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Exam 1: Economics: the Core Issues

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Question 41

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Refer to Figure 1.8.If the university decides to lower grading standards,then

A) This curve will shift rightward.
B) This curve will shift to the left.
C) The curve will begin to bend downward at an earlier point.
D) We will slide up the curve from point B to point C.

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Question 42

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A production possibilities curve indicates the

A) Combinations of goods and services an economy is actually producing.
B) Maximum combinations of goods and services an economy can produce given its available resources and technology.
C) Maximum combinations of goods and services an economy can produce given unlimited resources.
D) Average combinations of goods and services an economy can produce given its available resources and technology.

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Question 43

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If the United States decides to convert automobile factories to tank production,as it did during World War II,but finds that some auto manufacturing facilities are not well suited to tank production,then

A technological advance would best be represented by

Refer to Figure 1.7.If this economy is currently producing at point F,then by employing more resources this economy

The production possibilities curve illustrates which two of the following essential principles?

Factors of production are

Table 1.3 shows the hypothetical trade-off between different combinations of brushes and combs that might be produced in a year with the limited capacity for Country X,ceteris paribus. Table 1.3 Production Possibilities for Brushes and Combs $\begin{array} { | l | c | c | r | r | } \hline \text { Combination } & \begin{array} { c } \text { Number of } \\\text { combs }\end{array} & \begin{array} { c } \text { Opportunity } \\\text { Cost(Foregone } \\\text { brushes) }\end{array} & \begin{array} { c } \text { Number of } \\\text { brushes }\end{array} & \begin{array} { c } \text { Opportunity Cost } \\\text { (Foregone combs) }\end{array} \\\hline \mathrm { J } & 4 & & 0 & \text { NA } \\\hline \mathrm { K } & 3 & & 10 & \\\hline \mathrm { L } & 2 & & 17 & \\\hline M & 1 & & 21 & \\\hline \mathrm { N } & 0 & \text { NA } & 23 & \\\hline\end{array}$ On the basis of Table 1.3,the highest opportunity cost for brushes in terms of combs is

A mixed economy

In using a tanks and trucks production possibilities curve with increasing opportunity cost,producing more and more tanks

When the relationship between two variables changes,

Table 1.1 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S.capacity,ceteris paribus. Table 1.1 Production Possibilities for Bombers $\begin{array} { | l | c | c | c | c | } \hline \text { Combination } & \begin{array} { c } \text { Number of B- } \\1 \text { Bombers }\end{array} & \begin{array} { c } \text { Opportunity } \\\text { cost(Foregone } \\\text { Stealth) }\end{array} & \begin{array} { c } \text { Number of } \\\text { Stealth Bombers }\end{array} & \begin{array} { c } \text { Opportunity cost } \\\text { (Foregone B-1) }\end{array} \\\hline \mathrm { S } & 0 & \text { NA } & 10 & \\\hline \mathrm { T } & 1 & & 9 & \\\hline \mathrm { U } & 2 & & 7 & \\\hline \mathrm { V } & 3 & & 4 & \text { NA } \\\hline\end{array}$ The lowest opportunity cost e in Table 1.1 for B-1 bombers in terms of Stealth bombers is

All output combinations that lie outside a production possibilities curve are attainable with available resources and technology.

In Figure 1.9,the slope of the line between points L and M is

Using Figure 1.5,if an economy is currently producing on PP2,which of the following would shift the production possibilities curve toward PP1?

Using Figure 1.4 and starting at PP1,an increase in the capacity to produce can be represented by a movement from point

Explain the difference between macroeconomics and microeconomics.Give examples of each.

Every time we use scarce resources in one way,we give up the opportunity to use them in other ways.

The market mechanism may best be defined as

Table 1.3 shows the hypothetical trade-off between different combinations of brushes and combs that might be produced in a year with the limited capacity for Country X,ceteris paribus. Table 1.3 Production Possibilities for Brushes and Combs $\begin{array} { | l | c | c | r | r | } \hline \text { Combination } & \begin{array} { c } \text { Number of } \\\text { combs }\end{array} & \begin{array} { c } \text { Opportunity } \\\text { Cost(Foregone } \\\text { brushes) }\end{array} & \begin{array} { c } \text { Number of } \\\text { brushes }\end{array} & \begin{array} { c } \text { Opportunity Cost } \\\text { (Foregone combs) }\end{array} \\\hline \mathrm { J } & 4 & & 0& \text { NA } \\\hline \mathrm { K } & 3 & & 10 & \\\hline \mathrm { L } & 2 & & 17 & \\\hline\mathrm { M} & 1 & & 21 & \\\hline \mathrm { N } & 0 & \text { NA } & 23 & \\\hline\end{array}$ On the basis of Table 1.3,in the production range of 21 to 23 brushes the opportunity cost of producing one more comb in terms of brushes is