Question 1

(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 2

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 3

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 4

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 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

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 7

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 8

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 9

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 10

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 11

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 12

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 13

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 14

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 15

Choices entail marginal costs because resources are scarce.

Accepted Answer

A) True 
 B)False

Question 16

Normative statements are expressions of facts.

Accepted Answer

A) True 
 B)False

Question 17

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 18

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 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

Economic resources are also called:

Accepted Answer

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

Exam 1: B: Limits, Alternatives, and Choices

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

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

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

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The production possibilities curve has:

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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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Economic resources are also called:

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Purposeful behaviour suggests that:

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Which of the following statements is correct?

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Refer to the above diagram.Curve B is a:

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

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

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Choices entail marginal costs because resources are scarce.

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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 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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The above data suggest that:

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Normative statements are expressions of facts.

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Any point inside the production possibilities curve indicates:

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

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