Test Bank For The Exploration of Economics International Edition 6th Edition by Robert L. Sexton
Chapter 3—Scarcity, Trade-Offs, and Production Possibilities
TRUE/FALSE
1.In a market economy, government officials make most production decisions in a centralized manner.
ANS:FPTS:1REF:p. 75
TOP: 3.1 The Three Economic Questions Every Society Faces | What Goods and Services Will Be Produced?
2.Consumer sovereignty means that consumers vote with their dollars in a market economy, which helps determine what is produced.
ANS:TPTS:1REF:p. 75
TOP: 3.1 The Three Economic Questions Every Society Faces | What Goods and Services Will Be Produced?
3.In a market economy, prices help determine the distribution of goods and services but not the allocation of resources.
ANS:FPTS:1REF:p. 76
TOP: 3.1 The Three Economic Questions Every Society Faces | How Will the Goods and Services Be Produced?
4.An increase in production of one good will have zero opportunity cost only if the economy initially existed at a point inside the production possibilities curve.
ANS:TPTS:1REF:p. 82
TOP: 3.3 The Production Possibilities Curve | The Production Possibilities Curve
5.Capital-intensive production techniques tend to be utilized most commonly in countries where labor is relatively cheap.
ANS:FPTS:1REF:p. 76
TOP: 3.1 The Three Economic Questions Every Society Faces | How Will the Goods and Services Be Produced?
6.High wage countries like the United States tend to use less labor-intensive production methods than low wage countries like Mexico.
ANS:TPTS:1REF:p. 76
TOP: 3.1 The Three Economic Questions Every Society Faces | How Will the Goods and Services Be Produced?
7.An economy that has many unemployed workers and idle factories is not operating efficiently.
ANS:TPTS:1REF:p. 84
TOP: 3.3 The Production Possibilities Curve | Inefficiency and Efficiency
8.The production possibilities curve marks the boundary between attainable and unattainable combinations of output.
ANS:TPTS:1REF:p. 81
TOP: 3.3 The Production Possibilities Curve | The Production Possibilities Curve
9.Any output combination outside the production possibilities curve is attainable in the current period only if prices decrease.
ANS:FPTS:1REF:p. 81
TOP: 3.3 The Production Possibilities Curve | The Production Possibilities Curve
10.A decrease in the unemployment rate will shift an economy’s production possibilities curve outward.
ANS:FPTS:1REF:p. 84
TOP: 3.3 The Production Possibilities Curve | Inefficiency and Efficiency
11.An increase in available resources will tend to cause a society’s production possibilities curve to shift inward.
ANS:FPTS:1REF:p. 87
TOP: 3.4 Economic Growth and the Production Possibilities Curve | Generating Economic Growth
12.An improvement in technology will tend to cause a society’s production possibilities curve to shift outward.
ANS:TPTS:1REF:p. 87
TOP: 3.4 Economic Growth and the Production Possibilities Curve | Generating Economic Growth
13.The opportunity cost of a particular good tends to increase with its rate of output because some resources cannot be easily adapted from the production of one good or service to another.
ANS:TPTS:1REF:p. 84
TOP: 3.3 The Production Possibilities Curve | The Law of Increasing Opportunity Cost
14.The production possibilities curve for an economy that experiences a constant opportunity cost of production is linear (a straight line).
ANS:TPTS:1REF:p. 84
TOP: 3.3 The Production Possibilities Curve | The Production Possibilities Curve
15.The law of increasing opportunity costs implies that a society’s production possibilities curve will be a straight line.
ANS:FPTS:1REF:p. 84
TOP: 3.3 The Production Possibilities Curve | The Law of Increasing Opportunity Cost
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