Question 1

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

Accepted Answer

A)  the relationship between the two is purely random.
B)  an increase in one variable is associated with a decrease in the other variable.
C)  an increase in one variable is associated with an increase in the other variable.
D)  the two graph as a downsloping line.

Question 2

The above data suggest that:

Accepted Answer

A)  a policy of tax reduction will increase consumption.
B)  a policy of tax increases will increase consumption.
C)  tax changes will have no impact on consumption.
D)  after-tax income should be lowered to increase consumption.

Question 3

The law of increasing opportunity costs is reflected in a production possibilities curve which is:

Accepted Answer

A)  an upward sloping straight line.
B)  a downward sloping straight line.
C)  concave to the origin.
D)  convex to the origin.

Question 4

The linear equation for line (1)  on the above graph is:

Accepted Answer

A)  y = 8 + 2x.
B)  y = 8 + .5x.
C)  x = 8 + .5y.
D)  y = 8 - 2x.

Question 5

Purposeful behaviour suggests that:

Accepted Answer

A)  everyone will make identical choices.
B)  resource availability exceeds material wants.
C)  individuals make decisions with some desired outcome in mind.
D)  an individual's economic goals cannot involve tradeoffs.

Question 6

Choices entail marginal costs because resources are scarce.

Accepted Answer

A) True 
 B)False

Question 7

Refer to the above diagram.The combination of computers and bicycles shown by point F:

Accepted Answer

A)  is unattainable, given currently available resources and technology.
B)  is attainable, but entails economic inefficiency.
C)  is irrelevant because it is inconsistent with consumer preferences.
D)  suggests that opportunity costs are constant.

Question 8

Production possibilities (alternatives)   Refer to the above table.For these data the law of increasing opportunity costs is reflected in the fact that:

Accepted Answer

A)  the amount of consumer goods which must be sacrificed to get more capital goods diminishes beyond a point.
B)  larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods.
C)  the production possibilities data would graph as a straight downsloping line.
D)  the economy's resources are presumed not to be scarce.

Question 9

The following production possibilities table represents an economy which is producing two products, tanks and autos.Refer to the table, in moving from possibility C to D, the cost of a tank in terms of autos is:

Accepted Answer

A)  50
B)  100
C)  200
D)  300

Question 10

The institution that coordinates actions of consumers and producers to establish prices for goods and services is known as:

Accepted Answer

A)  a market.
B)  a monopoly.
C)  a production possibilities curve.
D)  consumer sovereignty.

Question 11

The production possibilities curve has:

Accepted Answer

A)  a positive slope which increases as we move along it from left to right.
B)  a negative slope which increases as we move along it from left to right.
C)  a negative slope which decreases as we move along it from left to right.
D)  a negative slope which is constant as we move along it from left to right.

Question 12

An economy cannot produce at a point outside of its production possibilities curve because human material wants are insatiable.

Accepted Answer

A) True 
 B)False

Question 13

Economic resources are also called:

Accepted Answer

A)  free gifts of nature.
B)  consumption goods.
C)  units of money capital.
D)  factors of production.

Question 14

(The following economy produces two products.)  Production Possibilities Table
 Refer to the above table.A change from possibility C to B means that:

Accepted Answer

A)  1 unit of steel is given up to get 75 units of wheat.
B)  2 units of steel are given up to get 75 units of wheat.
C)  1 unit of steel is given up to get 15 more units of wheat.
D)  2 units of steel are given up to get 15 more units of wheat.

Question 15

Refer to the above diagram.Curve B is a:

Accepted Answer

A)  production possibilities curve indicating constant opportunity costs.
B)  production possibilities curve indicating increasing opportunity costs.
C)  demand curve indicating that the quantity of consumer goods demanded increases as the price of capital falls.
D)  technology frontier curve.

Question 16

Normative statements are expressions of facts.

Accepted Answer

A) True 
 B)False

Question 17

The individuals and society both face an economic problem.This problem arises from the fact that:

Accepted Answer

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

Question 18

Which of the following statements is correct?

Accepted Answer

A)  The value of the independent variable is determined by the value of the dependent variable.
B)  The value of the dependent variable is determined by the value of the independent variable.
C)  The dependent variable designates the "cause" and the independent variable the "effect."
D)  Dependent variables graph as upsloping lines; independent variables graph as downward sloping lines.

Question 19

Any point inside the production possibilities curve indicates:

Accepted Answer

A)  the realization of allocative efficiency.
B)  that resources are imperfectly shiftable among alternative uses.
C)  the presence of inflationary pressures.
D)  that more output could be produced with available resources.

Question 20

When an economy is operating with maximum efficiency, the production of more of commodity A will mean the production of less of commodity B because:

Accepted Answer

A)  of the law of decreasing opportunity costs.
B)  material wants are insatiable.
C)  resources are limited.
D)  resources are not specialized and are imperfectly substitutable.

Exam 1: B: Limits, Alternatives, and Choices

The following production possibilities table represents an economy which is producing two products, tanks and autos.Refer to the table, in moving from possibility C to D, the cost of a tank in terms of autos is:

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Which of the following statements is correct?

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When an economy is operating with maximum efficiency, the production of more of commodity A will mean the production of less of commodity B because:

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Any point inside the production possibilities curve indicates:

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The institution that coordinates actions of consumers and producers to establish prices for goods and services is known as:

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The above data suggest that:

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Purposeful behaviour suggests that:

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Choices entail marginal costs because resources are scarce.

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Economic resources are also called:

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The linear equation for line (1) on the above graph is:

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Production possibilities (alternatives) Refer to the above table.For these data the law of increasing opportunity costs is reflected in the fact that:

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Normative statements are expressions of facts.

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The law of increasing opportunity costs is reflected in a production possibilities curve which is:

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The individuals and society both face an economic problem.This problem arises from the fact that:

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An economy cannot produce at a point outside of its production possibilities curve because human material wants are insatiable.

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(The following economy produces two products.) Production Possibilities Table Refer to the above table.A change from possibility C to B means that:

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The production possibilities curve has:

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Refer to the above diagram.The combination of computers and bicycles shown by point F:

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

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Refer to the above diagram.Curve B is a:

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