Question 1

In moving along a given budget line:

Accepted Answer

A)   the prices of both products and money income are assumed to be constant.
B)   each point on the line will be equally satisfactory to consumers.
C)   money income varies,but the prices of the two goods are constant.
D)   the prices of both products are assumed to vary,but money income is constant.E) None of the above
F) C) and D)

Question 2

Answer the question on the basis of the following data:   After-Tax Income‾ Consumption ‾$1,000$9002,0001,8003,0002,7004,0003,6005,0004,500\begin{array}{cc}\underline{	ext { After-Tax Income} } &\underline{ 	ext { Consumption }} \\$ 1,000 & \$ 900 \2,000 & 1,800 \3,000 & 2,700 \4,000 & 3,600 \5,000 & 4,500\end{array} After-Tax Income​$1,0002,0003,0004,0005,000​ Consumption ​$9001,8002,7003,6004,500​   The data indicate 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) None of the above
F) A) and B)

Question 3

A typical concave (bowed out from the origin) production possibilities curve implies:

Accepted Answer

A)   that economic resources are unlimited.
B)   that society must choose among various attainable combinations of goods.
C)   decreasing opportunity costs.
D)   that society is using a market system to allocate resources.E) B) and C)
F) All of the above

Question 4

Which of the following terms implies the least degree of confidence in an economic generalization?

Accepted Answer

A)   Hypothesis.
B)   Theory.
C)   Principle.
D)   Law.E) C) and D)
F) B) and C)

Question 5

Which of the following is not considered by economists to be an economic resource?

Accepted Answer

A)   Money.
B)   Factory workers.
C)   Computers at a retail store.
D)   A forest.E) All of the above
F) A) and C)

Question 6

A nation's production possibilities curve is bowed out from the origin because:

Accepted Answer

A)   resources are not generally equally efficient in producing every good.
B)   the originator of the idea drew it this way and modern economists follow this convention.
C)   resources are scarce.
D)   wants are virtually unlimited.E) All of the above
F) A) and B)

Question 7

The concept of opportunity cost:

Accepted Answer

A)   is irrelevant in socialistic economies because of central planning.
B)   suggests that the use of resources in any particular line of production means that alternative outputs must be forgone.
C)   is irrelevant if the production possibilities curve is shifting to the right.
D)   suggests that insatiable wants can be fulfilled.E) B) and C)
F) A) and B)

Question 8

When economists say that people act rationally in their self-interest,they mean that individuals:

Accepted Answer

A)   look for and pursue opportunities to increase their utility.
B)   generally disregard the interests of others.
C)   are mainly creatures of habit.
D)   are usually impulsive and unpredictable.E) None of the above
F) C) and D)

Question 9

Which of the following most closely relates to the idea of opportunity costs?

Accepted Answer

A)   trade-offs.
B)   economic growth.
C)   technological change.
D)   capitalism.E) B) and C)
F) A) and D)

Question 10

Which of the following is a labor resource?

Accepted Answer

A)   A computer programmer.
B)   A computer.
C)   Silicon (sand) used to make computer chips.
D)   A piece of software used by a firm.E) B) and C)
F) C) and D)

Question 11

The production possibilities curve tells us:

Accepted Answer

A)   the specific combination of two products that is most desired by society.
B)   that costs do not change as society varies its output.
C)   that costs are irrelevant in a society that has fixed resources.
D)   the combinations of two goods that can be produced with society's available resources.E) None of the above
F) A) and D)

Question 12

An economy will always operate at some point on its production possibilities curve.

Accepted Answer

A) True 
 B)False

Question 13

The law of increasing opportunity costs states that:

Accepted Answer

A)   if society wants to produce more of a particular good,it must sacrifice larger and larger amounts of another good to do so.
B)   the sum of the costs of producing a particular good cannot rise above the current market price of that good.
C)   if the sum of the costs of producing a particular good rises by a specified percent,the price of that good must rise by a greater relative amount.
D)   if the prices of all the resources used to produce goods increase,the cost of producing any particular good will increase at the same rate.E) A) and B)
F) A) and C)

Question 14

Suppose that Scoobania,which has full employment,can obtain 1 unit of capital goods by sacrificing 2 units of consumer goods domestically but can obtain 1 unit of capital goods from another country by trading 1 unit of consumer goods for it.This reality illustrates:

Accepted Answer

A)   a rightward (outward) shift of the production possibilities curve.
B)   increasing opportunity costs.
C)   achieving points beyond the production possibilities curve through international specialization and trade.
D)   productive efficiency.E) A) and B)
F) None of the above

Question 15

(Last Word) The safest way for an individual to leave a burning theater is to run for the nearest exit;it is therefore also the best means of escape for a large audience.This assertion illustrates the:

Accepted Answer

A)   "after this,therefore because of this" fallacy.
B)   correlation fallacy.
C)   fallacy of composition.
D)   fallacy of limited decisions.E) None of the above
F) B) and C)

Question 16

Because economic generalizations are simplifications from reality,they are impractical and useless.

Accepted Answer

A) True 
 B)False

Question 17

The basic purpose of the other-things-equal assumption is to:

Accepted Answer

A)   allow one to reason about the relationship between variables X and Y without the intrusion of variable Z.
B)   allow one to focus upon micro variables by ignoring macro variables.
C)   allow one to focus upon macro variables by ignoring micro variables.
D)   determine whether X causes Y or vice versa.E) B) and C)
F) C) and D)

Question 18

The present choice of position on the production possibilities curve will not influence the future location of the curve.

Accepted Answer

A) True 
 B)False

Question 19

Answer the question on the basis of the data given in the following production possibilities table:  \quad \quad \quad \quad \quad \quad \quad \quad  Production Possibilities (Alternatives)  ‾\underline{	ext { Production Possibilities (Alternatives)  }} Production Possibilities (Alternatives)  ​ 
 A‾B‾C‾D‾E‾F‾ Capital Goods 543210 onsumer Goods 059121415\begin{array}{ccccccc}&\underline{A}&\underline{B}&\underline{C}& \underline{D} &\underline{E}&\underline{F} \ 	ext { Capital Goods } &5&4&3&2&1&0\	ext { onsumer Goods } & 0 & 5 & 9 & 12 & 14 & 15 \end{array} Capital Goods  onsumer Goods ​A​50​B​45​C​39​D​212​E​114​F​015​   Refer to the 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 B)
F) A) and D)

Question 20

If an economy is operating inside its production possibilities curve for consumer goods and capital goods,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 resources that are currently idle.
D)   must improve its technology to produce more output.E) A) and D)
F) A) and B)

Exam 1: Limits, Alternatives, and Choices

The present choice of position on the production possibilities curve will not influence the future location of the curve.

Correct Answer
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The concept of opportunity cost:

Correct Answer
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When economists say that people act rationally in their self-interest,they mean that individuals:

Correct Answer
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A nation's production possibilities curve is bowed out from the origin because:

Correct Answer
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Because economic generalizations are simplifications from reality,they are impractical and useless.

Correct Answer
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(Last Word) The safest way for an individual to leave a burning theater is to run for the nearest exit;it is therefore also the best means of escape for a large audience.This assertion illustrates the:

Correct Answer
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Which of the following is not considered by economists to be an economic resource?

Correct Answer
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Which of the following is a labor resource?

Correct Answer
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In moving along a given budget line:

Correct Answer
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The law of increasing opportunity costs states that:

Correct Answer
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The basic purpose of the other-things-equal assumption is to:

Correct Answer
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Which of the following terms implies the least degree of confidence in an economic generalization?

Correct Answer
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Which of the following most closely relates to the idea of opportunity costs?

Correct Answer
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Correct Answer
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A typical concave (bowed out from the origin) production possibilities curve implies:

Correct Answer
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The production possibilities curve tells us:

Correct Answer
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Suppose that Scoobania,which has full employment,can obtain 1 unit of capital goods by sacrificing 2 units of consumer goods domestically but can obtain 1 unit of capital goods from another country by trading 1 unit of consumer goods for it.This reality illustrates:

Correct Answer
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If an economy is operating inside its production possibilities curve for consumer goods and capital goods,it:

Correct Answer
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Answer the question on the basis of the following data: $\begin{array}{cc}\underline{\text { After-Tax Income} } &\underline{ \text { Consumption }} \\\$ 1,000 & \$ 900 \\2,000 & 1,800 \\3,000 & 2,700 \\4,000 & 3,600 \\5,000 & 4,500\end{array}$ The data indicate that:

Correct Answer
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An economy will always operate at some point on its production possibilities curve.

Correct Answer
verified

Exam 1: Limits, Alternatives, and Choices

The present choice of position on the production possibilities curve will not influence the future location of the curve.

Correct AnswerverifiedShow Answer

The concept of opportunity cost:

Correct AnswerverifiedShow Answer

When economists say that people act rationally in their self-interest,they mean that individuals:

Correct AnswerverifiedShow Answer

A nation's production possibilities curve is bowed out from the origin because:

Correct AnswerverifiedShow Answer

Because economic generalizations are simplifications from reality,they are impractical and useless.

Correct AnswerverifiedShow Answer

(Last Word) The safest way for an individual to leave a burning theater is to run for the nearest exit;it is therefore also the best means of escape for a large audience.This assertion illustrates the:

Correct AnswerverifiedShow Answer

Which of the following is not considered by economists to be an economic resource?

Correct AnswerverifiedShow Answer

Which of the following is a labor resource?

Correct AnswerverifiedShow Answer

In moving along a given budget line:

Correct AnswerverifiedShow Answer

The law of increasing opportunity costs states that:

Correct AnswerverifiedShow Answer

The basic purpose of the other-things-equal assumption is to:

Correct AnswerverifiedShow Answer

Which of the following terms implies the least degree of confidence in an economic generalization?

Correct AnswerverifiedShow Answer

Which of the following most closely relates to the idea of opportunity costs?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A typical concave (bowed out from the origin) production possibilities curve implies:

Correct AnswerverifiedShow Answer

The production possibilities curve tells us:

Correct AnswerverifiedShow Answer

Suppose that Scoobania,which has full employment,can obtain 1 unit of capital goods by sacrificing 2 units of consumer goods domestically but can obtain 1 unit of capital goods from another country by trading 1 unit of consumer goods for it.This reality illustrates:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An economy will always operate at some point on its production possibilities curve.

Correct AnswerverifiedShow Answer

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