Question 1

When an economist says that material wants are insatiable,this means that:

Accepted Answer

A)   economic resources are valuable only because they can be used to produce consumer goods.
B)   economic resources-land,labour,capital,and entrepreneurial ability-are scarce.
C)   these wants are virtually unlimited and therefore incapable of complete satisfaction.
D)   the structure of consumer demand varies from time to time and from country to country.

Question 2

From an economic perspective,when consumers leave a fast-food restaurant because the lines to be served are too long,they have concluded that the:

Accepted Answer

A)   marginal cost of waiting is less than the marginal benefit of being served.
B)   marginal cost of waiting is greater than the marginal benefit of being served.
C)   management is exhibiting irrational behaviour by not maximizing profits.
D)   management is making an assumption that other things are equal.

Question 3

The fact that economic generalizations are abstract renders them impractical and useless.

Accepted Answer

A) True 
 B)False

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

Which of the following would be most likely to shift the production possibilities curve to the right?

Accepted Answer

A)   a sudden and substantial expansion of consumer wants
B)   an improvement in the literacy level and general level of education
C)   a decline in the size of the population and labour force
D)   shifting resources from butter to gun production

Question 6

Assume that a change in government policy results in the increased production of both consumer goods and investment goods.It can be concluded that:

Accepted Answer

A)   the economy was suffering from unemployment and/or the inefficient use of resources before the policy change.
B)   the economy's production possibilities curve has been shifted to the left as a result of the policy decision.
C)   this economy's production possibilities curve is convex (bowed inward) as viewed from the origin.
D)   the law of increasing opportunity costs does not apply in this society.

Question 7

-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 8

(The following economy produces two products. ) 
Production Possibilities Table
 
-Refer to the above table.In moving from possibility C to D,the cost of a unit of steel in terms of a unit of wheat is:

Accepted Answer

A)   10
B)   20
C)   25
D)   30

Question 9

Which of the following is a microeconomic statement?

Accepted Answer

A)   The real domestic output increased by 2.5 percent last year.
B)   Unemployment was 8.3 percent of the labour force last year.
C)   The price of personal computers declined last year.
D)   The general price level increased by 4 percent last year.

Question 10

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.

Question 11

The study of economics exists because:

Accepted Answer

A)   government interferes with the efficient allocation of scarce resources.
B)   resources are scarce in relation to human material wants.
C)   the market system is an obstacle to the efficient use of plentiful resources to satisfy constrained wants.
D)   resources are overly abundant as compared to wants;thus,an allocation problem exists.

Question 12

Refer to the diagram below.This production possibilities curve is constructed such that:

Accepted Answer

A)   resources are presumed to be perfectly shiftable between bread and tractors.
B)   the opportunity cost of bread diminishes as more bread is produced.
C)   the opportunity cost of tractors diminishes as more bread is produced.
D)   the opportunity cost of both bread and tractors in terms of each other increases as more of each is produced.

Question 13

The construction of a production possibilities curve assumes:

Accepted Answer

A)   the quantities of all resources are fixed.
B)   technology is fixed.
C)   full employment and full production are being realized.
D)   all of the above.

Question 14

-Refer to the above graph.Which of the following statements is correct?

Accepted Answer

A)   Quantity demanded and quantity supplied are independent of price.
B)   Price and quantity demanded are directly related.
C)   Price and quantity supplied are directly related.
D)   Price and quantity supplied are inversely related.

Question 15

-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 16

The concept of opportunity cost:

Accepted Answer

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

Question 17

Production possibilities tables for two countries,North Cantina and South Cantina:
North Cantina
Production possibilities (alternatives) 
 1/4 of a unit of capital goods. C)  8 units of capital goods. D)  1/8 of a unit of capital goods." class="answers-bank-image d-inline" rel="preload" > South Cantina
Production possibilities (alternatives) 
 1/4 of a unit of capital goods. C)  8 units of capital goods. D)  1/8 of a unit of capital goods." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above tables.If North Cantina is producing at production alternative B,the opportunity cost of the eleventh unit of consumer goods will be:

Accepted Answer

A)   10 units of capital goods.
B)   1/4 of a unit of capital goods.
C)   8 units of capital goods.
D)   1/8 of a unit of capital goods.

Question 18

Which situation would most likely shift the production possibilities curve for a nation in an outward direction?

Accepted Answer

A)   a decrease in the quality of products
B)   an increase in the supply of resources
C)   a decrease in the state of technology
D)   an increase in the amount of discrimination

Question 19

Unemployment and/or productive inefficiencies:

Accepted Answer

A)   cause the production possibilities curve to shift outward.
B)   can exist at any point on a production possibilities curve.
C)   can both be illustrated by a point outside the production possibilities curve.
D)   can both be illustrated by a point inside the production possibilities curve.

Question 20

1 to PP2 A)  immigration of skilled workers into the economy B)  worsening of the AIDS epidemic C)  an increase in consumer prices D)  a reduction in the age of retirement." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above diagram.Which one of the following would shift the production possibilities curve from PP1 to PP2

Accepted Answer

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

Exam 1: Limits, Alternatives, and Choices

From an economic perspective,when consumers leave a fast-food restaurant because the lines to be served are too long,they have concluded that the:

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

Correct Answer
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The concept of opportunity cost:

Correct Answer
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Which of the following is a microeconomic statement?

Correct Answer
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The fact that economic generalizations are abstract renders them impractical and useless.

Correct Answer
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Unemployment and/or productive inefficiencies:

Correct Answer
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Assume that a change in government policy results in the increased production of both consumer goods and investment goods.It can be concluded that:

Correct Answer
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-Refer to the above graph.Which of the following statements is correct?

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

Correct Answer
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(The following economy produces two products. ) Production Possibilities Table -Refer to the above table.In moving from possibility C to D,the cost of a unit of steel in terms of a unit of wheat is:

Correct Answer
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Which of the following would be most likely to shift the production possibilities curve to the right?

Correct Answer
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Which situation would most likely shift the production possibilities curve for a nation in an outward direction?

Correct Answer
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The study of economics exists because:

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

Correct Answer
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-The above data suggest that:

Correct Answer
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When an economist says that material wants are insatiable,this means that:

Correct Answer
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The construction of a production possibilities curve assumes:

Correct Answer
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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:

Correct Answer
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Refer to the diagram below.This production possibilities curve is constructed such that:

Correct Answer
verified

Exam 1: Limits, Alternatives, and Choices

From an economic perspective,when consumers leave a fast-food restaurant because the lines to be served are too long,they have concluded that the:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The concept of opportunity cost:

Correct AnswerverifiedShow Answer

Which of the following is a microeconomic statement?

Correct AnswerverifiedShow Answer

The fact that economic generalizations are abstract renders them impractical and useless.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Unemployment and/or productive inefficiencies:

Correct AnswerverifiedShow Answer

Assume that a change in government policy results in the increased production of both consumer goods and investment goods.It can be concluded that:

Correct AnswerverifiedShow Answer

-Refer to the above graph.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

(The following economy produces two products. ) Production Possibilities Table -Refer to the above table.In moving from possibility C to D,the cost of a unit of steel in terms of a unit of wheat is:

Correct AnswerverifiedShow Answer

Which of the following would be most likely to shift the production possibilities curve to the right?

Correct AnswerverifiedShow Answer

Which situation would most likely shift the production possibilities curve for a nation in an outward direction?

Correct AnswerverifiedShow Answer

The study of economics exists because:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

-The above data suggest that:

Correct AnswerverifiedShow Answer

When an economist says that material wants are insatiable,this means that:

Correct AnswerverifiedShow Answer

The construction of a production possibilities curve assumes:

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

Refer to the diagram below.This production possibilities curve is constructed such that:

Correct AnswerverifiedShow Answer

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

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