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Exam 1: Economics: the Core Issues

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Question 31

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Table 1.2 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that 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. $\begin{array}{|c|c|c|c|c|}\hline & \begin{array}{c}\text { Number of } \\\text { Stealth } \\\text { Bombers }\end{array} & \begin{array}{c}\text { Opportunity Cost of } \\\text { Stealth Bombers in } \\\text { Terms of B-1 } \\\text { Bombers }\end{array} & \begin{array}{c}\text { Number of } \\\text { B-1 } \\\text { Bombers }\end{array} & \begin{array}{c}\text { Opportunity Cost of B- } \\\text { 1 Bombers in Terms of } \\\text { Stealth Bombers }\end{array} \\\hline \text { A } & 195 & & 20 & \\\hline \text { B } & 180 & & 35 & \\\hline \text { C } & 150 & & 45 & \\\hline \text { D } & 100 & & 50 & \\\hline\end{array}$ Table 1.2 Production Possibilities for Bombers Refer to Table 1.2.In the production range of 20 to 35 B-1 bombers, the opportunity cost of producing 1 more B-1 bomber is

A) 195/20 of Stealth bombers.
B) 35/20 of Stealth bombers.
C) 15 Stealth bombers.
D) 1 Stealth bomber.

E) B) and D)
F) B) and C)

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Question 32

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Explain the concept of inefficiency in terms of a production possibilities curve.

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A production possibilities curve shows p...

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Question 33

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The fact that there are too few resources to satisfy all our wants is attributed to

The doctrine of laissez faire is based on the belief that

Choose the letter of the curve in Figure 1.2 that best represents a production possibilities curve for two goods that obey the law of increasing opportunity costs:

A point on a nation's production possibilities curve represents

The invisible hand refers to

The fundamental problem of economics is

Table 1.2 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that 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. $\begin{array}{|c|c|c|c|c|}\hline & \begin{array}{c}\text { Number of } \\\text { Stealth } \\\text { Bombers }\end{array} & \begin{array}{c}\text { Opportunity Cost of } \\\text { Stealth Bombers in } \\\text { Terms of B-1 } \\\text { Bombers }\end{array} & \begin{array}{c}\text { Number of } \\\text { B-1 } \\\text { Bombers }\end{array} & \begin{array}{c}\text { Opportunity Cost of B- } \\\text { 1 Bombers in Terms of } \\\text { Stealth Bombers }\end{array} \\\hline \text { A } & 195 & & 20 & \\\hline \text { B } & 180 & & 35 & \\\hline \text { C } & 150 & & 45 & \\\hline \text { D } & 100 & & 50 & \\\hline\end{array}$ Table 1.2 Production Possibilities for Bombers The highest opportunity cost anywhere in Table 1.2 for B-1 bombers in terms of Stealth bombers is

Economic models are used by economists to

Which of the following is not a macroeconomic statement?

Scarcity results when available resources cannot satisfy all desired uses of those resources.

Table 1.1 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that 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. $\begin{array}{|c|c|c|c|c|}\hline \text { Combination } & \begin{array}{c}\text { Number } \\\text { of Stealth } \\\text { Bombers }\end{array} & \begin{array}{c}\text { Opportunity cost } \\\text { of Stealth } \\\text { Bombers in } \\\text { Terms of B-1s }\end{array} & \begin{array}{c}\text { Number } \\\text { of B-1s }\end{array} & \begin{array}{c}\text { Opportunity } \\\text { Terms of B-1s in } \\\text { Bombers }\end{array} \\\hline \mathrm{S} & 10 & & 0 & \\\hline \mathrm{T} & 9 & & 1 & \\\hline \mathrm{U} & 7 & & 2 & \\\hline \mathrm{V} & 4 & & 3 & \\\hline\end{array}$ Table 1.1 Production Possibilities for Bombers The highest opportunity cost anywhere in Table 1.1 for B-1 bombers in terms of Stealth bombers is

Table 1.3 shows the hypothetical trade-off between different combinations of brushes and combs that 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. $\begin{array}{|c|c|c|c|c|c|}\hline & \begin{array}{c}\text { Number } \\\text { of } \\\text { Combination }\end{array} & \begin{array}{c}\text { Opportunity Cost } \\\text { of Brushes in } \\\text { Terms } \\\text { of Combs }\end{array} & \begin{array}{c}\text { Number } \\\text { of Combs }\end{array} & \begin{array}{c}\text { Opportunity Cost } \\\text { of Combs in Terms } \\\text { of Brushes }\end{array} \\\hline \mathrm{J} & 0 & & 4 & \\\hline \mathrm{K} & 10 & & 3 & \\\hline \mathrm{L} & 17 & & 2 & \\\hline \mathrm{M} & 21 & & 1 & \\\hline \mathrm{N} & 23 & & 0 & \\\hline\end{array}$ 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

Using Figure 1.3 and starting from PP1, an increase in the capacity to produce can be represented by a movement from

How does the market mechanism answer the WHAT, HOW, and FOR WHOM questions?

A movement from point C to point A in Figure 1.4 results in

In Figure 1.9 the slope of the line is

In Figure 1.9, the slope of the line between points L and M is

Table 1.1 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that 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. $\begin{array}{|c|c|c|c|c|}\hline \text { Combination } & \begin{array}{c}\text { Number } \\\text { of Stealth } \\\text { Bombers }\end{array} & \begin{array}{c}\text { Opportunity cost } \\\text { of Stealth } \\\text { Bombers in } \\\text { Terms of B-1s }\end{array} & \begin{array}{c}\text { Number } \\\text { of B-1s }\end{array} & \begin{array}{c}\text { Opportunity } \\\text { Terms of B-1s in } \\\text { Bombers }\end{array} \\\hline \mathrm{S} & 10 & & 0 & \\\hline \mathrm{T} & 9 & & 1 & \\\hline \mathrm{U} & 7 & & 2 & \\\hline \mathrm{V} & 4 & & 3 & \\\hline\end{array}$ Table 1.1 Production Possibilities for Bombers On the basis of your calculations in Table 1.1, you may infer that the law of increasing opportunity costs applies to