Question 1

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.For this economy to produce a total output of 3 units of capital goods and 13 units of consumer goods,it must:

Accepted Answer

A)   achieve economic growth.
B)   use its resources more efficiently than the data in the table now indicate.
C)   allocate its available resources most efficiently among alternative uses.
D)   achieve the full employment of available resources. E) C) and D)
F) None of the above

Question 2

Answer the question on the basis of the following production possibilities tables for two countries,North Cantina and South Cantina:  Refer to the tables.Suppose that resources in North Cantina and South Cantina are identical in quantity and quality.We can conclude that:

Accepted Answer

A)   South Cantina has better technology than North Cantina in producing both capital and consumer goods.
B)   North Cantina has better technology than South Cantina in producing both capital and consumer goods.
C)   North Cantina is growing more rapidly than South Cantina.
D)   North Cantina has better technology than South Cantina in producing consumer goods but not capital goods.E) A) and B)
F) A) and C)

Question 3

The typical production possibilities curve is:

Accepted Answer

A)   an upsloping line that is bowed out from the origin.
B)   a downsloping line that is bowed in toward the origin.
C)   a downsloping line that is bowed out from the origin.
D)   a straight upsloping line.E) C) and D)
F) B) and D)

Question 4

The main function of the entrepreneur is to:

Accepted Answer

A)   make routine pricing decisions.
B)   innovate.
C)   purchase capital.
D)   create market demand.E) A) and C)
F) A) and B)

Question 5

Economists:

Accepted Answer

A)   always put the independent variable on the horizontal axis and the dependent variable on the vertical axis.
B)   always put the dependent variable on the horizontal axis and the independent variable on the vertical axis.
C)   are somewhat arbitrary in assigning independent and dependent variables to the horizontal and vertical axes.
D)   measure the slope of a line differently than do mathematicians.E) A) and D)
F) B) and C)

Question 6

The production possibilities curve has:

Accepted Answer

A)   a positive slope that increases as we move along it from left to right.
B)   a negative slope that increases as we move along it from left to right.
C)   a negative slope that decreases as we move along it from left to right.
D)   a negative slope that is constant as we move along it from left to right.E) A) and B)
F) None of the above

Question 7

The alternative combinations of two goods that a consumer can purchase with a specific money income is shown by:

Accepted Answer

A)   a production possibilities curve.
B)   a demand curve.
C)   a consumer expenditure line.
D)   a budget line.E) A) and B)
F) None of the above

Question 8

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 suggest that:

Accepted Answer

A)   consumption varies inversely with after-tax income.
B)   consumption varies directly with after-tax income.
C)   consumption and after-tax income are unrelated.
D)   a tax increase will increase consumption. E) B) and C)
F) B) and D)

Question 9

Normative statements are expressions of facts.

Accepted Answer

A) True 
 B)False

Question 10

The assertion that "there is no free lunch" means that:

Accepted Answer

A)   there are always trade-offs between economic goals.
B)   all production involves the use of scarce resources and thus the sacrifice of alternative goods.
C)   marginal analysis is used in economic reasoning.
D)   choices need not be made if behavior is rational.E) A) and B)
F) None of the above

Question 11

Economic resources are also called:

Accepted Answer

A)   free gifts of nature.
B)   consumption goods.
C)   units of money capital.
D)   factors of production.E) B) and C)
F) All of the above

Question 12

The marginal cost curve is:

Accepted Answer

A)   upsloping because of increasing marginal opportunity costs.
B)   upsloping because successive units of a specific product yield less and less extra utility.
C)   downsloping because of increasing marginal opportunity costs.
D)   downsloping because successive units of a specific product yield less and less extra utility.E) A) and C)
F) All of the above

Question 13

Economic theories:

Accepted Answer

A)   are useless because they are not based on laboratory experimentation.
B)   that are true for individual economic units are never true for the economy as a whole.
C)   are generalizations based on a careful observation of facts.
D)   are abstractions and therefore of no application to real situations.E) A) and D)
F) All of the above

Question 14

Which of the following will shift the production possibilities curve to the right?

Accepted Answer

A)   An increase in the unemployment rate from 6 to 8 percent.
B)   A decline in the efficiency with which the present labor force is allocated.
C)   A decrease in the unemployment rate from 8 to 6 percent.
D)   A technological advance that allows farmers to produce more output from given inputs.E) A) and D)
F) A) and C)

Question 15

Rational individuals may make different choices because their preferences and circumstances differ.

Accepted Answer

A) True 
 B)False

Question 16

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.As compared to production alternative D,the choice of alternative C would:

Accepted Answer

A)   tend to generate a more rapid growth rate.
B)   be unattainable.
C)   entail unemployment.
D)   tend to generate a slower growth rate. E) All of the above
F) A) and B)

Question 17

The economizing problem is:

Accepted Answer

A)   the need to make choices because economic wants exceed economic means.
B)   how to distribute resources equally among all members of society.
C)   that people's means often exceed their wants.
D)   that people do not know how to rationally allocate resources.E) B) and C)
F) C) and D)

Question 18

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

Accepted Answer

A)   it is impossible to produce more consumer goods.
B)   resources cannot be reallocated between the two goods.
C)   it is impossible to produce more capital goods.
D)   more consumer goods can only be produced at the cost of fewer capital goods.E) B) and D)
F) B) and C)

Question 19

Opportunity costs exist because:

Accepted Answer

A)   the decision to engage in one activity means forgoing some other activity.
B)   wants are scarce relative to resources.
C)   households and businesses make rational decisions.
D)   most decisions do not involve sacrifices or trade-offs.E) A) and C)
F) All of the above

Question 20

(Last Word) A caller to a radio talk show states that oil companies are "greedy price gougers." This is an example of:

Accepted Answer

A)   loaded terminology.
B)   the "after this,therefore because of this fallacy."
C)   the fallacy of composition.
D)   the economic perspective.E) A) and C)
F) C) and D)

Exam 1: Limits, Alternatives, and Choices

The assertion that "there is no free lunch" means that:

Correct Answer
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Economic theories:

Correct Answer
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Rational individuals may make different choices because their preferences and circumstances differ.

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 suggest that:

Correct Answer
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The typical production possibilities curve is:

Correct Answer
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(Last Word) A caller to a radio talk show states that oil companies are "greedy price gougers." This is an example of:

Correct Answer
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Which of the following will shift the production possibilities curve to the right?

Correct Answer
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Answer the question on the basis of the following production possibilities tables for two countries,North Cantina and South Cantina: Refer to the tables.Suppose that resources in North Cantina and South Cantina are identical in quantity and quality.We can conclude that:

Correct Answer
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Economists:

Correct Answer
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The production possibilities curve has:

Correct Answer
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The economizing problem is:

Correct Answer
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Opportunity costs exist because:

Correct Answer
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The main function of the entrepreneur is to:

Correct Answer
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If an economy is operating on its production possibilities curve for consumer goods and capital goods,this means that:

Correct Answer
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The alternative combinations of two goods that a consumer can purchase with a specific money income is shown by:

Correct Answer
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Correct Answer
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Normative statements are expressions of facts.

Correct Answer
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Economic resources are also called:

Correct Answer
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Correct Answer
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The marginal cost curve is:

Correct Answer
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Exam 1: Limits, Alternatives, and Choices

The assertion that "there is no free lunch" means that:

Correct AnswerverifiedShow Answer

Economic theories:

Correct AnswerverifiedShow Answer

Rational individuals may make different choices because their preferences and circumstances differ.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The typical production possibilities curve is:

Correct AnswerverifiedShow Answer

(Last Word) A caller to a radio talk show states that oil companies are "greedy price gougers." This is an example of:

Correct AnswerverifiedShow Answer

Which of the following will shift the production possibilities curve to the right?

Correct AnswerverifiedShow Answer

Answer the question on the basis of the following production possibilities tables for two countries,North Cantina and South Cantina: Refer to the tables.Suppose that resources in North Cantina and South Cantina are identical in quantity and quality.We can conclude that:

Correct AnswerverifiedShow Answer

Economists:

Correct AnswerverifiedShow Answer

The production possibilities curve has:

Correct AnswerverifiedShow Answer

The economizing problem is:

Correct AnswerverifiedShow Answer

Opportunity costs exist because:

Correct AnswerverifiedShow Answer

The main function of the entrepreneur is to:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The alternative combinations of two goods that a consumer can purchase with a specific money income is shown by:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Normative statements are expressions of facts.

Correct AnswerverifiedShow Answer

Economic resources are also called:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The marginal cost curve is:

Correct AnswerverifiedShow Answer

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