Test Bank of 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