Question 1

Refer to the above diagram.Starting at point E, the production of successive units of bread will cost:

Accepted Answer

A) a constant 8 units of tractors. 
B) a constant 6 units of tractors. 
C) 1/8, 1/6, 1/4, and ½ units of tractors. 
D) 1/2, 1/4, 1/6, and 1/8 units of tractors. 
A) a constant 8 units of tractors. 
B) a constant 6 units of tractors. 
C) 1/8, 1/6, 1/4, and ½ units of tractors. 
D) 1/2, 1/4, 1/6, and 1/8 units of tractors.

Question 2

The "economic perspective" entails:

Accepted Answer

A) rational behaviour by individuals and institutions. 
B) a comparison of marginal benefits and marginal costs in decision making. 
C) the altering of behaviour when marginal benefits and marginal costs change. 
D) all of the above. 
A) rational behaviour by individuals and institutions. 
B) a comparison of marginal benefits and marginal costs in decision making. 
C) the altering of behaviour when marginal benefits and marginal costs change. 
D) all of the above.

Question 3

An economic model is:

Accepted Answer

A) a value judgment. 
B) a fact. 
C) built using theory. 
D) built on correlations. 
A) a value judgment. 
B) a fact. 
C) built using theory. 
D) built on correlations.

Question 4

Refer to the above production possibilities curves.Curve (a) is the current curve for the economy.The movement from curve (a) to curve (b) suggests:

Accepted Answer

A) a movement from unemployment to full employment. 
B) an improvement in capital goods technology but not in consumer goods technology. 
C) an improvement in consumer goods technology but not in capital goods technology. 
D) a decline in the total output of this society. 
A) a movement from unemployment to full employment. 
B) an improvement in capital goods technology but not in consumer goods technology. 
C) an improvement in consumer goods technology but not in capital goods technology. 
D) a decline in the total output of this society.

Question 5

Marginal costs exist because:

Accepted Answer

A) the decision to produce more of some product means the sacrifice of other products. 
B) wants are scarce relative to resources. 
C) households and businesses make rational decisions. 
D) most decisions do not involve sacrifices or tradeoffs. 
A) the decision to produce more of some product means the sacrifice of other products. 
B) wants are scarce relative to resources. 
C) households and businesses make rational decisions. 
D) most decisions do not involve sacrifices or tradeoffs.

Question 6

In the above diagram variables x and y are:

Accepted Answer

A) both dependent variables. 
B) directly related. 
C) inversely related. 
D) unrelated. 
A) both dependent variables. 
B) directly related. 
C) inversely related. 
D) unrelated.

Question 7

Which situation would most likely shift the production possibilities curve for a nation in an outward direction?

Accepted Answer

A) a decrease in the quality of products 
B) an increase in the supply of resources 
C) a decrease in the state of technology 
D) an increase in the amount of discrimination 
A) a decrease in the quality of products 
B) an increase in the supply of resources 
C) a decrease in the state of technology 
D) an increase in the amount of discrimination

Question 8

Refer to the production possibilities curves.The movement from curve (a) to curve (c) indicates an improvement in civilian goods technology but not in war goods technology.

Accepted Answer

A) True 
 B)False

Question 9

Certain inherently desirable products such as education and health care should be produced so long as resources are available.

Accepted Answer

A) True 
 B)False

Question 10

The production possibilities curve illustrates the basic principle that:

Accepted Answer

A) the production of more of any one good will in time require smaller and smaller sacrifices of other goods. 
B) an economy will automatically seek that level of output at which all of its resources are employed. 
C) if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced. 
D) an economy's capacity to produce increases in proportion to its population size. 
A) the production of more of any one good will in time require smaller and smaller sacrifices of other goods. 
B) an economy will automatically seek that level of output at which all of its resources are employed. 
C) if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced. 
D) an economy's capacity to produce increases in proportion to its population size.

Question 11

In drawing a production possibilities curve we hold constant:

Accepted Answer

A) the money supply. 
B) the consumer price index. 
C) both technology and resource supplies 
D) resource supplies only. 
A) the money supply. 
B) the consumer price index. 
C) both technology and resource supplies 
D) resource supplies only.

Question 12

If economic theories are solidly based on relevant facts, then there can be no question as to the character of appropriate economic policy.

Accepted Answer

A) True 
 B)False

Question 13

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 resources in North Cantina and South Cantina are identical in quantity and quality.We can conclude that:

Accepted Answer

A) South Cantina has better technology than North Cantina in producing both capital and consumer goods. 
B) North Cantina has better technology than South Cantina in producing both capital and consumer goods. 
C) North Cantina is growing more rapidly than South Cantina. 
D) North Cantina has better technology than South Cantina in producing consumer goods. 
A) South Cantina has better technology than North Cantina in producing both capital and consumer goods. 
B) North Cantina has better technology than South Cantina in producing both capital and consumer goods. 
C) North Cantina is growing more rapidly than South Cantina. 
D) North Cantina has better technology than South Cantina in producing consumer goods.

Question 14

A production possibilities curve illustrates:

Accepted Answer

A) scarcity. 
B) market prices. 
C) consumer preferences. 
D) the distribution of income. 
A) scarcity. 
B) market prices. 
C) consumer preferences. 
D) the distribution of income.

Question 15

The future location of the economy's production possibilities curve will be affected by:

Accepted Answer

A) the current division of domestic output between consumption and capital goods. 
B) the rate of technological progress. 
C) the growth of the economy's supplies of resources. 
D) all of the above. 
A) the current division of domestic output between consumption and capital goods. 
B) the rate of technological progress. 
C) the growth of the economy's supplies of resources. 
D) all of the above.

Question 16

How is the economic perspective reflected in lines for fast food?

Accepted Answer

A) Customers select the shortest line because they have perfect information. 
B) Customers select the shortest line because they believe it will reduce their time cost of obtaining food. 
C) Lines will typically be of unequal length because of the inefficiencies in counter service. 
D) The set of food choices is often too complex for most customers and thus creates long lines. 
A) Customers select the shortest line because they have perfect information. 
B) Customers select the shortest line because they believe it will reduce their time cost of obtaining food. 
C) Lines will typically be of unequal length because of the inefficiencies in counter service. 
D) The set of food choices is often too complex for most customers and thus creates long lines.

Question 17

Refer to the above diagram.Which line(s) show(s) a positive vertical intercept?

Accepted Answer

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

Question 18

Some agricultural sub-Saharan nations of Africa have over-farmed and overgrazed their land to the extent that significant portions of it have turned into desert.This suggests that:

Accepted Answer

A) the concavity of the production possibilities curves of such nations has increased. 
B) the production possibilities curves of such nations have shifted inward. 
C) the production possibilities curves of such nations have shifted outward. 
D) these nations are operating at some point outside of their production possibilities curves. 
A) the concavity of the production possibilities curves of such nations has increased. 
B) the production possibilities curves of such nations have shifted inward. 
C) the production possibilities curves of such nations have shifted outward. 
D) these nations are operating at some point outside of their production possibilities curves.

Question 19

Choices are usually made at the margin, is which of the ten key concepts to retain for a lifetime?

Accepted Answer

A) Facing trade-offs 
B) Interest Expense 
C) Marginal analysis 
D) The influence of incentives 
A) Facing trade-offs 
B) Interest Expense 
C) Marginal analysis 
D) The influence of incentives

Question 20

When economists describe "a market," they mean:

Accepted Answer

A) a place where stocks and bonds are traded. 
B) information networks that allow individuals to keep in touch with each other. 
C) a hypothetical place where the production of goods and services takes place. 
D) a mechanism which coordinates actions of consumers and producers to establish equilibrium prices and quantities. 
A) a place where stocks and bonds are traded. 
B) information networks that allow individuals to keep in touch with each other. 
C) a hypothetical place where the production of goods and services takes place. 
D) a mechanism which coordinates actions of consumers and producers to establish equilibrium prices and quantities.

Exam 1: B: Limits, Alternatives, and Choices

Refer to the above diagram.Starting at point E, the production of successive units of bread will cost:

The "economic perspective" entails:

An economic model is:

Refer to the above production possibilities curves.Curve (a) is the current curve for the economy.The movement from curve (a) to curve (b) suggests:

Marginal costs exist because:

In the above diagram variables x and y are:

Which situation would most likely shift the production possibilities curve for a nation in an outward direction?

Refer to the production possibilities curves.The movement from curve (a) to curve (c) indicates an improvement in civilian goods technology but not in war goods technology.

Certain inherently desirable products such as education and health care should be produced so long as resources are available.

The production possibilities curve illustrates the basic principle that:

In drawing a production possibilities curve we hold constant:

If economic theories are solidly based on relevant facts, then there can be no question as to the character of appropriate economic policy.

A production possibilities curve illustrates:

The future location of the economy's production possibilities curve will be affected by:

How is the economic perspective reflected in lines for fast food?

Refer to the above diagram.Which line(s) show(s) a positive vertical intercept?

Some agricultural sub-Saharan nations of Africa have over-farmed and overgrazed their land to the extent that significant portions of it have turned into desert.This suggests that:

Choices are usually made at the margin, is which of the ten key concepts to retain for a lifetime?

When economists describe "a market," they mean:

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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