Question 1

The construction of a production possibilities curve assumes:

Accepted Answer

A)   the quantities of all resources are fixed.
B)   technology is fixed.
C)   full employment and full production are being realized.
D)   all of the above.E) A) and C)
F) None of the above

Question 2

-Refer to the above diagram. The combination of computers and bicycles shown by point G is:

Accepted Answer

A)   attainable, but too costly.
B)   unattainable, given currently available resources and technology.
C)   attainable, but involves unemployment.
D)   irrelevant because it is inconsistent with consumer preferences.E) A) and B)
F) A) and C)

Question 3

-Refer to the production possibilities curves. The movement from curve (a) to curve (c) indicates an improvement in civilian goods technology but not in war goods technology.

Accepted Answer

A) True 
 B)False

Question 4

The budget line shift from cd to ab in the below figure is consistent with:

Accepted Answer

A)   decreases in the prices of both M and N.
B)   an increase in the price of M and a decrease in the price of N.
C)   a decrease in money income.
D)   an increase in money income.E) B) and C)
F) A) and B)

Question 5

Refer to the graph. The movement from line A to line A' represents a change in:

Accepted Answer

A)   the slope only.
B)   the intercept only.
C)   both the slope and the intercept.
D)   neither the slope nor the intercept.E) A) and B)
F) B) and C)

Question 6

Which of the following is real capital?

Accepted Answer

A)   a pair of stockings
B)   a dump truck
C)   a savings account
D)   a share of TD Bank stockE) All of the above
F) B) and D)

Question 7

If we say that two variables are inversely related, this means that:

Accepted Answer

A)   the two graph as an upsloping line.
B)   an increase in one variable is associated with a decrease in the other.
C)   an increase in one variable is associated with an increase in the other.
D)   the resulting relationship can be portrayed by a straight line parallel to the horizontal axis.E) A) and B)
F) None of the above

Question 8

When an economy is operating with maximum efficiency, the production of more of commodity A will mean the production of less of commodity B because:

Accepted Answer

A)   of the law of decreasing opportunity costs.
B)   material wants are insatiable.
C)   resources are limited.
D)   resources are not specialized and are imperfectly substitutable.E) A) and D)
F) All of the above

Question 9

-Refer to the above diagram. This production possibilities curve is:

Accepted Answer

A)   convex to the origin because opportunity costs are constant.
B)   linear because opportunity costs are constant.
C)   concave to the origin because of increasing opportunity costs.
D)   convex to the origin because of increasing opportunity costs.E) A) and C)
F) B) and C)

Question 10

Positive statements are expressions of value judgments.

Accepted Answer

A) True 
 B)False

Question 11

-Refer to the above diagram. If society is currently producing the combination of bicycles and computers shown by point D, the production of 2 more units of bicycles:

Accepted Answer

A)   cannot be realized because resources are fully employed.
B)   will cost 1 unit of computers.
C)   will cost 2 units of computers.
D)   will cause some resources to become unemployed.E) A) and C)
F) B) and C)

Question 12

Which situation would most likely shift the production possibilities curve for a nation in an outward direction?

Accepted Answer

A)   a decrease in the quality of products
B)   an increase in the supply of resources
C)   a decrease in the state of technology
D)   an increase in the amount of discriminationE) B) and D)
F) A) and B)

Question 13

If the equation y = -10 + 2.5x was plotted

Accepted Answer

A)   the vertical intercept would be -10.
B)   the slope would be +2.5.
C)   it would graph as an upsloping line.
D)   all of the above would be true.E) B) and D)
F) All of the above

Question 14

-Refer to the above production possibilities curves. Curve (a)  is the current curve for the economy. The movement from curve (a)  to curve (b)  suggests:

Accepted Answer

A)   a movement from unemployment to full employment.
B)   an improvement in capital goods technology but not in consumer goods technology.
C)   an improvement in consumer goods technology but not in capital goods technology.
D)   a decline in the total output of this society.E) None of the above
F) A) and B)

Question 15

Which of the following would be most likely to shift the production possibilities curve to the right?

Accepted Answer

A)   a sudden and substantial expansion of consumer wants
B)   an improvement in the literacy level and general level of education
C)   a decline in the size of the population and labour force
D)   shifting resources from butter to gun productionE) None of the above
F) A) and C)

Question 16

-The slope of a straight line can be determined by:

Accepted Answer

A)   comparing the absolute horizontal change to the absolute vertical change between two points on the line.
B)   comparing the absolute vertical change to the absolute horizontal change between two points on the line.
C)   taking the reciprocal of the vertical intercept.
D)   comparing the percentage vertical change to the percentage horizontal change between two points on the line.E) C) and D)
F) A) and C)

Question 17

Macroeconomics explains the behaviour of individual households and business firms; microeconomics is concerned with the behaviour of aggregates or the economy as a whole.

Accepted Answer

A) True 
 B)False

Question 18

-Refer to the table below. In moving from possibility A to F, the cost of a unit of steel in terms of a unit of wheat: (The following economy produces two products.) 
Production Possibilities

Accepted Answer

A)   increases.
B)   decreases.
C)   remains constant.
D)   increases from A to B, and decreases from B to F E) A) and C)
F) B) and C)

Question 19

Unemployment and/or productive inefficiencies:

Accepted Answer

A)   cause the production possibilities curve to shift outward.
B)   can exist at any point on a production possibilities curve.
C)   can both be illustrated by a point outside the production possibilities curve.
D)   can both be illustrated by a point inside the production possibilities curve.E) None of the above
F) C) and D)

Question 20

In drawing a budget line it is assumed that:

Accepted Answer

A)   consumer preferences are fixed.
B)   the prices of the two products are variable.
C)   money income is fixed.
D)   consumer willingness to substitute between the two products is fixed.E) A) and D)
F) A) and C)

Exam 1: Limits, Alternatives, and Choices

Which of the following would be most likely to shift the production possibilities curve to the right?

Correct AnswerverifiedShow Answer

-Refer to the above diagram. The combination of computers and bicycles shown by point G is:

Correct AnswerverifiedShow Answer

-The slope of a straight line can be determined by:

Correct AnswerverifiedShow Answer

Refer to the graph. The movement from line A to line A' represents a change in:

Correct AnswerverifiedShow Answer

If we say that two variables are inversely related, this means that:

Correct AnswerverifiedShow Answer

Positive statements are expressions of value judgments.

Correct AnswerverifiedShow Answer

Which situation would most likely shift the production possibilities curve for a nation in an outward direction?

Correct AnswerverifiedShow Answer

-Refer to the table below. In moving from possibility A to F, the cost of a unit of steel in terms of a unit of wheat: (The following economy produces two products.) Production Possibilities

Correct AnswerverifiedShow Answer

Which of the following is real capital?

Correct AnswerverifiedShow Answer

-Refer to the above production possibilities curves. Curve (a) is the current curve for the economy. The movement from curve (a) to curve (b) suggests:

Correct AnswerverifiedShow Answer

-Refer to the production possibilities curves. The movement from curve (a) to curve (c) indicates an improvement in civilian goods technology but not in war goods technology.

Correct AnswerverifiedShow Answer

-Refer to the above diagram. If society is currently producing the combination of bicycles and computers shown by point D, the production of 2 more units of bicycles:

Correct AnswerverifiedShow Answer

When an economy is operating with maximum efficiency, the production of more of commodity A will mean the production of less of commodity B because:

Correct AnswerverifiedShow Answer

If the equation y = -10 + 2.5x was plotted

Correct AnswerverifiedShow Answer

-Refer to the above diagram. This production possibilities curve is:

Correct AnswerverifiedShow Answer

Macroeconomics explains the behaviour of individual households and business firms; microeconomics is concerned with the behaviour of aggregates or the economy as a whole.

Correct AnswerverifiedShow Answer

Unemployment and/or productive inefficiencies:

Correct AnswerverifiedShow Answer

In drawing a budget line it is assumed that:

Correct AnswerverifiedShow Answer

The budget line shift from cd to ab in the below figure is consistent with:

Correct AnswerverifiedShow Answer

The construction of a production possibilities curve assumes:

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