Question 1

In every economic system, choices must be made because resources are:

Accepted Answer

A)  infinite, but economic wants are finite.
B)  finite, but economic wants are insatiable.
C)  unlimited, but economic wants are limited.
D)  limited, and so are economic wants.E) A) and C)
F) B) and C)

Question 2

1/3respectively. B) 3 and -11/3respectively. C) 3 and +3/4respectively. D) 4 and +3/4respectively." class="answers-bank-image d-inline" rel="preload" > In the above diagram the vertical intercept and slope are:

Accepted Answer

A)  4 and -11/3respectively.
B)  3 and -11/3respectively.
C)  3 and +3/4respectively.
D)  4 and +3/4respectively.E) B) and C)
F) A) and B)

Question 3

The production possibilities curve:

Accepted Answer

A)  shows all of those levels of production which are consistent with a stable price level.
B)  indicates that any combination of goods lying outside the curve is economically inefficient.
C)  is a frontier between all combinations of two goods which can be produced and those combinations which cannot be produced.
D)  shows all of those combinations of two goods which are most preferred by society.E) A) and D)
F) C) and D)

Question 4

The fact that economic generalizations are abstract renders them impractical and useless.

Accepted Answer

A) True 
 B)False

Question 5

Assume that if the interest rate that businesses must pay to borrow funds were 20 percent, it would be unprofitable for businesses to invest in new machinery and equipment so that investment would be zero.But if the interest rate were 16 percent, businesses would find it profitable to invest $10 billion.If the interest rate were 12 percent, $20 billion would be invested.Assume that total investment continues to increase by $10 billion for each successive 4 percentage point decline in the interest rate.Refer to the above information.Which of the following is the correct graphical presentation of the indicated relationship?

Accepted Answer

A)  line 4
B)  line 3
C)  line 2
D)  line 1E) B) and D)
F) B) and C)

Question 6

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) All of the above
F) B) and D)

Question 7

Which of the following is not correct? A typical production possibilities curve:

Accepted Answer

A)  indicates how much of two products a society can produce.
B)  reveals how much each additional unit of one product will cost in terms of the other product.
C)  specifies how much of each product society should produce.
D)  indicates that to produce more of one product society must give up larger and larger amounts of the other product.E) A) and C)
F) None of the above

Question 8

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

Question 9

1/4X. B) X = 1/4Y. C) Y = .4X. D) Y = 1/4X - 50." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram.The equation which shows the relationship between Y and X is:

Accepted Answer

A)  Y = 50 + 1/4X.
B)  X = 1/4Y.
C)  Y = .4X.
D)  Y = 1/4X - 50.E) B) and C)
F) A) and D)

Question 10

Refer to the above diagram.The movement down the production possibilities curve from point A to point E suggests that the production of:

Accepted Answer

A)  computers, but not bicycles, is subject to increasing opportunity costs.
B)  bicycles, but not computers, is subject to increasing opportunity costs.
C)  both bicycles and computers is subject to constant opportunity costs.
D)  both bicycles and computers is subject to increasing opportunity costs.E) B) and C)
F) A) and C)

Question 11

From the perspective of economists, which term provides the highest degree of confidence for explaining economic behaviour?

Accepted Answer

A)  an economic principle or a law
B)  a fact
C)  a hypothesis
D)  an assumptionE) B) and D)
F) None of the above

Question 12

The study of economics is primarily concerned with:

Accepted Answer

A)  keeping private businesses from losing money.
B)  demonstrating that capitalistic economies are superior to socialistic economies.
C)  choices which are made in seeking to use scarce resources efficiently.
D)  determining the most equitable distribution of society's output.E) C) and D)
F) B) and C)

Question 13

If the output of product X is such that marginal benefit equals marginal cost:

Accepted Answer

A)  the correct amount of resources is being allocated to X's production.
B)  the value of producing X and the value of producing alternative products with available resources is the same.
C)  there can be no net gain to society by allocating either more or less resources to producing X.
D)  all of the above are true.E) B) and C)
F) None of the above

Question 14

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 opportunity cost of producing the third unit of capital goods?

Accepted Answer

A)  4 units of consumer goods
B)  5 units of consumer goods
C)  6 units of consumer goods
D)  7 units of consumer goodsE) B) and D)
F) B) and C)

Question 15

The economic perspective focuses largely on:

Accepted Answer

A)  marginal analysis.
B)  rational task analysis.
C)  total revenues.
D)  total costs.E) A) and C)
F) All of the above

Question 16

At fast-food restaurants:

Accepted Answer

A)  consumers enjoy complete and accurate information.
B)  decisions are usually made by trial and error.
C)  decisions entail comparisons of marginal costs and marginal benefits.
D)  benefits always exceed costs.E) B) and D)
F) A) and B)

Question 17

Assume that a tradeoff exists in the short run between inflation and unemployment.This relationship means that:

Accepted Answer

A)  a low rate of unemployment causes a low rate of inflation.
B)  the unemployment rate always equals the inflation rate.
C)  less unemployment can be achieved with more inflation.
D)  less unemployment can be achieved with less inflation.E) B) and C)
F) C) and D)

Question 18

The output of blu ray players should be:

Accepted Answer

A)  reduced if marginal benefits exceed marginal costs.
B)  reduced if marginal costs exceed marginal benefits.
C)  increased if marginal costs exceed marginal benefits.
D)  reduced to zero if their unit costs exceed the unit costs of alternative products.E) B) and D)
F) A) and B)

Question 19

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) All of the above
F) A) and B)

Question 20

The term "other things equal" means that:

Accepted Answer

A)  the associated statement is normative.
B)  many variables affect the variable under consideration.
C)  the assumption that factors other than those being considered do not change.
D)  when variable X increases so does related variable Y.E) B) and C)
F) A) and D)

Exam 1: B: Limits, Alternatives, and Choices

In every economic system, choices must be made because resources are:

Correct Answer
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At fast-food restaurants:

Correct Answer
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Which of the following is not correct? A typical production possibilities curve:

Correct Answer
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Refer to the above diagram.The equation which shows the relationship between Y and X is:

Correct Answer
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From the perspective of economists, which term provides the highest degree of confidence for explaining economic behaviour?

Correct Answer
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The output of blu ray players should be:

Correct Answer
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The study of economics is primarily concerned with:

Correct Answer
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Correct Answer
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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 opportunity cost of producing the third unit of capital goods?

Correct Answer
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The concept of opportunity cost:

Correct Answer
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The fact that economic generalizations are abstract renders them impractical and useless.

Correct Answer
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Refer to the above diagram.The movement down the production possibilities curve from point A to point E suggests that the production of:

Correct Answer
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The production possibilities curve:

Correct Answer
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The main function of the entrepreneur is to:

Correct Answer
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Economic models:

Correct Answer
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If the output of product X is such that marginal benefit equals marginal cost:

Correct Answer
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The term "other things equal" means that:

Correct Answer
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The economic perspective focuses largely on:

Correct Answer
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In the above diagram the vertical intercept and slope are:

Correct Answer
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Assume that a tradeoff exists in the short run between inflation and unemployment.This relationship means that:

Correct Answer
verified

Exam 1: B: Limits, Alternatives, and Choices

In every economic system, choices must be made because resources are:

Correct AnswerverifiedShow Answer

At fast-food restaurants:

Correct AnswerverifiedShow Answer

Which of the following is not correct? A typical production possibilities curve:

Correct AnswerverifiedShow Answer

Refer to the above diagram.The equation which shows the relationship between Y and X is:

Correct AnswerverifiedShow Answer

From the perspective of economists, which term provides the highest degree of confidence for explaining economic behaviour?

Correct AnswerverifiedShow Answer

The output of blu ray players should be:

Correct AnswerverifiedShow Answer

The study of economics is primarily concerned with:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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 opportunity cost of producing the third unit of capital goods?

Correct AnswerverifiedShow Answer

The concept of opportunity cost:

Correct AnswerverifiedShow Answer

The fact that economic generalizations are abstract renders them impractical and useless.

Correct AnswerverifiedShow Answer

Refer to the above diagram.The movement down the production possibilities curve from point A to point E suggests that the production of:

Correct AnswerverifiedShow Answer

The production possibilities curve:

Correct AnswerverifiedShow Answer

The main function of the entrepreneur is to:

Correct AnswerverifiedShow Answer

Economic models:

Correct AnswerverifiedShow Answer

If the output of product X is such that marginal benefit equals marginal cost:

Correct AnswerverifiedShow Answer

The term "other things equal" means that:

Correct AnswerverifiedShow Answer

The economic perspective focuses largely on:

Correct AnswerverifiedShow Answer

In the above diagram the vertical intercept and slope are:

Correct AnswerverifiedShow Answer

Assume that a tradeoff exists in the short run between inflation and unemployment.This relationship means that:

Correct AnswerverifiedShow Answer

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