrange bank financing for the owners of new businesses.
D) Ensure full employment of labor.

Answer: A
Difficulty: 2 Medium
Topic: Scarcity: The Core Problem
Learning Objective: 01-01 What scarcity is.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

14) Economics can be defined as the study of
A) For whom resources are allocated to increase efficiency.
B) How society spends the income of individuals.
C) How scarce resources are allocated.
D) None of the choices are correct.

Answer: C
Difficulty: 1 Easy
Topic: Scarcity: The Core Problem
Learning Objective: 01-01 What scarcity is.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

15) Opportunity cost is
A) Measured only in dollars and cents.
B) The total dollar cost to society of producing the goods.
C) The difficulty associated with using one good in place of another.
D) What is given up in order to get something else.

Answer: D
Difficulty: 1 Easy
Topic: Scarcity: The Core Problem
Learning Objective: 01-02 How scarcity creates opportunity costs.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

16) Opportunity cost may be defined as the
A) Goods or services that are forgone in order to obtain something else.
B) Dollar prices paid for final goods and services.
C) Dollar cost of producing a particular product.
D) Difference between wholesale and retail prices.

Answer: A
Difficulty: 1 Easy
Topic: Scarcity: The Core Problem
Learning Objective: 01-02 How scarcity creates opportunity costs.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

17) The opportunity cost of studying for an economics test is
A) Negative because it may improve your grade.
B) Zero because you knew when you registered for the class that studying would be required.
C) The money you spent on tuition for the class.
D) The activity that is the best alternative use of your time.

Answer: D
Difficulty: 2 Medium
Topic: Scarcity: The Core Problem
Learning Objective: 01-02 How scarcity creates opportunity costs.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

18) The "guns versus butter" dilemma that all nations confront is that
A) Guns and butter can be produced using the same resources at the same time.
B) An increase in national defense implies more sacrifices of civilian goods and services.
C) An increase in national defense is possible only if we produce more butter.
D) All of the choices are correct.

Answer: B
Difficulty: 2 Medium
Topic: Production Possibilities
Learning Objective: 01-02 How scarcity creates opportunity costs.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

19) A production possibilities curve indicates the
A) Combinations of goods and services an economy is actually producing.
B) Maximum combinations of goods and services an economy can produce given its available resources and technology.
C) Maximum combinations of goods and services an economy can produce given unlimited resources.
D) Average combinations of goods and services an economy can produce given its available resources and technology.

Answer: B
Difficulty: 1 Easy
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

20) Which of the following is an assumption under which the production possibilities curve is drawn?
A) Total unemployment is zero.
B) The supply of resources is fixed.
C) The price level is changing.
D) Technology is changing.

21) A point on a nation's production possibilities curve represents
A) An undesirable combination of goods and services.
B) Combinations of production that are unattainable, given current technology and resources.
C) Levels of production that will cause both unemployment and inflation.
D) The full employment of resources to achieve a particular combination of goods and services.

Answer: D
Difficulty: 2 Medium
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

22) The production possibilities curve illustrates which two of the following essential principles?
A) Factors of production and price signals.
B) Scarce resources and opportunity cost.
C) Market mechanisms and laissez faire.
D) Economic growth and market failure.

23) If an economy experiences constant opportunity costs with respect to two goods, then the production possibilities curve between the two goods will be?
A) Bowed outward or concave from below.
B) A straight, downward-sloping line.
C) Bowed inward or convex from below.
D) Bowed outward until the two goods are equal, and then bowed inward.

24) The production possibilities curve illustrates
A) The limitations that exist because of scarce resources.
B) That there is no limit to what an economy can produce.
C) That there is no limit to the level of output.
D) The existence of unlimited wants and resources.

Answer: A
Difficulty: 1 Easy
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

25) According to the law of increasing opportunity costs,
A) The more one is willing to pay for resources; the smaller will be the possible level of production.
B) Increasing the production of a particular good will cause the price of the good to remain constant.
C) In order to produce additional units of a particular good, it is necessary for society to sacrifice increasingly larger amounts of alternative goods.
D) None of the choices are correct.

26) According to the law of increasing opportunity costs,
A) Greater production leads to greater inefficiency.
B) Greater production means factor prices rise.
C) Greater production of one good requires increasingly larger sacrifices of other goods.
D) Higher opportunity costs induce higher output per unit of input.

27) If an economy experiences increasing opportunity costs with respect to two goods, then the production possibilities curve between the two goods will be
A) Bowed outward or concave from below.
B) A straight, downward-sloping line.
C) Bowed inward or convex from below.
D) Bowed outward until the two goods are equal, and then bowed inward.

Answer: A
Difficulty: 2 Medium
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

28) If the United States decides to convert automobile factories to tank production, as it did during World War II, but finds that some auto manufacturing facilities are not well suited to tank production, then
A) The production possibilities curve between tanks and automobiles will appear as a straight line.
B) The production possibilities curve between tanks and automobiles will shift outward.
C) Decreasing opportunity costs will occur with greater automobile production.
D) Increasing opportunity costs will occur with greater tank production.

29) If North Korea is currently producing at efficiency, and it proceeds to increase the size of its military, then, as long as nothing else changes, its
A) Production possibilities curve will shift outward.
B) Production possibilities curve will shift inward.
C) Production of nonmilitary goods will increase.
D) Production of nonmilitary goods will decrease.

30) When an economy is producing efficiently, it is
A) Producing a combination of goods and services beyond the production possibilities curve.
B) Getting the maximum goods and services possible from the available resources.
C) Experiencing decreasing opportunity costs.
D) Producing equal amounts of all goods.

Answer: B
Difficulty: 2 Medium
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

31) Which of the following is true when an economy is producing efficiently?
A) The economy is producing on the production possibilities curve.
B) The economy is producing outside the production possibilities curve.
C) The economy is getting the fewest goods and services from the available resources.
D) Everyone in the economy is happy.

32) The points on a production possibilities curve show
A) Desired output.
B) Actual output.
C) Potential output.
D) None of the choices are correct.

33) In terms of the production possibilities curve, inefficiency is represented by
A) All points on the curve.
B) All points outside the curve.
C) All points inside the curve.
D) A rightward shift of the curve.

Answer: C
Difficulty: 2 Medium
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

34) If an economy is producing inside the production possibilities curve, then
A) There is full employment of resources.
B) It is operating efficiently.
C) It can produce more of one good without giving up some of another good.
D) There are not enough resources available to produce more output.

35) A technological advance would best be represented by
A) A shift outward of the production possibilities curve.
B) A shift inward of the production possibilities curve.
C) A movement from inside the production possibilities curve to a point on the production possibilities curve.
D) A movement from the production possibilities curve to a point inside the production possibilities curve.

36) Which of the following events would allow the production possibilities curve to shift outward?
A) The economy's capital stock declines.
B) More teenagers enter the labor force.
C) Technology is lost.
D) People begin to retire at earlier ages.

Answer: B
Difficulty: 2 Medium
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

37) Economic growth would best be represented by a
A) Shift outward of the production possibilities curve.
B) Shift inward of the production possibilities curve.
C) Movement from inside the production possibilities curve to a point on the production possibilities curve.
D) Movement from the production possibilities curve to a point inside the production possibilities curve.

38) Which of the following will cause the production possibilities curve to shift inward?
A) An increase in the working-age population.
B) A decrease in the size of the labor force.
C) A technological advance.
D) An increase in knowledge.

39) Which of the following is not a basic decision that all nations must confront?
A) Should we have economic growth?
B) How should we produce goods and services?
C) For whom should goods and services be produced?
D) What goods and services should we produce?

Answer: A
Difficulty: 2 Medium
Topic: Three Basic Decisions
Learning Objective: 01-04 The three core economic questions that every society must answer.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

40) In a market economy, the people who receive the goods and services that are produced are those who
A) Need the goods and services the most.
B) Have the most political power.
C) Want the goods and services the most.
D) Are willing to pay the highest price.

Answer: D
Difficulty: 2 Medium
Topic: Three Basic Decisions
Learning Objective: 01-04 The three core economic questions that every society must answer.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

41) Adam Smith's invisible hand is now called
A) Economic growth.
B) The market mechanism.
C) Opportunity cost.
D) Laissez faire.

Answer: B
Difficulty: 2 Medium
Topic: The Mechanisms of Choice
Learning Objective: 01-05 How market and government approaches to economic problems differ.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

42) The market mechanism may best be defined as
A) The use of market prices and sales to signal desired output.
B) The use of market signals and government directives to select economic outcomes.
C) The process by which the production possibilities curve shifts inward.
D) Price regulation by government.

Answer: A
Difficulty: 1 Easy
Topic: The Mechanisms of Choice
Learning Objective: 01-05 How market and government approaches to economic problems differ.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

43) The market mechanism
A) Is not a very efficient means of communicating consumer demand to the producers of goods and services.
B) Works through central planning by government.
C) Eliminates market failures created by government.
D) Works because prices serve as a means of communication between consumers and producers.

Answer: D
Difficulty: 2 Medium
Topic: The Mechanisms of Choice
Learning Objective: 01-05 How market and government approaches to economic problems differ.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

44) The invisible hand refers to
A) Intervention in the economy by the government bureaucrats we do not see and over whom we have no control.
B) Undiscovered natural resources.
C) The allocation of resources by market forces.
D) The person who has the responsibility to coordinate all the markets in a market economy.

45) The doctrine of laissez faire is based on the belief that
A) Markets are likely to do a better job of allocating resources than government directives.
B) Government directives are likely to do a better job of allocating resources than markets.
C) Government failure does not exist.
D) Markets result in an unfair distribution of income.

Answer: A
Difficulty: 2 Medium
Topic: The Mechanisms of Choice
Learning Objective: 01-05 How market and government approaches to economic problems differ.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
46) A city's decision to limit smoking in public areas is an example of
A) The invisible hand at work.
B) The market mechanism at work.
C) Market success.
D) Government intervention.

Answer: D
Difficulty: 3 Hard
Topic: The Mechanisms of Choice
Learning Objective: 01-05 How market and government approaches to economic problems differ.
Bloom's: Analyze
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

47) A mixed economy
A) Is justified by the superiority of laissez faire over government intervention.
B) Utilizes both market and nonmarket signals to allocate goods and services.
C) Relies on the use of central planning by private firms rather than the government.
D) Is one that allows trade with other countries.

Answer: B
Difficulty: 1 Easy
Topic: The Mechanisms of Choice
Learning Objective: 01-05 How market and government approaches to economic problems differ.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

48) Which of the following may be used in an attempt to correct market failure?
A) The market mechanism.
B) Laws and regulations.
C) Laissez faire price policies.
D) Government failure.

Answer: B
Difficulty: 3 Hard
Topic: The Mechanisms of Choice
Learning Objective: 01-05 How market and government approaches to economic problems differ.
Bloom's: Analyze
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
49) When the invisible hand does not produce optimal outcomes for the economy, there is evidence of
A) Market failure.
B) Government failure.
C) Macroeconomic failure.
D) Scarcity.

50) Government intervention may achieve a more optimal outcome than the market mechanism when addressing
A) Inefficient bureaucracy.
B) Consumption of cigarettes.
C) The supply of new hot dog stands.
D) None of the choices are correct.

51) If market signals result in pollution beyond the optimal level, then
A) The economy experiences government failure.
B) A laissez faire approach will reduce the level of pollution.
C) The market mechanism has failed to achieve efficiency.
D) The government is allocating resources inefficiently.

Answer: C
Difficulty: 2 Medium
Topic: The Mechanisms of Choice
Learning Objective: 01-05 How market and government approaches to economic problems differ.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
52) Which of the following has occurred when government directives do not produce better economic outcomes?
A) Government failure.
B) Market failure.
C) Macroeconomic failure.
D) Scarcity.

53) Which of the following is an example of government failure?
A) Bureaucratic delays.
B) Required use of pollution control technology that is obsolete.
C) Inefficient incentives.
D) All of the choices are correct.

Answer: D
Difficulty: 3 Hard
Topic: The Mechanisms of Choice
Learning Objective: 01-05 How market and government approaches to economic problems differ.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

54) Macroeconomics focuses on the behavior of
A) Individual consumers.
B) Government agencies.
C) The overall economy.
D) All of the choices are correct.

Answer: C
Difficulty: 2 Medium
Topic: What Economics is All About
Learning Objective: 01-05 How market and government approaches to economic problems differ.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
55) Which of the following is not a macroeconomic statement?
A) The unemployment rate for the United States rose to 5 percent in the last quarter.
B) The Federal Reserve lowered interest rates at its last meeting.
C) Congress increased the minimum wage rate in January.
D) Jenny's wage rate rose, and in response, she decided to work more hours.

Answer: D
Difficulty: 3 Hard
Topic: What Economics is All About
Learning Objective: 01-05 How market and government approaches to economic problems differ.
Bloom's: Analyze
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

56) The study of microeconomic theory focuses on
A) individual behavior in the economy
B) Operation of the entire economy.
C) Role of the banking system in the economy.
D) Interaction of international trade and domestic production of goods and services.

Answer: A
Difficulty: 2 Medium
Topic: What Economics is All About
Learning Objective: 01-05 How market and government approaches to economic problems differ.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

57) Microeconomics is concerned with issues such as
A) The demand for bottled water by individuals.
B) The level of inflation in the economy.
C) Maintaining a strong level of economic growth.
D) All of the choices are correct.

Answer: A
Difficulty: 3 Hard
Topic: What Economics is All About
Learning Objective: 01-05 How market and government approaches to economic problems differ.
Bloom's: Analyze
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
58) Economic models are used by economists to
A) Predict economic behavior.
B) Develop economic policies.
C) Explain economic behavior.
D) All of the choices are correct.

Answer: D
Difficulty: 2 Medium
Topic: What Economics is All About
Learning Objective: 01-05 How market and government approaches to economic problems differ.
Bloom's: Understand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

59) The Latin phrase ceteris paribus means
A) The production possibilities curve never shifts.
B) Laissez faire.
C) Other things remain equal.
D) The invisible hand.

Answer: C
Difficulty: 1 Easy
Topic: What Economics is All About
Learning Objective: 01-05 How market and government approaches to economic problems differ.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation

60)

At which point is society employing some of its available technology but not all of it? (See Figure 1.1.)
A) A.
B) B.
C) C.
D) D.

Answer: C
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

61)

At which point is society producing the most output possible with the available resources and technology? (See Figure 1.1.)
A) A.
B) B.
C) C.
D) D.

Answer: B
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

62)

At which point is society producing some of each type of structure but still producing inefficiently? (See Figure 1.1.)
A) A.
B) B.
C) C.
D) D.

Answer: C
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

63)

At which point might society be able to produce if new resources were discovered but cannot produce with current resources? (See Figure 1.1.)
A) A.
B) B.
C) C.
D) D.

Answer: A
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

64)

Choose the letter of the curve in Figure 1.2 that best represents a production possibilities curve for two goods that obey the law of increasing opportunity costs:
A) A.
B) B.
C) C.
D) D.

Answer: C
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

65)

Choose the letter of the curve in Figure 1.2 that best represents a production possibilities curve for two goods for which there are constant opportunity costs:
A) A.
B) B.
C) C.
D) D.

Answer: B
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

66)

Using Figure 1.3 and starting from PP1, an increase in the capacity to produce can be represented by a movement from
A) Point A to point B.
B) Point A to point C.
C) Point B to point C.
D) Point C to point F.

Answer: D
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

67)

Using Figure 1.3 and PP1, at point A,
A) There is inefficient use of available resources.
B) The available technology keeps production inside PP1.
C) All available resources are being used efficiently.
D) An increase in the production of mops would definitely require a decrease in the production of brooms.

Answer: A
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

68)

Which of the following is true about the combination of mops and brooms represented by point E in Figure 1.3 and using PP1?
A) Point E is efficient now.
B) Point E is attainable if this economy uses more of its available resources.
C) Point E is unattainable if this economy becomes more efficient.
D) Point E is attainable only if more resources become available or technological advances are made.

Answer: D
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

69)

An increase in the proportion of the population that is unemployed above the normal rate is best represented in Figure 1.3 and using PP1 by a movement from point
A) C to point D.
B) D to point C.
C) C to point A.
D) E to point D.

Answer: C
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

70)

A movement from point F to point D in Figure 1.3 results in
A) A reallocation of resources from mop production to broom production.
B) Permanent unemployment of workers producing brooms.
C) A reallocation of resources from broom production to mop production.
D) More efficient production.

Answer: C
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

71)

In Figure 1.3, a shift of the production possibilities curve from PP1 to PP2 could be caused by
A) A decrease in the quantity of raw materials available.
B) A decline in the production skills of workers.
C) The use of improved production technology.
D) All of the choices are correct.

Answer: C
Difficulty: 3 Hard
Topic: What Economics is All About
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

72)

Using Figure 1.4 and starting at PP1, an increase in the capacity to produce can be represented by a movement from point
A) A to point B.
B) C to point E.
C) A to point C.
D) D to point E.

Answer: B
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

73)

Which of the following is true about the combination of televisions and smartphones represented by point F in Figure 1.4?
A) Point F is inefficient now.
B) Point F is unattainable even with advances in technology.
C) Point F will be more easily attainable if the government takes control of all privately run factories.
D) Point F can possibly be reached if more economic resources become available or technology improves.

Answer: D
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

74)

A movement from point C to point A in Figure 1.4 results in
A) More efficient production.
B) Permanent unemployment of workers producing plasma televisions.
C) A reallocation of resources from smartphone production to television production.
D) A reallocation of resources from television production to smartphone production.

Answer: D
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

75)

In Figure 1.4, a shift of the production possibilities curve from PP1 to PP2 could be caused by
A) An increase in the unemployment rate.
B) Implementation of training programs that improve the skills of workers.
C) A flu epidemic that makes many workers sick.
D) Tougher pollution controls for the producers of televisions and smartphones.

Answer: B
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

76)

Using Figure 1.5, if an economy has the capacity to produce represented by PP2, then point E represents
A) A constant trade-off between potato chips and doughnuts.
B) A combination of potato chips and doughnuts that is not attainable.
C) An efficient use of resources.
D) None of the choices are correct.

Answer: C
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

77)

Using Figure 1.5, if an economy is currently producing on PP2, which of the following would shift the production possibilities curve toward PP1?
A) An increase in the quantity of labor available.
B) A decrease in the amount of capital available.
C) A decrease in the level of unemployment towards the normal level.
D) An advancement in technology.

Answer: B
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

78)

In Figure 1.5, at which of the following points would the opportunity cost of producing more doughnuts be greatest?
A) A.
B) F.
C) C.
D) E.

Answer: C
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

79)

Using Figure 1.6, if an economy has the capacity to produce represented by PP1, then point E represents
A) A combination of cars and SUVs that is not attainable.
B) A constant trade-off between cars and SUVs.
C) A change in technology.
D) An efficient use of resources.

Answer: D
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

80)

In Figure 1.6, if the opportunity cost of producing cars was zero at all levels of production, the production possibilities curve would be best be represented by a
A) Vertical line.
B) 45-degree line starting at the origin.
C) Horizontal line.
D) Circle.

Answer: A
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

81)

In Figure 1.6, at which of the following points would the opportunity cost of producing one more car be the lowest?
A) F.
B) B.
C) C.
D) D.

Answer: A
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

82)

In Figure 1.6, at which of the following points would the opportunity cost of producing one more SUV be highest?
A) A.
B) B.
C) C.
D) F.

Answer: D
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

83)

Refer to Figure 1.7. This economy will achieve efficiency in production at
A) Point D only.
B) Point G only.
C) Point J only.
D) Points D, G, and J.

Answer: D
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

84)

Refer to Figure 1.7. The cost of producing at point G rather than point D is
A) OA units of food.
B) KL units of clothing.
C) AB units of food.
D) OL units of clothing.

Answer: C
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

85)

Refer to Figure 1.7. The benefit of producing at point G rather than point D is
A) OA units of food.
B) KL units of clothing.
C) AB units of food.
D) OL units of clothing.

Answer: B
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

86)

Refer to Figure 1.7. The cost of producing at point D rather than point J is
A) KM units of clothing.
B) AC units of food.
C) OM units of clothing.
D) OA units of food.

Answer: A
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

87)

Refer to Figure 1.7. If this economy is currently producing at point F, then by employing more resources this economy
A) Can move to point D, but not points G or J.
B) Can move to points D, G, or J.
C) Can move to point G, but not points D or J.
D) Will remain at point F.

Answer: B
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

88)

Refer to Figure 1.7. Which of the following points are considered to be inefficient?
A) D.
B) E.
C) G.
D) D, G, and J.

Answer: B
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

89)

Refer to Figure 1.7. Which of the following points are unattainable, ceteris paribus?
A) G.
B) F.
C) N.
D) E.

Answer: C
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

90)

Refer to Figure 1.7. Which of the following points show unemployment of resources above the normal rate?
A) H.
B) J.
C) N.
D) D.

Answer: A
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-03 What the production-possibilities curve represents.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

91) Table 1.1 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus.

Table 1.1
Production Possibilities for Bombers

Combination Number of B-1 Bombers Opportunity cost(Foregone Stealth) Number of Stealth Bombers Opportunity cost (Foregone B-1)
S 0 NA 10
T 1 9
U 2 7
V 3 4 NA

On the basis of Table 1.1, you may infer that the law of increasing opportunity costs applies to increasing production of
A) Stealth bombers but not to B-1 bombers.
B) B-1 bombers.
C) Both B-1 bombers and Stealth Bombers.
D) Neither B-1 bombers or Stealth Bombers.

Answer: C
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-02 How scarcity creates opportunity costs.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

92) Table 1.1 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus.

Table 1.1
Production Possibilities for Bombers

Combination Number of B-1 Bombers Opportunity cost (Foregone Stealth) Number of Stealth Bombers Opportunity cost (Foregone B-1)
S 0 NA 10
T 1 9
U 2 7
V 3 4 NA

On the basis of Table 1.1, what is the opportunity cost of producing at point S rather than point T?
A) 1 Stealth bomber.
B) 1 B-1 bomber.
C) 10 Stealth bombers.
D) 0.9 Stealth bombers.

Answer: B
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-02 How scarcity creates opportunity costs.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

93) Table 1.1 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus.

Table 1.1
Production Possibilities for Bombers

Combination Number of B-1 Bombers Opportunity cost (Foregone Stealth) Number of Stealth Bombers Opportunity cost (Foregone B-1)
S 0 NA 10
T 1 9
U 2 7
V 3 4 NA

On the basis Table 1.1, what is the opportunity cost of producing at point V rather than point U?
A) 3 B-1 bombers.
B) 1 B-1 bomber.
C) 4 Stealth bombers.
D) 3 Stealth bombers.

Answer: D
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-02 How scarcity creates opportunity costs.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

94) Table 1.1 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus.

Table 1.1
Production Possibilities for Bombers

Combination Number of B-1 Bombers Opportunity cost(Foregone Stealth) Number of Stealth Bombers Opportunity cost (Foregone B-1)
S 0 NA 10
T 1 9
U 2 7
V 3 4 NA

In the production range of 7 to 9 Stealth bombers, the opportunity cost of producing 1 more Stealth bomber in terms of B-1s is
A) 0.
B) 3.
C) 0.5.
D) 2.

Answer: C
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-02 How scarcity creates opportunity costs.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

95) Table 1.1 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus.

Table 1.1
Production Possibilities for Bombers

Combination Number of B-1 Bombers Opportunity cost(Foregone Stealth) Number of Stealth Bombers Opportunity cost (Foregone B-1)
S 0 NA 10
T 1 9
U 2 7
V 3 4 NA

The highest opportunity cost anywhere in Table 1.1 for Stealth bombers in terms of B-1 bombers is
A) 1 B bombers
B) 3 B bombers
C) 2 B bombers
D) 0.5 B bombers

Answer: A
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-02 How scarcity creates opportunity costs.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

96) Table 1.1 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus.

Table 1.1
Production Possibilities for Bombers

Combination Number of B-1 Bombers Opportunity cost(Foregone Stealth) Number of Stealth Bombers Opportunity cost (Foregone B-1)
S 0 NA 10
T 1 9
U 2 7
V 3 4 NA

The highest opportunity cost in Table 1.1 for B-1 bombers in terms of Stealth bombers is
A) 1 Stealth bomber per B-1 bomber.
B) 3 Stealth bombers per B-1 bomber.
C) 2 Stealth bombers per B-1 bomber.
D) 0.5 Stealth bomber per B-1 bomber.

Answer: B
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-02 How scarcity creates opportunity costs.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

97) Table 1.1 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus.

Table 1.1
Production Possibilities for Bombers

Combination Number of B-1 Bombers Opportunity cost(Foregone Stealth) Number of Stealth Bombers Opportunity cost (Foregone B-1)
S 0 NA 10
T 1 9
U 2 7
V 3 4 NA

The lowest opportunity cost e in Table 1.1 for B-1 bombers in terms of Stealth bombers is
A) 0 Stealth bombers per B-1 bomber.
B) 2 Stealth bombers per B-1 bomber.
C) 1 Stealth bomber per B-1 bomber.
D) 0.5 Stealth bomber per B-1 bomber.

Answer: C
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-02 How scarcity creates opportunity costs.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

98) Table 1.2 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus.

Table 1.2
Production Possibilities for Bombers

Combination Number of B-1 Bombers Opportunity cost(Foregone Stealth) Number of Stealth Bombers Opportunity cost (Foregone B-1)
A 20 Na 195
B 35 180
C 45 150
D 50 100 NA

On the basis of Table 1.2, the law of increasing opportunity costs applies to
A) Both B-1 bombers and Stealth bombers.
B) B-1 bombers.
C) Stealth bombers but not to B-1 bombers.
D) Neither bomber.

Answer: A
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-02 How scarcity creates opportunity costs.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

99) Table 1.2 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus.

Table 1.2
Production Possibilities for Bombers

Combination Number of B-1 Bombers Opportunity cost(Foregone Stealth) Number of Stealth Bombers Opportunity cost (Foregone B-1)
A 20 Na 195
B 35 180
C 45 150
D 50 100 NA

On the basis Table 1.2, if the economy is currently producing at point C, what is the opportunity cost of producing at point B?
A) 45 B-1 bombers.
B) 35 Stealth bombers.
C) 180 Stealth bombers.
D) 10 B-1 bombers.

Answer: D
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-02 How scarcity creates opportunity costs.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

100) Table 1.2 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus.

Table 1.2
Production Possibilities for Bombers

Combination Number of B-1 Bombers Opportunity cost(Foregone Stealth) Number of Stealth Bombers Opportunity cost (Foregone B-1)
A 20 NA 195
B 35 180
C 45 150
D 50 100 NA

On the basis of your calculations in Table 1.2, what is gained by producing at point B rather than point C?
A) 45 B-1 bombers.
B) 30 Stealth bombers.
C) 180 Stealth bombers.
D) 10 B-1 bombers.

Answer: B
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-02 How scarcity creates opportunity costs.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

101) Table 1.2 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus.

Table 1.2
Production Possibilities for Bombers

Combination Number of B-1 Bombers Opportunity cost(Foregone Stealth) Number of Stealth Bombers Opportunity cost (Foregone B-1)
A 20 NA 195
B 35 180
C 45 150
D 50 100 NA

On the basis of Table 1.2, what is gained by producing at point B rather than point A?
A) 35 B-1 bombers.
B) 195 Stealth bombers.
C) 15 B-1 bombers.
D) 15 Stealth bombers.

Answer: C
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-02 How scarcity creates opportunity costs.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

102) Table 1.2 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus.

Table 1.2
Production Possibilities for Bombers

Combination Number of B-1 Bombers Opportunity cost(Foregone Stealth) Number of Stealth Bombers Opportunity cost (Foregone B-1)
A 20 NA 195
B 35 180
C 45 150
D 50 100 NA

Refer to Table 1.2. In the production range of 20 to 35 B-1 bombers, the opportunity cost of producing 1 more B-1 bomber is
A) 195/20 of Stealth bombers.
B) 35/20 of Stealth bombers.
C) 15 Stealth bombers.
D) 1 Stealth bomber.

Answer: D
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-02 How scarcity creates opportunity costs.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

103) Table 1.2 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus. Complete the table by calculating the required opportunity costs for both the B-1 and Stealth bombers.

Table 1.2
Production Possibilities for Bombers

Combination Number of B-1 Bombers Opportunity cost(Foregone Stealth) Number of Stealth Bombers Opportunity cost (Foregone B-1)
A 20 NA 195
B 35 180
C 45 150
D 50 100 NA

The highest opportunity cost in Table 1.2 for B-1 bombers in terms of Stealth bombers is
A) 10 Stealth bombers per B-1
B) 33 B-1 bombers
C) 10 B-1 bombers
D) 10 Stealth bomber per B-1

Answer: A
Difficulty: 3 Hard
Topic: Production Possibilities
Learning Objective: 01-02 How scarcity creates opportunity costs.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

104) Table 1.2 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus.

Table 1.2
Production Possibilities for Bombers

Combination Number of B-1 Bombers Opportunity cost(Foregone Stealth) Number of Stealth Bombers Opportunity cost (Foregone B-1)
A 20 NA 195
B 35 180
C 45 150
D 50 100 NA

The lowest opportunity cost in Table 1.2 for Stealth Bombers is
A) 4 B-1 bombers
B) 3 B-1 bombers
C) 2 B-1 bombers
D) 10 B-1 bombers

Answer: D
Difficulty: 3 Hard
Topic: What Economics is All About
Learning Objective: 01-02 How scarcity creates opportunity costs.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation

105) Table 1.3 shows the hypothetical trade-off between different combinations of brushes and combs that might be produced in a year with the limited capacity for Country X, ceteris paribus.