Chapter 2 Quiz

Instructions
Quiz

This assessment is worth 60 points.

  1. The production possibilities curve shows various combinations of two products which an economy can produce when achieving full employment and productive efficiency.   (1 point)

      
      

  2. The entrepreneur's sole function is to combine other resources (land, labor, and capital) in the production of some good or service.   (1 point)

      
      

  3. Products and services are scarce because resources are scarce.   (1 point)

      
      

  4. An economy cannot produce at a point outside of its production possibilities curve because human material wants are insatiable.   (1 point)

      
      

  5. The process by which capital goods are accumulated is known as investment.   (1 point)

      
      

  6. Although sleeping in on a work day or school day has an opportunity cost, sleeping late on the weekend does not.   (1 point)

      
      


  7. Refer to the above production possibilities curves. Given production possibilities curve (a), the combination of civilian and war goods indicated by point X is unattainable to this economy.   (1 point)

      
      


  8. Refer to the above production possibilities curves. The movement from curve (a) to curve (b) implies an increase in the quantity and/or quality of society's productive resources.   (1 point)

      
      


  9. Refer to the above production possibilities curves. The movement from curve (a) to curve (c) indicates an improvement in civilian goods technology but not in war goods technology.   (1 point)

      
      

  10. An economy will always operate at some point on its production possibilities curve.   (1 point)

      
      

  11. The science of economics stems from the fact that:   (1 point)

    a.  
    b.  
    c.  
    d.  

  12. As used in economics, the notion of scarce resources means that:   (1 point)

    a.  
    b.  
    c.  
    d.  

  13. Economics is primarily the study of:   (1 point)

    a.  
    b.  
    c.  
    d.  

  14. The money payments made to owners of land, labor, capital, and entrepreneurial ability are:   (1 point)

    a.  
    b.  
    c.  
    d.  
    e.  

  15. Assuming an economy has fixed quantities of resources, that economy:   (1 point)

    a.  
    b.  
    c.  
    d.  

  16. The production possibilities curve illustrates the basic principle that:   (1 point)

    a.  
    b.  
    c.  
    d.  

  17. Unemployment and/or productive inefficiencies:   (1 point)

    a.  
    b.  
    c.  
    d.  

  18. If the production possibilities curve is a straight line:   (1 point)

    a.  
    b.  
    c.  
    d.  

  19. A production possibilities curve shows:   (1 point)

    a.  
    b.  
    c.  
    d.  

  20. Answer the next question(s) on the basis of the data given in the following production possibilities table:
    R-1 REF02026

    Refer to the above table. If the economy is producing at production alternative C, the opportunity cost of the tenth unit of consumer goods will be:   (1 point)

    a.  
    b.  
    c.  
    d.  

  21. Answer the next question(s) on the basis of the data given in the following production possibilities table:
    R-1 REF02026

    Refer to the above table. For this economy to produce a total output of 3 units of capital goods and 13 units of consumer goods it must:   (1 point)

    a.  
    b.  
    c.  
    d.  

  22. Assume an economy is operating at some point on its production possibilities curve which shows civilian and military goods. If the output of military goods is increased, the output of civilian goods:   (1 point)

    a.  
    b.  
    c.  
    d.  

  23. Any point inside the production possibilities curve indicates:   (1 point)

    a.  
    b.  
    c.  
    d.  


  24. Refer to the above diagram. Other things equal, this economy will achieve the most rapid rate of growth if:   (1 point)

    a.  
    b.  
    c.  
    d.  

  25. In drawing the production possibilities curve we assume that:   (1 point)

    a.  
    b.  
    c.  
    d.  

  26. Which of the following is assumed in constructing a typical production possibilities curve?   (1 point)

    a.  
    b.  
    c.  
    d.  

  27. Deltonia produces both consumer and capital goods. If it reduces the percentage of its output devoted to capital goods, then:   (1 point)

    a.  
    b.  
    c.  
    d.  

  28. The process of producing and accumulating capital goods is called:   (1 point)

    a.  
    b.  
    c.  
    d.  


  29. Refer to the above diagram. Which of the following is a normative statement?   (1 point)

    a.  
    b.  
    c.  
    d.  


  30. Refer to the above production possibilities curve. At the onset of World War II the United States had large amounts of idle human and property resources. Its economic adjustment from peacetime to wartime can best be described by the movement from point:   (1 point)

    a.  
    b.  
    c.  
    d.  

  31. In drawing a production possibilities curve we hold constant:   (1 point)

    a.  
    b.  
    c.  
    d.  

  32. The construction of a production possibilities curve assumes:   (1 point)

    a.  
    b.  
    c.  
    d.  

  33. The production possibilities curve has:   (1 point)

    a.  
    b.  
    c.  
    d.  

  34. Answer the next question(s) on the basis of the following production possibilities tables for two countries, North Cantina and South Cantina:

    R-5 REF02066

    Refer to the above tables. Suppose that North Cantina is producing 2 units of capital goods and 17 units of consumer goods while South Cantina is producing 2 units of capital goods and 21 units of consumer goods. We can conclude that:   (1 point)

    a.  
    b.  
    c.  
    d.  

  35. Answer the next question(s) on the basis of the following production possibilities tables for two countries, North Cantina and South Cantina:

    Consumer goods0815212527
    R-5 REF02066

    Refer to the above tables. Suppose that resources in North Cantina and South Cantina are identical in quantity and quality. We can conclude that:   (1 point)

    a.  
    b.  
    c.  
    d.  

  36. If an economy is operating inside its production possibilities curve for consumer goods and capital goods, this means that it:   (1 point)

    a.  
    b.  
    c.  
    d.  


  37. Refer to the above diagram. This production possibilities curve is:   (1 point)

    a.  
    b.  
    c.  
    d.  


  38. Refer to the above diagram. The combination of computers and bicycles shown by point G is:   (1 point)

    a.  
    b.  
    c.  
    d.  


  39. Refer to the above diagram. As it relates to production possibilities analysis, the law of increasing opportunity cost is reflected in curve:   (1 point)

    a.  
    b.  
    c.  
    d.  

  40. Which one of the following expressions best states the idea of opportunity cost?   (1 point)

    a.  
    b.  
    c.  
    d.  

  41. The idea of opportunity cost:   (1 point)

    a.  
    b.  
    c.  
    d.  

  42. Which of the following is an economic explanation for why most college-aged movie stars do not attend college.   (1 point)

    a.  
    b.  
    c.  
    d.  

  43. The law of increasing opportunity costs exists because:   (1 point)

    a.  
    b.  
    c.  
    d.  

  44. Opportunity costs is best defined as:   (1 point)

    a.  
    b.  
    c.  
    d.  

  45. The idea of allocative efficiency is concerned with:   (1 point)

    a.  
    b.  
    c.  
    d.  

  46. The point on the production possibilities curve which entails allocative efficiency can be found by:   (1 point)

    a.  
    b.  
    c.  
    d.  

  47. The marginal benefit curve is:   (1 point)

    a.  
    b.  
    c.  
    d.  

  48. The marginal cost curve is:   (1 point)

    a.  
    b.  
    c.  
    d.  

  49. If the output of product X is such that marginal benefit equals marginal cost:   (1 point)

    a.  
    b.  
    c.  
    d.  


  50. Refer to the above diagram for athletic shoes. If the current output of shoes is Q*B 1, then:   (1 point)

    a.  
    b.  
    c.  
    d.  

  51. The future location of the economy's production possibilities curve will be affected by:   (1 point)

    a.  
    b.  
    c.  
    d.  

  52. Which of the following will shift the production possibilities curve to the right?   (1 point)

    a.  
    b.  
    c.  
    d.  


  53. Refer to the above diagram. The concave shape of each production possibilities curve indicates that:   (1 point)

    a.  
    b.  
    c.  
    d.  


  54. Refer to the above diagram. An improvement in technology will:   (1 point)

    a.  
    b.  
    c.  
    d.  

  55. The economy of the former Soviet Union is best described as:   (1 point)

    a.  
    b.  
    c.  
    d.  

  56. The economy of Hitler's Nazi Germany was characterized by:   (1 point)

    a.  
    b.  
    c.  
    d.  

  57. In the resource market:   (1 point)

    a.  
    b.  
    c.  
    d.  

  58. In the simple circular flow model:   (1 point)

    a.  
    b.  
    c.  
    d.  


  59. Refer to the above circular flow model of the economy. In the diagram flow (1) represents:   (1 point)

    a.  
    b.  
    c.  
    d.  


  60. Refer to the above circular flow model of the economy. In the diagram flow (2) represents:   (1 point)

    a.  
    b.  
    c.  
    d.  



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