Question 1

If a production possibilities boundary is a curve concave to the origin and not a straight line,then:

Accepted Answer

A)   resources are equally suited to producing alternative products.
B)   resources are not equally suited to producing alternative products.
C)   resources are perfectly interchangeable to alternative uses.
D)   there are unemployed resources.E) A) and C)
F) None of the above

Question 2

The graph above shows the production possibilities curve for an economy producing two goods,X and Y.Which of the points on the graph indicate unemployed resources?

Accepted Answer

A)   D only
B)   E only
C)   E and A only
D)   B and C onlyE) None of the above
F) All of the above

Question 3

The branch of economics that focuses primarily on aggregates is:

Accepted Answer

A)   macroeconomics.
B)   microeconomics.
C)   scientific economics.
D)   consumer economics.E) None of the above
F) A) and B)

Question 4

The production possibilities table below shows the hypothetical relationship between the production of capital goods and consumer goods in an economy.  Refer to the table above.What is the opportunity cost of producing the first 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 goodsProducing the first three capital goods requires giving up 15 (22 - 7 = 15) consumer goods.E) None of the above
F) A) and C)

Question 5

The following economy produces two products.  Refer to the above table.The opportunity cost of each additional tank in terms of autos:

Accepted Answer

A)   remains constant.
B)   falls as more tanks are produced.
C)   increases as more tanks are produced.
D)   cannot be measured because there is no currency.E) None of the above
F) A) and B)

Question 6

The following economy produces two products.  Refer to the above table.The total opportunity cost of the three units of tanks is:

Accepted Answer

A)   200 units of autos.
B)   350 units of autos.
C)   650 units of autos.
D)   1000 units of autos.To get 3 units of tanks,this economy had to give up 350 (1,000 - 650 = 350) autos.E) A) and D)
F) All of the above

Question 7

How is the economic perspective reflected in lines for fast food?

Accepted Answer

A)   Customers select the shortest line because they have perfect information.
B)   Customers select the shortest line because they believe it will reduce their time cost of obtaining food.
C)   Lines will typically be of unequal length because of the inefficiencies in counter service.
D)   The set of food choices is often too complex for customers and thus creates long lines.E) B) and C)
F) B) and D)

Question 8

The fundamental economic problem is that productive resources are scarce in relation to the demand for them.

Accepted Answer

A) True 
 B)False

Question 9

An "aggregate":

Accepted Answer

A)   treats a collection of specific units as one unit.
B)   treats a single unit as if it were a collection of specific units.
C)   is the primary unit of analysis in microeconomics.
D)   is too large to analyze using standard macroeconomic theories.E) A) and B)
F) A) and C)

Question 10

The overallocation of resources by society to a product means that the:

Accepted Answer

A)   marginal benefit is greater than the marginal cost.
B)   marginal cost is greater than the marginal benefit.
C)   entrepreneurs are making too much profit in the economy.
D)   workers are not being paid adequate wages and salaries.E) B) and D)
F) A) and C)

Question 11

As a consequence of the condition of scarcity:

Accepted Answer

A)   there is never enough of anything.
B)   production has to be centrally planned.
C)   things that are plentiful have relatively high prices.
D)   individuals and communities have to make choices from among alternatives.E) A) and B)
F) B) and D)

Question 12

Refer to the above production possibilities curves.Curve (a) is the current curve for the economy.The movement from curve (a) to curve (b) suggests:

Accepted Answer

A)   a movement from unemployment to full employment.
B)   an improvement in capital goods technology but not in consumer goods technology.
C)   an improvement in consumer goods technology but not in capital goods technology.
D)   a decline in the total output of this society.E) All of the above
F) C) and D)

Question 13

Which situation would most likely cause a nation's production possibilities curve to shift inward?

Accepted Answer

A)   The construction of more capital goods
B)   An increase in foreign trade
C)   An increase in the number of skilled immigrant workers
D)   The destruction from bombing and warfare in a losing military conflictE) All of the above
F) A) and D)

Question 14

Refer to the above graph.The total opportunity cost of nine drill presses is:

Accepted Answer

A)   1 unit of bread.
B)   2 units of bread.
C)   3 units of bread.
D)   4 units of bread.To get 9 drill presses,this economy must give up 3 (4 - 1 = 3) units of bread.E) A) and C)
F) B) and C)

Question 15

The term "scarcity" in economics can refer to the fact that:

Accepted Answer

A)   economic wants are limited and resources are abused.
B)   even in the richest country some people go hungry.
C)   no country can produce enough products to satisfy everybody's economic wants.
D)   it is impossible to produce too much of any particular good or service in a market economy.E) B) and D)
F) B) and C)

Question 16

Decreases in product prices causes the consumer's:

Accepted Answer

A)   production possibilities curves to shift outward from the origin.
B)   production possibilities curves to shift inward to the origin.
C)   budget line to shift outward from the origin.
D)   budget line to shift inward to the origin.E) None of the above
F) B) and C)

Question 17

Which expression is another way of saying "marginal cost"?

Accepted Answer

A)   total cost
B)   additional cost
C)   average cost
D)   scarcityE) C) and D)
F) All of the above

Question 18

Points C,D,E,and H on the above graph show:

Accepted Answer

A)   an inefficient allocation of society's scarce resources.
B)   a constant trade-off between food and clothing.
C)   possible combinations of food and clothing.
D)   unattainable combinations of food and clothing.E) A) and B)
F) None of the above

Question 19

The satisfaction or pleasure one gets from consuming a good or service is called:

Accepted Answer

A)   price.
B)   utility.
C)   consumption.
D)   preferences.E) B) and C)
F) C) and D)

Question 20

If the marginal benefits of the output from resources devoted to the production of a product are greater than the marginal costs,then there has been an overallocation of resources to the production of that product.

Accepted Answer

A) True 
 B)False

Exam 1: Limits, Alternatives, and Choices

As a consequence of the condition of scarcity:

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

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If a production possibilities boundary is a curve concave to the origin and not a straight line,then:

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An "aggregate":

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Refer to the above production possibilities curves.Curve (a) is the current curve for the economy.The movement from curve (a) to curve (b) suggests:

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The following economy produces two products. Refer to the above table.The total opportunity cost of the three units of tanks is:

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The term "scarcity" in economics can refer to the fact that:

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The following economy produces two products. Refer to the above table.The opportunity cost of each additional tank in terms of autos:

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Which expression is another way of saying "marginal cost"?

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Decreases in product prices causes the consumer's:

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The branch of economics that focuses primarily on aggregates is:

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The overallocation of resources by society to a product means that the:

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How is the economic perspective reflected in lines for fast food?

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Refer to the above graph.The total opportunity cost of nine drill presses is:

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Points C,D,E,and H on the above graph show:

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If the marginal benefits of the output from resources devoted to the production of a product are greater than the marginal costs,then there has been an overallocation of resources to the production of that product.

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Which situation would most likely cause a nation's production possibilities curve to shift inward?

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The fundamental economic problem is that productive resources are scarce in relation to the demand for them.

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The satisfaction or pleasure one gets from consuming a good or service is called:

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The graph above shows the production possibilities curve for an economy producing two goods,X and Y.Which of the points on the graph indicate unemployed resources?

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