Question 1

The price ratio of the two products is the:

Accepted Answer

A) marginal rate of substitution. 
B) slope of the budget line. 
C) point of tangency for equilibrium. 
D) elasticity of demand for the two products. 
A) marginal rate of substitution. 
B) slope of the budget line. 
C) point of tangency for equilibrium. 
D) elasticity of demand for the two products.

Question 2

Assume an economy is incurring unemployment and failing to realize least-cost production.The immediate effect of resolving these problems will be to:

Accepted Answer

A) move the level of actual output closer to the economy's production possibilities curve. 
B) create a less equal distribution of income. 
C) shift its production possibilities curve to the left. 
D) shift its production possibilities curve to the right. 
A) move the level of actual output closer to the economy's production possibilities curve. 
B) create a less equal distribution of income. 
C) shift its production possibilities curve to the left. 
D) shift its production possibilities curve to the right.

Question 3

Which of the following will not require an outward shift of the production possibilities curve?

Accepted Answer

A) an upgrading of the quality of a nation's human resources 
B) the reduction of unemployment 
C) an increase in the quantity of a society's labour force 
D) the improvement of a society's technological knowledge 
A) an upgrading of the quality of a nation's human resources 
B) the reduction of unemployment 
C) an increase in the quantity of a society's labour force 
D) the improvement of a society's technological knowledge

Question 4

If two variables are inversely related, then as the value of one variable:

Accepted Answer

A) increases, the value of the other may either increase or decrease. 
B) decreases, the value of the other decreases. 
C) increases, the value of the other decreases. 
D) increases, the value of the other increases. 
A) increases, the value of the other may either increase or decrease. 
B) decreases, the value of the other decreases. 
C) increases, the value of the other decreases. 
D) increases, the value of the other increases.

Question 5

Which one of the following statements is correct?

Accepted Answer

A) Relative scarcity is no longer a central notion in economics because we are in an age of abundance. 
B) Most production possibilities curves are convex as viewed from the origin. 
C) The production possibilities curve shows society's preferences for consumer goods relative to capital goods. 
D) The central concept underlying the production possibilities curve is that of limited resources. 
A) Relative scarcity is no longer a central notion in economics because we are in an age of abundance. 
B) Most production possibilities curves are convex as viewed from the origin. 
C) The production possibilities curve shows society's preferences for consumer goods relative to capital goods. 
D) The central concept underlying the production possibilities curve is that of limited resources.

Question 6

The assertion that "There is no free lunch" means:

Accepted Answer

A) there are always tradeoffs between economic goals. 
B) all production involves the use of scarce resources and thus the sacrifice of alternative goods. 
C) marginal analysis is not used in economic reasoning. 
D) choices do not need be made if behaviour is rational. 
A) there are always tradeoffs between economic goals. 
B) all production involves the use of scarce resources and thus the sacrifice of alternative goods. 
C) marginal analysis is not used in economic reasoning. 
D) choices do not need be made if behaviour is rational.

Question 7

The production possibilities curve below shows the hypothetical relationship between the production of capital goods and consumer goods in an economy.   Refer to the above table.What is the opportunity cost of producing the fourth unit of capital goods?

Accepted Answer

A) 6 units of consumer goods 
B) 7 units of consumer goods 
C) 15 units of consumer goods 
D) 22 units of consumer goods 
A) 6 units of consumer goods 
B) 7 units of consumer goods 
C) 15 units of consumer goods 
D) 22 units of consumer goods

Question 8

If we say that two variables are inversely related, this means that:

Accepted Answer

A) the two graph as an upsloping line. 
B) an increase in one variable is associated with a decrease in the other. 
C) an increase in one variable is associated with an increase in the other. 
D) the resulting relationship can be portrayed by a straight line parallel to the horizontal axis. 
A) the two graph as an upsloping line. 
B) an increase in one variable is associated with a decrease in the other. 
C) an increase in one variable is associated with an increase in the other. 
D) the resulting relationship can be portrayed by a straight line parallel to the horizontal axis.

Question 9

Refer to the above diagram for athletic shoes.If the current output of shoes is Q1, then:

Accepted Answer

A) society would consider additional units of shoes to be more valuable than alternative products. 
B) society would consider additional units of shoes to be less valuable than alternative products. 
C) society would experience a net loss by producing more shoes. 
D) resources are being allocated efficiently to the production of shoes. 
A) society would consider additional units of shoes to be more valuable than alternative products. 
B) society would consider additional units of shoes to be less valuable than alternative products. 
C) society would experience a net loss by producing more shoes. 
D) resources are being allocated efficiently to the production of shoes.

Question 10

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.If South Cantina is producing at production alternative D, the opportunity cost of the third unit of capital goods is:

Accepted Answer

A) 3 units of consumer goods. 
B) 4 units of consumer goods. 
C) 5 units of consumer goods. 
D) 6 units of consumer goods. 
A) 3 units of consumer goods. 
B) 4 units of consumer goods. 
C) 5 units of consumer goods. 
D) 6 units of consumer goods.

Question 11

Macroeconomics can best be described as the:

Accepted Answer

A) analysis of how a consumer tries to spend income. 
B) study of the large aggregates of the economy or the economy as a whole. 
C) analysis of how firms attempt to maximize their profits. 
D) study of how supply and demand determine prices in individual markets. 
A) analysis of how a consumer tries to spend income. 
B) study of the large aggregates of the economy or the economy as a whole. 
C) analysis of how firms attempt to maximize their profits. 
D) study of how supply and demand determine prices in individual markets.

Question 12

The society must also make choices under conditions of scarcity.This problem arises from the fact that:

Accepted Answer

A) society's wants are limited but the resources are not. 
B) resources are scarce relative to society's wants. 
C) societies behave only in their self-interest. 
D) society's wants and resources are both unlimited. 
A) society's wants are limited but the resources are not. 
B) resources are scarce relative to society's wants. 
C) societies behave only in their self-interest. 
D) society's wants and resources are both unlimited.

Question 13

Which of the following is not an illustration of the idea of opportunity cost?

Accepted Answer

A) A growing economy can produce more consumer goods and more capital goods at the same time. 
B) If I buy a pizza, I will not be able to afford a movie. 
C) Resources devoted to consumer goods production are not available for capital goods production. 
D) The land a Manitoba farmer plants in wheat is not available for corn production. 
A) A growing economy can produce more consumer goods and more capital goods at the same time. 
B) If I buy a pizza, I will not be able to afford a movie. 
C) Resources devoted to consumer goods production are not available for capital goods production. 
D) The land a Manitoba farmer plants in wheat is not available for corn production.

Question 14

Microeconomics:

Accepted Answer

A) is concerned with the aggregate or total levels of income, employment, and output. 
B) is not concerned with details, but only with the overall "big picture" of the economy. 
C) is concerned with individual economic units and specific markets. 
D) describes the aggregate flows of output and income. 
A) is concerned with the aggregate or total levels of income, employment, and output. 
B) is not concerned with details, but only with the overall "big picture" of the economy. 
C) is concerned with individual economic units and specific markets. 
D) describes the aggregate flows of output and income.

Question 15

Refer to the diagram below, suppose you have a money income of $10 all of which you spend on Coke and boxes of popcorn.The prices of Coke and popcorn respectively are:

Accepted Answer

A) $.50 and $1.00. 
B) $1.00 and $.50. 
C) $1.00 and $2.00. 
D) $.40 and $.50. 
A) $.50 and $1.00. 
B) $1.00 and $.50. 
C) $1.00 and $2.00. 
D) $.40 and $.50.

Question 16

In drawing the production possibilities curve we assume that:

Accepted Answer

A) technology is fixed. 
B) unemployment exists. 
C) economic resources are unlimited. 
D) wants are limited. 
A) technology is fixed. 
B) unemployment exists. 
C) economic resources are unlimited. 
D) wants are limited.

Question 17

Assume an economy is operating at some point on its production possibilities curve which shows civilian and military goods.If the output of military goods is increased, the output of civilian goods:

Accepted Answer

A) will remain unchanged. 
B) may be either increased or decreased. 
C) must be decreased. 
D) must also be increased. 
A) will remain unchanged. 
B) may be either increased or decreased. 
C) must be decreased. 
D) must also be increased.

Question 18

Refer to the above diagram.Which one of the following would shift the production possibilities curve from PP1 to PP2

Accepted Answer

A) immigration of skilled workers into the economy 
B) worsening of the AIDS epidemic 
C) an increase in consumer prices 
D) a reduction in the age of retirement. 
A) immigration of skilled workers into the economy 
B) worsening of the AIDS epidemic 
C) an increase in consumer prices 
D) a reduction in the age of retirement.

Question 19

Refer to the diagram below.The concept of opportunity cost is best represented by the:

Accepted Answer

A) shift of the production possibilities curve from PP1 to PP2. 
B) move from B on PP1 to E on PP2. 
C) move from B on PP1 to C on PP1. 
D) move from D inside PP1 to B on PP1. 
A) shift of the production possibilities curve from PP1 to PP2. 
B) move from B on PP1 to E on PP2. 
C) move from B on PP1 to C on PP1. 
D) move from D inside PP1 to B on PP1.

Question 20

Refer to the above graph.Using Qd for quantity demanded and P for price, which of the following equations correctly states the demand for this product?

Accepted Answer

A) P = Qd/10. 
B) P = 50 - P/2. 
C) P = 10 - .2Qd. 
D) P = 10 - 2Qd. 
A) P = Qd/10. 
B) P = 50 - P/2. 
C) P = 10 - .2Qd. 
D) P = 10 - 2Qd.

Exam 1: B: Limits, Alternatives, and Choices

The price ratio of the two products is the:

Assume an economy is incurring unemployment and failing to realize least-cost production.The immediate effect of resolving these problems will be to:

Which of the following will not require an outward shift of the production possibilities curve?

If two variables are inversely related, then as the value of one variable:

Which one of the following statements is correct?

The assertion that "There is no free lunch" means:

The production possibilities curve below shows the hypothetical relationship between the production of capital goods and consumer goods in an economy. Refer to the above table.What is the opportunity cost of producing the fourth unit of capital goods?

If we say that two variables are inversely related, this means that:

Refer to the above diagram for athletic shoes.If the current output of shoes is Q1, then:

Macroeconomics can best be described as the:

The society must also make choices under conditions of scarcity.This problem arises from the fact that:

Which of the following is not an illustration of the idea of opportunity cost?

Microeconomics:

Refer to the diagram below, suppose you have a money income of $10 all of which you spend on Coke and boxes of popcorn.The prices of Coke and popcorn respectively are:

In drawing the production possibilities curve we assume that:

Assume an economy is operating at some point on its production possibilities curve which shows civilian and military goods.If the output of military goods is increased, the output of civilian goods:

Refer to the above diagram.Which one of the following would shift the production possibilities curve from PP1 to PP2

Refer to the diagram below.The concept of opportunity cost is best represented by the:

Refer to the above graph.Using Qd for quantity demanded and P for price, which of the following equations correctly states the demand for this product?

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

Filters

Refer to the above diagram for athletic shoes.If the current output of shoes is Q₁, then:

Refer to the above diagram.Which one of the following would shift the production possibilities curve from PP₁ to PP₂

Refer to the above graph.Using Q_d for quantity demanded and P for price, which of the following equations correctly states the demand for this product?