Question 1

A typical concave (bowed out from the origin)production possibilities curve implies:

Accepted Answer

A)  that economic resources are unlimited. 
B)  that society must choose among various attainable combinations of goods. 
C)  decreasing opportunity costs. 
D)  that society is using a market system to allocate resources. 
A)  that economic resources are unlimited. 
B)  that society must choose among various attainable combinations of goods. 
C)  decreasing opportunity costs. 
D)  that society is using a market system to allocate resources.

Question 2

In moving along a given budget line:

Accepted Answer

A)  the prices of both products and money income are assumed to be constant. 
B)  each point on the line will be equally satisfactory to consumers. 
C)  money income varies,but the prices of the two goods are constant. 
D)  the prices of both products are assumed to vary,but money income is constant. 
A)  the prices of both products and money income are assumed to be constant. 
B)  each point on the line will be equally satisfactory to consumers. 
C)  money income varies,but the prices of the two goods are constant. 
D)  the prices of both products are assumed to vary,but money income is constant.

Question 3

The production possibilities curve tells us:

Accepted Answer

A)  the specific combination of two products that is most desired by society. 
B)  that costs do not change as society varies its output. 
C)  that costs are irrelevant in a society that has fixed resources. 
D)  the combinations of two goods that can be produced with society's available resources. 
A)  the specific combination of two products that is most desired by society. 
B)  that costs do not change as society varies its output. 
C)  that costs are irrelevant in a society that has fixed resources. 
D)  the combinations of two goods that can be produced with society's available resources.

Question 4

An economy will always operate at some point on its production possibilities curve.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is a labor resource?

Accepted Answer

A)  A computer programmer. 
B)  A computer. 
C)  Silicon (sand)used to make computer chips. 
D)  A piece of software used by a firm. 
A)  A computer programmer. 
B)  A computer. 
C)  Silicon (sand)used to make computer chips. 
D)  A piece of software used by a firm.

Question 6

The concept of opportunity cost:

Accepted Answer

A)  is irrelevant in socialistic economies because of central planning. 
B)  suggests that the use of resources in any particular line of production means that alternative outputs must be forgone. 
C)  is irrelevant if the production possibilities curve is shifting to the right. 
D)  suggests that insatiable wants can be fulfilled. 
A)  is irrelevant in socialistic economies because of central planning. 
B)  suggests that the use of resources in any particular line of production means that alternative outputs must be forgone. 
C)  is irrelevant if the production possibilities curve is shifting to the right. 
D)  suggests that insatiable wants can be fulfilled.

Question 7

The basic purpose of the other-things-equal assumption is to:

Accepted Answer

A)  allow one to reason about the relationship between variables X and Y without the intrusion of variable Z. 
B)  allow one to focus upon micro variables by ignoring macro variables. 
C)  allow one to focus upon macro variables by ignoring micro variables. 
D)  determine whether X causes Y or vice versa. 
A)  allow one to reason about the relationship between variables X and Y without the intrusion of variable Z. 
B)  allow one to focus upon micro variables by ignoring macro variables. 
C)  allow one to focus upon macro variables by ignoring micro variables. 
D)  determine whether X causes Y or vice versa.

Question 8

The present choice of position on the production possibilities curve will not influence the future location of the curve.

Accepted Answer

A) True 
 B)False

Question 9

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 another good 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 used to produce 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 another good 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 used to produce goods increase,the cost of producing any particular good will increase at the same rate.

Question 10

Answer the question on the basis of the following data: $\begin{array}{cc}
\underline{\text { After-Tax Income} } &\underline{ \text { Consumption }} \
\$ 1,000 & \$ 900 \
2,000 & 1,800 \
3,000 & 2,700 \
4,000 & 3,600 \
5,000 & 4,500
\end{array}$  The data indicate that:

Accepted Answer

A)  consumers spend 80 percent of their after-tax incomes. 
B)  consumers spend 90 percent of their after-tax incomes. 
C)  a tax reduction will reduce consumption. 
D)  the relationship between consumption and after-tax income is random. 
A)  consumers spend 80 percent of their after-tax incomes. 
B)  consumers spend 90 percent of their after-tax incomes. 
C)  a tax reduction will reduce consumption. 
D)  the relationship between consumption and after-tax income is random.

Question 11

Which of the following terms implies the least degree of confidence in an economic generalization?

Accepted Answer

A)  Hypothesis. 
B)  Theory. 
C)  Principle. 
D)  Law. 
A)  Hypothesis. 
B)  Theory. 
C)  Principle. 
D)  Law.

Question 12

When economists say that people act rationally in their self-interest,they mean that individuals:

Accepted Answer

A)  look for and pursue opportunities to increase their utility. 
B)  generally disregard the interests of others. 
C)  are mainly creatures of habit. 
D)  are usually impulsive and unpredictable. 
A)  look for and pursue opportunities to increase their utility. 
B)  generally disregard the interests of others. 
C)  are mainly creatures of habit. 
D)  are usually impulsive and unpredictable.

Question 13

Answer the question on the basis of the data given in the following production possibilities table: $\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\underline{\text { Production Possibilities (Alternatives) }}$
$\begin{array}{ccccccc}
&\underline{A}&\underline{B}&\underline{C}& \underline{D} &\underline{E}&\underline{F} \
 
\text { Capital Goods } &5&4&3&2&1&0\
\text { onsumer Goods } & 0 & 5 & 9 & 12 & 14 & 15 
\end{array}$  Refer to the table.If the economy is producing at production alternative C,the opportunity cost of the tenth unit of consumer goods will be:

Accepted Answer

A)  4 units of capital goods. 
B)  2 units of capital goods. 
C)  3 units of capital goods. 
D)  1/3 of a unit of capital goods. 
A)  4 units of capital goods. 
B)  2 units of capital goods. 
C)  3 units of capital goods. 
D)  1/3 of a unit of capital goods.

Question 14

Suppose that Scoobania,which has full employment,can obtain 1 unit of capital goods by sacrificing 2 units of consumer goods domestically but can obtain 1 unit of capital goods from another country by trading 1 unit of consumer goods for it.This reality illustrates:

Accepted Answer

A)  a rightward (outward)shift of the production possibilities curve. 
B)  increasing opportunity costs. 
C)  achieving points beyond the production possibilities curve through international specialization and trade. 
D)  productive efficiency. 
A)  a rightward (outward)shift of the production possibilities curve. 
B)  increasing opportunity costs. 
C)  achieving points beyond the production possibilities curve through international specialization and trade. 
D)  productive efficiency.

Question 15

Which of the following most closely relates to the idea of opportunity costs?

Accepted Answer

A)  trade-offs. 
B)  economic growth. 
C)  technological change. 
D)  capitalism. 
A)  trade-offs. 
B)  economic growth. 
C)  technological change. 
D)  capitalism.

Question 16

(Last Word)The safest way for an individual to leave a burning theater is to run for the nearest exit;it is therefore also the best means of escape for a large audience.This assertion illustrates the:

Accepted Answer

A)  "after this,therefore because of this" fallacy. 
B)  correlation fallacy. 
C)  fallacy of composition. 
D)  fallacy of limited decisions. 
A)  "after this,therefore because of this" fallacy. 
B)  correlation fallacy. 
C)  fallacy of composition. 
D)  fallacy of limited decisions.

Question 17

A nation's production possibilities curve is bowed out from the origin because:

Accepted Answer

A)  resources are not generally equally efficient in producing every good. 
B)  the originator of the idea drew it this way and modern economists follow this convention. 
C)  resources are scarce. 
D)  wants are virtually unlimited. 
A)  resources are not generally equally efficient in producing every good. 
B)  the originator of the idea drew it this way and modern economists follow this convention. 
C)  resources are scarce. 
D)  wants are virtually unlimited.

Question 18

Because economic generalizations are simplifications from reality,they are impractical and useless.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not considered by economists to be an economic resource?

Accepted Answer

A)  Money. 
B)  Factory workers. 
C)  Computers at a retail store. 
D)  A forest. 
A)  Money. 
B)  Factory workers. 
C)  Computers at a retail store. 
D)  A forest.

Question 20

If an economy is operating inside its production possibilities curve for consumer goods and capital goods,it:

Accepted Answer

A)  can only produce more consumer goods by producing fewer capital goods. 
B)  can only produce more capital goods by producing fewer consumer goods. 
C)  can produce more of both consumer goods and capital goods by using resources that are currently idle. 
D)  must improve its technology to produce more output. 
A)  can only produce more consumer goods by producing fewer capital goods. 
B)  can only produce more capital goods by producing fewer consumer goods. 
C)  can produce more of both consumer goods and capital goods by using resources that are currently idle. 
D)  must improve its technology to produce more output.

A typical concave (bowed out from the origin)production possibilities curve implies:

In moving along a given budget line:

The production possibilities curve tells us:

An economy will always operate at some point on its production possibilities curve.

Which of the following is a labor resource?

The concept of opportunity cost:

The basic purpose of the other-things-equal assumption is to:

The present choice of position on the production possibilities curve will not influence the future location of the curve.

The law of increasing opportunity costs states that:

Answer the question on the basis of the following data: \ 1,000 \ 900 2,000 1,800 3,000 2,700 4,000 3,600 5,000 4,500 The data indicate that:

Which of the following terms implies the least degree of confidence in an economic generalization?

When economists say that people act rationally in their self-interest,they mean that individuals:

Suppose that Scoobania,which has full employment,can obtain 1 unit of capital goods by sacrificing 2 units of consumer goods domestically but can obtain 1 unit of capital goods from another country by trading 1 unit of consumer goods for it.This reality illustrates:

Which of the following most closely relates to the idea of opportunity costs?

(Last Word)The safest way for an individual to leave a burning theater is to run for the nearest exit;it is therefore also the best means of escape for a large audience.This assertion illustrates the:

A nation's production possibilities curve is bowed out from the origin because:

Because economic generalizations are simplifications from reality,they are impractical and useless.

Which of the following is not considered by economists to be an economic resource?

If an economy is operating inside its production possibilities curve for consumer goods and capital goods,it:

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

Technology RD and Efficiency

The Demand for Resources

Wage Determination

Rent Interest and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Filters

Exam 1: Limits, Alternatives, and Choices

A typical concave (bowed out from the origin)production possibilities curve implies:

In moving along a given budget line:

The production possibilities curve tells us:

An economy will always operate at some point on its production possibilities curve.

Which of the following is a labor resource?

The concept of opportunity cost:

The basic purpose of the other-things-equal assumption is to:

The present choice of position on the production possibilities curve will not influence the future location of the curve.

The law of increasing opportunity costs states that:

Answer the question on the basis of the following data: \ 1,000 \ 900 2,000 1,800 3,000 2,700 4,000 3,600 5,000 4,500 The data indicate that:

Which of the following terms implies the least degree of confidence in an economic generalization?

When economists say that people act rationally in their self-interest,they mean that individuals:

Suppose that Scoobania,which has full employment,can obtain 1 unit of capital goods by sacrificing 2 units of consumer goods domestically but can obtain 1 unit of capital goods from another country by trading 1 unit of consumer goods for it.This reality illustrates:

Which of the following most closely relates to the idea of opportunity costs?

(Last Word)The safest way for an individual to leave a burning theater is to run for the nearest exit;it is therefore also the best means of escape for a large audience.This assertion illustrates the:

A nation's production possibilities curve is bowed out from the origin because:

Because economic generalizations are simplifications from reality,they are impractical and useless.

Which of the following is not considered by economists to be an economic resource?

If an economy is operating inside its production possibilities curve for consumer goods and capital goods,it:

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

Technology RD and Efficiency

The Demand for Resources

Wage Determination

Rent Interest and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Filters