Test Bank For The Exploration of Economics International Edition 5th Edition by Robert L. Sexton

Test Bank For The Exploration of Economics International Edition 5th Edition by Robert L. Sexton

Chapter 3—Scarcity, Trade-Offs and Production Possibilities

TRUE/FALSE

1.In a market economy, government officials make most production decisions in a centralized manner.

ANS: F PTS: 1

2.Consumer sovereignty means that consumers vote with their dollars in a market economy, which helps determine what is produced.

ANS: T PTS: 1

3.In a market economy, prices help determine the distribution of goods and services but not the allocation of resources.

ANS: F PTS: 1

4.An increase in production of one good will have zero opportunity cost only if the economy initially existed at a point inside the production possibilities curve.

ANS: T PTS: 1

5.Capital-intensive production techniques tend to be utilized most commonly in countries where labor is relatively cheap.

ANS: F PTS: 1

6.High wage countries like the United States tend to use less labor-intensive production methods than low wage countries like Mexico.

ANS: T PTS: 1

7.An economy that has many unemployed workers and idle factories is not operating efficiently.

ANS: T PTS: 1

8.The production possibilities curve marks the boundary between attainable and unattainable combinations of output.

ANS: T PTS: 1

9.Any output combination outside the production possibilities curve is attainable in the current period only if prices decrease.

ANS: F PTS: 1

10.A decrease in the unemployment rate will shift an economy’s production possibilities curve outward.

ANS: F PTS: 1

11.An increase in available resources will tend to cause a society’s production possibilities curve to shift inward.

ANS: F PTS: 1

12.An improvement in technology will tend to cause a society’s production possibilities curve to shift outward.

ANS: T PTS: 1

13.The opportunity cost of a particular good tends to increase with its rate of output because some resources cannot be easily adapted from the production of one good or service to another.

ANS: T PTS: 1

14.The production possibilities curve for an economy that experiences a constant opportunity cost of production is linear (a straight line).

ANS: T PTS: 1

15.The law of increasing opportunity costs implies that a society’s production possibilities curve will be a straight line.

ANS: F PTS: 1

16.Movement from one point on the production possibilities curve to another leads to more of both goods being produced.

ANS: F PTS: 1

17.An increase in an economy’s capital stock increases its future productive capacity.

ANS: T PTS: 1

18.Other things being constant, an economy must give up some consumer goods and services today to produce more capital goods in order to grow.

ANS: T PTS: 1

19.Capital accumulation causes the production possibilities curve to shift inward over time.

ANS: F PTS: 1

20.A straight line production possibilities curve implies increasing opportunity costs.

ANS: F PTS: 1

Test Bank for “The Exploration of Economics,” International Edition, 5th Edition by Robert L. Sexton

Overview: The Exploration of Economics, 5th Edition by Robert L. Sexton, offers a comprehensive introduction to economic principles, focusing on fundamental concepts and real-world applications. The test bank designed for this edition provides educators and students with a robust set of assessment tools to gauge understanding and application of economic theories.

Content Details:

1. Introduction to Economics:
   • Basic Economic Principles: Covers essential concepts such as scarcity, opportunity cost, and the role of economics in addressing resource allocation.
   • Economic Systems: Introduces different economic systems and their impact on economic decision-making.
2. Supply and Demand Analysis:
   • Market Mechanics: Examines the laws of supply and demand, market equilibrium, and how shifts in supply and demand affect prices and quantities.
   • Elasticity: Discusses price elasticity of demand and supply, exploring how elasticity influences consumer and producer behavior.
3. Consumer Choice Theory:
   • Utility and Preferences: Analyzes the concept of utility, consumer preferences, and decision-making within budget constraints.
   • Demand Curve Analysis: Examines how changes in income and prices affect consumer choices and demand.
4. Production and Cost Analysis:
   • Production Functions: Discusses short-run and long-run production functions, including the relationship between inputs and outputs.
   • Cost Concepts: Covers various cost metrics such as total, average, and marginal costs, and their implications for production and pricing.
5. Market Structures:
   • Types of Market Structures: Provides an overview of market structures including perfect competition, monopoly, monopolistic competition, and oligopoly.
   • Pricing and Output Decisions: Examines pricing strategies and output decisions in different market environments.
6. Factor Markets and Income Distribution:
   • Labor and Capital Markets: Analyzes the determination of wages, rental rates, and the functioning of factor markets.
   • Income Inequality: Discusses factors influencing income distribution and economic inequality.
7. Market Failures and Government Intervention:
   • Externalities and Public Goods: Explores the causes and effects of market failures, including externalities and public goods.
   • Role of Government: Examines government policies aimed at correcting market failures and promoting economic efficiency.
8. Macroeconomic Concepts:
   • Economic Indicators: Introduces key macroeconomic indicators such as GDP, inflation, and unemployment rates.
   • Fiscal and Monetary Policy: Discusses the role of fiscal and monetary policy in managing economic performance and stability.
9. International Economics:
   • Trade Theories and Policies: Reviews international trade theories, trade policies, and their impact on global trade and economics.
   • Global Financial Issues: Explores issues related to international finance, including exchange rates and global financial markets.
10. Economic Growth and Development:
    • Growth Theories: Analyzes theories of economic growth and the factors contributing to economic development.
    • Development Challenges: Discusses challenges related to economic development, including poverty, inequality, and sustainability.

Interactive Features of the Test Bank:

• Multiple-Choice Questions: Test understanding of fundamental economic concepts and theories.
• True/False Questions: Assess basic knowledge and definitions of economic terms.
• Short Answer Questions: Encourage detailed responses and deeper analysis of economic issues.
• Problem-Solving Questions: Provide practical scenarios to apply economic theories and problem-solving skills.
• Essay Questions: Allow for in-depth exploration and critical analysis of complex economic topics and policies.

Conclusion:

The test bank for The Exploration of Economics, 5th Edition by Robert L. Sexton, is a valuable resource for both students and educators. It offers a wide range of questions to test knowledge and application of economic principles, ensuring a thorough understanding of both theoretical concepts and practical applications in economics. This comprehensive tool supports effective learning and assessment in the study of economics.