Question 1

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) B) and D)
F) A) and C)

Question 2

A leftward shift of a consumer's budget line to a position parallel with the original one could indicate that the:

Accepted Answer

A)   price of one product has decreased in relation to the other.
B)   prices of both products have decreased in the same proportion.
C)   marginal utilities derived from both products have decreased.
D)   consumer's money income has increased but the prices of both products have increased proportionately more.E) None of the above
F) All of the above

Question 3

One of the basic economic defences of economic growth rests on the conclusion that:

Accepted Answer

A)   growth makes workers less obsolete and more secure in employment.
B)   growth reduces the cost of "common property" resources to society.
C)   growth makes the gap between unlimited wants and scarce resources less acute.
D)   a growth-oriented society has a relatively equitable income distribution.E) B) and C)
F) A) and B)

Question 4

-Refer to the above table. As compared to production alternative D, the choice of alternative C would:

Accepted Answer

A)   tend to generate a more rapid growth rate.
B)   be unattainable.
C)   entail unemployment.
D)   tend to generate a slower growth rate.E) All of the above
F) A) and D)

Question 5

If price (P)  and quantity (Q)  are directly related, this means that:

Accepted Answer

A)   a change in Q will alter P, but a change in P will not alter Q.
B)   if P increases, Q will decrease.
C)   if P increases, Q will also increase.
D)   an increase in P will cause Q to change, but the direction in which Q changes cannot be predicted.E) B) and D)
F) None of the above

Question 6

The economic perspective used in customer decision making at fast-food restaurants is reflected in:

Accepted Answer

A)   customers selecting the shortest line.
B)   customers leaving rather than waiting if all lines are long.
C)   all customer lines tending to be of equal length.
D)   all of the above.E) All of the above
F) C) and D)

Question 7

(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.E) A) and D)
F) C) and D)

Question 8

Through specialization and international trade a nation:

Accepted Answer

A)   can achieve some combination of goods lying outside its production possibilities curve.
B)   can move from a high consumption-low investment to a high investment-low consumption point on its production possibilities curve.
C)   will achieve some combination of goods lying within its production possibilities curve.
D)   will cause its production possibilities curve to shift leftward.E) C) and D)
F) All of the above

Question 9

(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.E) All of the above
F) A) and B)

Question 10

-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) All of the above
F) B) and C)

Question 11

1/3 respectively. B)  3 and -11/3 respectively. C)  3 and + 3/4 respectively. D)  4 and + 3/4 respectively." class="answers-bank-image d-inline" rel="preload" >
-In the above diagram the vertical intercept and slope are:

Accepted Answer

A)   4 and -11/3 respectively.
B)   3 and -11/3 respectively.
C)   3 and + 3/4 respectively.
D)   4 and + 3/4 respectively.E) A) and B)
F) A) and C)

Question 12

Opportunity cost is best defined as:

Accepted Answer

A)   the monetary price of any productive resource.
B)   the amount of labour which must be used to produce one unit of any product.
C)   the ratio of the prices of imported goods to the prices of exported goods.
D)   the amount of one product which must be given up to produce one more unit of another product.E) C) and D)
F) None of the above

Question 13

Production possibilities tables for two countries, North Cantina and South Cantina:
North Cantina
Production possibilities (alternatives) 
  South Cantina
Production possibilities (alternatives) 
 
-Refer to the above tables. The opportunity cost of the fifth unit of capital goods:

Accepted Answer

A)   is higher in North Cantina than in South Cantina.
B)   is the same in North Cantina and South Cantina.
C)   is lower in North Cantina than in South Cantina.
D)   cannot be determined from the information provided.E) C) and D)
F) B) and C)

Question 14

-Refer to the above diagram. Which line(s)  show(s)  a negative relationship between x and y?

Accepted Answer

A)   A only
B)   both A and D
C)   A, B, and D
D)   both C and EE) A) and B)
F) B) and C)

Question 15

-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) B) and D)
F) A) and D)

Question 16

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.E) A) and D)
F) A) and C)

Question 17

Which of the following statements, if any, is correct for a nation which is producing only consumption and capital goods?

Accepted Answer

A)   Other things equal, the more consumer goods a nation produces, the greater will be its future growth rate.
B)   Other things equal, the more capital goods a nation produces, the greater will be its future growth rate.
C)   There is no general relationship between the current division of output between consumer and capital goods and the future growth rate.
D)   None of the above statements is correct.E) B) and C)
F) None of the above

Question 18

Rational individuals may make different choices because their information and circumstances differ.

Accepted Answer

A) True 
 B)False

Question 19

-The linear equation for line (3)  on the above graph is:

Accepted Answer

A)   y = 24 - 1.5x.
B)   y = 16 - .5x.
C)   y = 24 - .66x.
D)   y = 24 - .75x.E) All of the above
F) A) and D)

Question 20

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 D)
F) A) and C)

Exam 1: Limits, Alternatives, and Choices

Production possibilities tables for two countries, North Cantina and South Cantina: North Cantina Production possibilities (alternatives) South Cantina Production possibilities (alternatives) -Refer to the above tables. The opportunity cost of the fifth unit of capital goods:

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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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Through specialization and international trade a nation:

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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:

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One of the basic economic defences of economic growth rests on the conclusion that:

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-The above data suggest that:

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-The linear equation for line (3) on the above graph is:

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-Refer to the above diagram. Which line(s) show(s) a negative relationship between x and y?

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

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A leftward shift of a consumer's budget line to a position parallel with the original one could indicate that the:

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If price (P) and quantity (Q) are directly related, this means that:

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The economic perspective used in customer decision making at fast-food restaurants is reflected in:

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-In the above diagram the vertical intercept and slope are:

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

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-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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Which of the following statements, if any, is correct for a nation which is producing only consumption and capital goods?

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Rational individuals may make different choices because their information and circumstances differ.

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Which of the following statements is correct?

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-Refer to the above table. As compared to production alternative D, the choice of alternative C would:

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Opportunity cost is best defined as:

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