Question 1

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 three units of capital goods?

Accepted Answer

A)   6 units of consumer goods
B)   7 units of consumer goods
C)   15 units of consumer goods
D)   22 units of consumer goodsE) A) and B)
F) A) and D)

Question 2

The entrepreneur's sole function is to combine other resources (land, labour, and capital) in the production of some good or service.

Accepted Answer

A) True 
 B)False

Question 3

-In the above diagram variables x and y are:

Accepted Answer

A)   both dependent variables.
B)   directly related.
C)   inversely related.
D)   unrelated.E) All of the above
F) B) and C)

Question 4

"Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase." This is a reflection of:

Accepted Answer

A)   resource scarcity and the necessity of choice.
B)   purposeful behaviour.
C)   marginal costs which exceed marginal benefits.
D)   the tradeoff problem which exists between competing goals.E) All of the above
F) A) and C)

Question 5

Which one of the following statements is correct?

Accepted Answer

A)   Relative scarcity is no longer a central notion in economics because we are in an age of abundance.
B)   Most production possibilities curves are convex as viewed from the origin.
C)   The production possibilities curve shows society's preferences for consumer goods relative to capital goods.
D)   The central concept underlying the production possibilities curve is that of limited resources.E) A) and B)
F) A) and C)

Question 6

-The above data suggest that:

Accepted Answer

A)   a policy of tax reduction will increase consumption.
B)   a policy of tax increases will increase consumption.
C)   tax changes will have no impact on consumption.
D)   after-tax income should be lowered to increase consumption.E) B) and D)
F) A) and D)

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 D)
F) B) and C)

Question 8

Suppose an economist says that "Other things equal, the lower the price of bananas, the greater the amount of bananas purchased." This statement indicates that:

Accepted Answer

A)   the quantity of bananas purchased determines the price of bananas.
B)   all factors other than the price of bananas (for example, consumer tastes and incomes)  are assumed to be constant.
C)   economists can conduct controlled laboratory experiments.
D)   one cannot generalize about the relationship between the price of bananas and the quantity purchased.E) A) and B)
F) B) and C)

Question 9

s for quantity supplied and P for price, which of the following equations correctly states the supply of this product? A)  P = 4 + .2Qs. B)  P = 60/Qs. C)  P = 10Qs - 2P. D)  P = 2 + .2Qs." class="answers-bank-image d-inline" rel="preload" >
-Refer to the above graph. Using Qs for quantity supplied and P for price, which of the following equations correctly states the supply of this product?

Accepted Answer

A)   P = 4 + .2Qs.
B)   P = 60/Qs.
C)   P = 10Qs - 2P.
D)   P = 2 + .2Qs.E) B) and C)
F) A) and B)

Question 10

-Refer to the above production possibilities curves. Given production possibilities curve (a), point Y indicates that society is failing to use available resources efficiently.

Accepted Answer

A) True 
 B)False

Question 11

-Refer to the above production possibilities curves. Given production possibilities curve (a), the combination of civilian and war goods indicated by point X is unattainable to this economy.

Accepted Answer

A) True 
 B)False  False

Question 12

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

Question 13

Production possibilities tables for two countries, North Cantina and South Cantina:
North Cantina Production possibilities (alternatives) 
  South Cantina Production possibilities (alternatives) 
 
-Refer to the table below. According to the production possibilities schedule for the economy which produces two products, a combination of four tanks and 650 autos is: Production Possibilities

Accepted Answer

A)   attainable, but involves an efficient use of society's resources.
B)   attainable, but would not be in the best interests of a strong national defence.
C)   not attainable because it is not listed in the schedule.
D)   not attainable because society does not have sufficient resources to produce this combination.E) A) and B)
F) B) and D)

Question 14

-Refer to the above production possibilities curves. The movement from curve (a) to curve (b) implies an increase in the quantity and/or quality of society's productive resources.

Accepted Answer

A) True 
 B)False  True

Question 15

-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 16

-In line (3)  on the above graph, variables x and y are:

Accepted Answer

A)   directly related.
B)   negatively related.
C)   positively related.
D)   nonlinearly related.E) None of the above
F) A) and B)

Question 17

Refer to the following production possibilities curves. Curve (a)  is the current curve for the economy. Given production possibilities curve (a) , the combination of capital and consumer goods indicated by point L:

Accepted Answer

A)   would entail substantial unemployment.
B)   would entail an inefficient use of society's resources.
C)   is beyond the productive capacity of this society.
D)   suggests the productive capacity of the system is declining.E) A) and B)
F) None of the above

Question 18

A point inside the production possibilities curve is:

Accepted Answer

A)   attainable and the economy is efficient.
B)   attainable, but the economy is inefficient.
C)   unattainable, but the economy is inefficient.
D)   unattainable and the economy is efficient.E) None of the above
F) A) and B)

Question 19

1/3 x. B)  y = 3 + 3/4 x. C)  y = 4 - 3/4 x. D)  y = 4 + 11/3 x." class="answers-bank-image d-inline" rel="preload" >
-In the above diagram the equation for this line is:

Accepted Answer

A)   y = 4 - 11/3 x.
B)   y = 3 + 3/4 x.
C)   y = 4 - 3/4 x.
D)   y = 4 + 11/3 x.E) All of the above
F) A) and B)

Question 20

Refer to the diagram below. The concave shape of each production possibilities curve indicates that:

Accepted Answer

A)   resources are perfectly substitutable.
B)   wants are virtually unlimited.
C)   prices are constant.
D)   resources are not equally suited for alternative uses.E) A) and B)
F) A) and C) D

Exam 1: Limits, Alternatives, and Choices

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 three units of capital goods?

Correct Answer
verified

The entrepreneur's sole function is to combine other resources (land, labour, and capital) in the production of some good or service.

Correct Answer
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-In the above diagram variables x and y are:

Correct Answer
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"Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase." This is a reflection of:

Correct Answer
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Which one of the following statements is correct?

Correct Answer
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-The above data suggest that:

Correct Answer
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The concept of opportunity cost:

Correct Answer
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Suppose an economist says that "Other things equal, the lower the price of bananas, the greater the amount of bananas purchased." This statement indicates that:

Correct Answer
verified

-Refer to the above graph. Using Q_s for quantity supplied and P for price, which of the following equations correctly states the supply of this product?

Correct Answer
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-Refer to the above production possibilities curves. Given production possibilities curve (a), point Y indicates that society is failing to use available resources efficiently.

Correct Answer
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-Refer to the above production possibilities curves. Given production possibilities curve (a), the combination of civilian and war goods indicated by point X is unattainable to this economy.

Correct Answer
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False

-Refer to the above table. For these data the law of increasing opportunity costs is reflected in the fact that:

Correct Answer
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Correct Answer
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-Refer to the above production possibilities curves. The movement from curve (a) to curve (b) implies an increase in the quantity and/or quality of society's productive resources.

Correct Answer
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True

-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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-In line (3) on the above graph, variables x and y are:

Correct Answer
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Refer to the following production possibilities curves. Curve (a) is the current curve for the economy. Given production possibilities curve (a) , the combination of capital and consumer goods indicated by point L:

Correct Answer
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A point inside the production possibilities curve is:

Correct Answer
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-In the above diagram the equation for this line is:

Correct Answer
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Refer to the diagram below. The concave shape of each production possibilities curve indicates that:

Correct Answer
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D

Exam 1: Limits, Alternatives, and Choices

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 three units of capital goods?

Correct AnswerverifiedShow Answer

The entrepreneur's sole function is to combine other resources (land, labour, and capital) in the production of some good or service.

Correct AnswerverifiedShow Answer

-In the above diagram variables x and y are:

Correct AnswerverifiedShow Answer

"Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase." This is a reflection of:

Correct AnswerverifiedShow Answer

Which one of the following statements is correct?

Correct AnswerverifiedShow Answer

-The above data suggest that:

Correct AnswerverifiedShow Answer

The concept of opportunity cost:

Correct AnswerverifiedShow Answer

Suppose an economist says that "Other things equal, the lower the price of bananas, the greater the amount of bananas purchased." This statement indicates that:

Correct AnswerverifiedShow Answer

-Refer to the above graph. Using Qs for quantity supplied and P for price, which of the following equations correctly states the supply of this product?

Correct AnswerverifiedShow Answer

-Refer to the above production possibilities curves. Given production possibilities curve (a), point Y indicates that society is failing to use available resources efficiently.

Correct AnswerverifiedShow Answer

-Refer to the above production possibilities curves. Given production possibilities curve (a), the combination of civilian and war goods indicated by point X is unattainable to this economy.

Correct AnswerverifiedFalse

-Refer to the above table. For these data the law of increasing opportunity costs is reflected in the fact that:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

-Refer to the above production possibilities curves. The movement from curve (a) to curve (b) implies an increase in the quantity and/or quality of society's productive resources.

Correct AnswerverifiedTrue

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

Correct AnswerverifiedShow Answer

-In line (3) on the above graph, variables x and y are:

Correct AnswerverifiedShow Answer

Refer to the following production possibilities curves. Curve (a) is the current curve for the economy. Given production possibilities curve (a) , the combination of capital and consumer goods indicated by point L:

Correct AnswerverifiedShow Answer

A point inside the production possibilities curve is:

Correct AnswerverifiedShow Answer

-In the above diagram the equation for this line is:

Correct AnswerverifiedShow Answer

Refer to the diagram below. The concave shape of each production possibilities curve indicates that:

Correct AnswerverifiedD

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-Refer to the above graph. Using Q_s for quantity supplied and P for price, which of the following equations correctly states the supply of this product?

Correct Answer
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False

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True

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D