sample test for chapter 1
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7/23/2019 Sample Test for Chapter 1
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award:
10 00
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Wi1ici1Cifihetolkiwiii9 .isr;Citoiieot tile ii1ree.core ec:aiiomic.issuestf1ai ;nusf e resoivea?
r
How to produce the goods and services we select.
_ I
What to produce with unlimited resources.
I Who should get the goods and services we produce .
I What to produce with limited resources.
Resources are not unlimited.
Multiple Choice
Difficulty: 1 Easy
award:
2
10 00
points
3
theunaamentarjif bi em
ot
eon m s s
The law of increasing opportunity costs .
_ I
The scarcity of resources relative to human wants .
I How to get government to operate efficiently .
How to create employment for everyone .
Wants will always exceed resources.
Multiple Choice Difficulty: 1 Easy
award :
10 00
points
;; conseq.uence oitlie ecoiiam-c problem of scardtYis that .
_ I Choices have to be made about how resources are used .
I There is never too much of any good or service produced.
Learning Objective: 01-03 The three
core economic questions that every
society must answer.
Learning Objective: 01-01 How
scarcity creates opportunity costs.
I The production of goods and services must be controlled by the government.
I The production possibilities curve is bowed outward .
Scarcity means choices must
be
made.
Multiple Choice
Difficulty: 1 Easy
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Learning Objective: 01-01 How
scarcity creates opportunity costs.
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4
5
6
award:
10 00
points
\ Vhicticifiiletoilowin9 s.notata.ct'orc;t pr:oc:iu Ctioi1? .
I
A psychiatrist
-> ( The $100,000 used to start a new business .
(
A bulldozer.
I
Six thousand acres
of
farmland .
Land, labor, capital , and entrepreneurship are the factors
of
production. Money does not fall under any category of the
factors of production. Factors of production are what are needed on a camping trip . Money
is
not needed on a
camping trip.
Multiple hoice
Difficulty : 2 Medium
Learning Objective: 01-01 How
scarcity creates opportunity costs.
award:
10 00
points
(
Factors
of
production are also known as resources .
In order to produce any good or service , it is necessary to have factors of production .
I Factors of production include land, labor, capital , and entrepreneurship.
>C
Only those resources that are privately owned are counted as factors of production.
Even resources owned by governments count as factors of production.
Multiple
hoice
award :
10 00
points
Difficulty: 2 Medium
Learning Objective: 01-01 How
scarcity creates opportunity costs.
.... .....
Which ciftile toilowiii.9"i5 '
ihe
.best"exampie
cif
land?
I The ethanol refined from corn .
A factory that produces new goods and services.
-+ The water used to make a soft drink.
I A barber's chair.
If it directly becomes a part
of
the final product, it is land or a raw material. Water used to float a boat
is
the same as a
delivery van.
In
this case it would be capital.
Multiple hoice
Difficulty : 2 Medium
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Learning Objective: 01-01 How
scarcity creates opportunity costs.
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iew
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40
7
8
9
awa
r
:
10.00
points
cai:>itai,
as economists
use
itie ierm: refers
c;
.
r
The money needed to start a new business.
( ; The costs of operating a business .
( Shares o stock issued by businesses.
-- Final goods that are used to produce other goods and services .
Physical capital is used to produce other goods and services, including other capital goods . Hammers produce
houses. Forklifts move forklift parts around a forklift factory. Money is financial capital, which is a throughput. It is used
to
acquire a hammer or physical capital.
Multiple Choice
award:
10.00
points
Difficulty: 1 Easy
Learning Objective: 01-01 How
scarcity creates opportunity costs.
Which
eCOnoniSfarguea
hat'
ree
markets
u l e a s h f t h e ~ : l f i i a l spiriiS 'Oen irtipreneus. iOj:)Sinng innovatiOn
technology, and growth?
Lord Kelvin.
Kenneth Olsen.
{ Irving Fisher.
-- John Maynard Keynes.
Competition leads companies to always try to do something better and more efficiently in order to maximize profits.
Multiple Choice
Difficulty: 1 Easy
award:
10.00
points
Economics.
can
.
:ie
.defined sihe.stlid.
ot
r
For whom resources are allocated to increase efficiency .
{ How society spends the income o individuals .
Learning Objective: 01-01 How
scarcity creates opportunity costs.
--
How scarce resources are allocated on a macro level to best meet society s goals or on a micro level to
best meet an individual s or firm s goals.
r
None of the choices are correct.
Economics studies how we get the most we can out o what we have.
Multiple Choice Difficulty: 1 Easy
Learning Objective: 01-01 How
scarcity creates opportunity costs .
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award:
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points
................. he
gun-
sversus
butter;; dilemma ttia'iaH nations.confront is
.t i lac
.
.
... ..............
11
12
Guns and butter can be produced using the same resources at the same time .
.r
An increase in national defense implies more sacrifices of civilian goods and services.
r
An increase
in
national defense is possible only if we produce more butter.
r
All
of
the choices are correct.
To get more
of
one good, we must sacrifice production
of
other goods. Guns versus butter
is
a figurative way of
expressing the trade-off between defense and civilian goods and services .
ultiple hoice
award:
10 00
points
Difficulty: 1 Easy
Learning Objective:
01
-
01
How
scarcity creates opportunity costs.
liihicil
c;t
itietoilowing .sa:;;a'ssumptionunder which the pr.
odu Ction
.p.o.sslbiiities c-c;;:;;e;
[5
drawn?
Total unemployment is zero.
- .r
The supply
of
resources is fixed.
(
The price level is changing.
( '
Technology is changing.
The production possibilities curve
is
a snapshot
of
a short time frame when resources are fixed .
ultiple hoice
award:
10 00
points
Difficulty: 1 Easy
Learning Objective: 01-02 What the
production-possibilities curve
represents.
..
Which
of
thefoiiCiwing correctiy
ch
.aracterizes.the shape
of
a 'coris'iant'opportu'riity C:ost'produCiiori .pos.sibi'iitiesC'urve?
...
.
r A straight line indicating that the law
of
increasing opportunity costs applies.
- .r
A straight line when there is constant opportunity costs.
A line that curves outward when resources are perfectly adaptable
in
the production
of
different goods.
A line that curves inward when resources are perfectly adaptable
in
the production o f different goods.
A straight-line production possibilities curve means resources are equally adaptable to producing either good.
ultiple hoice
Difficulty: 2 Medium
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Learning Objective : 01-02 What the
production-possibilities curve
represents .
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........................... Accordin9.o.he .
aw
. :i finc.easin9 .of portunity
c:asts
, .
...............
...... ...............................
14.
15.
( Greater production leads to greater inefficiency.
(
Greater production means factor prices rise.
__.( Greater production
o
one good requires increasingly larger sacrifices
o
other goods.
(
Higher opportunity costs induce higher output per unit of input
The opportunity cost rises incrementally as more
o
one particular good is produced.
Multiple Choice
award
10.00
points
Difficulty : 1 Easy
Learning Objective: 01-02 What the
production-possibil ities curve
represents.
ira.,:;
e;c:oiiorliY'e:XiJ
.9i:re
nc:es
inc.easin9 c,r;i)oitlii1i yc:as.s-witii.
espeCi
.a.Wo .
9oods
:ilen.ile.>roduction
possitii iiiies
curve between the two goods will be
__.(
Bowed outward or concave from below.
(
A straight, downward-sloping line.
( Bowed inward or convex from below.
r Bowed outward until the two goods are equal, and then bowed inward.
A bowed-out production possibilities curve means opportunity costs are increasing as we move from one point to
another along the curve.
Multiple Choice
award
10.00
points
Difficulty : 2 Medium
Learning Objective: 01-02 What the
production-possibilities curve
represents.
ittiia uilited.
staies
.ci'ecici'es'iac:c;neit
a.uiomoi:ii'le
aCiories .
o
.
ani< produc:tioii
:as
.ii
did
durii19.wa
ri
awar l:>uti'ii'ds
that some auto manufacturing facilities are not well suited to tank production, then
r The production possibilities curve between tanks and automobiles will appear as a straight line.
r The production possibilities curve between tanks and automobiles will shift outward.
(
Decreasing opportunity costs will occur with greater automobile production .
__.( Increasing opportunity costs will occur with greater tank production.
Factors
o
production, including capital, are specialized , meaning they are generally better suited for one use.
Multiple Choice Difficulty : 3 Hard
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Learning Objective: 01-02 What the
production-possibilities curve
represents.
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Adiy;s -dedsi.
oil tolimit
.
siTioi
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22
award:
10.00
points
1/iihidi cif'thefollowing' is 'noia macroeccinom'ic'siiitem'ei lt?'''' '
' '''' ''
23
r The unemployment rate for the United States rose to 5 percent
in
the last quarter.
r
The Federal Reserve lowered interest rates at its last meeting .
Congress increased the minimum wage rate in January.
__ r Jenny's wage rate rose , and in response, she decided to work more hours.
The wages of a particular worker are a microeconomics topic.
Multiple Choice
award:
10.00
points
Difficulty : 1 Easy
Learning Objective: 01 04 How
market and government approaches
to economic problems diffe
r
file study Ofm icroeco-nomictheory focuses c;nthe
24
__
C: Structure and performance
of
individual markets and the operation
of
the price system.
r
Operation of the entire economy.
r
Role of the banking system in the economy.
Interaction of international trade and domestic production
of
goods and services.
Microeconomics studies how the foundation of an economy and individual markets work.
Multiple Choice
Difficulty: 1 Easy
award:
10.00
points
Microeconomcs
isc ncerne wiih issuessuch s
__ r The demand for bottled water by individuals.
r
The level of inflat ion in the economy.
Maintaining a strong level
of
economic growth.
r All
of
the choices are correct.
The demand for a particular product is a microeconomic topic.
Multiple Choice
Difficulty : 1 Easy
Learning Objective:
01 04
How
market and government approaches
to economic problems differ.
Learning Objective:
01 04
How
market and government approaches
to economic problems differ.
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26
award:
10.00
points
Economic models are use i by. conomists to
r
Predict economic behavior.
r Develop economic policies.
(
Explain economic behavior.
_ r
All
of
the choices are correct.
The economic models are designed to benefit society and prevent us from doing things that lead to lower living
standards.
Multiple hoice
award:
10.00
points
D
Figue 1 1
Difficulty : 1 Easy
o
us n
g
P1oduction Possibilities Curve
Learning Objective: 01-04 How
market and government approaches
to economic problems differ.
At which point
s
society employing some of its available technology but not all of it? See Figure 1.1.)
A
r s.
_
c.
r D.
We could produce more by using the resources we have more efficiently.
Multiple hoice
Difficulty: 2 Medium
Learning Objective: 01-02 What the
production-possibilities curve
represents.
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points
8
D
PP1 PP2
OUTPU
T
OF
PL SMA
TELEVIS
IO
NS
Figure 1 4
A movement from point C to point A in Figure 1.4 results in
(
More efficient production.
( Permanent unemployment of workers producing plasma televisions.
( A reallocation of resources from MP3 player production to plasma television production.
___.(
A reallocation of resources from plasma television production to MP3 player production.
Moving from one point to another on the same production possibilities curve represents changing the combination of
the two goods.
Multiple
hoice
Difficulty : 3 Hard
Learning Objective: 01 02 What the
production possibilities curve
represents.
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points
s
PPl PP
OUTPUT OF
PlASMA
TELEVIS
I
ONS
Figure 1 4
In
Figure 1.4 a shift
of
the production possibilities curve from PP to PP2 could be caused by
( An increase in the unemployment rate.
_,( Implementation of training programs that improve the skills
of
workers.
r A flu epidemic that makes many workers sick.
(
Tougher pollution controls for the producers
of
plasma televisions and MP3 players.
An increase
in
any resource including physical or human capital increases the production possibilities curve.
ultiple
Choice
Difficulty : 3 Hard
Learning Objective: 01-02 What the
production-possibilities curve
represents.
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40
29
award
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points
D
PP PP2
OUTPUT
OF
OUGHNUTS
Figu e 1 5
Using Figure 1.5 if an economy
is
currently producing on PP2 which o the following would shift the production
possibilities curve toward PP1?
( An increase
in
the quantity
o
labor available.
--->( A decrease in the amount
o
capital available.
r An increase
in
the level
o
unemployment above the normal level.
I
An advancement in technology.
If resources decrease the production possibilities curve will shift inward toward the origin.
Multiple
Choice
Difficulty: 3 Hard
Learning Objective: 01-02 What the
production-possibilities curve
represents.
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u
0
t -
: :
a
t -
>
0
Figure 1.6
Page 13 of 40
PP
PP
OUTPUT OF
SUVs
Us
i
ng
Figure 1.6 if
an
economy has the capacity
to
produce represented by
PP1
then point E represents
I A combination of cars and SUVs that
is
not attainable.
A constant trade-off between cars and SUVs.
I A change
in
technology.
_ I
An efficient use of resources.
Any point on the production possibilities curve
is
considered efficient.
ultiple
Choice
Difficulty : 3 Hard
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Learning Objective:
1
- 2What the
production -possibilities curve
represents.
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31
award:
10 00
points
.
....................................
PP PP2
OUTPUT
O SUVs
Figure 1 6
In Figure 1.6, at which of the following points would the opportunity cost of producing one more car be the lowest?
.r F
r s.
r c.
r D
Since most of the economy is devoted to SUV production at point F allowing more resources to go toward car
production would result in only a small loss
of
SUVs (a low opportunity cost) . Since point D is not on a PPC, its
slope cannot not be determined .
Multiple hoice
Difficulty: 3 Hard
Learning Objective: 01 02 What the
production-possibil ities curve
represents.
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points
. . ... . . ......
PP1 PP2
OUTPUT OF SUVs
Figure 1.6
In Figure 1.6 at which
of
the following points would the opportunity cost
of
producing one more
SUV
be highest?
C
A.
r s.
r c.
_ r
F.
Opportunity cost is determined by the slope of the production possibilities curve.
The
slope
is
steepest at point F for
all
of
the possible answers. Since point A is not on a PPC, its slope cannot be determined .
Multiple Choice Difficulty: 3 Hard
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Learning Objective: 01 -02 What the
production-possibilities curve
represents.
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1
:;:)
a..
1
:::
0
0
0
0
u..
-
....
tO
Q
>
\....
Q
0
J l
.
.c:
:;,
-
A
. I
B:
tE
I
0
:
I I
- - - - - - - -
t
IF IH
I I
I I
I I
K L M
ClOTHING OUTPUT
(units per year
Refer to Figure 1.7. This economy will achieve efficiency in production at
I Point D only.
I Point G only.
r
Point J only.
r Points
D,
G, and J.
Page 16 of 40
Any point along the production possibilities curve is considered an efficient point.
Multiple
Choice
Difficulty: 3 Hard
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Learning Objective : 01-02 What the
production-possibilities curve
represents.
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I
B I ff
0
I I
-------- p:-----
IF IH
l I
l I
I I
K L M
CLOTHING OUTPUT
(units per
year
Figu1e 1.7
Refer to Figure 1.7. The cost of producing at point G rather than point
Dis
OA units
of
food .
I KL units of clothing .
_ r
AB units of food.
r
OL units of clothing .
Page 7 o 40
To get additional clothing, food must be given up as resources are shifted out of the food industry.
Multiple Choice
Difficulty: 3 Hard
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Learning Objective: 01-02 What the
production-possibilities curve
represents.
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award:
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points
0
I
t
I
I
I
I I
t
_ _
IF
t
I
I
I
K L M
ClOTHING OUTPUT
{units per
year
Figue 1 7
Refer to Figure 1.7. The benefit of producing at point G rather than point
Dis
O units of food.
_ r KL units
of
clothing.
r
AB units
of
food.
OL units of clothing.
Page
18
o 40
By moving resources out
of
the food industry and into the clothing industry more clothing may be produced .
Multiple Choice Difficulty : 3 Hard
http
I
ezto.mhecloud.mcgraw hill.com/hm. tpx
Learning Objective: 01-02 What the
production-possibilities curve
represents.
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36.
award:
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points
B
0
I
- t.-
,E
I
I I
- - - - - - - - f
IF IH
I
I
I
K L M
, ,N
CLOTHING
OUTPUT
units per year
Figue 1.7
Refer to Figure 1 7. The cost of producing at point D rather than point J is
_.(' KM
units
of
clothing .
('
AC
units of food.
('
OM units
of
clothing .
('
OA units of food.
Page
9 o
40
Additional food may be produced by giving up the opportunity to produce clothing.
Multiple Choice Difficulty: 3 Hard
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Learning Objective: 01-02 What the
production-possibilities curve
represents.
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Print View
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4
37
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1- 'C
t
0.. Q
I
1 >
i
Oc .
B - -
tE-
l
I
l
0
c:
0 s
u
0
Figue 1.7
I I
- - -- - - - -
t:
-
IF :a
I
I
I
K L M
ClOTHING OUTPUT
(units per year
Refer to Figure 1.7. If this economy is currently producing at point F, then by employing more resources this economy
Can move to point D, but not points G
or
J .
__ r Can move to points D, G, or J .
Can move to point
G,
but not points D or J .
(
Will remain at point F.
Inefficient production results when resources are not being fully used. Using more resources moves us toward-in
this case, onto-the production possibilities curve.
Multiple Choice
Difficulty : 3 Hard
Learning Objective: 01-02 What the
production-possibilities curve
represents.
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...................................................................................................
A
B
0
Figute 1.7
I
--------t:E
I
I
I I
,_ - _,- - - - - t t
,F IH
I
I
I
K L M
ClOT:HIING OUTPUT
units per year)
Page 2 o 40
Refer to Figure 1.7. Which of the following points are considered to be inefficient?
r
D
->(' E.
('
G
(' D
G, and J.
Production choices that fall inside the production possibilities curve are considered inefficient.
Multiple
Choice
Difficulty: 3 Hard
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Learning Objective: 01-02 What the
production-possibilities curve
represents.
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points
. . , .
0
Figu e 1.7
f
N
t
E
:J
I I
f:
---
IF IH
I J
I I
I I
K L M
C
LOTHING OUTPUT
units per year
Page 22 of40
Refer to Figure 1.7. Which of the following points show unemployment
of
resources above the normal rate?
_ r
H.
r J.
r
N.
r D
Resources must be unemployed at production levels below the production possibilities curve .
Multiple Choice
Difficulty: 3 Hard
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Learning Objective : 01-02 What the
production-possibilities curve
represents.
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i a l : > i e 1 f s t i o w s i i l e t i y p o t t 1 e t i C : a f i r a d e ~ o H
I : > e i W e e n
r e n l c o m 5 i r i a i i o r i s o f s l e a H h
h o m 5 e r s a n d b o m l : > e r s
t t i a i
might be produced in a year with the limited U.S. capacity, ceteris paribus Complete the table by calculating the
required opportunity costs for both the
B-1
and Stealth bombers.
O
pp
ortunity cost
O p p o r t u n i t ~
N
umb
er
o f S
l t h
Cost
ofB ls
in
of
Stealth
Bombers in
N
umb
er
Tenus
of Stealth
Combination
Bombers
Terms ofB
l
s
ofB
l
s
Bombers
s 10
0
T 9
1
lJ
7
)
v J
.
.
_
.
Table
1 1
Production ssibilities fm Bombers
In the production range of 7 to 9 Stealth bombers, the opportunity cost of producing 1 more Stealth bomber in terms of B
-1s is
o.
r 3.
_ r o.s.
c 2.
In this production range, 2 additional stealth bombers require us to forgo the opportunity to produce one entire
B-1
bomber, or half a B-1 bomber for each Stealth bomber.
Opportunity cost
Number
of
Stealth
of
Stealth Bombers
in
Co
mbinati
on
Bombers
Terms
ofB ls
s
10
T
9
1 1
= 1
tT
7
l
+ 2
= 0.5
y
4
t
1
0 0 '
';
= ,.) ,)
Table 1 1 n ~ w e r s
Multiple
Choice
Difficulty: 3 Hard
Opportunity
Cost
ofB ls
li
Number
Tenus of
Stealth
ofB ls
Bombers
0
1
1
T
1
:::::;:
1
2
2 -;-
1
::::;: )
.., ..,
J
..,
.
;
= ,)
Learning Objective:
01
-
01
How
scarcity creates opportunity costs.
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41
award:
10 00
points
................... i'ahie 1.:fsii.ows
iile
. tiypoiiiet i'cai rade-otfhetvie.enartterent
c:
amhl.riai ions.Cif'steartii.hom5ers.aria o m h
might be produced in a year with the limited U.S. capacity, cet
is paribus Complete the table by calculating the
requ ired opportunity costs for both the B-1 and Stealth bombers.
Oppor
tunity cost
Opportunity
Nu
mber
of
Stealth
Cost o
fB-1
sin
of Stealth
Bo
mbers in
Number
Terms of Stealth
Combination Bombers
Terms of B-ls
ofB
-
ls
Bombers
s
10
0
T
1
l
7
2
\
J
' '
T
ab l
e l l
Pt
oducti o
trl
P
ossibili
ties f o li
o b
ers
The highest opportunity cost anywhere in Table 1.1 for Stealth bombers in terms
of
B-1 bombers is
__ r 1 B-1 bomber per Stealth bomber.
r
3 B-1 bombers per Stealth bomber.
r 2 B-1 bombers per Stealth bomber.
r
0.5 B-1 bomber per Stealth bomber.
This is one of the extreme points on the production possibilities curve where it meets the axis on the Stealth bomber
end.
Op
port
unity c.ost
Number
of
Stealth
of
Stealth
Bombers
in
Combination
Bombers Tenus ofB -ls
s
0
T
1 1
= 1
l
7
1
+ 2
=
0.5
,.
4
J
.
- \
- 0 .
-:- _ -
,. .
T
abl
e 11 An
swe
ts
Multiple Choice
Difficulty : 3 Hard
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Opportunity
Co t of
B-l s in
N
umber
Tenn
.:
of
Stealth
ofB -ls Bombers
0
1 1
1
=
1
2
2
1
= 2
'
...
1
= .i
_
-:-
Learning Objective:
01
-01 How
scarcity creates opportunity costs.
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42
award:
10 00
points
Tat>ie;
:; :s .ows tlle.tiypothet iC:afirade-otf t>etvie.en di.fferentcoilihi'riaiioils.of'.s ea iih . o m b e r s a i C i s ~ ..
might be produced in a year with the limited U.S. capacity, ceteris paribus Complete the table by calculating the
required opportunity costs for both the B-1 and Stealth bombers.
Oppo
rtunity cost
Opportunity
N
umb
er
of
SteaJth Cost
f
B-1
H
in
of Stealth Bombers in
Number
Terms
of
Stealth
Combination Bombers.
Tenn s of
B 1
s ofB -ls
Bombers
s
10
0
T 9
1
u
7
')
v
4
._
, '
T tble 1 1
P1oducdon Possibilities fot Bombers
The highest opportunity cost anywhere in Table 1.1 for B-1 bombers in terms of Stealth bombers is
I 1 Stealth bomber per B-1 bomber.
>r
3 Stealth bombers per
B-1
bomber.
( 2 Stealth bombers per B-1 bomber.
I 0.5 Stealth bomber per
B-1
bomber.
This is one of the extreme points on the production possibilities curve where it meets the axis on the B-1 bomber end.
p p o r
t u n i t
cost
Nmnber
of
Stealth
of Stealth Bombers in
Combination
Bombers Terms ofB -ls
s
[0
T 9
I+
l
;;;::; 1
lT
7
1 + 2 = 0.5
\ .
4
I
1
_: _ -
0
.
_. \
- -,
.
Table 1 1 Answers
Multiple Cho ice
Difficulty : 3 Hard
Opportunity
Cost of B
-l
s in
Number
Terms
of
Stealth
ofB -ls Bombers
0
1
1 1 = 1
)
2 7 1 = 2
.)
;) +
-
Learning Objective: 01-01 How
scarcity creates opportunity costs.
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40
43.
award :
10.00
points
: : r a b i e
1 s t i o w s t i l e
i l ' Y i > o t h e t i c ~ i ' i t r a d e ~ o f i
.. etween.. i f i e r e n t c o m b i l 1 a i i o l 1 5 o i s i e a h h t o m b e r s i i f s ~ b a m b e r s
f i 1 a i
might be produced in a year with the limited U.S. capacity,
ceteris paribus
Complete the table by calculating the
required opportunity costs for both the
B 1
and Stealth bombers.
N
umber
of
Stealth
Combination Bombers
s 10
T 9
tT
7
v 4
Table
1.1
Opp()I tlmity
cost
of
Stealth
Bombers in
Tenus ofB ls
Production
Possibilities fm Bontbers
Number
ofB ls
0
1
2
Opportunity
Cost
of
B-1 s in
Terms of Stealth
Bombers
The lowest opportunity cost anywhere in Table 1.1 for B 1 bombers in terms
of
Stealth bombers is
r
0 Stealth bombers per B 1 bomber.
C,
2 Stealth bombers per B 1 bomber.
_ r 1 Stealth bomber per B 1 bomber.
0.5 Stealth bomber per B 1 bomber.
This
is
one of the extreme points on the production possibilities curve where it meets the axis on the Stealth bomber
end.
Number
of
Stealth
Combination Bombers
s
10
T 9
u
7
ultiple
Choice
I
I
p p o r t u n t ~ cost
of Stealth
Bombers
in
Terms of B ls
1+ 1 = 1
1
;
2
=
0.5
Difficulty: 3 Hard
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Number
ofB
ls
0
1
2
Oppotiunity
Cost
of
B-1 s in
Terms
of
Stealth
Bombers
1 + 1 = 1
2 + 1 = 2
Learning Objective: 01-01 How
scarcity creates opportunity costs.
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44.
award :
10.00
points
fabie 1.2 sil.ows i l e i l y p o t t i e t i c a i i r a d e ~ o t f b e t w e e n a i t t e r e n t c.oiTi6inatioii.s ofstealth bombersanCi f b o i T i 5 e r s tilai
might be produced in a year with the limited U.S. capacity, ceteris paribus Complete the table by calculating the
required opportunity costs for both the B-1 and Stealth bombers.
l
Opportunity Cost of
Number of
Skalth Bomb
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Assignment
Print
View
Page
28 of
4
45.
award:
10.00
points
fable 12"5ilows .
i1e
i l y p o t i l e t i r a C i e ~ o t f 5 e t v : i e e n a i f i e r e n t c o m b t i c i i i s
s i e a
i h h o m b e i s bomhe.
rs
.
ilat
might be produced in a year with the limited U.S. capacity ,
ceteris paribus.
Complete the table by calculating the
required opportunity costs for both the
B-1
and Stealth bombers.
Opportunity Cost
of
Numher
of
Sh alth
Bombers in Number
of
Opportunity Cost
ofR
-
Stealth
Terms
ofB
-1
B-1
1 Bombers in
Tenns of
Combination
Bombers Bombers
Bomber
s Stealth Bombers
. 195
20
B 180
35
(
150 45
D
100
50
.
Ta ble 1.1
rroduction Possibilities fot Bombers
On the basis of your calculations in Table 1.2 what is gained by producing at point B rather than po int A?
r
35 B-1 bombers.
( ' 195 Stealth bombers.
.r 15 B-1
bombers.
( ' 15 Stealth bombers.
Reallocating resources to
B-1
bombers will allow 15 35- 20) B-1 bombers to be produced .
I
Opportunity
C o ~ t
of
umber
of
Stealth Bombers in
Stealth
Tenus ofB
-1
Combination Bombers Bombers
_\
I
195
B
180 5 15 1
c
1
50
10 30:::: 0.33
D
100
5
5 =
O.l
Table 12
Ans
wers
Multiple Choice
Difficulty : 3 Hard
http:/ /ezto mhecloud.mcgraw-hill.corn/hm.
tpx
Number
of
Opportunity Cost
ofB
-
B-1 l
Bombers in T
enns of
Bombers Stealth Bombers
20
-..
1
5 15
1
4 5
3
+ 1
=
3
50 50 5
=
10
Learning Objective:
01
-
01
How
scarcity creates opportunity costs.
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46.
award:
10.00
points
i'a&i9
'
:3
'
5ti
.
ows
f e
..
i y i o i f 1 e i i c a i i r a C i e ~ o f : r e ; t : . : v e ; e ; i 1 o n ; h r r i a : i o f h r u s f l e 5 a r i C I o m h s i f 1 a t 9 t i t p r o J u c e a
in a year with the limited capacity for Country X,
ceteris paribus
Complete the table by calculating the required
opportunity costs for brushes and combs.
O
pp
ortunity Cost
Number
of Brushes in Opportunity Cost
of Terms
: lumber
of
Combs in Terms
Combination Bmshes
of
Combs
of
Combs of
Brushes
J 0
4
K
10
..
L
17 2
M
21 1
N 23 0
Table 1.3
Production Possibilities for Brushes and Combs
On the basis
o
your calculations in Table 1 3, what is gained by producing at point M rather than point N?
r
23 combs.
r 21 combs.
_ r 1 comb.
(
2 combs.
Sh
ifting resources toward production
o
combs allows for greater comb production (1 - 0).
O
pp
ortunity Cost
Number
of Brushes in
of
T
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award:
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tabie1:3.
5tiows
.
itie
..
l y p o i t i e t k : a f i r a d e ~ o f i
b e t w e e i l a Y f i e r e n c o r l i b f r 1 a i i o r 1 5 o i h r u s
t i e s a r 1 a
c : c ; r r ; t i t i a f
r r ; i 9 h i . 5 9
proauc:ea
in
a year with the limited capacity for Country
X ceteris paribus.
Complete the table
by
calculating the required
opportunity costs for brushes and combs.
Opportunity Cost
Number
ofBnn:hes in
Oppm1unity
Cost
of
Terms
~ u m e r
of
Combs in Terms
Combi11ation
Brushes
of
Co
mb
s
of Combs
of Brushes
J 0
4
K
10
3
L
17
2
M
21
1
N
-
0
Table 1.3
Production Possibilities for Brushes ami
Combs
On the basis of your calculations in Table 1.3 what is gained from producing at point L rather than point
K?
I 17 combs.
10 combs.
1 brush.
__.( 7 brushes.
Shifting resources toward production of brushes allows for greater brush production
17-
10 .
Number
of
Combination B111sltes
J 0
K
10
L
17
M
21
N
23
Table 1.3 Answers
Multiple Choice
Opportunity Cost
ofBrushes
in
Terms
of Combs
1710
=
0.10
177 =0
.
14
1
+
4 = 0.25
1 + 2 = 0.50
Difficulty: 3 Hard
Opportunity Cost
~ u m e r
ofCombs in
Tenus
of Combs
ofBnlshes
4
3
I
10
7 1
=
10
2
i
7 1=7
I
1
I
4
;
1 = 4
0
2 1
=2
Learning Objective: 01-01 How
scarcity creates opportunity costs.
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48.
award:
10.00
points
Ta6ie1
:
35tiow5 i l e i l Y i > o i i l e t i C : a f i r a d e ~ o H b e t w e a i f i e r e o m i n i i o n o T h r l i s f 1 e s and
.
com55
.
if1afmi911i
be
proa
ucea
in a year with the limited capacity for Country X
ceteris paribus
Complete the table by calculating the required
opportunity costs for brushes and combs .
Opportunity Cost
Number
of Brushes in
Opportunity Cost
of
Terms )Jumber
ofCombs in Terms
Co
mbination
Bntshe of Combs
of Combs
of
Brushes
J
0
4
K 10
..
_
L
17
2
M 21
1
N
' ) '
-
0
Table 1.3
Prmluction Possibilities for Brushes and Combs
On
the basis of your calculations in Table 1.3 the law of increasing opportunity costs applies to
>r
Both brushes
and
combs.
Combs but not brushes.
r
Brushes but not combs.
I Neither brushes nor combs.
A production possibilities curve will be bowed out from the origin where there are increasing opportunity costs.
Opportunity Cost
Number
of Bt1lshes
in
of Terms
Combittation Brushes
of
Combs
J
0
K 10
1 7 10 = 0.10
L 17
7 7=0.
14
~ v (
21
1
.;.
4 = 0.25
N 23 1 .;. 2
=
0.50
Table 1.3 Answers
Multiple hoice
Difficulty: 3 Hard
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Opportunity Cost
Jumber
ofCombs
in
Terms
of Combs
ofBrushes
4
i
3
10
l = 10
2
7-7-1=7
1
4+ 1=4
0
I
I
2.; .1=2
Learning Objective: 01-01 How
scarcity creates opportunity costs.
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Assignment
Print
View
Page 32
of
4
49.
award:
10.00
points
fabie 1.35ti.ow5.ifle t i y i o t h e t f r a i e o f 6 e t w e e n dittererit.comhi.riations.of'5-us'hes
anci com55 .i
i1a
t mi
9'h't
.he
pr
oCiucea
in a year with the limited capacity for Country X, ceteris paribus
Complete the table by calculating the required
opportunity costs for brushes and combs.
Opportunity
Co
st
Number
of Brushes in
Opportunity Cost
of
Terms
::.lum
ber
of
Combs in
Tenu
s
Combination
Bms
hes
of Combs
of
Co
mbs
ofBrushes
J 0
4
K
10
3
L
17
2
M
21
1
N
-'
0
Table 1.3
Pr
oduction Possibilities for Brushes anc:l
Combs
On the basis of your calculations
in
Table 1.3,
in
the production range of 2 to 3 combs the opportunity cost of producing
1 more comb in terms
of
brushes is
r
3.33.
(
7.0.
r
o.67.
r
o.14.
Shifting resources toward more combs requires a drop in the production
of
brushes.
Opportunity Cost
N
umb
er of Brushes in
of
Terms
Combination Bm shes of Combs
J 0
K
10
1-:-10 = 0.10
L 17
1-:-7 = 0.14
lvf 21
1 ..;. 4 = 0.25
N
2 '
I
..;..
2
=
0.50
T11ble
1.3 An
s
wer
s
Multiple Choice Difficulty: 3 Hard
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Opportunity
Cos
t
Number
of
Combs in Te
nu
s
of
Combs
of Brushes
4
3
I
I
10-:-1 = 10
2
I
7 :
1 = 7
1
I
4 .;.. 1= 4
0
I
2 .;.. 1 = 2
Learning Object ive: 01-01 H
ow
scarcity creates opportunity costs.
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of
40
award:
50
10.00
points
ra5i91:3.5iiows tfie i y i > o t h e t i C : a T i r a d e ~ o t t e t w e e n
a i i f e
r , t e : c ; n ; b r r a t i o r 5 o f b r i J s i i e s a r 1 C i c o m s t i i a t m i ~ i h i i > r o d u c e d
in a year with the limited capacity for Country X, ceteris paribus Complete the table by calculating the required
opportunity costs for brushes and combs.
Opportunity Cost
Number
of r u s h ~
s
in
Oppmiunity
Cost
of
Terms
~ u m b e r
of Combs in Tenus
Combination
Bmshes
of
Combs
of Combs
of
Brushes
J
0
4
K 10
3
L
17
2
1v[
21
1
N
23
0
Table
1.3
Production
Possibilities
for
Brushes
anti
Combs
On the basis
o
your calculations
in
Table 1.
3,
in the production range
o 21
to 23 brushes the opportunity cost
o
producing more comb
in
terms
o
brushes
is
r 1/21 .
21/23.
_ r
1/2.
4.
Shifting resources toward more brushes (2) requires a drop
in
the production
o
combs 1 ). Therefore for each 1
brush, Y a comb is given up
1
divided by 2).
Opportunity Cost
Number
ofBrushes
in
of Terms
Combination
Bmshes
of
Combs
J
0
K 10
1 : 10
=0
.10
L 17
1 7
=0 .14
} ;{
21
1 ; 4 = 0.25
N
23
1 ;
2 = 0.50
Table
1.3 Answers
Multiple Choice Difficulty : 3 Hard
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Opportunity Cost
~ u m b e r
ofCombs
in Terms
of
Combs
of
Brushes
4
3
I
10 -i-
1 = 10
2
I
7-:-1=7
I
1
I
4 1=4
0
I
2 1
= 2
Learning Objective: 01-01 How
scarcity creates opportunity costs .
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51.
award:
10.00
points
. . i abie 1 3shows the hypotheticaf r d e ~ o f f between different'combinations'
of
hrus.hesand'comtisthat might be-produced
in a year with the limited capacity for Country
X
ceteris paribus Complete the table by calculating the required
opportunity costs for brushes and combs.
Opportunity Cost
Number
of
Brushes in
Opportunity Cost
of
Terms
:.I
umber
of
Combs in Terms
Combination
Bmshes
of Combs.
of Combs
of
Brushes
J
0
4
K
10
3
L
17
)
M
21
1
N
23
.
0
Table 1.3
Production Possibilities for Brushes and Combs
On
the basis of your calculations
in
Table 1.3,
in
the production range
of
1 to 2 combs the opportunity cost
of
producing
1 more comb
in
terms
of
brushes is
_ r 4.
( 1/2.
r 2111
( 1/7.
Shifting resources toward more combs requires a drop in the production
of
brushes.
Opportunity Cost
Numbet
ofBrushes
in
of
Terms
Combination Bmsltes of Combs
J
0
K
10
1..;-10
=0 .10
L
17
1..;-7
=0
14
lvf
21 1.;. 4
=
0.25
N l.;. 2 = 0.50
~ l b l e 1.3 Answers
Multiple Choice Difficulty : 3 Hard
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Opportunity Cost
:.I
umber
ofCombs
in Terms
of
Combs
I
ofBrushes
4
3
I I
10..;-1 = 10
2
7..;-1 = 7
1
I
I
4 ; 1=4
0
I
I
2+1=2
I
Learning Objective: 01-01 How
scarcity creates opportunity costs.
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Assignment Print View
Page 35 of 40
52.
awa
rd
:
10.00
points
.
....
. faiJie 1
Ssti
.ows ttie
t i y p o t i l e t r a d e i e t w e e n
di fferen
t c
cimbinations ot b
ru
s
h
es .and combs.ttiat .mi9 hi.tie produced.
in
a year with the limited capacity for Country X , ceteris paribus. Complete the table by calculating the requ ired
opportunity costs for brushes and combs.
Opportuni ty Cost
Number
o
fB
rushes in
Oppmiunity Cost
of
Terms
:.lumber
of Combs in Tenus
Combination
Brushes of Co
mb
s
of Combs
ofBr
ushes
J 0
4
K 10
'
L
17 2
M
21 1
N
?'
.
0
Table 1.3
Pr
oduction
Possibilities for Bru shes and Combs
On the basis
of
your calculations
in
Table 1.3, the highest opportunity cost for brushes
in
terms
of
combs is
( 0.10 comb per brush .
(
23 combs per brush.
__.(
0.50 comb per brush .
( 0.29 comb per brush.
This is a point where the production possibilities curve touches the axis. The opportunity costs are 0.1 0, 0.14, 0.25,
and 0.5, respectively , as
we
increase brush production.
Oppormnity Cost
Number of B
ru
shes in
of
Terms
Combination Brushes
of
Co
mb
s
J
0
K
10
1 7 10 = 0 10
L
17
17
7 = 0.14
vf
21
1 7 4 = 0.25
N
,
1 + 2 = 0 50
T ~ l b l e 1.3 An
sw
ers
Multiple
Choice
Difficulty: 3 Hard
http:/ ezto.mhecloud.mcgraw-hill.comlhm.tpx
Op
port
unity Cost
:Jumber
of
Combs in
Ten
us
of Combs
of
Br
ushes
4
3
2
1
0
17 = 10
I
77
= 7
I
4+
1= 4
I
2+
1 = 2
Learning Objective:
01
-02 What the
production-possibilities curve
represents.
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36/40
Assignment Print View
Page 36 of40
53.
award:
10.00
points
................. .
........
ffibi9
1. ShOWS .ih9
hYPOihE tiC8
fi
rade ot
f
betwe
en
different
com'binaiiO.
l S
.Ofhrush9S
8nd
COrrlbS ihat
might b9
poauced
n
a year with the limited capacity for Country X,
ceteris paribus
Complete the table by calculating the required
opportunity costs for brushes and combs .
Opportunity Cost
Number of
Brushes
in
Opportunity Cost
of
Tenns
~ u
of Co
mb
s in Terms
Co mbi1tr 2 brushes per comb.
r 0.33 brush per comb.
8.5 brushes
per
comb.
This is a point where the production possibilities curve touches the axis. For each combination , the opportunity costs
for 1 comb are 10, 7, 4, and 2.
Oppl)ft\lnity Cost
Number
of
Brushes
in
of
Tenn s
Combination Bntshes
of
Combs
J 0
K
10
1-;-10=0 .10
L
17
}-;-7 =0. 14
}v(
21
1 ; 4 = 0.25
N
2:1
1
.;.
2 = 0.50
~ l b l e
1.3 Answers
Multiple hoice
Difficulty: 3 Hard
http:/ ezto .mhecloud.mcgraw-hill.com/hm. tpx
Opportunity Cost
:'-Jumber
of Co
mbs in Terms
of
Combs
I
ofBrushes
4
3
2
1
0
I
I
10 ; 1
=
10
7-;-1 = 7
I
4 ; 1=4
I
2 ; 1=2
Learning Objective: 01-02 What the
production-possibilities curve
represents.
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Assignment Print View
Page 37 of 40
54.
award:
10.00
points
. . . .
.......
.
4 5
4.0
3.5
3.0
2 5
2.0
l.S
l O
5
Figure
1.8
1
0
20 30
S
TUD
Y
TIME
Rehding t ~ d e s
and
Hours Studied
Figure 1.8 suggests that
40
The law o increasing opportunity cost does not apply.
5 ]
Resources can be perfectly adapted between study time and grade po int average.
_
The relationship between study time and grade point average is first linear then nonlinea
r
The relationship between study time and grade point average is constant.
The function beg ins with a constant positive slope and then
it
becomes nonconstant
Multiple Choice
Difficulty : 2 Med ium
Learning Objective: 01-02 What the
production-possibil ities curve
represents.
http ://ezto.mhecloud.mcgraw hill.com/hm.tpx
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Assignment Print View
55
award:
10.00
points
y
80
50
30
15
0
25 50
7
Figure 1 9
Ivf
100
In
Figure 1.9 the slope
o
the line between points K and L is
r 1.25.
_.r
o.
8o
.
o. .
o.
6o
.
Page 38 of 40
x
The slope
is
calculated as the change
in
the vertical variable divided by the change
in
the horizontal variable 0.80 =
20/25).
Multiple Choice
Difficulty: 2 Medium
http:/ e zio .mhecloud.mcgraw hill.comlhm. tpx
Learning Objective: 01 -01 How
scarcity creates opportunity costs .
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award:
56
10 00
points
....... ..
.
. .
y
80
50
3
5
0
25
50 75
Figure 1 9
In Figure 1.9 the slope of the line is
Greater at point K than point L
Equal
to
zero at all points.
The same at points J and K.
___,( , Greater at point M than point L
Page 39 of 40
100
The slope increases as we move from left to right because the curve is getting steeper.
57
Multiple
hoice
award:
10 00
points
Difficulty: 2 Medium
Learning Objective: 01-01 How
scarcity creates opportunity costs.
iiius
.
i19
a
9i.Ji1s alid
6liiter
.
proauc:Hc;
i
possibiiiiiescuiVe
wiifl.
ncreasii19
.
opportui1iiY
c:ost
p; oaudil9
:nc;;.9
ar;a
:nc:i;.e
tanks
(
Lowers the cost
of
each individual tank.
r Can be done at a constant opportunity cost.
_ r Requires us to give up larger and larger amounts of butter per tank produced.
Is not possible due to scarcity.
This is because
of
the law
of
increasing opportunity cost.
Multiple
Choice
Difficulty: 3 Hard
Learning Objective: 01-01 How
scarcity creates opportunity costs.
http:/
ezJ o
.mhecloud.mcgraw hill.corn/hm. px
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Assignment Print View
58
award :
10 00
points
Page 40 of4
G.reaier.re9Liiaiion.
io
correc:tiile.i m5alai1ces.iii ttie.economy:-a;;;ei 9overnmeili . i1teiVentioii .
io
;:naintaintull
employment, was associated primarily with the work of
.1 John Maynard Keynes.
I Adam Smith.
I Karl Marx.
I Ronald Reagan.
This forms the basis of the Keynesian school of economics.
Multiple
Choice Difficulty :
2
Medium
Learning Objective: -04 How
market and government approaches
to economic problems differ.