AnswersLA-Financial Math ATopic Test

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1
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A production possibilities frontier represents the different choices or trade-offs a society faces.

A
T
B
F
2
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An efficient economy is one that

A
has very few people who do not work for a living.
B
makes the best use of some its goods and services.
C
uses its resources to make the most goods and services.
D
makes the least costly use of its resources.
3

Which of the following is the kind of decision that can be made at the margin?

A
whether or not to hire new workers
B
whether or not to go on a vacation
C
whether or not to build an extra room on a home
D
whether to have a dog or a cat as a pet
4

“Choosing is Refusing” means individuals face an opportunity cost with each decision they make.

A
T
B
F
5

When you are thinking on the margin, the factor that should most influence your decision is most closely described by which of the following terms _________

A
marginal cost
B
opportunity cost
C
the “guns or butter” theory
D
marginal opportunity benefits
6

One example of thinking at the margin is

A
determining whether it is better to spend your savings on a new CD player or on a television.
B
deciding whether the benefit of working two extra hours per day is worth the sacrifice of study time.
C
putting all of your money in a savings account because the interest rates are so high.
D
deciding to buy a car you don’t really like because it is significantly less expensive than the one you want.
7

A person has a choice between an apple or an orange. The person chooses the apple. What is the opportunity cost of choosing the apple?

A
There is no opportunity cost.
B
The value of what was not chosen.
C
The utility of the apple.
D
The scarcity of oranges.
8

The government of a country must make a decision between spending money on a hospital or spending the same amount on border security. What kind of decision is this?

A
guns or butter
B
decision at the margin
C
global trade-off
D
production efficiency decision
9

Economists use graphs to analyze the choices and trade-offs that people make in a society.

A
T
B
F
10

The production-possibilities frontier separates outcomes that are possible for an individual (or a group) to produce from those which_______.

A
are scarce.
B
have utility.
C
cannot be produced.
D
are efficient.
11

When deciding between two alternatives, an individual considers___________.

A
being at the margin
B
the scarcity of production of the alternatives
C
the"guns and butter" ratio
D
the sacrifice involved with choosing one over the other
12

A legislative committee is weighing the pros and cons of a clean-air program. If it spends $1 million on the program, the air will be cleaner by 20 percent. If it spends $2 million, the air will be cleaner by 30 percent. If it spends $3 million, the air will be cleaner by 35 percent. After comparing opportunity costs and benefits at the margin, the committee agrees to fund the program with $2 million. Why did it not choose to appropriate $3 million?

A
At $3 million, the air is not improved as much as the committee would like.
B
At $3 million, the costs are no longer worth the benefits.
C
It was too much to spend without a guarantee.
D
The air is improved by the same amount whether $2 million or $3 million is spent.
13

As displayed on a production possibilities curve, what will an increase in technology allow a society to do?

A
Produce more, as long as the resources are also available.
B
Produce less, because more resources are spent on developing technology.
C
It will not affect society’s production.
D
The society will spend more on the same level of production.
14

A nation’s automakers install new robotic machinery to build cars. Now, cars take only a day to make, and the factories can produce many more cars than before. This is an example of growth caused by

A
land and natural resources.
B
human capital.
C
technology.
D
production possibility curves.
15

By the end of the summer, Jason had saved enough money for college from his job as a waiter. He even had some money left over. Although he wanted both, he decided to buy a DVD player rather than a digital camera. Which of the following is the opportunity cost in this scenario?

A
the DVD player
B
the digital camera
C
college
D
the job
16

What does a production possibilities frontier show?

A
scarce and less scarce resources
B
global trade-offs and costs of doing business
C
an economy that is producing but not at the maximum
D
the maximum amount that an economy can produce
17

Opportunity cost is the least desirable alternative given up as a result of a decision.

A
T
B
F
18

The opportunity cost of a decision can be examined by using a

A
production possibilities graph.
B
factors of production chart.
C
global trade-off grid.
D
graph of increasing costs.
19

According to the “guns or butter” example, if a country decides to spend more on military goods, which of the following will happen?

A
The country will have less money to devote to consumer goods.
B
The country will have an equal amount of money to devote to consumer goods.
C
The country will be forced to make trade-offs in military purchasing.
D
The country will have more resources to devote to consumer goods.
20

Please select the word from the list that best fits the definition

A
factors of production
B
production possibilities frontier
C
production possibilities graph
D
trade-offs
E
shortage
F
scarcity
G
growth
H
opportunity cost
I
underutilization
J
efficiency
K
services

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