Question 1

Refer to the above graphs.Which pairs of budget constraints represent only a decrease in the price of good A,but no change in income?

Accepted Answer

A)   Graph A
B)   Graph B
C)   Graph C
D)   Graph DE) A) and D)
F) A) and C)

Question 2

Refer to the above graph.Which point on the production possibilities curve would indicate that there is unemployment in this economy?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) A) and C)
F) None of the above

Question 3

Society wants to use its scarce resources efficiently.To achieve this economic goal it must:

Accepted Answer

A)   have full employment and full production.
B)   have a fixed resource base and fixed technology.
C)   expand the use of capital goods and reduce the use of labor.
D)   increase the rental,interest,wage,and profit payments to the factors of production.E) A) and B)
F) None of the above

Question 4

Macroeconomics focuses on:

Accepted Answer

A)   the individual units that make up the whole of the economy.
B)   studies of how individual markets and industries are organized.
C)   total output and the general level of prices in the economy.
D)   how a business determines how much output to produce.E) A) and C)
F) A) and B)

Question 5

Economic growth may be represented by a:

Accepted Answer

A)   rightward shift of the production possibilities curve.
B)   leftward shift of the production possibilities curve.
C)   production possibilities curve that remains fixed.
D)   point outside (to the right) of the production possibilities curve.E) A) and B)
F) B) and D)

Question 6

The four factors of production are land,labor,capital,and government services.

Accepted Answer

A) True 
 B)False

Question 7

A nation can increase its production possibilities by:

Accepted Answer

A)   shifting resources from investment good production to consumer good production.
B)   shifting resources from private goods to public goods.
C)   improving labor productivity.
D)   reducing international trade.E) None of the above
F) C) and D)

Question 8

In the diagram above,Cheri's budget line shifts outward from AB to CD.Which statement below is consistent with this shift?

Accepted Answer

A)   Both prices double;her income doubles.
B)   Her income is reduced;no change in either price.
C)   Both prices are reduced by 50 percent;her income is reduced by less than 50 percent.
D)   Both the price of good 1 and Cheri's income increase;there is no change in the price of good 2.E) A) and B)
F) All of the above

Question 9

As a student of economics,when you speak of scarcity,you are referring to the ability of society to:

Accepted Answer

A)   employ all of its resources.
B)   consume all that is produced.
C)   satisfy economic wants given limited resources.
D)   continually make technological breakthroughs and increase production.E) A) and B)
F) A) and C)

Question 10

The following economy produces two products.  Given the production possibilities schedule above,a combination of three tanks and 350 autos:

Accepted Answer

A)   illustrates the trade-off between tanks and autos.
B)   is attainable but involves the unemployment or inefficient use of some of society's resources.
C)   cannot be produced by society,given its current level of resources and production technology.
D)   is not attainable because this combination is not listed in the schedule.E) A) and D)
F) A) and C)

Question 11

The law of increasing opportunity costs indicates that:

Accepted Answer

A)   resources are perfectly mobile except for transportation costs.
B)   the sum of all costs cannot rise above the market price of a product.
C)   to produce more of one good,society must sacrifice larger and larger amounts of alternative goods.
D)   if the prices of all the resources involved in the production of goods increase,the cost of producing those goods will increase at the same rate.E) C) and D)
F) B) and D)

Question 12

A point inside the production possibilities curve illustrates that resources are not being used as efficiently as possible.

Accepted Answer

A) True 
 B)False

Question 13

The implied production possibilities curve between work time and grades suggests that more hours spent working will mean more income,but also less study time and a lower grade average.

Accepted Answer

A) True 
 B)False

Question 14

One reason economists have difficulty applying the scientific method is because:

Accepted Answer

A)   economic conditions are constant.
B)   controlled laboratory experiments are often infeasible and sometimes impossible.
C)   people are involved,and their behavior is entirely unpredictable.
D)   the scientific method does not apply to economics.E) A) and B)
F) B) and C)

Question 15

If an economy that produces capital and consumer goods is operating at a point on its production possibilities curve:

Accepted Answer

A)   it is achieving full employment but not full production.
B)   it is achieving full production but not full employment.
C)   more capital goods can be produced only at the cost of some consumer goods.
D)   the economy is incapable of achieving significant economic growth.E) All of the above
F) A) and D)

Question 16

Refer to the above graphs.Which pairs of budget constraints represent only a decrease in income,but no change in the price of X and Y?

Accepted Answer

A)   Graph A
B)   Graph B
C)   Graph C
D)   Graph DE) A) and B)
F) A) and D)

Question 17

The following economy produces two products.  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 C)
F) B) and C)

Question 18

Consider a society that is producing inside its production possibilities frontier.This society could best achieve efficiency in its production of output by:

Accepted Answer

A)   distributing incomes more equally.
B)   fully employing all available resources.
C)   increasing the levels of wages and prices.
D)   producing relatively more capital goods and relatively fewer consumer goods.E) All of the above
F) B) and C)

Question 19

On a production possibilities curve,the optimal or best combination of output for any society:

Accepted Answer

A)   is at a point near the top of the curve.
B)   is at the precise midpoint of the curve.
C)   is at a point near the bottom of the curve.
D)   depends upon the preferences of society.E) A) and D)
F) C) and D)

Question 20

The following economy produces two products.  Refer to the above table.The marginal opportunity cost of the third unit of steel is:

Accepted Answer

A)   10 units of wheat.
B)   15 units of wheat.
C)   20 units of wheat.
D)   30 units of wheat.If this economy goes from 2 units of steel to 3,then it must give up 20 units of wheat.E) A) and B)
F) All of the above

Exam 1: Limits, Alternatives, and Choices

As a student of economics,when you speak of scarcity,you are referring to the ability of society to:

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Economic growth may be represented by a:

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The following economy produces two products. Refer to the above table.A change from possibility C to B means that:

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A nation can increase its production possibilities by:

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The four factors of production are land,labor,capital,and government services.

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Society wants to use its scarce resources efficiently.To achieve this economic goal it must:

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A point inside the production possibilities curve illustrates that resources are not being used as efficiently as possible.

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Refer to the above graphs.Which pairs of budget constraints represent only a decrease in the price of good A,but no change in income?

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Macroeconomics focuses on:

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The law of increasing opportunity costs indicates that:

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The following economy produces two products. Refer to the above table.The marginal opportunity cost of the third unit of steel is:

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In the diagram above,Cheri's budget line shifts outward from AB to CD.Which statement below is consistent with this shift?

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Refer to the above graphs.Which pairs of budget constraints represent only a decrease in income,but no change in the price of X and Y?

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Consider a society that is producing inside its production possibilities frontier.This society could best achieve efficiency in its production of output by:

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On a production possibilities curve,the optimal or best combination of output for any society:

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Refer to the above graph.Which point on the production possibilities curve would indicate that there is unemployment in this economy?

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One reason economists have difficulty applying the scientific method is because:

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The implied production possibilities curve between work time and grades suggests that more hours spent working will mean more income,but also less study time and a lower grade average.

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If an economy that produces capital and consumer goods is operating at a point on its production possibilities curve:

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The following economy produces two products. Given the production possibilities schedule above,a combination of three tanks and 350 autos:

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