Issues in Economics Today 8th Edition Test Bank

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Chapter 1Economics: The Studyof Opportunity CostPage1©2018by McGraw-Hill Education.This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in anymanner.This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.Multiple Choice1)Economics is the study ofA)how much people should buy and the prices they should be willing to pay.B)how much people should sell and the prices they should be willing to accept.C)the allocation of the world's freelyavailable resources and who should get them.D)the allocation and use of scarce resources to satisfy unlimited human wants.Answer: DLearning Objective: 01-01Topic: Economics and Opportunity CostBlooms: RememberAACSB: Analytical ThinkingDifficulty: 1 Easy2)The one word in the definition of economics that focuses on the fact that it is impossible toprovide all of the goods and services that everyone wants isA)scarcity.B)resources.C)study.D)allocation.Answer: ALearning Objective: 01-01Topic: Economics and Opportunity CostBlooms: UnderstandAACSB: Analytical ThinkingDifficulty: 1 Easy3)The one word in the definition of economics that focuses on the fact that we have to makechoices about who gets what and how much isA)scarcity.B)resources.C)study.D)allocation.Answer: DLearning Objective: 01-01Topic: Economics and Opportunity CostBlooms: UnderstandAACSB: Analytical ThinkingDifficulty: 1 Easy

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Page2© 2018by McGraw-Hill Education.This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in anymanner.This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.4)Economists focus on “unlimited human wants” rather than _____ to describe our pursuit ofgoods and services.A)needsB)pricesC)outputD)physical requirementsAnswer: ALearning Objective: 01-01Topic: Economics and Opportunity CostBlooms: UnderstandAACSB: Analytical ThinkingDifficulty: 1 Easy5)Scarcity implies that the allocation schemechosen by society canA)not make more of any one good.B)typically make more of a good but at the expense of making less of another.C)always make more of all goods simultaneously.Answer: CLearning Objective: 01-01Topic: Economics and Opportunity CostBlooms: UnderstandAACSB: Analytical ThinkingDifficulty: 1 Easy6)Production possibilities frontier modelsA)the choices we make in setting prices.B)the choices we make in setting output alternatives.C)the choices we make in setting wages.D)the choices we make in setting incomes.Answer: BLearning Objective: 01-01Topic: Economics and Opportunity CostBlooms: RememberAACSB: Analytical ThinkingDifficulty: 1 Easy

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Page3© 2018by McGraw-Hill Education.This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in anymanner.This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.7)A production possibilities frontier is a simple model ofA)scarcity and allocation.B)prices andoutput.C)production and costs.D)inputs and outputs.Answer: ALearning Objective: 01-01Topic: Economics and Opportunity CostBlooms: RememberAACSB: Analytical ThinkingDifficulty: 1 Easy8)A simplifying assumption is typically made so as toA)make a point clearer by stripping away excess detail.B)make a point clearer by adding sufficient detail to get things precise.C)divert attention from the real problem.D)make things look better than they really are.Answer: ALearning Objective: 01-01Topic: Economics and Opportunity CostBlooms: UnderstandAACSB: Analytical ThinkingDifficulty: 1 Easy9)Something is scarce as long asA)there is a price that the market puts on the item.B)there is no freely available infinite source of the item.C)the government provides it.D)themarket provides it.Answer: BLearning Objective: 01-01Topic: Economics and Opportunity CostBlooms: UnderstandAACSB: Analytical ThinkingDifficulty: 1 Easy

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Page4© 2018by McGraw-Hill Education.This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in anymanner.This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.10)A resourceA)must come from the earth.B)only includes physical things.C)is anything that we consume directly or use to make things we will ultimately consume.D)A) and C)Answer: CLearning Objective: 01-01Topic: Economics and Opportunity CostBlooms: RememberAACSB: Analytical ThinkingDifficulty: 1 Easy11)The underlying reason that there are unattainable points on a production possibilitiesfrontier diagram is that thereA)is government.B)are always choices that have to be made.C)is a scarcity of resources within a fixed level of technology.D)is unemployment of resources.Answer: CLearningObjective: 01-01Topic:Modeling Opportunity Cost Using the Production Possibilities FrontierBlooms: ApplyAACSB:Knowledge ApplicationDifficulty: 2 Medium12)The underlying reason production possibilities frontiers are likely to be bowed out (ratherthan linear) isA)choices have consequences.B)there is always opportunity costs.C)some resources and people can be better used producing one good rather than another.D)there is always some level of unemployment.Answer: CLearning Objective: 01-01Topic:Modeling Opportunity Cost Using the Production Possibilities FrontierBlooms: ApplyAACSB:Knowledge ApplicationDifficulty: 2 Medium

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Page5© 2018by McGraw-Hill Education.This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in anymanner.This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.13)The optimization assumption suggests that people makeA)irrational decisions.B)unpredictable decisions.C)decisions to make themselves as well off as possible.D)decisions without thinking very hard.Answer: CLearning Objective: 01-01Topic: Modeling Opportunity Cost Using the Production Possibilities FrontierBlooms: ApplyAACSB:Knowledge ApplicationDifficulty: 2 Medium14)The factthat we are operating at a point inside a bowed out production possibilitiesfrontier, indicates there isA)scarcity.B)constant opportunity cost.C)unemployment.D)increasing opportunity cost.Answer: CLearning Objective: 01-01Topic: Modeling Opportunity Cost Using the Production Possibilities FrontierBlooms: ApplyAACSB:Knowledge ApplicationDifficulty: 2 Medium15)If the production possibilities frontier is not bowed out but is a line, indicates there isA)scarcity.B)constant opportunity cost.C)unemployment.D)increasing opportunity cost.Answer: BLearning Objective: 01-02Topic: Modeling Opportunity Cost Using the Production Possibilities FrontierBlooms: ApplyAACSB:Knowledge ApplicationDifficulty: 2 Medium

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Page6© 2018by McGraw-Hill Education.This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in anymanner.This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.16)The fact that the productionpossibilities frontier is bowed out indicates there isA)scarcity.B)constant opportunity cost.C)unemployment.D)increasing opportunity cost.Answer: DLearning Objective: 01-02Topic: Modeling Opportunity Cost Using the Production Possibilities FrontierBlooms: ApplyAACSB:Knowledge ApplicationDifficulty: 2 Medium17)The fact that we cannot operate at a point outside a production possibilities frontierindicates there isA)scarcity.B)constant opportunity cost.C)unemployment.D)increasing opportunity cost.Answer: ALearning Objective: 01-01Topic: Modeling Opportunity Cost Using the Production Possibilities FrontierBlooms: ApplyAACSB:Knowledge ApplicationDifficulty: 2 Medium18)Points on the Production Possibilities Frontier areA)attainable.B)unattainable.C)associated with some unemploymentD)bothattainable and unattainable.Answer: ALearning Objective: 01-01Topic: Modeling Opportunity Cost Using the Production Possibilities FrontierBlooms: ApplyAACSB:Knowledge ApplicationDifficulty: 2 Medium

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Page7© 2018by McGraw-Hill Education.This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in anymanner.This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.19)Points inside the Production Possibilities Frontier areA)attainable.B)unattainable.C)associated with some unemployment.D)bothattainable and unattainable.Answer: DLearning Objective: 01-01Topic: Modeling Opportunity Cost Using the Production Possibilities FrontierBlooms: ApplyAACSB:Knowledge ApplicationDifficulty: 2 Medium20)Points outside the Production Possibilities Frontier areA)attainable.B)unattainable.C)associated with some unemployment.D)bothattainable and unattainable.Answer: BLearning Objective: 01-01Topic:Attributes of the Production Possibilities FrontierBlooms: ApplyAACSB:Knowledge ApplicationDifficulty: 2 Medium

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Page8© 2018by McGraw-Hill Education.This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in anymanner.This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.21)In Figure 1.1, which labeled points are attainable?A)only AB)only B and CC)only DD)A, B and CAnswer: DLearning Objective: 01-01Topic:Attributes of the Production Possibilities FrontierBlooms: ApplyAACSB:Knowledge ApplicationDifficulty: 2 Medium

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Page9© 2018by McGraw-Hill Education.This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in anymanner.This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.22)In Figure 1.1, which labeled points are unattainable?A)only AB)only B and CC)only DD)A, B and CAnswer: CLearning Objective: 01-01Topic:Attributes of the Production Possibilities FrontierBlooms: ApplyAACSB:Knowledge ApplicationDifficulty: 2 Medium

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Page10© 2018by McGraw-Hill Education.This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in anymanner.This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.23)In Figure 1.1, which labeled points represent the existence of unemployment?a.only Ab.only B and Cc.only Dd.A, B and CAnswer: ALearning Objective: 01-01Topic:Attributes of the Production Possibilities FrontierBlooms: ApplyAACSB:Knowledge ApplicationDifficulty: 2 Medium

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Page11© 2018by McGraw-Hill Education.This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in anymanner.This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.24)In Figure 1.1, which labeled point indicates that there aresufficient resources andtechnology to produce the combination of goods represented by that point?A)only AB)only B and CC)only DD)A, B and CAnswer: DLearning Objective: 01-01Topic: Attributes of the Production Possibilities FrontierBlooms: ApplyAACSB:Knowledge ApplicationDifficulty: 2 Medium

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Page12© 2018by McGraw-Hill Education.This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in anymanner.This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.25)In Figure 1.1, which labeled point indicates that there are insufficient resources ortechnology to produce the combination of goods represented by that point?A)only AB)only B and CC)only DD)A, B and CAnswer: CLearning Objective: 01-01Topic: Attributes of the Production Possibilities FrontierBlooms: ApplyAACSB:Knowledge ApplicationDifficulty: 2 Medium

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Page13© 2018by McGraw-Hill Education.This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in anymanner.This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.26)InFigure 1.2, which labeled points are attainable?A)only AB)only B and CC)only DD)A, B and CAnswer: DLearning Objective: 01-01Topic: Attributes of the Production Possibilities FrontierBlooms: ApplyAACSB:Knowledge ApplicationDifficulty: 2 Medium

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Page14© 2018by McGraw-Hill Education.This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in anymanner.This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.27)In Figure 1.2, which labeled points are unattainable?A)only AB)only B and CC)only DD)A, Band CAnswer: CLearning Objective: 01-01Topic: Attributes of the Production Possibilities FrontierBlooms: ApplyAACSB:Knowledge ApplicationDifficulty: 2 Medium

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Page15© 2018by McGraw-Hill Education.This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in anymanner.This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.28)In Figure 1.2, which labeled points represent the existence of unemployment?A)only AB)only B and CC)only DD)A, B and CAnswer: ALearning Objective: 01-01Topic: Attributes of the Production Possibilities FrontierBlooms: ApplyAACSB:Knowledge ApplicationDifficulty: 2 Medium

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