Question 1

Economics can best be described as the study of:

Accepted Answer

A)   how to increase the level of productive resources so there is maximum output in society.
B)   how to use productive resources to maximize income level.
C)   how people,institutions,and society make choices under conditions of scarcity.
D)   how business structures influence the allocation of income among firms.E) A) and B)
F) A) and C)

Question 2

Macroeconomics is the study of economics from the standpoint of:

Accepted Answer

A)   individual economic units.
B)   a typical firm.
C)   a typical household.
D)   the overall economy.E) A) and B)
F) None of the above

Question 3

From an economic perspective,when a student decides to attend another year of college,the student has concluded that the marginal:

Accepted Answer

A)   costs of attending college have increased that year.
B)   benefits of attending college have decreased that year.
C)   benefits of attending college are greater than the marginal costs.
D)   costs of attending college will be subsidized by someone else such as parents or the government.E) All of the above
F) B) and C)

Question 4

The opportunity cost of a new national park is the:

Accepted Answer

A)   alternative uses for the land and funding for the park.
B)   cost of constructing park buildings and highways to get to it.
C)   cost of hiring staff and park rangers to provide services for visitors.
D)   increased pollution to the wildlife habitat at the park.E) C) and D)
F) None of the above

Question 5

Opportunity cost is best defined as:

Accepted Answer

A)   marginal cost minus marginal benefit.
B)   the value of the best forgone alternative.
C)   the time spent on an economic activity.
D)   the money cost of an economic decision.E) A) and B)
F) A) and C)

Question 6

Economic growth is shown by a shift of the production possibilities curve outward and to the right.

Accepted Answer

A) True 
 B)False

Question 7

In a production possibilities table,the most-valued or optimal point for society is determined by:

Accepted Answer

A)   a combination of products at the midpoint of the table.
B)   a combination of products at the ends of the table.
C)   the equality of marginal benefits and marginal costs.
D)   the maximization of opportunity costs.E) A) and B)
F) B) and C)

Question 8

Refer to the above graph.The selection of which point on the production possibilities curve is most like to result in the largest increase in economic growth over time?

Accepted Answer

A)   A
B)   B
C)   C
D)   DE) All of the above
F) None of the above

Question 9

After graduating from high school,Ron Willis plans to go to college.The college tuition is $15,000 a year.But,instead of going to college,Ron could take a full-time job paying $20,000.If Ron decides to go to college,what is his opportunity cost for attending for one year?

Accepted Answer

A)   $5,000
B)   $15,000
C)   $20,000
D)   $35,000E) B) and C)
F) A) and D)

Question 10

A movement along the production possibilities curve would imply that:

Accepted Answer

A)   the labor force has grown.
B)   productivity has increased.
C)   productivity has declined.
D)   society has chosen a different set of outputs.E) None of the above
F) A) and D)

Question 11

If a nation is incurring a trade deficit (it is buying more from abroad-importing,than it is selling abroad-exporting),then it is most likely producing beyond the frontier of its production possibilities curve.

Accepted Answer

A) True 
 B)False

Question 12

The production possibilities curve represents which of the following?

Accepted Answer

A)   The amount of goods attainable with variable resources
B)   The maximum amount of goods attainable with variable resources
C)   The maximum combinations of goods attainable with fixed resources
D)   The amount of goods attainable if prices declineE) A) and D)
F) All of the above

Question 13

Suppose there are two economies,Alpha and Beta,which have the same production possibilities curves and are on the same point on each curve.If Beta then devotes more resources to investment goods than consumer goods when compared to Alpha,then in the future:

Accepted Answer

A)   Alpha will experience greater economic growth than Beta.
B)   Beta will experience greater economic growth than Alpha.
C)   Alpha will not be able to achieve full employment or productive efficiency.
D)   Beta will not be able to achieve full employment or productive efficiencyE) None of the above
F) A) and D)

Question 14

Refer to the above production possibilities curves.Curve (a) is the current curve for the economy.Other things being equal,society's current choice of point P on curve (a) will:

Accepted Answer

A)   allow it to achieve more rapid economic growth than would the choice of point N.
B)   entail a slower rate of economic growth than would the choice of point N.
C)   entail the same rate of growth as would the choice of point N.
D)   be unobtainable because it exceeds the productive capacity of the economy.E) A) and C)
F) All of the above

Question 15

The economizing problem arises from the conflict between having relatively unlimited resources and relatively limited wants.

Accepted Answer

A) True 
 B)False

Question 16

The production possibilities curve bows outward from the origin because:

Accepted Answer

A)   opportunity costs decrease as the production of a good increases.
B)   opportunity costs increase as the production of a good increases.
C)   more production of one good results in more production of the other good.
D)   resources are not of uniform quality.E) All of the above
F) B) and C)

Question 17

When an economy is at full employment and full production,more of any one product:

Accepted Answer

A)   cannot be produced because there is full production.
B)   can be produced only if there is a general decrease in prices.
C)   can be produced only if there is less production of some other products.
D)   cannot be produced unless private enterprise does so rather than government.E) A) and D)
F) All of the above

Question 18

By using the same ceteris paribus assumptions,economic principles are just as certain and precise as those of the laboratory sciences.

Accepted Answer

A) True 
 B)False

Question 19

The production possibility curve:

Accepted Answer

A)   is convex to the origin.
B)   is based on the law of diminishing returns.
C)   is the boundary between attainable and unattainable outputs.
D)   reflects the mixed economy found with most economic systems.E) C) and D)
F) B) and C)

Question 20

Which question is an illustration of a microeconomic question?

Accepted Answer

A)   Is the quantity of wine purchased in one year dependent upon the price of wine?
B)   Does government spending influence the total level of employment in the economy?
C)   Is the purchasing power of the dollar higher or lower today than it was in 2005?
D)   Is capitalism superior to socialism?E) A) and B)
F) All of the above

Exam 1: Limits, Alternatives, and Choices

The production possibility curve:

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After graduating from high school,Ron Willis plans to go to college.The college tuition is $15,000 a year.But,instead of going to college,Ron could take a full-time job paying $20,000.If Ron decides to go to college,what is his opportunity cost for attending for one year?

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Refer to the above graph.The selection of which point on the production possibilities curve is most like to result in the largest increase in economic growth over time?

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From an economic perspective,when a student decides to attend another year of college,the student has concluded that the marginal:

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If a nation is incurring a trade deficit (it is buying more from abroad-importing,than it is selling abroad-exporting),then it is most likely producing beyond the frontier of its production possibilities curve.

Correct AnswerverifiedShow Answer

A movement along the production possibilities curve would imply that:

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By using the same ceteris paribus assumptions,economic principles are just as certain and precise as those of the laboratory sciences.

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Refer to the above production possibilities curves.Curve (a) is the current curve for the economy.Other things being equal,society's current choice of point P on curve (a) will:

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Opportunity cost is best defined as:

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When an economy is at full employment and full production,more of any one product:

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The economizing problem arises from the conflict between having relatively unlimited resources and relatively limited wants.

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In a production possibilities table,the most-valued or optimal point for society is determined by:

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The opportunity cost of a new national park is the:

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Suppose there are two economies,Alpha and Beta,which have the same production possibilities curves and are on the same point on each curve.If Beta then devotes more resources to investment goods than consumer goods when compared to Alpha,then in the future:

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The production possibilities curve bows outward from the origin because:

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Economic growth is shown by a shift of the production possibilities curve outward and to the right.

Correct AnswerverifiedShow Answer

Macroeconomics is the study of economics from the standpoint of:

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Economics can best be described as the study of:

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Which question is an illustration of a microeconomic question?

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The production possibilities curve represents which of the following?

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