Question 1

Refer to the above graph.Assume that before the Persian Gulf War,Iraq's production possibilities were represented by AB.Which line on the above graph would represent the change in Iraq's production possibilities after the war?
A) AB to BE
B) AB to AF
C) AB to AD
D) AB to EF

Accepted Answer

The answer of  Refer to the above graph.Assume that...

Question 2

A nation can increase its production possibilities by:
A) shifting resources from investment good production to consumer good production.
B) shifting resources from private goods to public goods.
C) improving labor productivity.
D) reducing international trade.

Accepted Answer

Improving labor productivity allows for more output to be produced with the same amount of resources, thus increasing the production possibilities of the nation. Choices A and B involve shifting resources, but do not necessarily increase overall productivity. Choice D reduces international trade, which can limit access to resources and markets, ultimately decreasing production possibilities.

Question 3

Macroeconomics is concerned with the whole economy or its major sectors.

Accepted Answer

Macroeconomics deals with the overall functioning and performance of the economy, including its major sectors like government, households, and businesses.

Question 4

If the marginal benefits are greater than the marginal cost of an activity,then society is overallocating resources to this activity.

Accepted Answer

If the marginal benefits are greater than the marginal cost of an activity, it means that the activity is providing more benefits than the resources that are being used to produce it. This suggests that the activity is underallocated, not overallocated. Therefore, option B is the correct answer.

Question 5

From the "economic perspective," people make purposeful decisions based on hypotheses.

Accepted Answer

From an economic perspective, people make purposeful decisions based on rational self-interest and available information, not hypotheses.

Question 6

Cuba is a command economy that suffered decline in economic growth because of a cut in support from the former Soviet Union when it collapsed.As a consequence,Cuba:
A) experienced a shift outward in its production possibilities curve.
B) experienced a shift inward in its production possibilities curve.
C) moved along its existing production possibilities curve.
D) went to a point inside its production possibilities curve.

Accepted Answer

The collapse of the Soviet Union led to a reduction in resources and support for Cuba, causing a decrease in its production capacity, which is represented by an inward shift of the production possibilities curve.

Question 7

The concave,or bowed-out,shape of the production possibilities curve illustrates the law of increasing opportunity costs.

Accepted Answer

The concave shape of the production possibilities curve signifies that as we produce more of one good, the opportunity cost of producing additional units of that good increases. This is because resources are not equally efficient in producing different goods, and as we allocate more resources to one good, we have to take them away from other goods that they are relatively more efficient at producing. Therefore, the law of increasing opportunity costs is represented by the bowed-out shape of the production possibilities curve.

Question 8

The economizing problem arises from the conflict between having relatively unlimited resources and relatively limited wants.

Accepted Answer

The economizing problem arises from the conflict between having relatively limited resources and relatively unlimited wants.

Question 9

Suppose there are two economies,Alpha and Beta,which have the same production possibilities curves and are on the same point on each curve.If Beta then devotes more resources to investment goods than consumer goods when compared to Alpha,then in the future:
A) Alpha will experience greater economic growth than Beta.
B) Beta will experience greater economic growth than Alpha.
C) Alpha will not be able to achieve full employment or productive efficiency.
D) Beta will not be able to achieve full employment or productive efficiency

Accepted Answer

Devoting more resources to investment goods indicates that Beta is focusing on increasing its productive capacity and improving its technology. This will lead to greater economic growth in the future as Beta will be able to produce more in the long run. Therefore, the correct choice is Option B. Option A is incorrect because Alpha is not making changes to increase its productive capacity, so it will not experience greater economic growth than Beta. Option C and D are incorrect because there is no indication that either Alpha or Beta will not be able to achieve full employment or productive efficiency.

Question 10

The four factors of production are land,labor,capital,and government services.

Accepted Answer

The four factors of production are land, labor, capital, and entrepreneurship.

Question 11

The marginal cost curve for a product slopes upward as more units are produced because of the law of increasing costs.

Accepted Answer

The law of increasing costs states that as production increases, the cost of producing each additional unit rises. This is due to various factors such as the scarcity of resources or the need to invest in new technology. As a result, the marginal cost curve for a product slopes upward as more units are produced.

Question 12

Refer to the above production possibilities curves.Curve (a)is the current curve for the economy.Other things being equal,society's current choice of point P on curve (a)will:
A) allow it to achieve more rapid economic growth than would the choice of point N.
B) entail a slower rate of economic growth than would the choice of point N.
C) entail the same rate of growth as would the choice of point N.
D) be unobtainable because it exceeds the productive capacity of the economy.

Accepted Answer

The answer of  Refer to the above production possibilities...

Question 13

If the marginal benefits of the output from resources devoted to the production of a product are greater than the marginal costs,then there has been an overallocation of resources to the production of that product.

Accepted Answer

If the marginal benefits of the output from resources devoted to the production of a product are greater than the marginal costs, it implies that the benefits outweigh the costs, and therefore resources have been allocated efficiently. An overallocation of resources would occur if the marginal costs exceeded the marginal benefits.

Question 14

By using the same ceteris paribus assumptions,economic principles are just as certain and precise as those of the laboratory sciences.

Accepted Answer

Economic principles often rely on ceteris paribus assumptions, but they deal with human behavior and complex systems, making them less precise and certain than laboratory sciences.

Question 15

A point inside the production possibilities curve illustrates that resources are not being used as efficiently as possible.

Accepted Answer

A point inside the production possibilities curve indicates that the economy is not utilizing all of its resources to produce goods and services, and therefore is not achieving the maximum possible output level.

Question 16

Marginal analysis is the comparison of additional benefits with the additional costs.

Accepted Answer

Marginal analysis involves comparing the additional benefits of a decision or action with the additional costs it will incur, in order to determine whether it is worth pursuing or not.

Question 17

The fundamental economic problem is that productive resources are scarce in relation to the demand for them.

Accepted Answer

This statement is true. All economies face the fundamental economic problem of scarcity, which means that we have infinite wants and needs, but limited resources available to fulfill them. This necessitates the need to make choices about how to allocate resources, which is the central focus of economics.

Question 18

Which situation would most likely cause a nation's production possibilities curve to shift inward?
A) The construction of more capital goods
B) An increase in foreign trade
C) An increase in the number of skilled immigrant workers
D) The destruction from bombing and warfare in a losing military conflict

Accepted Answer

The destruction from bombing and warfare in a losing military conflict would most likely cause a nation's production possibilities curve to shift inward. This is because the destruction of capital goods and infrastructure would decrease the country's ability to produce goods and services, thereby limiting the amount of output that it can produce.

Question 19

Economics is the study of the efficient use of scarce resources to achieve maximum satisfaction of economic wants.

Accepted Answer

This is the definition of economics as it is concerned with how to allocate scarce resources in order to satisfy human wants and needs.

Question 20

Which situation would most likely shift the production possibilities curve for a nation in an outward direction?
A) A decrease in the quality of products
B) An increase in the supply of resources
C) A decrease in the state of technology
D) An increase in the amount of discrimination

Accepted Answer

An increase in the supply of resources, such as the discovery of new natural resources or an increase in human capital, would shift the production possibilities curve for a nation in an outward direction. This allows for the production of more goods and services, increasing the potential output of the economy.

Quiz 1: Limits, Alternatives, and Choices

Refer to the above graph.Assume that before the Persian Gulf War,Iraq's production possibilities were represented by AB.Which line on the above graph would represent the change in Iraq's production possibilities after the war?

A nation can increase its production possibilities by: