Question 1

-The vertical intercept of line (2)  on the above graph is:

Accepted Answer

A)   8.
B)   12.
C)   16.
D)   24.E) None of the above
F) B) and D)

Question 2

If an economy is operating inside its production possibilities curve for consumer goods and capital goods, this means that it:

Accepted Answer

A)   can only produce more consumer goods by producing fewer capital goods.
B)   can only produce more capital goods by producing fewer consumer goods.
C)   can produce more of both consumer goods and capital goods by using its resources more efficiently.
D)   must improve its technology to produce more output.E) A) and B)
F) None of the above

Question 3

Purposeful behaviour suggests that:

Accepted Answer

A)   everyone will make identical choices.
B)   resource availability exceeds material wants.
C)   individuals make decisions with some desired outcome in mind..
D)   an individual's economic goals cannot involve tradeoffs.E) B) and C)
F) A) and D)

Question 4

Economic models:

Accepted Answer

A)   are of limited use because they cannot be tested empirically.
B)   are limited to variables which are directly related to one another.
C)   emphasize basic economic relationships by abstracting from the complexities of the real world.
D)   are unrealistic and therefore of no practical consequence.E) A) and B)
F) None of the above

Question 5

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

Question 6

-The slope of a line parallel to the vertical axis is:

Accepted Answer

A)   zero.
B)   one.
C)   infinite.
D)   one-half.E) C) and D)
F) A) and C)

Question 7

-Refer to the above production possibilities curve. At the onset of World War II the Soviet Union's economy was already at full employment. Its economic adjustment from peacetime to wartime can best be described by the movement from point:

Accepted Answer

A)   c to point b.
B)   b to point c.
C)   a to point b.
D)   c to point d.E) A) and C)
F) A) and B)

Question 8

Refer to the diagram below. Points A, B, C, D, and E show:

Accepted Answer

A)   that the opportunity cost of bicycles increases, while that of computers is constant.
B)   combinations of bicycles and computers which society can produce by using its resources efficiently.
C)   that the opportunity cost of computers increases, while that of bicycles is constant.
D)   that society's demand for computers is greater than its demand for bicycles.E) None of the above
F) C) and D)

Question 9

A production possibilities curve illustrates:

Accepted Answer

A)   scarcity.
B)   market prices.
C)   consumer preferences.
D)   the distribution of income.E) C) and D)
F) None of the above

Question 10

The study of economics exists because:

Accepted Answer

A)   government interferes with the efficient allocation of scarce resources.
B)   resources are scarce in relation to human material wants.
C)   the market system is an obstacle to the efficient use of plentiful resources to satisfy constrained wants.
D)   resources are overly abundant as compared to wants; thus, an allocation problem exists.E) None of the above
F) C) and D)

Question 11

If economic theories are solidly based on relevant facts, then there can be no question as to the character of appropriate economic policy.

Accepted Answer

A) True 
 B)False

Question 12

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) A) and B)
F) None of the above

Question 13

Even though local newspapers are very inexpensive, people rarely buy more than one of them each day. This fact:

Accepted Answer

A)   is an example of irrational behaviour.
B)   implies that reading should be taught through phonics rather than the whole language method.
C)   contradicts the economic perspective.
D)   implies that, for most people, the marginal benefit of reading a second newspaper is less than the marginal cost.E) None of the above
F) C) and D)

Question 14

1/8, 1/6, 1/4, and 1/2 units of tractors. D)  1/2, 1/4, 1/6, and 1/8 units of tractors." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above diagram. Starting at point E, the production of successive units of bread will cost:

Accepted Answer

A)   a constant 8 units of tractors.
B)   a constant 6 units of tractors.
C)   1/8, 1/6, 1/4, and 1/2 units of tractors.
D)   1/2, 1/4, 1/6, and 1/8 units of tractors.E) C) and D)
F) None of the above

Question 15

The production possibilities curve represents:

Accepted Answer

A)   the maximum amount of labour and capital available for production.
B)   combinations of goods and services among which consumers are indifferent.
C)   maximum combinations of products available with fixed resources and technology.
D)   the maximum rate of growth of capital and labour in an economy.E) A) and B)
F) A) and C)

Question 16

The production possibilities curve shows:

Accepted Answer

A)   the various combinations of two goods which can be produced when society uses its scarce resources efficiently.
B)   the minimum outputs of two goods which will sustain a society.
C)   the various combinations of two goods which can be produced when some resources are unemployed.
D)   the ideal, but unattainable, combinations of two goods which would maximize consumer satisfactions.E) A) and D)
F) None of the above

Question 17

If two variables are inversely related, then as the value of one variable:

Accepted Answer

A)   increases, the value of the other may either increase or decrease.
B)   decreases, the value of the other decreases.
C)   increases, the value of the other decreases.
D)   increases, the value of the other increases.E) B) and D)
F) B) and C)

Question 18

A major argument for economic growth is that it:

Accepted Answer

A)   creates an equal distribution of income.
B)   protects common property resources.
C)   leads to a higher standard of living.
D)   reduces the amount of taxation.E) None of the above
F) B) and D)

Question 19

1 to PP2. B)  move from B on PP1 to E on PP2. C)  move from B on PP1 to C on PP1. D)  move from D inside PP1 to B on PP1." class="answers-bank-image d-inline" rel="preload" >
-Refer to the diagram below. The concept of opportunity cost is best represented by the: 1 to PP2. B)  move from B on PP1 to E on PP2. C)  move from B on PP1 to C on PP1. D)  move from D inside PP1 to B on PP1." class="answers-bank-image d-inline" rel="preload" >

Accepted Answer

A)   shift of the production possibilities curve from PP1 to PP2.
B)   move from B on PP1 to E on PP2.
C)   move from B on PP1 to C on PP1.
D)   move from D inside PP1 to B on PP1.E) A) and D)
F) A) and C)

Question 20

In a linear equation relating income and consumption, you know that the intercept is $1,000 and the slope of the line is .4. If income is $20,000, then consumption is:

Accepted Answer

A)   $8,000.
B)   $9,000.
C)   $10,000.
D)   $11,000.E) C) and D)
F) All of the above

Exam 1: Limits, Alternatives, and Choices

In a linear equation relating income and consumption, you know that the intercept is $1,000 and the slope of the line is .4. If income is $20,000, then consumption is:

Correct AnswerverifiedShow Answer

-Refer to the diagram below. The concept of opportunity cost is best represented by the:

Correct AnswerverifiedShow Answer

A production possibilities curve illustrates:

Correct AnswerverifiedShow Answer

The production possibilities curve represents:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

-Refer to the above diagram. Starting at point E, the production of successive units of bread will cost:

Correct AnswerverifiedShow Answer

If economic theories are solidly based on relevant facts, then there can be no question as to the character of appropriate economic policy.

Correct AnswerverifiedShow Answer

When economists describe "a market," they mean:

Correct AnswerverifiedShow Answer

If two variables are inversely related, then as the value of one variable:

Correct AnswerverifiedShow Answer

-The vertical intercept of line (2) on the above graph is:

Correct AnswerverifiedShow Answer

A major argument for economic growth is that it:

Correct AnswerverifiedShow Answer

Purposeful behaviour suggests that:

Correct AnswerverifiedShow Answer

The study of economics exists because:

Correct AnswerverifiedShow Answer

-Refer to the above production possibilities curve. At the onset of World War II the Soviet Union's economy was already at full employment. Its economic adjustment from peacetime to wartime can best be described by the movement from point:

Correct AnswerverifiedShow Answer

If an economy is operating inside its production possibilities curve for consumer goods and capital goods, this means that it:

Correct AnswerverifiedShow Answer

Refer to the diagram below. Points A, B, C, D, and E show:

Correct AnswerverifiedShow Answer

Economic models:

Correct AnswerverifiedShow Answer

-The slope of a line parallel to the vertical axis is:

Correct AnswerverifiedShow Answer

The production possibilities curve shows:

Correct AnswerverifiedShow Answer

Even though local newspapers are very inexpensive, people rarely buy more than one of them each day. This fact:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified