Question 1

You should decide to go to a movie:

Accepted Answer

A) if the marginal cost of the movie exceeds its marginal benefit. 
B) if the marginal benefit of the movie exceeds its marginal cost. 
C) if your income will allow you to buy a ticket 
D) because movies are inherently good products. 
A) if the marginal cost of the movie exceeds its marginal benefit. 
B) if the marginal benefit of the movie exceeds its marginal cost. 
C) if your income will allow you to buy a ticket 
D) because movies are inherently good products.

Question 2

A leftward shift of a consumer's budget line to a position parallel with the original one could indicate that the:

Accepted Answer

A) price of one product has decreased in relation to the other. 
B) prices of both products have decreased in the same proportion. 
C) marginal utilities derived from both products have decreased. 
D) consumer's money income has increased but the prices of both products have increased proportionately more. 
A) price of one product has decreased in relation to the other. 
B) prices of both products have decreased in the same proportion. 
C) marginal utilities derived from both products have decreased. 
D) consumer's money income has increased but the prices of both products have increased proportionately more.

Question 3

Refer to the above diagram.The vertical intercept:

Accepted Answer

A) is 40. 
B) is 50. 
C) is 60. 
D) cannot be determined from the information given. 
A) is 40. 
B) is 50. 
C) is 60. 
D) cannot be determined from the information given.

Question 4

As used in economics, the notion of scarce resources means that:

Accepted Answer

A) mineral deposits are only available in finite amounts. 
B) resources are not so plentiful that all individuals' material wants can be fulfilled. 
C) some resources are free while others have price tags on them. 
D) the quantities available of some resources exceed the demand for them. 
A) mineral deposits are only available in finite amounts. 
B) resources are not so plentiful that all individuals' material wants can be fulfilled. 
C) some resources are free while others have price tags on them. 
D) the quantities available of some resources exceed the demand for them.

Question 5

Which of the following will shift the production possibilities curve to the right?

Accepted Answer

A) an increase in the unemployment rate from 6 to 8 percent 
B) a decline in the efficiency with which the present labour force is allocated 
C) a decrease in the unemployment rate from 8 to 6 percent 
D) a technological advance which allows farmers to produce more output from given inputs 
A) an increase in the unemployment rate from 6 to 8 percent 
B) a decline in the efficiency with which the present labour force is allocated 
C) a decrease in the unemployment rate from 8 to 6 percent 
D) a technological advance which allows farmers to produce more output from given inputs

Question 6

Assume that if the interest rate that businesses must pay to borrow funds were 20 percent, it would be unprofitable for businesses to invest in new machinery and equipment so that investment would be zero.But if the interest rate were 16 percent, businesses would find it profitable to invest $10 billion.If the interest rate were 12 percent, $20 billion would be invested.Assume that total investment continues to increase by $10 billion for each successive 4 percentage point decline in the interest rate.Refer to the above information.Which of the following correctly expresses the indicated relationship as an equation?

Accepted Answer

A) i = 20 - 4I. 
B) i = 20 -.4I. 
C) i = 24 -.4I. 
D) i = 20 - 10I. 
A) i = 20 - 4I. 
B) i = 20 -.4I. 
C) i = 24 -.4I. 
D) i = 20 - 10I.

Question 7

Refer to the above diagram.Which line(s) show(s) a negative relationship between x and y?

Accepted Answer

A) A only 
B) both A and D 
C) A, B, and D 
D) both C and E 
A) A only 
B) both A and D 
C) A, B, and D 
D) both C and E

Question 8

Production possibilities tables for two countries, North Cantina and South Cantina: North Cantina Production possibilities (alternatives)
    South Cantina Production possibilities (alternatives)
  Refer to the above tables.Suppose that North Cantina is producing 2 units of capital goods and 17 units of consumer goods while South Cantina is producing 2 units of capital goods and 21 units of consumer goods.We can conclude that:

Accepted Answer

A) North Cantina is fully and efficiently using its resources, but South Cantina is not. 
B) South Cantina is fully and efficiently using its resources, but North Cantina is not. 
C) neither South Cantina nor North Cantina are fully and efficiently using their resources. 
D) both South Cantina and North Cantina are fully and efficiently using their resources. 
A) North Cantina is fully and efficiently using its resources, but South Cantina is not. 
B) South Cantina is fully and efficiently using its resources, but North Cantina is not. 
C) neither South Cantina nor North Cantina are fully and efficiently using their resources. 
D) both South Cantina and North Cantina are fully and efficiently using their resources.

Question 9

The study of economics exists because:

Accepted Answer

A) government interferes with the efficient allocation of scarce resources. 
B) resources are scarce in relation to human material wants. 
C) the market system is an obstacle to the efficient use of plentiful resources to satisfy constrained wants. 
D) resources are overly abundant as compared to wants; thus, an allocation problem exists. 
A) government interferes with the efficient allocation of scarce resources. 
B) resources are scarce in relation to human material wants. 
C) the market system is an obstacle to the efficient use of plentiful resources to satisfy constrained wants. 
D) resources are overly abundant as compared to wants; thus, an allocation problem exists.

Question 10

The slope of a straight line can be determined by:

Accepted Answer

A) comparing the absolute horizontal change to the absolute vertical change between two points on the line. 
B) comparing the absolute vertical change to the absolute horizontal change between two points on the line. 
C) taking the reciprocal of the vertical intercept. 
D) comparing the percentage vertical change to the percentage horizontal change between two points on the line. 
A) comparing the absolute horizontal change to the absolute vertical change between two points on the line. 
B) comparing the absolute vertical change to the absolute horizontal change between two points on the line. 
C) taking the reciprocal of the vertical intercept. 
D) comparing the percentage vertical change to the percentage horizontal change between two points on the line.

Question 11

Refer to the above production possibilities curves.Given production possibilities curve (a), the combination of civilian and war goods indicated by point X is unattainable to this economy.

Accepted Answer

A) True 
 B)False

Question 12

Even though local newspapers are very inexpensive, people rarely buy more than one of them each day.This fact:

Accepted Answer

A) is an example of irrational behaviour. 
B) implies that reading should be taught through phonics rather than the whole language method. 
C) contradicts the economic perspective. 
D) implies that, for most people, the marginal benefit of reading a second newspaper is less than the marginal cost. 
A) is an example of irrational behaviour. 
B) implies that reading should be taught through phonics rather than the whole language method. 
C) contradicts the economic perspective. 
D) implies that, for most people, the marginal benefit of reading a second newspaper is less than the marginal cost.

Question 13

The attainable area for the budget line, per Figure 1.1, includes:

Accepted Answer

A) the area below the line but not the budget line itself. 
B) the area below the budget line and the budget line. 
C) the area above the budget line but no the budget line itself. 
D) the area above the budget line and the budget line. 
A) the area below the line but not the budget line itself. 
B) the area below the budget line and the budget line. 
C) the area above the budget line but no the budget line itself. 
D) the area above the budget line and the budget line.

Question 14

The marginal cost curve is:

Accepted Answer

A) upsloping because of increasing marginal opportunity costs. 
B) upsloping because successive units of a specific product yield less and less extra utility. 
C) downsloping because of increasing marginal opportunity costs. 
D) downsloping because successive units of a specific product yield less and less extra utility. 
A) upsloping because of increasing marginal opportunity costs. 
B) upsloping because successive units of a specific product yield less and less extra utility. 
C) downsloping because of increasing marginal opportunity costs. 
D) downsloping because successive units of a specific product yield less and less extra utility.

Question 15

A point inside the production possibilities curve is:

Accepted Answer

A) attainable and the economy is efficient. 
B) attainable, but the economy is inefficient. 
C) unattainable, but the economy is inefficient. 
D) unattainable and the economy is efficient. 
A) attainable and the economy is efficient. 
B) attainable, but the economy is inefficient. 
C) unattainable, but the economy is inefficient. 
D) unattainable and the economy is efficient.

Question 16

Refer to the above diagram.If society is currently producing 9 units of bicycles and 4 units of computers and it now decides to increase computer output to 6, the cost:

Accepted Answer

A) will be 4 units of bicycles. 
B) will be 2 units of bicycles. 
C) will be zero because unemployed resources are available. 
D) of doing so cannot be determined from the information given. 
A) will be 4 units of bicycles. 
B) will be 2 units of bicycles. 
C) will be zero because unemployed resources are available. 
D) of doing so cannot be determined from the information given.

Question 17

(The following economy produces two products.) Production Possibilities Table
  Refer to the above table.In moving from possibility C to D, the cost of a unit of steel in terms of a unit of wheat is:

Accepted Answer

A) 10 
B) 20 
C) 25 
D) 30 
A) 10 
B) 20 
C) 25 
D) 30

Question 18

Which situation would most likely cause a nation's production possibilities curve to shift inward?

Accepted Answer

A) the construction of more capital goods 
B) a decrease in discrimination based on race 
C) an increase in the number of skilled immigrant workers 
D) the destruction from bombing and warfare in a losing military conflict 
A) the construction of more capital goods 
B) a decrease in discrimination based on race 
C) an increase in the number of skilled immigrant workers 
D) the destruction from bombing and warfare in a losing military conflict

Question 19

The law of increasing opportunity costs states that:

Accepted Answer

A) if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of other goods to do so. 
B) the sum of the costs of producing a particular good cannot rise above the current market price of that good. 
C) if the sum of the costs of producing a particular good rises by a specified percent, the price of that good must rise by a greater relative amount. 
D) if the prices of all the resources devoted to the production of goods increase, the cost of producing any particular good will increase at the same rate. 
A) if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of other goods to do so. 
B) the sum of the costs of producing a particular good cannot rise above the current market price of that good. 
C) if the sum of the costs of producing a particular good rises by a specified percent, the price of that good must rise by a greater relative amount. 
D) if the prices of all the resources devoted to the production of goods increase, the cost of producing any particular good will increase at the same rate.

Question 20

Refer to the following production possibilities curves.Curve (a) is the current curve for the economy.Given production possibilities curve (a), the combination of capital and consumer goods indicated by point L:

Accepted Answer

A) would entail substantial unemployment. 
B) would entail an inefficient use of society's resources. 
C) is beyond the productive capacity of this society. 
D) suggests the productive capacity of the system is declining. 
A) would entail substantial unemployment. 
B) would entail an inefficient use of society's resources. 
C) is beyond the productive capacity of this society. 
D) suggests the productive capacity of the system is declining.

Exam 1: B: Limits, Alternatives, and Choices

You should decide to go to a movie:

A leftward shift of a consumer's budget line to a position parallel with the original one could indicate that the:

Refer to the above diagram.The vertical intercept:

As used in economics, the notion of scarce resources means that:

Which of the following will shift the production possibilities curve to the right?

Refer to the above diagram.Which line(s) show(s) a negative relationship between x and y?

The study of economics exists because:

The slope of a straight line can be determined by:

Refer to the above production possibilities curves.Given production possibilities curve (a), the combination of civilian and war goods indicated by point X is unattainable to this economy.

Even though local newspapers are very inexpensive, people rarely buy more than one of them each day.This fact:

The attainable area for the budget line, per Figure 1.1, includes:

The marginal cost curve is:

A point inside the production possibilities curve is:

Refer to the above diagram.If society is currently producing 9 units of bicycles and 4 units of computers and it now decides to increase computer output to 6, the cost:

(The following economy produces two products.) Production Possibilities Table Refer to the above table.In moving from possibility C to D, the cost of a unit of steel in terms of a unit of wheat is:

Which situation would most likely cause a nation's production possibilities curve to shift inward?

The law of increasing opportunity costs states that:

Refer to the following production possibilities curves.Curve (a) is the current curve for the economy.Given production possibilities curve (a), the combination of capital and consumer goods indicated by point L:

A: - Limits, Alternatives, and Choices

B: The Market System and the Circular Flow

A: - The Market System and the Circular Flow

B: Demand, Supply, and Market Equilibrium

A: - Demand, Supply, and Market Equilibrium

B: Market Failures: Public Goods and Externalities

A: - Market Failures: Public Goods and Externalities

B: Governments Role and Government Failure

A: Governments Role and Government Failure

B: an Introduction to Macroeconomics

A: an Introduction to Macroeconomics

B: Measuring the Economys Output

A: Measuring the Economys Output

B: Economic Growth

A: Economic Growth

B: Business Cycles, Unemployment, and Inflation

A: Business Cycles, Unemployment, and Inflation

B: Basic Macroeconomic Relationships

A: Basic Macroeconomic Relationships

B: The Aggregate Expenditures Model

A: The Aggregate Expenditures Model

B: Aggregate Demand and Aggregate Supply

A: Aggregate Demand and Aggregate Supply

B: Fiscal Policy, Deficits, Surpluses, and Debt

A: Fiscal Policy, Deficits, Surpluses, and Debt

B: Money, Banking, and Money Creation

A: Money, Banking, and Money Creation

B: Interest Rates and Monetary Policy

A: Interest Rates and Monetary Policy

C: Financial Economics

A: Long-Run Macroeconomic Adjustments

B: Long-Run Macroeconomic Adjustments

A: International Trade

B: International Trade

A: The Balance of Payments and Exchange Rates

B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

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