Question 1

The typical production possibilities curve is:

Accepted Answer

A)  an upward sloping line which is concave to the origin.
B)  a downward sloping line which is convex to the origin.
C)  a downward sloping line which is concave to the origin.
D)  a straight upward sloping line.E) B) and C)
F) A) and D)

Question 2

From an economic perspective, when consumers leave a fast-food restaurant because the lines to be served are too long, they have concluded that the:

Accepted Answer

A)  marginal cost of waiting is less than the marginal benefit of being served.
B)  marginal cost of waiting is greater than the marginal benefit of being served.
C)  management is exhibiting irrational behaviour by not maximizing profits.
D)  management is making an assumption that other things are equal.E) A) and B)
F) B) and C)

Question 3

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 D)

Question 4

Microeconomics:

Accepted Answer

A)  is concerned with the aggregate or total levels of income, employment, and output.
B)  is not concerned with details, but only with the overall "big picture" of the economy.
C)  is concerned with individual economic units and specific markets.
D)  describes the aggregate flows of output and income.E) B) and D)
F) All of the above

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

The above data indicates that:

Accepted Answer

A)  consumers spend 80 percent of their after-tax incomes.
B)  consumers spend 90 percent of their after-tax incomes.
C)  a tax reduction will reduce consumption.
D)  the relationship between consumption and after-tax income is random.E) B) and D)
F) B) and C)

Question 7

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 8

As used in economics, the notion of scarce resources means that:

Accepted Answer

A)  mineral deposits are only available in finite amounts.
B)  resources are not so plentiful that all individuals' material wants can be fulfilled.
C)  some resources are free while others have price tags on them.
D)  the quantities available of some resources exceed the demand for them.E) B) and D)
F) A) and B)

Question 9

Refer to the above diagram.The slope of curve ZZ at point B is:

Accepted Answer

A)  infinity.
B)  zero.
C)  one.
D)  none of the above.E) A) and C)
F) B) and C)

Question 10

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) None of the above
F) All of the above

Question 11

When economists describe "a market," they mean:

Accepted Answer

A)  a place where stocks and bonds are traded.
B)  information networks that allow individuals to keep in touch with each other.
C)  a hypothetical place where the production of goods and services takes place.
D)  a mechanism which coordinates actions of consumers and producers to establish equilibrium prices and quantities.E) B) and C)
F) A) and C)

Question 12

In constructing models, economists:

Accepted Answer

A)  make simplifying assumptions.
B)  include all available information.
C)  must use mathematical equations.
D)  attempt to duplicate the real world.E) A) and B)
F) None of the above

Question 13

The slope of line (2)  on the above graph is:

Accepted Answer

A)  0
B)  .66.
C)  .75.
D)  1.50.E) A) and C)
F) B) and D)

Question 14

Refer to the above diagram.The vertical intercept:

Accepted Answer

A)  is 40.
B)  is 50.
C)  is 60.
D)  cannot be determined from the information given.E) B) and D)
F) All of the above

Question 15

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

Question 16

The linear equation for line (1)  on the above graph is:

Accepted Answer

A)  y = 8 + 2x.
B)  y = 8 + .5x.
C)  x = 8 + .5y.
D)  y = 8 - 2x.E) B) and D)
F) B) and C)

Question 17

Which of the following would be most likely to shift the production possibilities curve to the right?

Accepted Answer

A)  a sudden and substantial expansion of consumer wants
B)  an improvement in the literacy level and general level of education
C)  a decline in the size of the population and labour force
D)  shifting resources from butter to gun productionE) A) and C)
F) B) and C)

Question 18

The "economic perspective" entails:

Accepted Answer

A)  rational behaviour by individuals and institutions.
B)  a comparison of marginal benefits and marginal costs in decision making.
C)  the altering of behaviour when marginal benefits and marginal costs change.
D)  all of the above.E) A) and C)
F) A) and D)

Question 19

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 two units of capital goods?

Accepted Answer

A)  4 units of consumer goods
B)  5 units of consumer goods
C)  9 units of consumer goods
D)  13 units of consumer goodsE) B) and C)
F) C) and D)

Question 20

Production possibilities (alternatives)   Refer to the above table.For these data the law of increasing opportunity costs is reflected in the fact that:

Accepted Answer

A)  the amount of consumer goods which must be sacrificed to get more capital goods diminishes beyond a point.
B)  larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods.
C)  the production possibilities data would graph as a straight downsloping line.
D)  the economy's resources are presumed not to be scarce.E) C) and D)
F) A) and C)

Exam 1: Part B: Limits, Alternatives, and Choices

Refer to the above diagram.The slope of curve ZZ at point B is:

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

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When economists describe "a market," they mean:

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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 two units of capital goods?

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The above data indicates that:

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Which of the following would be most likely to shift the production possibilities curve to the right?

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In constructing models, economists:

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The slope of line (2) on the above graph is:

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

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The typical production possibilities curve is:

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Refer to the above diagram.The vertical intercept:

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

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The linear equation for line (1) on the above graph is:

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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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Production possibilities (alternatives) Refer to the above table.For these data the law of increasing opportunity costs is reflected in the fact that:

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The "economic perspective" entails:

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As used in economics, the notion of scarce resources means that:

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

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From an economic perspective, when consumers leave a fast-food restaurant because the lines to be served are too long, they have concluded that the:

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Microeconomics:

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