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Scarcity, Choice, and the Production Possibilities Curve Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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Question 1 1. Jim has invested $1,000 in government bonds, while he could have invested $500 in a small startup. Calculate the opportunity cost:

Question 2 2. John is considering whether he should work for an hour, or go running for an hour. What is the opportunity cost of going running?

Question 3 3. Why is scarcity central to understanding economics?

Question 4 4. James is considering opening a new line of fast food restaurants. He has a great idea of making many affordable restaurants and hopes to develop his own franchise. He will need to rent some space in order to be able to do so and he will need at least $16,000,000 to start implementing his idea. Why is this an example of the use of factors of production?

Question 5 5. Why are all resources essentially scarce?

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Question 6 6. Which of the following is FALSE regarding incentives?

Question 7 7. Rachel is considering how several factors may help her company's productivity. She is considering using advances in technology, more investment into human capital and she is trying to predict the changing trends in the labor force. Which of the following would be MOST beneficial to this scenario?

Question 8 8. Which of the following is a key assumption of the production possibilities model?

Question 9 9. Rebeca is the CEO of a large marketing company. After paying taxes, her company was left with $18,000,000 of disposable income. She can reinvest this money into her company in infrastructure spending and salary increase, or she can invest it into the stock market. The cost of choosing one over the other is called the _____ cost.

Question 10 10. Tom owns a company and he is analyzing his company's capital structure. Which of the following is he NOT likely to find?

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Question 11 11. Jenifer owns a company which grows and distributes organic food throughout four continents. She is considering going into a joint venture with another company, but she also is considering spending money to increase the satisfaction of her employees. What is a key assumption for her to be able to use opportunity cost to find a solution?

Question 12 12. Provided that other factors remain the same, which of the following would shift an economy's production possibilities curve to the left?

Question 13 13. How are capital goods different from consumer goods?

Question 14 14. Outward shifts (to the right) in the production possibilities curve will result in which of the following?

Question 15 15. Assume that you have two hours to spend at the mall. You can either visit the bookstore or enjoy a movie at the theater. The opportunity cost of watching a movie is equivalent to which of the following?

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Question 16 16. During the time Mary spent studying macroeconomics, she could have instead either made brownies or played the piano. She thinks to herself that if she wasn't studying, then she would have made brownies. In this case, her opportunity cost of studying is equal to which of the following?

Question 17 17. Which of the following best describes opportunity cost?

Question 18 18. It takes Joan 1 hour to make a pizza and 2 hours to make a cake, while Tom can make a pizza in 2 hours and make a cake in 4 hours. Joan's opportunity cost of making a pizza is which of the following?

Question 19 19. With the same amount of resources, Country A can produce 25 tons of chicken or 50 tons of wheat. What is Country A's opportunity cost of producing 1 ton of wheat?

Question 20 20. In one hour, Sally can complete 4 reports or she can write 9 computer programs. Calculate the opportunity cost for this scenario.

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Question 21 21. Carl owns a computer company. On any given day, he can produce either 500 desktop computers or 300 laptops. What's his opportunity cost if he decides to produce desktops?

Question 22 22. A CFO can invest company profits in stocks with projected returns of 10%, or use the money to add a new assembly line, projected to yield 14% after payment of the debt. What is the opportunity cost of investing in stocks instead of the factory upgrade?

Question 23 23.

Which of the following may be a component of a company's capital structure?

I. Long-term debt

II. Short-term debt

III. Equity

Question 24 24. A point that is located inside the production possibility curve is:

Question 25 25. The production possibilities curve for two goods is bowed outward because _____.

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Question 26 26. When a point is on the production possibilities curve and there are no other points specifically on the curve, how can we interpret this point?

Question 27 27. Scarcity means:

Question 28 28. Economics looks at

Question 29 29. The perpetual problem in economics is:

Question 30 30. Why doesn't the output continue to increase on the production possibilities curve?

Scarcity, Choice, and the Production Possibilities Curve Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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