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Econ 101 Section 4 Quiz # 2 9-07-05

Use the following choices for questions 1 to 5.


a. Capitalism b. Law of increasing opportunity cost c. Traditional economy
d. Resource allocation e. Economic system f. Production
1. The more of something we produce, the greater the opportunity cost of producing one more unit.
2. A method of determining which goods and services will be produced, how they will be produced, and who will
get them. !
". An economy in which resources are allocated according to longlived practices from the past. #
4. A type of economic system in which most resources are owned privately. $
5. !eneral term for a system of resource allocation and resource ownership. E
#hoices %re gi&en for e%ch nu'(er fro' ) to 10.
). "or society, opportunity cost arises because of a scarcity of !
a. technology, b. land, c. money, d. resources, e. mar#ets.
7. A point inside a production possibilities frontier might represent
a. productive efficiency, b. recession, c. a very high opportunity cost, d. full employment of resources.
*. $nder market capitalism, resources are !
a. owned by society, b. owned by the mar#et, c. owned by no one, d. none of the above.
9. The production possibilities frontier is concave shaped %li#e an upsidedown bowl& because of
a. the scarcity of resources, b. the law of increasing opportunity cost, c. productive inefficiency,
10. 'hich of the following is a method of resource allocation( #
a. Capitalism, b. )ocialism, c. Command, d. All of the above
+or Questions 11 to 1*, the choices %re %. -rue %n. (. +%lse
11. The correct measure of the cost of a choice is the time used up by that choice.
12. *f we can not produce more of one good without producing less of any other goods, the economy is productively
inefficient. or $
1". The law of increasing opportunity cost tells us that the opportunity costs of our choices tend to rise over time.
14. An individual has a comparative advantage in producing a good if he or she can produce it at a lower opportunity cost
than some other individual. $
15. The economic system of the former )oviet $nion was mar#et socialism
1). The $nited )tates is an e+ample of a pure mar#et economy, in which all resource allocation is accomplished
through the mar#et.
17. A recession can be illustrated by a movement downward and rightward along a country,s production
possibilities frontier.
1*. An economic system is comprised of two components- a method of resource allocation and a mode of
resource ownership. $
$ //+ is gi&en in the screen. +or Questions 19 to 22, use the choices (elow
a. ./ b. 0 c. 1 d. 1/ e. /
19. The opportunity cost of the additional oranges obtained in moving from E to 2 is 333 mangoes foregone.
20. Assume the islanders are currently producing at point A, devoting all their resources to orange production.
*n moving to point 4, the resources released from producing oranges are then able to produce mangoes. The
opportunity cost to society of these mangoes is 3333 orange%s&. #
21. 5ow assume the islanders are currently producing at point ", devoting all their resources to mango
production. *n moving to point E, this society gives up 333 mangoes.
22. The resources released from producing these mangoes are then able to produce 333 oranges. $

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