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Deck 1: Economic Issues and Concepts
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Question
With a budget of $200 million,the government can choose to purchase 4 helicopters or repair 200 km of highway. 
FIGURE 1-1
Refer to Figure 1-1.If the government chooses to allocate all $200 million to highway repair,we can say that
A)the opportunity cost of the highway repair is uncertain.
B)the opportunity cost of the highway repair is $0.
C)the opportunity cost of the highway repair is 4 search and rescue helicopters.
D)there is no opportunity cost involved because the government has achieved its objectives.
E)there is no opportunity cost involved because the government stayed within its budget.
FIGURE 1-1Refer to Figure 1-1.If the government chooses to allocate all $200 million to highway repair,we can say that
A)the opportunity cost of the highway repair is uncertain.
B)the opportunity cost of the highway repair is $0.
C)the opportunity cost of the highway repair is 4 search and rescue helicopters.
D)there is no opportunity cost involved because the government has achieved its objectives.
E)there is no opportunity cost involved because the government stayed within its budget.
Question
With a budget of $500 000,a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination)for use in classrooms. 
FIGURE 1-2
Refer to Figure 1-2.Suppose the school board chooses to allocate all $500 000 to the purchase of laptop computers.What is the opportunity cost of this entire purchase?
A)The opportunity cost is 2000 laptops.
B)The opportunity cost is 20,000 textbooks.
C)The opportunity cost is uncertain.
D)The opportunity cost is $0.
E)There is no opportunity cost because the purchase was made within the available budget.
FIGURE 1-2Refer to Figure 1-2.Suppose the school board chooses to allocate all $500 000 to the purchase of laptop computers.What is the opportunity cost of this entire purchase?
A)The opportunity cost is 2000 laptops.
B)The opportunity cost is 20,000 textbooks.
C)The opportunity cost is uncertain.
D)The opportunity cost is $0.
E)There is no opportunity cost because the purchase was made within the available budget.
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With a budget of $500 000,a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination)for use in classrooms. FIGURE 1-2
Refer to Figure 1-2.For the school board,what is the opportunity cost of one additional textbook?
A)2000 laptops
B)1000 laptops
C)1/100 of a laptop
D)1/1000 of a laptop
E)1/10 of a laptop
FIGURE 1-2Refer to Figure 1-2.For the school board,what is the opportunity cost of one additional textbook?
A)2000 laptops
B)1000 laptops
C)1/100 of a laptop
D)1/1000 of a laptop
E)1/10 of a laptop
Question
With a budget of $500 000,a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination)for use in classrooms. FIGURE 1-2
Refer to Figure 1-2.Which of the following combinations of textbooks and laptops is unaffordable,given the school board's budget of $500 000?
A)A
B)B
C)C
D)D
E)E
FIGURE 1-2Refer to Figure 1-2.Which of the following combinations of textbooks and laptops is unaffordable,given the school board's budget of $500 000?
A)A
B)B
C)C
D)D
E)E
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With a budget of $500 000,a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination)for use in classrooms. FIGURE 1-2
Refer to Figure 1-2.What is the price of a laptop computer in this example?
A)$25
B)$40
C)$50
D)$100
E)$250
FIGURE 1-2Refer to Figure 1-2.What is the price of a laptop computer in this example?
A)$25
B)$40
C)$50
D)$100
E)$250
Question
With a budget of $200 million,the government can choose to purchase 4 helicopters or repair 200 km of highway. FIGURE 1-1
Refer to Figure 1-1.For the government,the opportunity cost of one search and rescue helicopter is
A)0 kilometres of highway repair.
B)50 kilometres of highway repair.
C)100 kilometres of highway repair.
D)150 kilometres of highway repair.
E)200 kilometres of highway repair.
FIGURE 1-1Refer to Figure 1-1.For the government,the opportunity cost of one search and rescue helicopter is
A)0 kilometres of highway repair.
B)50 kilometres of highway repair.
C)100 kilometres of highway repair.
D)150 kilometres of highway repair.
E)200 kilometres of highway repair.
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With a budget of $200 million,the government can choose to purchase 4 helicopters or repair 200 km of highway. FIGURE 1-1
Refer to Figure 1-1.Which of the following combinations of kilometres of highway repair and helicopters is unaffordable,given the government's budget of $200 million?
A)B
B)D
C)E
D)F
E)G
FIGURE 1-1Refer to Figure 1-1.Which of the following combinations of kilometres of highway repair and helicopters is unaffordable,given the government's budget of $200 million?
A)B
B)D
C)E
D)F
E)G
Question
With a budget of $500 000,a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination)for use in classrooms. FIGURE 1-2
Refer to Figure 1-2.For the school board,what is the opportunity cost of one additional laptop computer?
A)0 textbooks
B)1/10 of a textbook
C)10 textbooks
D)20 textbooks
E)2000 textbooks
FIGURE 1-2Refer to Figure 1-2.For the school board,what is the opportunity cost of one additional laptop computer?
A)0 textbooks
B)1/10 of a textbook
C)10 textbooks
D)20 textbooks
E)2000 textbooks
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With a budget of $500 000,a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination)for use in classrooms. FIGURE 1-2
Refer to Figure 1-2.What is the price of a textbook in this example?
A)$25
B)$40
C)$50
D)$100
E)$250
FIGURE 1-2Refer to Figure 1-2.What is the price of a textbook in this example?
A)$25
B)$40
C)$50
D)$100
E)$250
Question
With a budget of $200 million,the government can choose to purchase 4 helicopters or repair 200 km of highway. FIGURE 1-1
Refer to Figure 1-1.For the government,the opportunity cost of one kilometre of highway repair is
A)1 search and rescue helicopter.
B)1/2 of a search and rescue helicopter.
C)1/10 of a search and rescue helicopter.
D)1/50 of a search and rescue helicopter.
E)1/100 of a search and rescue helicopter.
FIGURE 1-1Refer to Figure 1-1.For the government,the opportunity cost of one kilometre of highway repair is
A)1 search and rescue helicopter.
B)1/2 of a search and rescue helicopter.
C)1/10 of a search and rescue helicopter.
D)1/50 of a search and rescue helicopter.
E)1/100 of a search and rescue helicopter.
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Madeleine allows herself $100 per month for purchasing coffee.The diagram below illustrates the choices available to her in each month. 
FIGURE 1-3
Refer to Figure 1-3.For Madeleine,the opportunity cost of one latte is
A)1/4 of a regular coffee.
B)1/4 of a latte.
C)8 regular coffees.
D)80 regular coffees.
E)4 regular coffees.
FIGURE 1-3Refer to Figure 1-3.For Madeleine,the opportunity cost of one latte is
A)1/4 of a regular coffee.
B)1/4 of a latte.
C)8 regular coffees.
D)80 regular coffees.
E)4 regular coffees.
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Madeleine allows herself $100 per month for purchasing coffee.The diagram below illustrates the choices available to her in each month. FIGURE 1-3
Refer to Figure 1-3.Which of the following combinations of regular coffees and lattes is affordable over the one-month period,given Madeleine's budget?
A)15 lattes and 30 coffees
B)16 lattes and 16 coffees
C)8 lattes and 50 coffees
D)4 lattes and 66 coffees
E)20 lattes and 80 coffees
FIGURE 1-3Refer to Figure 1-3.Which of the following combinations of regular coffees and lattes is affordable over the one-month period,given Madeleine's budget?
A)15 lattes and 30 coffees
B)16 lattes and 16 coffees
C)8 lattes and 50 coffees
D)4 lattes and 66 coffees
E)20 lattes and 80 coffees
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The table below illustrates that,in one day,Tristan can produce either 12 fishing lures or mow 3 lawns,while Thomas can produce either 6 fishing lures or mow 6 lawns.
TABLE 1-1
Refer to Table 1-1.Which of the following statements about Tristan's and Thomas's opportunity costs is correct?
A)Tristan has a higher opportunity cost of producing mowed lawns.
B)Thomas has a higher opportunity cost of producing mowed lawns.
C)Tristan has a higher opportunity cost of producing fishing lures.
D)Thomas has a higher opportunity cost of producing fishing lures.
E)Both A and D are correct.
TABLE 1-1Refer to Table 1-1.Which of the following statements about Tristan's and Thomas's opportunity costs is correct?
A)Tristan has a higher opportunity cost of producing mowed lawns.
B)Thomas has a higher opportunity cost of producing mowed lawns.
C)Tristan has a higher opportunity cost of producing fishing lures.
D)Thomas has a higher opportunity cost of producing fishing lures.
E)Both A and D are correct.
Question
Madeleine allows herself $100 per month for purchasing coffee.The diagram below illustrates the choices available to her in each month. FIGURE 1-3
Refer to Figure 1-3.What is the price of a coffee latte in this example?
A)$0.80
B)$1.00
C)$1.25
D)$2.00
E)$5.00
FIGURE 1-3Refer to Figure 1-3.What is the price of a coffee latte in this example?
A)$0.80
B)$1.00
C)$1.25
D)$2.00
E)$5.00
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The table below illustrates that,in one day,Tristan can produce either 12 fishing lures or mow 3 lawns,while Thomas can produce either 6 fishing lures or mow 6 lawns.
TABLE 1-1
Refer to Table 1-1.What is Thomas's opportunity cost of producing one mowed lawn?
A)0 fishing lures
B)1/6 fishing lure
C)one fishing lure
D)6 fishing lures
E)12 fishing lures
TABLE 1-1Refer to Table 1-1.What is Thomas's opportunity cost of producing one mowed lawn?
A)0 fishing lures
B)1/6 fishing lure
C)one fishing lure
D)6 fishing lures
E)12 fishing lures
Question
Madeleine allows herself $100 per month for purchasing coffee.The diagram below illustrates the choices available to her in each month. FIGURE 1-3
Refer to Figure 1-3.What is the price of a regular coffee in this example?
A)$0.80
B)$1.25
C)$2.00
D)$5.00
E)$8.00
FIGURE 1-3Refer to Figure 1-3.What is the price of a regular coffee in this example?
A)$0.80
B)$1.25
C)$2.00
D)$5.00
E)$8.00
Question
The table below illustrates that,in one day,Tristan can produce either 12 fishing lures or mow 3 lawns,while Thomas can produce either 6 fishing lures or mow 6 lawns.
TABLE 1-1
Refer to Table 1-1.If Tristan and Thomas want to maximize their joint output from one day of work,how should they specialize their production?
A)Tristan produces 3 mowed lawns; Thomas produces 6 mowed lawns
B)Tristan produces 6 lures; Thomas produces 6 lures
C)Tristan produces 6 lures and 3 mowed lawns
D)Tristan produces 12 lures; Thomas produces 6 mowed lawns
E)Tristan produces nothing,Thomas produces 6 lures and 6 mowed lawns
TABLE 1-1Refer to Table 1-1.If Tristan and Thomas want to maximize their joint output from one day of work,how should they specialize their production?
A)Tristan produces 3 mowed lawns; Thomas produces 6 mowed lawns
B)Tristan produces 6 lures; Thomas produces 6 lures
C)Tristan produces 6 lures and 3 mowed lawns
D)Tristan produces 12 lures; Thomas produces 6 mowed lawns
E)Tristan produces nothing,Thomas produces 6 lures and 6 mowed lawns
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The table below illustrates that,in one day,Tristan can produce either 12 fishing lures or mow 3 lawns,while Thomas can produce either 6 fishing lures or mow 6 lawns.
TABLE 1-1
Refer to Table 1-1.What is Tristan's opportunity cost of producing one mowed lawn?
A)one fishing lure
B)3 fishing lures
C)4 fishing lures
D)6 fishing lures
E)12 fishing lures
TABLE 1-1Refer to Table 1-1.What is Tristan's opportunity cost of producing one mowed lawn?
A)one fishing lure
B)3 fishing lures
C)4 fishing lures
D)6 fishing lures
E)12 fishing lures
Question
Madeleine allows herself $100 per month for purchasing coffee.The diagram below illustrates the choices available to her in each month. FIGURE 1-3
Refer to Figure 1-3.If Madeleine chooses to allocate all $100 to buying lattes,we can say that her opportunity cost in one month is
A)zero because she bought what she desired.
B)zero because she stayed within her budget.
C)80 cups of regular coffee.
D)40 cups of regular coffee.
E)20 cups of regular coffee.
FIGURE 1-3Refer to Figure 1-3.If Madeleine chooses to allocate all $100 to buying lattes,we can say that her opportunity cost in one month is
A)zero because she bought what she desired.
B)zero because she stayed within her budget.
C)80 cups of regular coffee.
D)40 cups of regular coffee.
E)20 cups of regular coffee.
Question
The table below illustrates that,in one day,Tristan can produce either 12 fishing lures or mow 3 lawns,while Thomas can produce either 6 fishing lures or mow 6 lawns.
TABLE 1-1
Refer to Table 1-1.What is Thomas's opportunity cost of producing one fishing lure?
A)5 lures
B)1 mowed lawn
C)1/6 of a lure
D)1/6 of a mowed lawn
E)there is no opportunity cost
TABLE 1-1Refer to Table 1-1.What is Thomas's opportunity cost of producing one fishing lure?
A)5 lures
B)1 mowed lawn
C)1/6 of a lure
D)1/6 of a mowed lawn
E)there is no opportunity cost
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The table below illustrates that,in one day,Tristan can produce either 12 fishing lures or mow 3 lawns,while Thomas can produce either 6 fishing lures or mow 6 lawns.
TABLE 1-1
Refer to Table 1-1.What is Tristan's opportunity cost of producing one fishing lure?
A)one mowed lawn
B)3 mowed lawns
C)1/3 of a mowed lawn
D)1/4 of a mowed lawn
E)4 mowed lawns
TABLE 1-1Refer to Table 1-1.What is Tristan's opportunity cost of producing one fishing lure?
A)one mowed lawn
B)3 mowed lawns
C)1/3 of a mowed lawn
D)1/4 of a mowed lawn
E)4 mowed lawns
Question
Madeleine allows herself $100 per month for purchasing coffee.The diagram below illustrates the choices available to her in each month. FIGURE 1-3
Refer to Figure 1-3.For Madeleine,the opportunity cost of one regular coffee is
A)1/4 of a regular coffee.
B)20 lattes.
C)4 lattes.
D)1/4 of a latte.
E)80 lattes.
FIGURE 1-3Refer to Figure 1-3.For Madeleine,the opportunity cost of one regular coffee is
A)1/4 of a regular coffee.
B)20 lattes.
C)4 lattes.
D)1/4 of a latte.
E)80 lattes.
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The diagram below shows two production possibilities boundaries for Country X. 
FIGURE 1-4
Refer to Figure 1-4.If Country X,constrained by the production possibilities boundary PPB1,is currently producing at point A,it can produce more capital goods by moving to point
A)F.
B)E.
C)D.
D)C.
E)B.
FIGURE 1-4Refer to Figure 1-4.If Country X,constrained by the production possibilities boundary PPB1,is currently producing at point A,it can produce more capital goods by moving to point
A)F.
B)E.
C)D.
D)C.
E)B.
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The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4
Refer to Figure 1-4.The production possibilities boundaries are drawn concave to the origin.What does this shape of the PPB demonstrate?
A)the decreasing opportunity cost of producing more of either good
B)the scarcity of resources in the economy
C)the constant opportunity cost of producing more of either good
D)the unfair distribution of resources in the economy
E)the increasing opportunity cost of producing more of either good
FIGURE 1-4Refer to Figure 1-4.The production possibilities boundaries are drawn concave to the origin.What does this shape of the PPB demonstrate?
A)the decreasing opportunity cost of producing more of either good
B)the scarcity of resources in the economy
C)the constant opportunity cost of producing more of either good
D)the unfair distribution of resources in the economy
E)the increasing opportunity cost of producing more of either good
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The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4
Refer to Figure 1-4.If Country X,constrained by the production possibilities boundary PPB1,is producing the combination of goods indicated at point F,it can produce more consumer goods by moving to one of the points
A)A or E.
B)D or E.
C)A,B,or C.
D)A or B,but not C.
E)A,B,C,D,or E.
FIGURE 1-4Refer to Figure 1-4.If Country X,constrained by the production possibilities boundary PPB1,is producing the combination of goods indicated at point F,it can produce more consumer goods by moving to one of the points
A)A or E.
B)D or E.
C)A,B,or C.
D)A or B,but not C.
E)A,B,C,D,or E.
Question
The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4
Refer to Figure 1-4.If Country X were producing at point C,
A)the opportunity cost of moving to point B is to give up some consumption goods.
B)the opportunity cost of moving to point A is zero.
C)the opportunity cost of moving to point A is to give up some capital goods.
D)this is the maximum output possible from given resources.
E)it is not possible to move to any point on PPB1 or PPB2 without technological progress.
FIGURE 1-4Refer to Figure 1-4.If Country X were producing at point C,
A)the opportunity cost of moving to point B is to give up some consumption goods.
B)the opportunity cost of moving to point A is zero.
C)the opportunity cost of moving to point A is to give up some capital goods.
D)this is the maximum output possible from given resources.
E)it is not possible to move to any point on PPB1 or PPB2 without technological progress.
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The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4
Refer to Figure 1-4.At point B,
A)the price of capital goods is higher than the price of consumer goods.
B)Country X is producing too many consumer goods and too few capital goods.
C)the price of consumer goods is equal to the price of capital goods.
D)the opportunity cost of producing an extra unit of capital goods is higher than at point A.
E)the opportunity cost of producing an extra unit of consumer goods is higher than at point A.
FIGURE 1-4Refer to Figure 1-4.At point B,
A)the price of capital goods is higher than the price of consumer goods.
B)Country X is producing too many consumer goods and too few capital goods.
C)the price of consumer goods is equal to the price of capital goods.
D)the opportunity cost of producing an extra unit of capital goods is higher than at point A.
E)the opportunity cost of producing an extra unit of consumer goods is higher than at point A.
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The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4
Refer to Figure 1-4.If Country X is currently producing at point A,it could move to point B if
A)the cost of producing capital goods were to increase.
B)some resources were switched from the capital goods industries to the consumer goods industries.
C)the cost of producing consumer goods were to increase.
D)some resources were switched from the consumer goods industries to the capital goods industries.
E)Country X is no longer able to produce the quantity of capital goods at point A.
FIGURE 1-4Refer to Figure 1-4.If Country X is currently producing at point A,it could move to point B if
A)the cost of producing capital goods were to increase.
B)some resources were switched from the capital goods industries to the consumer goods industries.
C)the cost of producing consumer goods were to increase.
D)some resources were switched from the consumer goods industries to the capital goods industries.
E)Country X is no longer able to produce the quantity of capital goods at point A.
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The downward-sloping line in the diagram below shows the combinations of health care and education expenditures that the government can afford with a given amount of tax revenue. 
FIGURE 1-6
Refer to Figure 1-6.The levels of health and education expenditures at point C
A)are less than at point D.
B)are equal to those of point A and point B.
C)are more cost-effective than those at points A,B,and D.
D)could be achieved if the prices of health and/or education increased.
E)are not attainable with the government's current budget.
FIGURE 1-6Refer to Figure 1-6.The levels of health and education expenditures at point C
A)are less than at point D.
B)are equal to those of point A and point B.
C)are more cost-effective than those at points A,B,and D.
D)could be achieved if the prices of health and/or education increased.
E)are not attainable with the government's current budget.
Question
FIGURE 1-5Refer to Figure 1-5.Which production possibilities boundaries exhibit decreasing opportunity costs?
A)boundary B only
B)boundaries A and C
C)boundaries A and B
D)boundary A only
E)boundary C only
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FIGURE 1-5Refer to Figure 1-5.Which production possibilities boundaries are consistent with increasing opportunity costs?
A)boundary A only
B)boundaries A and B
C)boundary C only
D)boundaries B and C
E)boundaries A,B,and C
Question
The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4
Refer to Figure 1-4.Growth in the country's productive capacity is illustrated by
A)a point like D outside the boundary.
B)a movement from a point inside the boundary such as C to the boundary.
C)the movement between points on a given boundary.
D)a single point such as A on the boundary.
E)an outward shift of the boundary,for example from PPB1 to PPB2.
FIGURE 1-4Refer to Figure 1-4.Growth in the country's productive capacity is illustrated by
A)a point like D outside the boundary.
B)a movement from a point inside the boundary such as C to the boundary.
C)the movement between points on a given boundary.
D)a single point such as A on the boundary.
E)an outward shift of the boundary,for example from PPB1 to PPB2.
Question
The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4
Refer to Figure 1-4.An outward shift of the production possibilities boundary from
to 
indicates which of the following?
A)an increase in the price of raw materials for consumer goods
B)growth in the country's productive capacity
C)an increase in the price of raw material for capital goods
D)more of the country's resources are being used
E)the country's resources are being used less efficiently
FIGURE 1-4Refer to Figure 1-4.An outward shift of the production possibilities boundary from
to indicates which of the following?A)an increase in the price of raw materials for consumer goods
B)growth in the country's productive capacity
C)an increase in the price of raw material for capital goods
D)more of the country's resources are being used
E)the country's resources are being used less efficiently
Question
FIGURE 1-5Refer to Figure 1-5.Suppose that the relevant production possibilities boundary is the one labelled B.This boundary implies that
A)the concept of opportunity cost is not at work in this economy.
B)the opportunity cost of producing either capital goods or consumer goods does not depend on how much of each good is produced.
C)consumer goods are preferred to capital goods.
D)in this society the resources are not efficiently employed.
E)capital goods are preferred to consumer goods.
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The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4
Refer to Figure 1-4.Suppose that Country X is currently producing at point E.Country X could achieve production at point D if
A)the given resources were fully employed.
B)the given resources were more efficiently employed.
C)sufficient improvements in technology occurred in either the capital goods industry or the consumer goods industries.
D)firms reduced output of capital goods.
E)the prices of capital goods and consumption goods fell.
FIGURE 1-4Refer to Figure 1-4.Suppose that Country X is currently producing at point E.Country X could achieve production at point D if
A)the given resources were fully employed.
B)the given resources were more efficiently employed.
C)sufficient improvements in technology occurred in either the capital goods industry or the consumer goods industries.
D)firms reduced output of capital goods.
E)the prices of capital goods and consumption goods fell.
Question
The downward-sloping line in the diagram below shows the combinations of health care and education expenditures that the government can afford with a given amount of tax revenue. FIGURE 1-6
Refer to Figure 1-6.If the government's spending on health and education is given by point B,a move to point A must involve
A)less spending on health.
B)zero opportunity cost.
C)less spending on education.
D)less spending in total.
E)more spending on education.
FIGURE 1-6Refer to Figure 1-6.If the government's spending on health and education is given by point B,a move to point A must involve
A)less spending on health.
B)zero opportunity cost.
C)less spending on education.
D)less spending in total.
E)more spending on education.
Question
The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4
Refer to Figure 1-4.A shift of the production possibilities boundary from PPB1 to PPB2 implies
A)a movement from full employment to some unemployment.
B)that if point E is the new choice of outputs,productivity has increased in the consumer goods industry.
C)that technology in the capital goods industries has improved.
D)an inevitable decrease in total output.
E)that technology in the consumer goods industry has improved.
FIGURE 1-4Refer to Figure 1-4.A shift of the production possibilities boundary from PPB1 to PPB2 implies
A)a movement from full employment to some unemployment.
B)that if point E is the new choice of outputs,productivity has increased in the consumer goods industry.
C)that technology in the capital goods industries has improved.
D)an inevitable decrease in total output.
E)that technology in the consumer goods industry has improved.
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Deck 1: Economic Issues and Concepts
1
With a budget of $200 million,the government can choose to purchase 4 helicopters or repair 200 km of highway. FIGURE 1-1
Refer to Figure 1-1.If the government chooses to allocate all $200 million to highway repair,we can say that
A)the opportunity cost of the highway repair is uncertain.
B)the opportunity cost of the highway repair is $0.
C)the opportunity cost of the highway repair is 4 search and rescue helicopters.
D)there is no opportunity cost involved because the government has achieved its objectives.
E)there is no opportunity cost involved because the government stayed within its budget.
FIGURE 1-1Refer to Figure 1-1.If the government chooses to allocate all $200 million to highway repair,we can say that
A)the opportunity cost of the highway repair is uncertain.
B)the opportunity cost of the highway repair is $0.
C)the opportunity cost of the highway repair is 4 search and rescue helicopters.
D)there is no opportunity cost involved because the government has achieved its objectives.
E)there is no opportunity cost involved because the government stayed within its budget.
the opportunity cost of the highway repair is 4 search and rescue helicopters.
2
With a budget of $500 000,a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination)for use in classrooms. FIGURE 1-2
Refer to Figure 1-2.Suppose the school board chooses to allocate all $500 000 to the purchase of laptop computers.What is the opportunity cost of this entire purchase?
A)The opportunity cost is 2000 laptops.
B)The opportunity cost is 20,000 textbooks.
C)The opportunity cost is uncertain.
D)The opportunity cost is $0.
E)There is no opportunity cost because the purchase was made within the available budget.
FIGURE 1-2Refer to Figure 1-2.Suppose the school board chooses to allocate all $500 000 to the purchase of laptop computers.What is the opportunity cost of this entire purchase?
A)The opportunity cost is 2000 laptops.
B)The opportunity cost is 20,000 textbooks.
C)The opportunity cost is uncertain.
D)The opportunity cost is $0.
E)There is no opportunity cost because the purchase was made within the available budget.
The opportunity cost is 20,000 textbooks.
3
Which of the following statements best describes the economic concept of scarcity?
A)Society is not employing all of its available resources in an efficient manner.
B)People's wants can never be satisfied by the available resources.
C)Scarcity afflicts only poor countries.
D)Too many frivolous goods and services are produced at the expense of socially desirable goods and services.
E)Production is efficient,but distribution is inefficient.
A)Society is not employing all of its available resources in an efficient manner.
B)People's wants can never be satisfied by the available resources.
C)Scarcity afflicts only poor countries.
D)Too many frivolous goods and services are produced at the expense of socially desirable goods and services.
E)Production is efficient,but distribution is inefficient.
People's wants can never be satisfied by the available resources.
4
With a budget of $500 000,a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination)for use in classrooms. FIGURE 1-2
Refer to Figure 1-2.For the school board,what is the opportunity cost of one additional textbook?
A)2000 laptops
B)1000 laptops
C)1/100 of a laptop
D)1/1000 of a laptop
E)1/10 of a laptop
FIGURE 1-2Refer to Figure 1-2.For the school board,what is the opportunity cost of one additional textbook?
A)2000 laptops
B)1000 laptops
C)1/100 of a laptop
D)1/1000 of a laptop
E)1/10 of a laptop
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5
With a budget of $500 000,a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination)for use in classrooms. FIGURE 1-2
Refer to Figure 1-2.Which of the following combinations of textbooks and laptops is unaffordable,given the school board's budget of $500 000?
A)A
B)B
C)C
D)D
E)E
FIGURE 1-2Refer to Figure 1-2.Which of the following combinations of textbooks and laptops is unaffordable,given the school board's budget of $500 000?
A)A
B)B
C)C
D)D
E)E
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6
Economics can best be described as
A)the study of how a society ought to allocate its resources.
B)the study of the use of scarce resources to satisfy unlimited human wants.
C)the application of sophisticated mathematical models to address social problems.
D)a normative science.
E)the study of how to reduce inflation and unemployment.
A)the study of how a society ought to allocate its resources.
B)the study of the use of scarce resources to satisfy unlimited human wants.
C)the application of sophisticated mathematical models to address social problems.
D)a normative science.
E)the study of how to reduce inflation and unemployment.
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7
Society's resources are often divided into broad categories.They are
A)goods and services.
B)factors of consumption.
C)land,labour,and capital.
D)population and natural resources.
E)tangible commodities and intangible commodities.
A)goods and services.
B)factors of consumption.
C)land,labour,and capital.
D)population and natural resources.
E)tangible commodities and intangible commodities.
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8
Scarcity is likely to be
A)a problem that will be solved by the proper use of available resources.
B)unique to the twentieth century.
C)a problem that will always exist.
D)a result of the work ethic.
E)eliminated with a better understanding of economics.
A)a problem that will be solved by the proper use of available resources.
B)unique to the twentieth century.
C)a problem that will always exist.
D)a result of the work ethic.
E)eliminated with a better understanding of economics.
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9
Which of the following best describes the study of economics?
A)how to plan an economy
B)how to limit human wants so that scarce resources are sufficient
C)why resources are scarce
D)the allocation of scarce resources among alternative uses
E)how to distribute income as equally as possible
A)how to plan an economy
B)how to limit human wants so that scarce resources are sufficient
C)why resources are scarce
D)the allocation of scarce resources among alternative uses
E)how to distribute income as equally as possible
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10
With a budget of $500 000,a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination)for use in classrooms. FIGURE 1-2
Refer to Figure 1-2.What is the price of a laptop computer in this example?
A)$25
B)$40
C)$50
D)$100
E)$250
FIGURE 1-2Refer to Figure 1-2.What is the price of a laptop computer in this example?
A)$25
B)$40
C)$50
D)$100
E)$250
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11
With a budget of $200 million,the government can choose to purchase 4 helicopters or repair 200 km of highway. FIGURE 1-1
Refer to Figure 1-1.For the government,the opportunity cost of one search and rescue helicopter is
A)0 kilometres of highway repair.
B)50 kilometres of highway repair.
C)100 kilometres of highway repair.
D)150 kilometres of highway repair.
E)200 kilometres of highway repair.
FIGURE 1-1Refer to Figure 1-1.For the government,the opportunity cost of one search and rescue helicopter is
A)0 kilometres of highway repair.
B)50 kilometres of highway repair.
C)100 kilometres of highway repair.
D)150 kilometres of highway repair.
E)200 kilometres of highway repair.
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12
A basic underlying point in economics is that
A)people have unlimited wants in the face of limited resources.
B)there are unlimited resources.
C)governments should satisfy the needs of the people.
D)people have limited wants in the face of limited resources.
E)governments should never interfere in the workings of a market economy.
A)people have unlimited wants in the face of limited resources.
B)there are unlimited resources.
C)governments should satisfy the needs of the people.
D)people have limited wants in the face of limited resources.
E)governments should never interfere in the workings of a market economy.
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13
With a budget of $200 million,the government can choose to purchase 4 helicopters or repair 200 km of highway. FIGURE 1-1
Refer to Figure 1-1.Which of the following combinations of kilometres of highway repair and helicopters is unaffordable,given the government's budget of $200 million?
A)B
B)D
C)E
D)F
E)G
FIGURE 1-1Refer to Figure 1-1.Which of the following combinations of kilometres of highway repair and helicopters is unaffordable,given the government's budget of $200 million?
A)B
B)D
C)E
D)F
E)G
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14
With a budget of $500 000,a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination)for use in classrooms. FIGURE 1-2
Refer to Figure 1-2.For the school board,what is the opportunity cost of one additional laptop computer?
A)0 textbooks
B)1/10 of a textbook
C)10 textbooks
D)20 textbooks
E)2000 textbooks
FIGURE 1-2Refer to Figure 1-2.For the school board,what is the opportunity cost of one additional laptop computer?
A)0 textbooks
B)1/10 of a textbook
C)10 textbooks
D)20 textbooks
E)2000 textbooks
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15
Which of the following statements provides the best definition of economics?
A)The study of the most equitable distribution of scarce resources.
B)The study of the use of scarce resources to satisfy unlimited human wants.
C)The study of the production of goods and services.
D)The study of the productive capacity of a nation's factors of production.
E)The study of production and increasing its efficiency.
A)The study of the most equitable distribution of scarce resources.
B)The study of the use of scarce resources to satisfy unlimited human wants.
C)The study of the production of goods and services.
D)The study of the productive capacity of a nation's factors of production.
E)The study of production and increasing its efficiency.
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16
Consider the following list: a worker with training in video gaming technology,10 hectares of arable land in southern Ontario,a fishing trawler in Nova Scotia,an ice-cream truck at a park in Quebec.Each of these is an example of
A)a factor of production.
B)a capital resource.
C)a commodity.
D)goods and services.
E)an economic service.
A)a factor of production.
B)a capital resource.
C)a commodity.
D)goods and services.
E)an economic service.
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17
With a budget of $500 000,a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate combination)for use in classrooms. FIGURE 1-2
Refer to Figure 1-2.What is the price of a textbook in this example?
A)$25
B)$40
C)$50
D)$100
E)$250
FIGURE 1-2Refer to Figure 1-2.What is the price of a textbook in this example?
A)$25
B)$40
C)$50
D)$100
E)$250
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18
With a budget of $200 million,the government can choose to purchase 4 helicopters or repair 200 km of highway. FIGURE 1-1
Refer to Figure 1-1.For the government,the opportunity cost of one kilometre of highway repair is
A)1 search and rescue helicopter.
B)1/2 of a search and rescue helicopter.
C)1/10 of a search and rescue helicopter.
D)1/50 of a search and rescue helicopter.
E)1/100 of a search and rescue helicopter.
FIGURE 1-1Refer to Figure 1-1.For the government,the opportunity cost of one kilometre of highway repair is
A)1 search and rescue helicopter.
B)1/2 of a search and rescue helicopter.
C)1/10 of a search and rescue helicopter.
D)1/50 of a search and rescue helicopter.
E)1/100 of a search and rescue helicopter.
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19
Because resources are scarce,individuals are required to
A)make choices among alternatives.
B)use resources inefficiently.
C)sacrifice production but not consumption.
D)improve distribution but not production.
E)improve production but not distribution.
A)make choices among alternatives.
B)use resources inefficiently.
C)sacrifice production but not consumption.
D)improve distribution but not production.
E)improve production but not distribution.
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20
Which of the following statements best describes the underlying feature in most economic problems?
A)People have unlimited wants in the face of limited resources.
B)There are unlimited resources.
C)Our country is rich; we just don't realize it.
D)People have limited wants in the face of limited resources.
E)Governments should never interfere in the workings of a market economy.
A)People have unlimited wants in the face of limited resources.
B)There are unlimited resources.
C)Our country is rich; we just don't realize it.
D)People have limited wants in the face of limited resources.
E)Governments should never interfere in the workings of a market economy.
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21
Madeleine allows herself $100 per month for purchasing coffee.The diagram below illustrates the choices available to her in each month. FIGURE 1-3
Refer to Figure 1-3.For Madeleine,the opportunity cost of one latte is
A)1/4 of a regular coffee.
B)1/4 of a latte.
C)8 regular coffees.
D)80 regular coffees.
E)4 regular coffees.
FIGURE 1-3Refer to Figure 1-3.For Madeleine,the opportunity cost of one latte is
A)1/4 of a regular coffee.
B)1/4 of a latte.
C)8 regular coffees.
D)80 regular coffees.
E)4 regular coffees.
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22
Suppose there are only three alternatives to attending a "free" social event: read a novel (you value this at $10),go to work (you could earn $20),or watch videos with some friends (you value this at $25).The opportunity cost of attending the social event is
A)$10.
B)$20.
C)$25.
D)$45.
E)$55.
A)$10.
B)$20.
C)$25.
D)$45.
E)$55.
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23
Suppose you own a courier service and you use two types of delivery vehicles - Model A,which costs $30 000 to purchase,and Model B,which costs $50 000 to purchase.You have a budget of $300 000 for the purchase of new vehicles.If you were to draw a budget line to illustrate the choice between Model A and Model B vehicles,with A on the vertical axis and B on the horizontal axis,the vertical intercept and the horizontal intercept,respectively,would be
A)10 and 10.
B)6 and 6.
C)0 and 10.
D)0 and 0.
E)10 and 6.
A)10 and 10.
B)6 and 6.
C)0 and 10.
D)0 and 0.
E)10 and 6.
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24
Madeleine allows herself $100 per month for purchasing coffee.The diagram below illustrates the choices available to her in each month. FIGURE 1-3
Refer to Figure 1-3.Which of the following combinations of regular coffees and lattes is affordable over the one-month period,given Madeleine's budget?
A)15 lattes and 30 coffees
B)16 lattes and 16 coffees
C)8 lattes and 50 coffees
D)4 lattes and 66 coffees
E)20 lattes and 80 coffees
FIGURE 1-3Refer to Figure 1-3.Which of the following combinations of regular coffees and lattes is affordable over the one-month period,given Madeleine's budget?
A)15 lattes and 30 coffees
B)16 lattes and 16 coffees
C)8 lattes and 50 coffees
D)4 lattes and 66 coffees
E)20 lattes and 80 coffees
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25
The opportunity cost of going to college or university for four years is
A)equal to the wage rate a person will earn after graduation.
B)the least valued alternative one forfeits to attend.
C)the cost of tuition and books and four years of lost wages from employment.
D)the cost of tuition,residence fees and books.
E)zero.
A)equal to the wage rate a person will earn after graduation.
B)the least valued alternative one forfeits to attend.
C)the cost of tuition and books and four years of lost wages from employment.
D)the cost of tuition,residence fees and books.
E)zero.
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26
The table below illustrates that,in one day,Tristan can produce either 12 fishing lures or mow 3 lawns,while Thomas can produce either 6 fishing lures or mow 6 lawns.
TABLE 1-1
Refer to Table 1-1.Which of the following statements about Tristan's and Thomas's opportunity costs is correct?
A)Tristan has a higher opportunity cost of producing mowed lawns.
B)Thomas has a higher opportunity cost of producing mowed lawns.
C)Tristan has a higher opportunity cost of producing fishing lures.
D)Thomas has a higher opportunity cost of producing fishing lures.
E)Both A and D are correct.
TABLE 1-1Refer to Table 1-1.Which of the following statements about Tristan's and Thomas's opportunity costs is correct?
A)Tristan has a higher opportunity cost of producing mowed lawns.
B)Thomas has a higher opportunity cost of producing mowed lawns.
C)Tristan has a higher opportunity cost of producing fishing lures.
D)Thomas has a higher opportunity cost of producing fishing lures.
E)Both A and D are correct.
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27
Madeleine allows herself $100 per month for purchasing coffee.The diagram below illustrates the choices available to her in each month. FIGURE 1-3
Refer to Figure 1-3.What is the price of a coffee latte in this example?
A)$0.80
B)$1.00
C)$1.25
D)$2.00
E)$5.00
FIGURE 1-3Refer to Figure 1-3.What is the price of a coffee latte in this example?
A)$0.80
B)$1.00
C)$1.25
D)$2.00
E)$5.00
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28
Suppose you own a courier service and you use two types of delivery vehicles - Model A,which costs $30 000 to purchase,and Model B,which costs $50 000 to purchase.You have a budget of $300 000 for the purchase of new vehicles.What is the opportunity cost of one Model B vehicle?
A)0
B)3/5ths of a Model A vehicle
C)5/3rds of a Model A vehicle
D)5 Model A vehicles
E)3 Model A vehicles
A)0
B)3/5ths of a Model A vehicle
C)5/3rds of a Model A vehicle
D)5 Model A vehicles
E)3 Model A vehicles
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29
Suppose you own a courier service and you use two types of delivery vehicles - Model A,which costs $30 000 to purchase,and Model B,which costs $50 000 to purchase.You have a budget of $300 000 for the purchase of new vehicles.What is the opportunity cost of one Model A vehicle?
A)0
B)3/5 ths of a Model B vehicle
C)5/3rds of Model B vehicle
D)5 Model B vehicles
E)3 Model B vehicles
A)0
B)3/5 ths of a Model B vehicle
C)5/3rds of Model B vehicle
D)5 Model B vehicles
E)3 Model B vehicles
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30
Suppose you own a courier service and you use two types of delivery vehicles - Model A,which costs $30 000 to purchase,and Model B,which costs $50 000 to purchase.You have a budget of $300 000 for the purchase of new vehicles.Which of the following statements best describes the shape of your budget line?
A)The budget line is concave to the origin,indicating that the opportunity cost of each model of vehicle increases with each additional unit purchased.
B)The budget line is convex to the origin,indicating that the opportunity cost of each vehicle decreases with each additional unit purchased.
C)The budget line is a straight line,indicating that the opportunity cost of each vehicle decreases with each additional unit purchased.
D)The budget line is a straight line,indicating that the opportunity cost of each model of vehicle is independent of how many are purchased.
E)The budget line is a straight line,indicating that the opportunity cost of each vehicle increases with each additional unit purchased.
A)The budget line is concave to the origin,indicating that the opportunity cost of each model of vehicle increases with each additional unit purchased.
B)The budget line is convex to the origin,indicating that the opportunity cost of each vehicle decreases with each additional unit purchased.
C)The budget line is a straight line,indicating that the opportunity cost of each vehicle decreases with each additional unit purchased.
D)The budget line is a straight line,indicating that the opportunity cost of each model of vehicle is independent of how many are purchased.
E)The budget line is a straight line,indicating that the opportunity cost of each vehicle increases with each additional unit purchased.
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31
The table below illustrates that,in one day,Tristan can produce either 12 fishing lures or mow 3 lawns,while Thomas can produce either 6 fishing lures or mow 6 lawns.
TABLE 1-1
Refer to Table 1-1.What is Thomas's opportunity cost of producing one mowed lawn?
A)0 fishing lures
B)1/6 fishing lure
C)one fishing lure
D)6 fishing lures
E)12 fishing lures
TABLE 1-1Refer to Table 1-1.What is Thomas's opportunity cost of producing one mowed lawn?
A)0 fishing lures
B)1/6 fishing lure
C)one fishing lure
D)6 fishing lures
E)12 fishing lures
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32
Madeleine allows herself $100 per month for purchasing coffee.The diagram below illustrates the choices available to her in each month. FIGURE 1-3
Refer to Figure 1-3.What is the price of a regular coffee in this example?
A)$0.80
B)$1.25
C)$2.00
D)$5.00
E)$8.00
FIGURE 1-3Refer to Figure 1-3.What is the price of a regular coffee in this example?
A)$0.80
B)$1.25
C)$2.00
D)$5.00
E)$8.00
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33
The table below illustrates that,in one day,Tristan can produce either 12 fishing lures or mow 3 lawns,while Thomas can produce either 6 fishing lures or mow 6 lawns.
TABLE 1-1
Refer to Table 1-1.If Tristan and Thomas want to maximize their joint output from one day of work,how should they specialize their production?
A)Tristan produces 3 mowed lawns; Thomas produces 6 mowed lawns
B)Tristan produces 6 lures; Thomas produces 6 lures
C)Tristan produces 6 lures and 3 mowed lawns
D)Tristan produces 12 lures; Thomas produces 6 mowed lawns
E)Tristan produces nothing,Thomas produces 6 lures and 6 mowed lawns
TABLE 1-1Refer to Table 1-1.If Tristan and Thomas want to maximize their joint output from one day of work,how should they specialize their production?
A)Tristan produces 3 mowed lawns; Thomas produces 6 mowed lawns
B)Tristan produces 6 lures; Thomas produces 6 lures
C)Tristan produces 6 lures and 3 mowed lawns
D)Tristan produces 12 lures; Thomas produces 6 mowed lawns
E)Tristan produces nothing,Thomas produces 6 lures and 6 mowed lawns
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34
The opportunity cost of producing good A is defined to be
A)the money cost of the factors of production used in good A.
B)the retail price of good A.
C)the cheapest method of producing good A.
D)what must be sacrificed of other goods to get an additional unit of good A.
E)the cost of having to get by using something else in place of good A.
A)the money cost of the factors of production used in good A.
B)the retail price of good A.
C)the cheapest method of producing good A.
D)what must be sacrificed of other goods to get an additional unit of good A.
E)the cost of having to get by using something else in place of good A.
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35
The table below illustrates that,in one day,Tristan can produce either 12 fishing lures or mow 3 lawns,while Thomas can produce either 6 fishing lures or mow 6 lawns.
TABLE 1-1
Refer to Table 1-1.What is Tristan's opportunity cost of producing one mowed lawn?
A)one fishing lure
B)3 fishing lures
C)4 fishing lures
D)6 fishing lures
E)12 fishing lures
TABLE 1-1Refer to Table 1-1.What is Tristan's opportunity cost of producing one mowed lawn?
A)one fishing lure
B)3 fishing lures
C)4 fishing lures
D)6 fishing lures
E)12 fishing lures
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36
Madeleine allows herself $100 per month for purchasing coffee.The diagram below illustrates the choices available to her in each month. FIGURE 1-3
Refer to Figure 1-3.If Madeleine chooses to allocate all $100 to buying lattes,we can say that her opportunity cost in one month is
A)zero because she bought what she desired.
B)zero because she stayed within her budget.
C)80 cups of regular coffee.
D)40 cups of regular coffee.
E)20 cups of regular coffee.
FIGURE 1-3Refer to Figure 1-3.If Madeleine chooses to allocate all $100 to buying lattes,we can say that her opportunity cost in one month is
A)zero because she bought what she desired.
B)zero because she stayed within her budget.
C)80 cups of regular coffee.
D)40 cups of regular coffee.
E)20 cups of regular coffee.
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37
The table below illustrates that,in one day,Tristan can produce either 12 fishing lures or mow 3 lawns,while Thomas can produce either 6 fishing lures or mow 6 lawns.
TABLE 1-1
Refer to Table 1-1.What is Thomas's opportunity cost of producing one fishing lure?
A)5 lures
B)1 mowed lawn
C)1/6 of a lure
D)1/6 of a mowed lawn
E)there is no opportunity cost
TABLE 1-1Refer to Table 1-1.What is Thomas's opportunity cost of producing one fishing lure?
A)5 lures
B)1 mowed lawn
C)1/6 of a lure
D)1/6 of a mowed lawn
E)there is no opportunity cost
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38
Scarcity arises from limited resources.For this reason,all economic choices involve
A)a value judgement.
B)an educated decision.
C)an opportunity cost.
D)complementary ends.
E)greed.
A)a value judgement.
B)an educated decision.
C)an opportunity cost.
D)complementary ends.
E)greed.
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39
The table below illustrates that,in one day,Tristan can produce either 12 fishing lures or mow 3 lawns,while Thomas can produce either 6 fishing lures or mow 6 lawns.
TABLE 1-1
Refer to Table 1-1.What is Tristan's opportunity cost of producing one fishing lure?
A)one mowed lawn
B)3 mowed lawns
C)1/3 of a mowed lawn
D)1/4 of a mowed lawn
E)4 mowed lawns
TABLE 1-1Refer to Table 1-1.What is Tristan's opportunity cost of producing one fishing lure?
A)one mowed lawn
B)3 mowed lawns
C)1/3 of a mowed lawn
D)1/4 of a mowed lawn
E)4 mowed lawns
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40
Madeleine allows herself $100 per month for purchasing coffee.The diagram below illustrates the choices available to her in each month. FIGURE 1-3
Refer to Figure 1-3.For Madeleine,the opportunity cost of one regular coffee is
A)1/4 of a regular coffee.
B)20 lattes.
C)4 lattes.
D)1/4 of a latte.
E)80 lattes.
FIGURE 1-3Refer to Figure 1-3.For Madeleine,the opportunity cost of one regular coffee is
A)1/4 of a regular coffee.
B)20 lattes.
C)4 lattes.
D)1/4 of a latte.
E)80 lattes.
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41
A small landscaping firm purchases a tractor that,in one day,is capable of drilling 60 fence-post holes or removing 12 tree stumps (or some intermediate combination).For this landscaper,what is the opportunity cost of removing one extra tree stump?
A)1/12th of the cost of the tractor
B)1/5 of the cost of the tractor
C)drilling 12 fence-post holes
D)drilling 5 fence-post holes
E)there is no opportunity cost
A)1/12th of the cost of the tractor
B)1/5 of the cost of the tractor
C)drilling 12 fence-post holes
D)drilling 5 fence-post holes
E)there is no opportunity cost
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42
The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4
Refer to Figure 1-4.If Country X,constrained by the production possibilities boundary PPB1,is currently producing at point A,it can produce more capital goods by moving to point
A)F.
B)E.
C)D.
D)C.
E)B.
FIGURE 1-4Refer to Figure 1-4.If Country X,constrained by the production possibilities boundary PPB1,is currently producing at point A,it can produce more capital goods by moving to point
A)F.
B)E.
C)D.
D)C.
E)B.
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43
Katie and Hugh are producing pies and jars of pickles.Katie can produce either 200 jars of pickles or 100 pies per month.Hugh can produce either 800 jars of pickles or 200 pies per month.Which of the following statements is correct?
A)Katie's opportunity cost of producing 1 jar of pickles is 2 pies.
B)Katie's opportunity cost of producing 1 jar of pickles is 1/2 of a pie.
C)Hugh's opportunity cost of producing 1 jar of pickles is 4 pies.
D)Hugh's opportunity cost of producing 1 pie is 1/4 jar of pickles.
E)Hugh's and Katie's opportunity costs of producing are the same.
A)Katie's opportunity cost of producing 1 jar of pickles is 2 pies.
B)Katie's opportunity cost of producing 1 jar of pickles is 1/2 of a pie.
C)Hugh's opportunity cost of producing 1 jar of pickles is 4 pies.
D)Hugh's opportunity cost of producing 1 pie is 1/4 jar of pickles.
E)Hugh's and Katie's opportunity costs of producing are the same.
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44
The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4
Refer to Figure 1-4.The production possibilities boundaries are drawn concave to the origin.What does this shape of the PPB demonstrate?
A)the decreasing opportunity cost of producing more of either good
B)the scarcity of resources in the economy
C)the constant opportunity cost of producing more of either good
D)the unfair distribution of resources in the economy
E)the increasing opportunity cost of producing more of either good
FIGURE 1-4Refer to Figure 1-4.The production possibilities boundaries are drawn concave to the origin.What does this shape of the PPB demonstrate?
A)the decreasing opportunity cost of producing more of either good
B)the scarcity of resources in the economy
C)the constant opportunity cost of producing more of either good
D)the unfair distribution of resources in the economy
E)the increasing opportunity cost of producing more of either good
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45
Suppose Andrea has a job that pays her $25 000 per year (after taxes).She is considering quitting her job and going to university full time for four years.Tuition fees and books will cost $12 000 per year.Living expenses in either situation will cost $10 000 per year.What is the opportunity cost of Andrea's four-year university degree?
A)$88 000
B)$100 000
C)$120 000
D)$148 000
E)$188 000
A)$88 000
B)$100 000
C)$120 000
D)$148 000
E)$188 000
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46
Suppose that a bakeshop with 5 employees can produce both pies and cakes.In one day,if all resources are devoted to baking pies,the shop can produce 125 pies; if all resources are devoted to baking cakes,the shop can produce 50.What is the shop's opportunity cost of producing any one cake?
A)0.4 pies
B)0.25 pies
C)2.5 pies
D)0.4 cakes
E)2.5 cakes
A)0.4 pies
B)0.25 pies
C)2.5 pies
D)0.4 cakes
E)2.5 cakes
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47
Consider a production possibilities boundary showing the possible combinations of military goods and civilian goods that a country can produce.Suppose that the country is currently at a point on the boundary.If the production of military goods is increased,the production of civilian goods will necessarily
A)decrease.
B)remain the same.
C)increase.
D)increase at a decreasing rate.
E)increase at a increasing rate.
A)decrease.
B)remain the same.
C)increase.
D)increase at a decreasing rate.
E)increase at a increasing rate.
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48
Suppose Amin has a job that pays him $87 000 per year (after taxes).He is considering taking an unpaid leave of absence from his job to complete a 12-month MBA program.Tuition is $75 000 and books and materials will cost $5000.Living expenses for the 12-month period will be cheaper by $500 per month,mostly due to lower apartment rental costs.What is the opportunity cost of Amin's 1-year MBA program?
A)$75 000
B)$76 000
C)$161 000
D)$167 000
E)$175 000
A)$75 000
B)$76 000
C)$161 000
D)$167 000
E)$175 000
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49
The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4
Refer to Figure 1-4.If Country X,constrained by the production possibilities boundary PPB1,is producing the combination of goods indicated at point F,it can produce more consumer goods by moving to one of the points
A)A or E.
B)D or E.
C)A,B,or C.
D)A or B,but not C.
E)A,B,C,D,or E.
FIGURE 1-4Refer to Figure 1-4.If Country X,constrained by the production possibilities boundary PPB1,is producing the combination of goods indicated at point F,it can produce more consumer goods by moving to one of the points
A)A or E.
B)D or E.
C)A,B,or C.
D)A or B,but not C.
E)A,B,C,D,or E.
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50
The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4
Refer to Figure 1-4.If Country X were producing at point C,
A)the opportunity cost of moving to point B is to give up some consumption goods.
B)the opportunity cost of moving to point A is zero.
C)the opportunity cost of moving to point A is to give up some capital goods.
D)this is the maximum output possible from given resources.
E)it is not possible to move to any point on PPB1 or PPB2 without technological progress.
FIGURE 1-4Refer to Figure 1-4.If Country X were producing at point C,
A)the opportunity cost of moving to point B is to give up some consumption goods.
B)the opportunity cost of moving to point A is zero.
C)the opportunity cost of moving to point A is to give up some capital goods.
D)this is the maximum output possible from given resources.
E)it is not possible to move to any point on PPB1 or PPB2 without technological progress.
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51
It has been observed that university enrollment in Canada is higher during periods of high unemployment.A possible explanation for this is that
A)when prospects for getting a job are poor,the opportunity cost of getting a job is lower.
B)when prospects for getting a job are poor,the opportunity cost of doing nothing is higher.
C)during periods of high unemployment,tuition fees are reduced.
D)during periods of high unemployment,the opportunity cost is no longer relevant.
E)when prospects for getting a job are poor,the opportunity cost of going to university is lower.
A)when prospects for getting a job are poor,the opportunity cost of getting a job is lower.
B)when prospects for getting a job are poor,the opportunity cost of doing nothing is higher.
C)during periods of high unemployment,tuition fees are reduced.
D)during periods of high unemployment,the opportunity cost is no longer relevant.
E)when prospects for getting a job are poor,the opportunity cost of going to university is lower.
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52
Suppose that a bakeshop with 5 employees can produce both pies and cakes.In one day,if all resources are devoted to baking pies,the shop can produce 125 pies; if all resources are devoted to baking cakes,the shop can produce 50.What is the shop's opportunity cost of producing any one pie?
A)125 pies
B)0.4 cakes
C)2.5 pies
D)0.4 pies
E)50 cakes
A)125 pies
B)0.4 cakes
C)2.5 pies
D)0.4 pies
E)50 cakes
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53
The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4
Refer to Figure 1-4.At point B,
A)the price of capital goods is higher than the price of consumer goods.
B)Country X is producing too many consumer goods and too few capital goods.
C)the price of consumer goods is equal to the price of capital goods.
D)the opportunity cost of producing an extra unit of capital goods is higher than at point A.
E)the opportunity cost of producing an extra unit of consumer goods is higher than at point A.
FIGURE 1-4Refer to Figure 1-4.At point B,
A)the price of capital goods is higher than the price of consumer goods.
B)Country X is producing too many consumer goods and too few capital goods.
C)the price of consumer goods is equal to the price of capital goods.
D)the opportunity cost of producing an extra unit of capital goods is higher than at point A.
E)the opportunity cost of producing an extra unit of consumer goods is higher than at point A.
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54
During economic recessions,the opportunity cost of going to university ________ because the wages a student can expect to earn working in the best alternative ________.
A)increases; decrease
B)decreases; increase
C)increases; increase
D)decreases; decrease
E)remains the same; remain the same
A)increases; decrease
B)decreases; increase
C)increases; increase
D)decreases; decrease
E)remains the same; remain the same
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55
The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4
Refer to Figure 1-4.If Country X is currently producing at point A,it could move to point B if
A)the cost of producing capital goods were to increase.
B)some resources were switched from the capital goods industries to the consumer goods industries.
C)the cost of producing consumer goods were to increase.
D)some resources were switched from the consumer goods industries to the capital goods industries.
E)Country X is no longer able to produce the quantity of capital goods at point A.
FIGURE 1-4Refer to Figure 1-4.If Country X is currently producing at point A,it could move to point B if
A)the cost of producing capital goods were to increase.
B)some resources were switched from the capital goods industries to the consumer goods industries.
C)the cost of producing consumer goods were to increase.
D)some resources were switched from the consumer goods industries to the capital goods industries.
E)Country X is no longer able to produce the quantity of capital goods at point A.
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56
Suppose that one unit of labour can produce either 5 units of wool or 2 pineapples.What is the opportunity cost of producing 1 pineapple?
A)5 units of wool
B)2 units of wool
C)2/5 unit of wool
D)5/2 units of wool
E)zero
A)5 units of wool
B)2 units of wool
C)2/5 unit of wool
D)5/2 units of wool
E)zero
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57
A point lying inside the production possibilities boundary is one at which
A)there is no scarcity.
B)the opportunity cost of producing more output is negative.
C)it is not possible to produce more output with existing resources.
D)the economy has run out of resources.
E)more output could be produced with existing resources.
A)there is no scarcity.
B)the opportunity cost of producing more output is negative.
C)it is not possible to produce more output with existing resources.
D)the economy has run out of resources.
E)more output could be produced with existing resources.
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58
Chantal has a full-time job as a geological engineer and earns an annual after-tax salary of $85 000.She decides to leave her job for 6 months to scuba dive on the Great Barrier Reef in Australia,and incurs costs of $7500 for course equipment and certification,$2500 for airfare,and $12 000 for regular living expenses in Australia (equal to her living expenses at home).What is Chantal's opportunity cost for this 6-month,unpaid leave of absence?
A)$12 000
B)$22 000
C)$42 000
D)$52 500
E)$65 000
A)$12 000
B)$22 000
C)$42 000
D)$52 500
E)$65 000
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59
A country's production possibilities boundary shows that
A)when a society combines its resources efficiently,it cannot produce more of one good without producing less of the other good.
B)when a society combines its resources inefficiently,it cannot produce more of one good without producing less of the other good.
C)when a society combines its resources efficiently,it is always possible to produce more of all goods.
D)all points inside the boundary are preferred to all points on the boundary.
E)the supply for goods always exceeds the demand.
A)when a society combines its resources efficiently,it cannot produce more of one good without producing less of the other good.
B)when a society combines its resources inefficiently,it cannot produce more of one good without producing less of the other good.
C)when a society combines its resources efficiently,it is always possible to produce more of all goods.
D)all points inside the boundary are preferred to all points on the boundary.
E)the supply for goods always exceeds the demand.
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60
If a country's production possibilities boundary is drawn as a straight (downward-sloping)line it indicates
A)decreasing opportunity cost of producing more of either good.
B)the use of the scarce resources in an economy.
C)constant opportunity cost of producing more of either good.
D)an unfair distribution of resources in an economy.
E)increasing opportunity cost of producing more of either good.
A)decreasing opportunity cost of producing more of either good.
B)the use of the scarce resources in an economy.
C)constant opportunity cost of producing more of either good.
D)an unfair distribution of resources in an economy.
E)increasing opportunity cost of producing more of either good.
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61
Consider Canada's production possibilities boundary.Suppose a scientific breakthrough leads to a lower-cost method of producing battery-operated cars in Canada.The likely effect would be to move Canada's current production
A)to a point beyond its new production possibilities boundary.
B)to a point inside its new production possibilities boundary.
C)possibilities boundary outward.
D)possibilities boundary inward.
E)above the level of U.S.production.
A)to a point beyond its new production possibilities boundary.
B)to a point inside its new production possibilities boundary.
C)possibilities boundary outward.
D)possibilities boundary inward.
E)above the level of U.S.production.
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62
A move from inside the production possibilities boundary to the boundary itself could be caused by
A)the employment of previously idle resources.
B)a reallocation of resources from military to civilian goods.
C)technological progress.
D)an increase in the labour supply.
E)an improvement in the government's ability to control its spending.
A)the employment of previously idle resources.
B)a reallocation of resources from military to civilian goods.
C)technological progress.
D)an increase in the labour supply.
E)an improvement in the government's ability to control its spending.
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63
Consider a production possibilities boundary showing the quantity of military goods and the quantity of civilian goods on the two axes.A movement along the production possibilities boundary could be caused by
A)the employment of previously idle resources.
B)the reallocation of resources between military and civilian goods.
C)the growth of productive capacity.
D)an increase in the labour supply.
E)technological progress.
A)the employment of previously idle resources.
B)the reallocation of resources between military and civilian goods.
C)the growth of productive capacity.
D)an increase in the labour supply.
E)technological progress.
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64
In recent years,several large Canadian-owned mining and resource companies have been sold to foreign owners.The immediate effect on Canada's production possibilities boundary is
A)a shift outward.
B)a shift inward.
C)no change.
D)a movement along.
E)a movement to a point beyond the boundary.
A)a shift outward.
B)a shift inward.
C)no change.
D)a movement along.
E)a movement to a point beyond the boundary.
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65
If there is always a three-for-one trade-off between the production of goods X and Y,then the production possibilities boundary for X and Y is
A)a downward-sloping curve convex to the origin.
B)semi-circular.
C)a downward-sloping straight line.
D)a downward-sloping straight line that is broken at one point.
E)a downward-sloping curve concave to the origin.
A)a downward-sloping curve convex to the origin.
B)semi-circular.
C)a downward-sloping straight line.
D)a downward-sloping straight line that is broken at one point.
E)a downward-sloping curve concave to the origin.
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66
The world price of oil fell in 2014-2015 from over $100 per barrel to less than $50.As a producer of oil,what effect did this change have on Canada's production possibilities boundary?
A)a shift outward
B)a shift inward
C)movement to a point beyond the boundary
D)movement to a point within the boundary
E)no change
A)a shift outward
B)a shift inward
C)movement to a point beyond the boundary
D)movement to a point within the boundary
E)no change
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67
On a diagram of a production possibilities boundary,the concept of opportunity cost is illustrated by the
A)distance from the origin to the boundary.
B)negative slope of the boundary.
C)boundary being concave to the origin.
D)unattainable points outside the boundary.
E)area bounded by the two axes and the boundary.
A)distance from the origin to the boundary.
B)negative slope of the boundary.
C)boundary being concave to the origin.
D)unattainable points outside the boundary.
E)area bounded by the two axes and the boundary.
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68
On a diagram of a production possibilities boundary,the concept of scarcity is illustrated by the
A)points on the boundary.
B)area within the boundary.
C)distance from the origin to the boundary.
D)negative slope of the boundary.
E)unattainable points outside the boundary.
A)points on the boundary.
B)area within the boundary.
C)distance from the origin to the boundary.
D)negative slope of the boundary.
E)unattainable points outside the boundary.
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69
Consider Canada's production possibilities boundary.Suppose fire destroys many millions of hectares of valuable Canadian forest.The effect on the Canadian economy would be best illustrated by ________ the production possibilities boundary.
A)a movement inside
B)a movement along
C)a movement to a point beyond
D)a shift outward of
E)an inward shift of
A)a movement inside
B)a movement along
C)a movement to a point beyond
D)a shift outward of
E)an inward shift of
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70
The downward-sloping line in the diagram below shows the combinations of health care and education expenditures that the government can afford with a given amount of tax revenue. FIGURE 1-6
Refer to Figure 1-6.The levels of health and education expenditures at point C
A)are less than at point D.
B)are equal to those of point A and point B.
C)are more cost-effective than those at points A,B,and D.
D)could be achieved if the prices of health and/or education increased.
E)are not attainable with the government's current budget.
FIGURE 1-6Refer to Figure 1-6.The levels of health and education expenditures at point C
A)are less than at point D.
B)are equal to those of point A and point B.
C)are more cost-effective than those at points A,B,and D.
D)could be achieved if the prices of health and/or education increased.
E)are not attainable with the government's current budget.
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71
FIGURE 1-5Refer to Figure 1-5.Which production possibilities boundaries exhibit decreasing opportunity costs?
A)boundary B only
B)boundaries A and C
C)boundaries A and B
D)boundary A only
E)boundary C only
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72
FIGURE 1-5Refer to Figure 1-5.Which production possibilities boundaries are consistent with increasing opportunity costs?
A)boundary A only
B)boundaries A and B
C)boundary C only
D)boundaries B and C
E)boundaries A,B,and C
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73
The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4
Refer to Figure 1-4.Growth in the country's productive capacity is illustrated by
A)a point like D outside the boundary.
B)a movement from a point inside the boundary such as C to the boundary.
C)the movement between points on a given boundary.
D)a single point such as A on the boundary.
E)an outward shift of the boundary,for example from PPB1 to PPB2.
FIGURE 1-4Refer to Figure 1-4.Growth in the country's productive capacity is illustrated by
A)a point like D outside the boundary.
B)a movement from a point inside the boundary such as C to the boundary.
C)the movement between points on a given boundary.
D)a single point such as A on the boundary.
E)an outward shift of the boundary,for example from PPB1 to PPB2.
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74
The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4
Refer to Figure 1-4.An outward shift of the production possibilities boundary from to indicates which of the following?
A)an increase in the price of raw materials for consumer goods
B)growth in the country's productive capacity
C)an increase in the price of raw material for capital goods
D)more of the country's resources are being used
E)the country's resources are being used less efficiently
FIGURE 1-4Refer to Figure 1-4.An outward shift of the production possibilities boundary from
to indicates which of the following?A)an increase in the price of raw materials for consumer goods
B)growth in the country's productive capacity
C)an increase in the price of raw material for capital goods
D)more of the country's resources are being used
E)the country's resources are being used less efficiently
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75
FIGURE 1-5Refer to Figure 1-5.Suppose that the relevant production possibilities boundary is the one labelled B.This boundary implies that
A)the concept of opportunity cost is not at work in this economy.
B)the opportunity cost of producing either capital goods or consumer goods does not depend on how much of each good is produced.
C)consumer goods are preferred to capital goods.
D)in this society the resources are not efficiently employed.
E)capital goods are preferred to consumer goods.
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76
Consider Canada's production possibilities boundary.During the nineteenth and early twentieth centuries,millions of people immigrated to western Canada.The effect on the Canadian economy was to
A)move it to a point beyond its new production possibilities boundary.
B)move it inside its new production possibilities boundary.
C)shift its production possibilities boundary inward.
D)shift its production possibilities boundary outward.
E)move it along an unchanged production possibilities boundary.
A)move it to a point beyond its new production possibilities boundary.
B)move it inside its new production possibilities boundary.
C)shift its production possibilities boundary inward.
D)shift its production possibilities boundary outward.
E)move it along an unchanged production possibilities boundary.
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77
A straight-line production possibilities boundary differs from a concave boundary in which of the following ways?
A)The straight-line boundary illustrates constant opportunity costs,whereas the concave boundary illustrates increasing opportunity costs.
B)The concave boundary illustrates constant opportunity costs,whereas the straight-line boundary illustrates decreasing opportunity costs.
C)The straight-line boundary does not show scarcity,whereas the concave boundary does.
D)The straight-line boundary shows opportunity cost,whereas the concave boundary does not.
E)A straight-line boundary is associated with a command economy,whereas a concave boundary is associated with a free-market economy.
A)The straight-line boundary illustrates constant opportunity costs,whereas the concave boundary illustrates increasing opportunity costs.
B)The concave boundary illustrates constant opportunity costs,whereas the straight-line boundary illustrates decreasing opportunity costs.
C)The straight-line boundary does not show scarcity,whereas the concave boundary does.
D)The straight-line boundary shows opportunity cost,whereas the concave boundary does not.
E)A straight-line boundary is associated with a command economy,whereas a concave boundary is associated with a free-market economy.
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78
The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4
Refer to Figure 1-4.Suppose that Country X is currently producing at point E.Country X could achieve production at point D if
A)the given resources were fully employed.
B)the given resources were more efficiently employed.
C)sufficient improvements in technology occurred in either the capital goods industry or the consumer goods industries.
D)firms reduced output of capital goods.
E)the prices of capital goods and consumption goods fell.
FIGURE 1-4Refer to Figure 1-4.Suppose that Country X is currently producing at point E.Country X could achieve production at point D if
A)the given resources were fully employed.
B)the given resources were more efficiently employed.
C)sufficient improvements in technology occurred in either the capital goods industry or the consumer goods industries.
D)firms reduced output of capital goods.
E)the prices of capital goods and consumption goods fell.
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79
The downward-sloping line in the diagram below shows the combinations of health care and education expenditures that the government can afford with a given amount of tax revenue. FIGURE 1-6
Refer to Figure 1-6.If the government's spending on health and education is given by point B,a move to point A must involve
A)less spending on health.
B)zero opportunity cost.
C)less spending on education.
D)less spending in total.
E)more spending on education.
FIGURE 1-6Refer to Figure 1-6.If the government's spending on health and education is given by point B,a move to point A must involve
A)less spending on health.
B)zero opportunity cost.
C)less spending on education.
D)less spending in total.
E)more spending on education.
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80
The diagram below shows two production possibilities boundaries for Country X. FIGURE 1-4
Refer to Figure 1-4.A shift of the production possibilities boundary from PPB1 to PPB2 implies
A)a movement from full employment to some unemployment.
B)that if point E is the new choice of outputs,productivity has increased in the consumer goods industry.
C)that technology in the capital goods industries has improved.
D)an inevitable decrease in total output.
E)that technology in the consumer goods industry has improved.
FIGURE 1-4Refer to Figure 1-4.A shift of the production possibilities boundary from PPB1 to PPB2 implies
A)a movement from full employment to some unemployment.
B)that if point E is the new choice of outputs,productivity has increased in the consumer goods industry.
C)that technology in the capital goods industries has improved.
D)an inevitable decrease in total output.
E)that technology in the consumer goods industry has improved.
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