Question 1

Like other branches of social science, economics relies on the:

Accepted Answer

A)  trial and error method.
B)  sub-optimization model.
C)  heuristic method.
D)  scientific method.E) B) and C)
F) A) and C)

Question 2

Refer to the above graph.Which of the following schedules correctly reflects "supply"?

Accepted Answer

A)  schedule (
A)  
B)  schedule (
B)  
C)  schedule (
C)  
D)  schedule (
D)  E) A) and B)
F) A) and C)

Question 3

The production possibilities curve below shows the hypothetical relationship between the production of capital goods and consumer goods in an economy.  Refer to the above table.What is the total opportunity cost of producing three units of capital goods?

Accepted Answer

A)  6 units of consumer goods
B)  7 units of consumer goods
C)  15 units of consumer goods
D)  22 units of consumer goodsE) C) and D)
F) B) and D)

Question 4

If the production possibilities curve were a straight downsloping line, this would suggest that:

Accepted Answer

A)  resources are perfectly substitutable between the production of these two goods.
B)  it is possible to produce more of both products.
C)  both products are equally capable of satisfying consumer wants.
D)  the two products have identical prices.E) A) and B)
F) B) and D)

Question 5

The process of developing hypotheses, testing them against facts, and using the results to construct theories is called:

Accepted Answer

A)  opportunity cost calculation.
B)  the scientific method.
C)  marginal analysis.
D)  microeconomics.E) None of the above
F) A) and B)

Question 6

Answer on the basis of the relationships shown in the above four figures.The amount of Y is inversely related to the amount of X in:

Accepted Answer

A)  2 only.
B)  both 1 and 3.
C)  3 only.
D)  1 only.E) A) and B)
F) A) and C)

Question 7

Refer to the above diagram.Starting at point A, the opportunity cost of producing each successive unit of tractors is:

Accepted Answer

A)  a constant 2 units of bread.
B)  2, 4, 6, and 8 units of bread.
C)  8, 6, 4, and 2 units of bread.
D)  the reciprocal of the output of tractors.E) B) and C)
F) A) and D)

Question 8

Other things equal, which of the following would shift an economy's production possibilities curve to the left?

Accepted Answer

A)  the discovery of a low-cost means of generating and storing solar energy
B)  the entrance of more women into the labour force
C)  a law requiring mandatory retirement from the labour force at age 55
D)  an increase in the proportion of total output which consists of capital or investment goodsE) A) and B)
F) A) and C)

Question 9

Which of the following is a macroeconomic statement?

Accepted Answer

A)  The gross profits of all Canadian businesses were $70 billion last year.
B)  The price of beef declined by 3 percent last year.
C)  General Motors' profits increased in 2012.
D)  The productivity of steelworkers increased by 1 percent in 2012.E) All of the above
F) C) and D)

Question 10

Production possibilities (alternatives)  1/3 of a unit of capital goods." class="answers-bank-image d-inline" rel="preload" > Refer to the above table.If the economy is producing at production alternative C, the opportunity cost of the tenth unit of consumer goods will be:

Accepted Answer

A)  4 units of capital goods.
B)  2 units of capital goods.
C)  3 units of capital goods.
D)  1/3 of a unit of capital goods.E) A) and B)
F) B) and C)

Question 11

The above data suggest that:

Accepted Answer

A)  consumption varies inversely with after-tax income.
B)  consumption varies directly with after-tax income.
C)  consumption and after-tax income are unrelated.
D)  a tax increase will increase consumption.E) C) and D)
F) A) and B)

Question 12

Refer to the above graph.Which of the following schedules correctly reflects "demand"?

Accepted Answer

A)  schedule (
A)  
B)  schedule (
B)  
C)  schedule (
C)  
D)  schedule (
D)  E) All of the above
F) None of the above

Question 13

The fundamental problem of economics is:

Accepted Answer

A)  to establish a democratic political framework for the provision of social goods and services.
B)  the establishment of prices which accurately reflect the relative scarcities of products and resources.
C)  the scarcity of productive resources relative to material wants.
D)  to achieve a more equitable distribution of money income in order to mitigate poverty.E) B) and D)
F) B) and C)

Question 14

A point inside a production possibilities curve may indicate:

Accepted Answer

A)  unemployment.
B)  the inefficient use of resources.
C)  failure to use the best available technology.
D)  all of the above.E) B) and C)
F) None of the above

Question 15

A typical concave production possibilities curve implies:

Accepted Answer

A)  that economic resources are scarce.
B)  that society must choose among various attainable combinations of goods.
C)  increasing opportunity costs.
D)  all of the above.E) All of the above
F) C) and D)

Question 16

If the equation y = -10 + 2.5x was plotted

Accepted Answer

A)  the vertical intercept would be -10.
B)  the slope would be +2.5.
C)  it would graph as an upsloping line.
D)  all of the above would be true.E) All of the above
F) A) and C)

Question 17

The production possibilities curve tells us:

Accepted Answer

A)  what specific combinations of two products is most desired by society.
B)  that costs do not change as society varies its output.
C)  costs are irrelevant in a society which has fixed resources.
D)  what combinations of two goods can be produced with society's available resources.E) A) and C)
F) B) and D)

Question 18

The basic purpose of the "other things equal" assumption is to:

Accepted Answer

A)  allow one to reason about the relationship between variables X and Y without the intrusion of variable Z.
B)  allow one to focus upon micro variables by ignoring macro variables.
C)  allow one to focus upon macro variables by ignoring micro variables.
D)  determine whether X causes Y or vice versa.E) A) and C)
F) A) and B)

Question 19

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.E) All of the above
F) B) and C)

Question 20

The process by which capital goods are accumulated is known as investment.

Accepted Answer

A) True 
 B)False

Exam 1: B: Limits, Alternatives, and Choices

Refer to the above graph.Which of the following schedules correctly reflects "supply"?

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The production possibilities curve tells us:

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Production possibilities (alternatives) Refer to the above table.If the economy is producing at production alternative C, the opportunity cost of the tenth unit of consumer goods will be:

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The production possibilities curve below shows the hypothetical relationship between the production of capital goods and consumer goods in an economy. Refer to the above table.What is the total opportunity cost of producing three units of capital goods?

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Other things equal, which of the following would shift an economy's production possibilities curve to the left?

Correct AnswerverifiedShow Answer

A point inside a production possibilities curve may indicate:

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Answer on the basis of the relationships shown in the above four figures.The amount of Y is inversely related to the amount of X in:

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If the production possibilities curve were a straight downsloping line, this would suggest that:

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If the equation y = -10 + 2.5x was plotted

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Refer to the above graph.Which of the following schedules correctly reflects "demand"?

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A typical concave production possibilities curve implies:

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The process of developing hypotheses, testing them against facts, and using the results to construct theories is called:

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The above data suggest that:

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

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The fundamental problem of economics is:

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Refer to the above diagram.Starting at point A, the opportunity cost of producing each successive unit of tractors is:

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Like other branches of social science, economics relies on the:

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Which of the following is a macroeconomic statement?

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The basic purpose of the "other things equal" assumption is to:

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The process by which capital goods are accumulated is known as investment.

Correct AnswerverifiedShow Answer

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