Question 1

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

Question 2

A production possibilities curve illustrates:

Accepted Answer

A)  scarcity.
B)  market prices.
C)  consumer preferences.
D)  the distribution of income.E) B) and C)
F) A) and D)

Question 3

The production possibilities curve illustrates the basic principle that:

Accepted Answer

A)  the production of more of any one good will in time require smaller and smaller sacrifices of other goods.
B)  an economy will automatically seek that level of output at which all of its resources are employed.
C)  if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced.
D)  an economy's capacity to produce increases in proportion to its population size.E) A) and B)
F) All of the above

Question 4

Even though local newspapers are very inexpensive, people rarely buy more than one of them each day.This fact:

Accepted Answer

A)  is an example of irrational behaviour.
B)  implies that reading should be taught through phonics rather than the whole language method.
C)  contradicts the economic perspective.
D)  implies that, for most people, the marginal benefit of reading a second newspaper is less than the marginal cost.E) C) and D)
F) A) and C)

Question 5

Refer to the above production possibilities curve.At the onset of World War II Canada had large amounts of idle human and property resources.Its economic adjustment from peacetime to wartime can best be described by the movement from point:

Accepted Answer

A)  c to point b.
B)  b to point c.
C)  a to point b.
D)  c to point d.E) None of the above
F) B) and C)

Question 6

(The following economy produces two products.)  Production Possibilities Table
 Refer to the above table.In moving from possibility C to D, the cost of a unit of steel in terms of a unit of wheat is:

Accepted Answer

A)  10
B)  20
C)  25
D)  30E) B) and C)
F) A) and C)

Question 7

If the equation y = 5 + 6x was graphed, the:

Accepted Answer

A)  slope would be -5.
B)  slope would be +5.
C)  slope would be +6.
D)  vertical intercept would be +.6.E) A) and B)
F) A) and C)

Question 8

Refer to the diagram below.Points A, B, C, D, and E show:

Accepted Answer

A)  that the opportunity cost of bicycles increases, while that of computers is constant.
B)  combinations of bicycles and computers which society can produce by using its resources efficiently.
C)  that the opportunity cost of computers increases, while that of bicycles is constant.
D)  that society's demand for computers is greater than its demand for bicycles.E) A) and B)
F) A) and C)

Question 9

The individual's limited income problem:

Accepted Answer

A)  persists only because countries have failed to achieve continuous full employment.
B)  exists because material wants are limited.
C)  has been solved in all industrialized nations.
D)  has been eliminated in affluent societies such as Canada and the United States.E) None of the above
F) B) and C)

Question 10

The price ratio of the two products is the:

Accepted Answer

A)  marginal rate of substitution.
B)  slope of the budget line.
C)  point of tangency for equilibrium.
D)  elasticity of demand for the two products.E) A) and D)
F) C) and D)

Question 11

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 12

Most of the disagreement among economists involves:

Accepted Answer

A)  facts.
B)  theories.
C)  positive statements.
D)  normative statements.E) A) and D)
F) B) and D)

Question 13

As a consequence of the condition of scarcity:

Accepted Answer

A)  there is always enough of everything.
B)  production has to be centrally planned.
C)  things which are plentiful have relatively high prices.
D)  individuals and communities have to make choices among alternatives.E) A) and D)
F) All of the above

Question 14

The slope of a line parallel to the vertical axis is:

Accepted Answer

A)  zero.
B)  one.
C)  infinite.
D)  one-half.E) C) and D)
F) B) and D)

Question 15

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

Question 16

Production possibilities (alternatives)  1/3 of a unit of capital goods." class="answers-bank-image d-inline" rel="preload" > Refer to the above 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) B) and C)
F) B) and D)

Question 17

d for quantity demanded and P for price, which of the following equations correctly states the demand for this product? A) P = Qd/10. B) P = 50 - P/2. C) P = 10 - .2Qd. D) P = 10 - 2Qd." class="answers-bank-image d-inline" rel="preload" > Refer to the above graph.Using Qd for quantity demanded and P for price, which of the following equations correctly states the demand for this product?

Accepted Answer

A)  P = Qd/10.
B)  P = 50 - P/2.
C)  P = 10 - .2Qd.
D)  P = 10 - 2Qd.E) B) and D)
F) None of the above

Question 18

When an economist says that material wants are insatiable, this means that:

Accepted Answer

A)  economic resources are valuable only because they can be used to produce consumer goods.
B)  economic resources-land, labour, capital, and entrepreneurial ability-are scarce.
C)  these wants are virtually unlimited and therefore incapable of complete satisfaction.
D)  the structure of consumer demand varies from time to time and from country to country.E) B) and D)
F) None of the above

Question 19

Assume that a change in government policy results in the increased production of both consumer goods and investment goods.It can be concluded that:

Accepted Answer

A)  the economy was suffering from unemployment and/or the inefficient use of resources before the policy change.
B)  the economy's production possibilities curve has been shifted to the left as a result of the policy decision.
C)  this economy's production possibilities curve is convex (bowed inward)  as viewed from the origin.
D)  the law of increasing opportunity costs does not apply in this society.E) B) and C)
F) None of the above

Question 20

The fact that the slope of the production possibilities curve becomes steeper as we move down along the curve indicates that:

Accepted Answer

A)  the principle of increasing opportunity costs is relevant.
B)  society's resources are limited.
C)  the opportunity cost of producing each product is constant.
D)  resources are perfectly shiftable between alternative uses.E) B) and C)
F) None of the above

Exam 1: Part B: Limits, Alternatives, and Choices

When an economist says that material wants are insatiable, this means that:

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The price ratio of the two products is the:

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Refer to the above production possibilities curve.At the onset of World War II Canada had large amounts of idle human and property resources.Its economic adjustment from peacetime to wartime can best be described by the movement from point:

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Refer to the above graph.Using Qd for quantity demanded and P for price, which of the following equations correctly states the demand for this product?

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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:

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A production possibilities curve illustrates:

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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.

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Even though local newspapers are very inexpensive, people rarely buy more than one of them each day.This fact:

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Most of the disagreement among economists involves:

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The fact that the slope of the production possibilities curve becomes steeper as we move down along the curve indicates that:

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(The following economy produces two products.) Production Possibilities Table Refer to the above table.In moving from possibility C to D, the cost of a unit of steel in terms of a unit of wheat is:

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As a consequence of the condition of scarcity:

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Assume that a change in government policy results in the increased production of both consumer goods and investment goods.It can be concluded that:

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

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Production possibilities (alternatives) Refer to the above table.If the economy is producing at production alternative C, the opportunity cost of the tenth unit of consumer goods will be:

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If the equation y = 5 + 6x was graphed, the:

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Refer to the diagram below.Points A, B, C, D, and E show:

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The slope of a line parallel to the vertical axis is:

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The production possibilities curve illustrates the basic principle that:

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The individual's limited income problem:

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Refer to the above graph.Using Q_d for quantity demanded and P for price, which of the following equations correctly states the demand for this product?

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