The Ideal Quiz On The Economizing Problem
There are unlimited demands and not enough resources to meet these demands, is what leads to the economizing problem. Take this true and false review questions for McConnell and Brue 15th ed and see how much of the chapter you understood. All the best and keep an eye out for more quizzes.
Questions and Answers
- 1.
The conflict between the scarce economic wants of society and its limited resources gives rise to the economizing problem.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The statement is false because the conflict between scarce economic wants and limited resources does not give rise to the economizing problem. The economizing problem is actually caused by the unlimited wants of individuals and the limited resources available to satisfy those wants. This conflict leads to the need for individuals and societies to make choices and prioritize their wants in order to allocate resources efficiently.Rate this question:
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- 2.
The wants with which economics is concerned include only those wants that can be satisfied by goods and services.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Economics is concerned with wants that can be satisfied by goods and services because it focuses on the allocation of scarce resources to fulfill these wants. The study of economics revolves around analyzing how individuals, businesses, and governments make choices to satisfy their needs and desires through the production, distribution, and consumption of goods and services. Therefore, the statement that economics is concerned with wants that can be satisfied by goods and services is true.Rate this question:
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- 3.
Money is a resource called capital.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
Money is not a resource called capital. While money can be used as a form of capital, capital refers to a broader range of resources such as machinery, equipment, and buildings that are used in the production of goods and services. Money is simply a medium of exchange that facilitates transactions. Therefore, the statement is false.Rate this question:
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- 4.
From the economist's perspective, investment refers to the production and purchase of capitals goods.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
From an economist's perspective, investment refers to the production and purchase of capital goods. This means that when individuals or businesses invest, they are using their resources to produce or acquire assets such as machinery, equipment, or buildings that are used to generate income or increase productivity. This definition aligns with the understanding that investment is a key driver of economic growth and development, as it leads to increased production capacity and potential for future returns.Rate this question:
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- 5.
The payment to entrepreneurial ability is interest income.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The given statement is false. The payment to entrepreneurial ability is not interest income. Entrepreneurs are typically rewarded with profits, which are the returns they receive for taking risks and successfully managing their business ventures. Interest income, on the other hand, refers to the earnings generated from lending money or investing in financial instruments. So, the correct answer is false.Rate this question:
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- 6.
Resources are scarce because society's material wants are unlimited and productive resources are limited.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Resources are considered scarce because society's material wants are unlimited, meaning that people always desire more goods and services than can be produced. At the same time, productive resources, such as land, labor, and capital, are limited in quantity. This creates a situation where demand for resources exceeds their availability, leading to scarcity. Therefore, the statement that resources are scarce because society's material wants are unlimited and productive resources are limited is true.Rate this question:
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- 7.
Economic efficiency requires that there be both full employment of resources and full production.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Economic efficiency is achieved when resources are utilized to their maximum potential and when production is at its highest level. Full employment of resources means that all available resources, such as labor, capital, and natural resources, are being utilized effectively. Full production means that the economy is operating at its maximum capacity and producing the highest possible output. Therefore, the statement that economic efficiency requires both full employment of resources and full production is true.Rate this question:
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- 8.
Allocative efficiency means that goods and services are being produced by society in the least costly way.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
Allocative efficiency means that goods and services are being produced in a way that maximizes society's welfare or satisfaction. It is not necessarily about producing them in the least costly way. Therefore, the statement is false.Rate this question:
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- 9.
Only allocative efficiency is necessary for there to be full production.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
Allocative efficiency refers to the optimal allocation of resources in order to produce the right combination of goods and services that maximizes societal welfare. While allocative efficiency is important for full production, it is not the only factor necessary. In addition to allocative efficiency, productive efficiency is also required for full production, which means producing goods and services at the lowest possible cost. Therefore, the statement that only allocative efficiency is necessary for full production is false.Rate this question:
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- 10.
The opportunity cost of producing antipollution devices is the other goods and services the economy is unable to produce because it has decided to produce these devices.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The statement is true because the opportunity cost refers to the value of the next best alternative that is forgone when making a decision. In this case, by choosing to produce antipollution devices, the economy is giving up the production of other goods and services. This means that resources such as labor, capital, and materials are being allocated towards the production of antipollution devices instead of being used for other purposes. Therefore, the opportunity cost of producing antipollution devices is indeed the other goods and services that the economy is unable to produce.Rate this question:
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- 11.
The opportunity cost of producing a good tends to be increase as more of it is produced because resources less suitable to its production must be employed.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
As more of a good is produced, resources that are less suitable for its production have to be utilized, resulting in a higher opportunity cost. This means that the production of additional units of the good comes at the expense of producing other goods that could have been produced using those resources. Therefore, the opportunity cost of producing a good tends to increase as more of it is produced.Rate this question:
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- 12.
Drawing a production possibilities curve concave to the origin is the geometric way of stating the law of increasing opportunity costs.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Drawing a production possibilities curve concave to the origin means that as more of one good is produced, the opportunity cost of producing additional units of that good increases. This is because resources are not equally suited for producing both goods, and as more resources are allocated to one good, the resources that are best suited for producing the other good are being used less efficiently. Therefore, the curve being concave to the origin is a graphical representation of the law of increasing opportunity costs, making the statement true.Rate this question:
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- 13.
Economic rationale for the law of increasing opportunity costs is that economic resources are fully adaptable to alternative uses.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The economic rationale for the law of increasing opportunity costs is that economic resources are NOT fully adaptable to alternative uses. This means that as more resources are allocated to the production of a particular good, the opportunity cost of producing additional units of that good increases. This is because resources are not equally suited for all uses and have varying levels of productivity in different industries. As resources are shifted from one industry to another, their productivity may decrease, leading to higher opportunity costs. Therefore, the statement is false.Rate this question:
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- 14.
Allocative efficiency is determined by assessing the marginal costs and benefits of the output from the allocation of resources to production.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Allocative efficiency refers to the optimal allocation of resources in order to produce the maximum output. It is determined by comparing the marginal costs (the additional cost of producing one more unit) and the marginal benefits (the additional benefit gained from producing one more unit). If the marginal benefits outweigh the marginal costs, then the allocation of resources is considered allocatively efficient. Therefore, the given statement is true as it accurately describes how allocative efficiency is determined.Rate this question:
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- 15.
The marginal-cost curve for a product rises because of increasing satisfaction from the consumption of the product.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
The marginal-cost curve for a product does not rise because of increasing satisfaction from the consumption of the product. The marginal-cost curve represents the additional cost incurred for producing one more unit of a product. It typically rises due to factors such as diminishing returns, where the cost of additional inputs increases as production levels increase. Therefore, the statement is false.Rate this question:
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- 16.
Given full employment and full production, it is not possible for an economy capable of producing just two goods to increase its production of both at any one point in time.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
In an economy with full employment and full production, resources are already fully utilized to produce the maximum output of goods. Therefore, it is not possible to increase the production of both goods simultaneously without additional resources or technological advancements. This is because any increase in the production of one good would require diverting resources away from the production of the other good, resulting in a decrease in its production. Hence, the statement is true.Rate this question:
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- 17.
Economic growth means an increase in the production of goods and services, and is shown by a movement of the PPC outward and to the right.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Economic growth refers to an expansion in the output of goods and services within an economy. This is typically represented by a shift of the production possibilities curve (PPC) outward and to the right. As the economy becomes more productive and efficient, it can produce more goods and services, leading to economic growth. Therefore, the statement that economic growth is shown by a movement of the PPC outward and to the right is true.Rate this question:
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- 18.
The more capital goods an economy produces today, the greater will be the total output of all goods it can produce in the future, all things being equal.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
This statement is based on the concept of investment and capital accumulation. By producing more capital goods today, such as machinery and equipment, an economy can increase its productive capacity in the future. This is because capital goods are used to produce other goods and services, so having more of them allows for higher levels of production. Therefore, if all other factors remain constant, producing more capital goods today will result in a greater total output of all goods in the future.Rate this question:
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- 19.
International specialization and trade permit an economy to overcome the limits imposed by domestic production possibilities and have the same effect on the economy as having more or better resources.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
International specialization and trade allow an economy to access resources and goods that may not be available domestically. By engaging in trade, countries can focus on producing goods and services that they have a comparative advantage in, and then import goods and services that they are less efficient at producing. This leads to increased efficiency and productivity, as well as a wider variety of goods and services available to consumers. Overall, international specialization and trade can help an economy overcome the limitations of domestic production possibilities and have a similar effect as having more or better resources.Rate this question:
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- 20.
The elimination of widespread discrimination based on race, ethnicity, or religion in an economy would move it from a point inside the PPC toward a point on its curve.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The elimination of widespread discrimination based on race, ethnicity, or religion in an economy would lead to a more inclusive and diverse workforce. This would result in increased productivity and efficiency, as people would be hired and promoted based on their skills and qualifications rather than their race, ethnicity, or religion. As a result, the economy would be able to produce more goods and services, moving it from a point inside the production possibilities curve (PPC) to a point on the curve. Therefore, the statement is true.Rate this question:
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- 21.
Pure capitalism is called laissez-faire capitalism.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
Laissez-faire capitalism refers to a system where the government does not interfere in economic activities, allowing individuals and businesses to operate freely without regulations or restrictions. Pure capitalism, which is synonymous with laissez-faire capitalism, follows this principle of minimal government intervention. Therefore, the given statement is true.Rate this question:
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- 22.
A command economy is characterized by the private ownership of resources and the use of markets and prices to coordinate and direct economic activity.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
A command economy is actually characterized by the government or a central authority owning and controlling most, if not all, resources and making decisions about production, distribution, and pricing. In a command economy, markets and prices are not used to coordinate economic activity as they are in a market economy. Instead, the government dictates what goods and services are produced, how much is produced, and how they are distributed. Therefore, the statement that a command economy is characterized by private ownership of resources and the use of markets and prices is false.Rate this question:
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- 23.
Russia and most nations in Eastern Europe have been transforming their economies from a command to market system since the demise of the former Soviet Union.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The statement is true because after the collapse of the Soviet Union, Russia and many Eastern European nations shifted their economies from a command system, where the government controlled production and distribution, to a market system, where supply and demand determine economic activities. This transition involved privatizing state-owned enterprises, liberalizing trade and investment policies, and implementing market-oriented reforms to encourage competition and entrepreneurship.Rate this question:
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- 24.
In the circular flow model, households function on the buying side of the resource and product markets.
- A.
True
- B.
False
Correct Answer
B. FalseExplanation
In the circular flow model, households function on the selling side of the resource and product markets. This means that households provide resources, such as labor, land, and capital, to businesses in exchange for income. They then use this income to buy goods and services from businesses in the product market. Therefore, the statement that households function on the buying side of the resource and product markets is incorrect.Rate this question:
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- 25.
In the circular flow model, there is a real flow f economic resources and finished goods and services and a money flow of income and consumption expenditures.
- A.
True
- B.
False
Correct Answer
A. TrueExplanation
The circular flow model is a representation of how money, goods, and services flow through the economy. It shows that there is a real flow of economic resources and finished goods and services, meaning that resources are used to produce goods and services which are then consumed by households. Additionally, there is a money flow of income and consumption expenditures, indicating that households receive income from selling their resources and use that income to purchase goods and services. Therefore, the given statement is true.Rate this question:
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Mar 18, 2023Quiz Edited by
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