Question 1

In a graph of the production possibilities curve, the two axes of the graph indicate the:

Accepted Answer

A)   Prices of the two products that a nation can produce
B)   Maximum quantities of the two resources that a nation possesses
C)   Price of the products on the vertical axis, and quantities on the horizontal
D)   Quantities of the two products that a nation can produce

Question 2

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule:  Refer to the above table. If the nation uses all of its resources to produce only wheat, then its production combination will be:

Accepted Answer

A)   A
B)   B
C)   E
D)   F

Question 3

Which pitfall to sound economic reasoning is illustrated when a person comments that "capitalists focus only on profits and don't care about their workers"?

Accepted Answer

A)   Abstraction
B)   Biases
C)   The fallacy of composition
D)   Confusing correlation and causation

Question 4

In a graph showing the relationship between variables X and Y, ceteris paribus means that:

Accepted Answer

A)   X is inversely related to Y
B)   X is positively related to Y
C)   X and Y are independent
D)   Other variables not shown are held constant

Question 5

All of the following would affect the position and shape of a nation's production possibilities curve, except:

Accepted Answer

A)   The amount of labor available
B)   The level of unemployment
C)   The amount of the capital resources
D)   The rate of technological progress

Question 6

The question below are based on the following four sets of data-pairs: (1)  A and B, (2)  C and D, (3)  E and F, and (4)  G and H. In each set, the independent variable is in the left column and the dependent variable is in the right column.  Which of the four sets of data pairs shows an inverse relationship between the independent and dependent variable?

Accepted Answer

A)   1 and 3
B)   2 and 3
C)   3 and 4
D)   2 and 4

Question 7

Refer to the following table which shows the quantities of corn demanded at various levels of corn price (hypothetical data) .  Which curve in the graph shown above best represents the data in the table?

Accepted Answer

A)   A
B)   B
C)   C
D)   D

Question 8

The law of increasing opportunity costs states that:

Accepted Answer

A)   Costs of production increase for one good, but costs decrease for the other good
B)   Increases in wages and other resource costs is what the increasing opportunity costs refer to
C)   Increases in the production of one good require larger and larger sacrifices of the other good
D)   Increases in the production of one good make the production of that good and easier

Question 9

Assume that a consumer has a given budget or income of $12, and that she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.75. Refer to the information given above. What is the slope of the budget line, if the quantity of apples were measured on the horizontal axis and bananas on the vertical axis?

Accepted Answer

A)   -0.5
B)   -0.8
C)   -1.6
D)   -2.0

Question 10

The economic principle that "unemployment rate will tend to increase as the economy moves into a recession" is an example of:

Accepted Answer

A)   A normative statement
B)   An assumption
C)   A loaded terminology
D)   A generalization

Question 11

Refer to the above graph. Which of the following statements about combination G is true?

Accepted Answer

A)   The nation cannot produce combination G even if the nation gets additional resources
B)   The nation can currently produce combination G if the nation specializes and trades with another nation
C)   The nation may not be able to produce combination G, but it can consume that combination if it specializes and trades
D)   The nation would much prefer to be at combination F than at combination G

Question 12

The following graph is the production possibilities curve of a nation:  Refer to the above graph. The marginal opportunity cost of the fourth unit of bread is:

Accepted Answer

A)   0 unit of drill presses
B)   1 unit of drill presses
C)   3 units of drill presses
D)   4 units of drill presses

Question 13

Which of the following would not be considered a capital resource by economists?

Accepted Answer

A)   A van used by a mother to transport the family around
B)   An office computer used by an accountant
C)   A crane used by a building contractor
D)   A camera used by a professional photographer

Question 14

Refer to the above production possibilities curves. Curve (a)  is the current curve for the economy. Focusing on curve (a) , point N suggests that the economy currently produces:

Accepted Answer

A)   More goods for the future than at point P
B)   Less goods for the future than at point P
C)   Less goods for the present than at point P
D)   A combination of output that is less than its potential

Question 15

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule:  Refer to the above table. Which of the following output-combinations is unattainable:

Accepted Answer

A)   1 steel and 80 wheat
B)   4 steel and 55 wheat
C)   30 wheat and 3 steel
D)   95 wheat and 0 steel

Question 16

Economic growth is shown as an increase in production from inside the production possibilities curve out toward a point on the possibilities curve.

Accepted Answer

A) True 
 B)False

Question 17

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities:  Refer to the above table. In moving from combination C to B, the opportunity cost of producing 100 more autos is:

Accepted Answer

A)   2 units of tanks
B)   1 unit of tanks
C)   850 units of autos
D)   1800 units of autos

Question 18

Economists have difficulty applying the scientific method because:

Accepted Answer

A)   Economics has a short history
B)   The scientific method does not really apply to economics
C)   People are the focus of economics, and their behavior is highly predictable
D)   Controlled laboratory experiments in economics are often not feasible

Question 19

Which of the following statements regarding people's wants is true?

Accepted Answer

A)   Over time, people's wants tend to be stable and constant
B)   As people consume more products, their wants will be reduced
C)   Intangible serves, like tangible goods, may satisfy people's wants
D)   People's wants do not include their basic needs

Question 20

The budget line shows the various incomes that an individual can earn from different jobs.

Accepted Answer

A) True 
 B)False

Exam 1: Limits, Alternatives, and Choices

Correct Answer
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Refer to the above production possibilities curves. Curve (a) is the current curve for the economy. Focusing on curve (a) , point N suggests that the economy currently produces:

Correct Answer
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Which of the following would not be considered a capital resource by economists?

Correct Answer
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Economic growth is shown as an increase in production from inside the production possibilities curve out toward a point on the possibilities curve.

Correct Answer
verified

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule: Refer to the above table. If the nation uses all of its resources to produce only wheat, then its production combination will be:

Correct Answer
verified

Which of the following statements regarding people's wants is true?

Correct Answer
verified

The economic principle that "unemployment rate will tend to increase as the economy moves into a recession" is an example of:

Correct Answer
verified

Correct Answer
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In a graph of the production possibilities curve, the two axes of the graph indicate the:

Correct Answer
verified

Refer to the above graph. Which of the following statements about combination G is true?

Correct Answer
verified

All of the following would affect the position and shape of a nation's production possibilities curve, except:

Correct Answer
verified

Refer to the following table which shows the quantities of corn demanded at various levels of corn price (hypothetical data) . Which curve in the graph shown above best represents the data in the table?

Correct Answer
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The law of increasing opportunity costs states that:

Correct Answer
verified

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule: Refer to the above table. Which of the following output-combinations is unattainable:

Correct Answer
verified

Economists have difficulty applying the scientific method because:

Correct Answer
verified

The following graph is the production possibilities curve of a nation: Refer to the above graph. The marginal opportunity cost of the fourth unit of bread is:

Correct Answer
verified

Which pitfall to sound economic reasoning is illustrated when a person comments that "capitalists focus only on profits and don't care about their workers"?

Correct Answer
verified

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities: Refer to the above table. In moving from combination C to B, the opportunity cost of producing 100 more autos is:

Correct Answer
verified

The budget line shows the various incomes that an individual can earn from different jobs.

Correct Answer
verified

In a graph showing the relationship between variables X and Y, ceteris paribus means that:

Correct Answer
verified

Exam 1: Limits, Alternatives, and Choices

Correct AnswerverifiedShow Answer

Refer to the above production possibilities curves. Curve (a) is the current curve for the economy. Focusing on curve (a) , point N suggests that the economy currently produces:

Correct AnswerverifiedShow Answer

Which of the following would not be considered a capital resource by economists?

Correct AnswerverifiedShow Answer

Economic growth is shown as an increase in production from inside the production possibilities curve out toward a point on the possibilities curve.

Correct AnswerverifiedShow Answer

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule: Refer to the above table. If the nation uses all of its resources to produce only wheat, then its production combination will be:

Correct AnswerverifiedShow Answer

Which of the following statements regarding people's wants is true?

Correct AnswerverifiedShow Answer

The economic principle that "unemployment rate will tend to increase as the economy moves into a recession" is an example of:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In a graph of the production possibilities curve, the two axes of the graph indicate the:

Correct AnswerverifiedShow Answer

Refer to the above graph. Which of the following statements about combination G is true?

Correct AnswerverifiedShow Answer

All of the following would affect the position and shape of a nation's production possibilities curve, except:

Correct AnswerverifiedShow Answer

Refer to the following table which shows the quantities of corn demanded at various levels of corn price (hypothetical data) . Which curve in the graph shown above best represents the data in the table?

Correct AnswerverifiedShow Answer

The law of increasing opportunity costs states that:

Correct AnswerverifiedShow Answer

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule: Refer to the above table. Which of the following output-combinations is unattainable:

Correct AnswerverifiedShow Answer

Economists have difficulty applying the scientific method because:

Correct AnswerverifiedShow Answer

The following graph is the production possibilities curve of a nation: Refer to the above graph. The marginal opportunity cost of the fourth unit of bread is:

Correct AnswerverifiedShow Answer

Which pitfall to sound economic reasoning is illustrated when a person comments that "capitalists focus only on profits and don't care about their workers"?

Correct AnswerverifiedShow Answer

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities: Refer to the above table. In moving from combination C to B, the opportunity cost of producing 100 more autos is:

Correct AnswerverifiedShow Answer

The budget line shows the various incomes that an individual can earn from different jobs.

Correct AnswerverifiedShow Answer

In a graph showing the relationship between variables X and Y, ceteris paribus means that:

Correct AnswerverifiedShow Answer

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