Question 1

The notion of opportunity cost is best defined as:

Accepted Answer

A)  the monetary price of any productive resource
B)  the amount of labour that must be used to produce one unit of any product
C)  the monetary price of any product
D)  the utility that could have been gained by choosing an action's best alternative
E)  the number of units of a product that are available to be purchasedF) C) and D)
G) B) and C)

Question 2

The production possibilities curve:

Accepted Answer

A)  shows all levels of production that are consistent with a stable price level
B)  indicates that any combination of products lying outside the curve is undesirable
C)  shows how an economy actually employs its resources
D)  shows all combinations of products that are most preferred by consumers
E)  is a frontier between all combinations of products that can be produced and those combinations that cannot be producedF) B) and E)
G) A) and E)

Question 3

Utility refers to the:

Accepted Answer

A)  extent to which a product can be used as a capital resource
B)  opportunity cost of a product
C)  relative scarcity of a product
D)  usefulness of a product
E)  satisfaction that a consumer derives from a good or serviceF) A) and C)
G) A) and B)

Question 4

Stocks and bonds are not considered to be an economic resource because they:

Accepted Answer

A)  sometimes fall in value
B)  do not earn interest income
C)  are available in unlimited quantities
D)  are not free gifts of nature
E)  do not add to the economy's stock of real capitalF) B) and D)
G) All of the above

Question 5

1 to PP2 B) move from point B on PP1 to point E on PP2 C) move from point E on PP2 to point A on PP1 D) move from point D inside PP1 to point B on PP1 E) move from point B to point C along PP1" class="answers-bank-image d-inline" rel="preload" >
-The concept of opportunity cost is best represented by the:

Accepted Answer

A)  shift of the production possibilities curve from PP1 to PP2
B)  move from point B on PP1 to point E on PP2
C)  move from point E on PP2 to point A on PP1
D)  move from point D inside PP1 to point B on PP1
E)  move from point B to point C along PP1F) C) and E)
G) C) and D)

Question 6

Laissez-faire suggests that:

Accepted Answer

A)  land and other natural resources should be privately owned but capital should be owned by the government
B)  land and other natural resources should be owned by the government but capital should be privately owned
C)  government should not interfere with the operation of the economy
D)  government action is necessary if the economy is to achieve full employment
E)  government policies are needed to deal with environmental damageF) A) and B)
G) C) and E)

Question 7

A product has utility if it:

Accepted Answer

A)  takes more and more resources to produce successive units of it
B)  can be produced in unlimited quantities
C)  satisfies consumer wants
D)  is useful
E)  is available in only limited quantitiesF) B) and C)
G) All of the above

Question 8

Economists assume that people customarily behave rationally,meaning that people:

Accepted Answer

A)  virtually always weigh the personal benefits and costs of every available action and choose an action on the basis of their individual wants
B)  act in a rational way when buying and selling products, but not in other settings
C)  act rationally when they buy products, but not when they sell them
D)  act rationally when they sell products, but not when they buy them
E)  are unable to act in an irrational wayF) A) and B)
G) C) and D)

Question 9

Macroeconomics approaches the study of economics from the viewpoint of:

Accepted Answer

A)  individual producers
B)  governmental units
C)  specific product and resource markets
D)  individual consumers
E)  entire economic sectorsF) D) and E)
G) B) and E)

Question 10

The economic problem is essentially one of deciding how to make the best use of:

Accepted Answer

A)  unlimited resources to satisfy unlimited wants
B)  limited resources to satisfy unlimited wants
C)  unlimited resources to satisfy limited wants
D)  limited resources to satisfy limited wants
E)  free resources to satisfy expensive wantsF) A) and B)
G) A) and C)

Question 11

An economic model usually includes:

Accepted Answer

A)  neither independent nor dependent variables
B)  only a dependent variable and no independent variables
C)  the proposition that no relationship exists between various factors
D)  only an independent variable and no dependent variables
E)  two or more factors that have measurable valuesF) B) and D)
G) B) and C)

Question 12

1 to PP2 B) shift the production possibilities curve from PP2 to PP1 C) move the economy from point A to point C along PP1 D) move the economy from points A, B, or C on PP1 to point D inside PP1 E) move the economy from point C to point A along PP1" class="answers-bank-image d-inline" rel="preload" >
-An improvement in technology could be expected to:

Accepted Answer

A)  shift the production possibilities curve from PP1 to PP2
B)  shift the production possibilities curve from PP2 to PP1
C)  move the economy from point A to point C along PP1
D)  move the economy from points A, B, or C on PP1 to point D inside PP1
E)  move the economy from point C to point A along PP1F) B) and E)
G) C) and D)

Question 13

According to Adam Smith,the most significant single cause of economic progress has been:

Accepted Answer

A)  the increase in the fertility of land used in agriculture
B)  the use of more specialized forms of machinery in manufacturing
C)  a more educated workforce
D)  the division of labour
E)  the rise of large companies that dominate particular industriesF) A) and B)
G) B) and E)

Question 14

As used in economics,the notion of scarcity means that:

Accepted Answer

A)  mineral deposits are available only in limited amounts
B)  resources are not so plentiful that all consumer wants can be fulfilled
C)  many resources are freely available
D)  the quantities available of some resources exceed the demand for them
E)  the demand for some resources is nonexistentF) B) and C)
G) A) and E)

Question 15

Economic resources do NOT include:

Accepted Answer

A)  natural resources
B)  real capital assets
C)  human effort
D)  stocks and bonds
E)  human ingenuityF) D) and E)
G) A) and B)

Question 16

If a society is currently producing 9 bicycles and 4 computers,the decision to increase computer output to 6 costs:

Accepted Answer

A)  4 bicycles
B)  2 bicycles
C)  5 bicycles
D)  zero because unemployed resources are available
E)  irrelevant because this decision is inconsistent with consumer preferencesF) D) and E)
G) All of the above

Question 17

Between the early 1990s and late 2000s,India's and China's economies steadily grew by annual average of:

Accepted Answer

A)  4 percent and 6 percent respectively
B)  6 percent and 8 percent respectively
C)  8 percent and 10 percent respectively
D)  10 percent and 12 percent respectively
E)  12 percent and 14 percent respectivelyF) A) and B)
G) None of the above

Question 18

The production possibilities curve illustrates the basic principle that:

Accepted Answer

A)  the production of more of any one item will in time require smaller and smaller sacrifices of other items
B)  an economy automatically seeks that level of output that employs all of its resources
C)  if all the resources of an economy are fully used, more of one item could be produced only if less of another item is produced
D)  any production point below the curve reflects high opportunity cost
E)  any production point above the curve reflects low opportunity costF) A) and C)
G) B) and E)

Question 19

The law of increasing opportunity costs is reflected in a production possibilities curve that:

Accepted Answer

A)  is an upward-sloping straight line
B)  is a downward-sloping straight line
C)  bows in to the left
D)  is any shape
E)  bows out to the rightF) C) and E)
G) B) and E)

Question 20

The economy of India most closely approximates a:

Accepted Answer

A)  traditional mixed economy
B)  market economy
C)  command economy
D)  modern mixed economy
E)  traditional economyF) D) and E)
G) A) and B)

Exam 1: The Economic Problem

Stocks and bonds are not considered to be an economic resource because they:

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According to Adam Smith,the most significant single cause of economic progress has been:

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-An improvement in technology could be expected to:

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The notion of opportunity cost is best defined as:

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If a society is currently producing 9 bicycles and 4 computers,the decision to increase computer output to 6 costs:

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Economic resources do NOT include:

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The law of increasing opportunity costs is reflected in a production possibilities curve that:

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An economic model usually includes:

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A product has utility if it:

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Macroeconomics approaches the study of economics from the viewpoint of:

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The production possibilities curve:

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-The concept of opportunity cost is best represented by the:

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Economists assume that people customarily behave rationally,meaning that people:

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Between the early 1990s and late 2000s,India's and China's economies steadily grew by annual average of:

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The economic problem is essentially one of deciding how to make the best use of:

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Utility refers to the:

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The economy of India most closely approximates a:

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The production possibilities curve illustrates the basic principle that:

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As used in economics,the notion of scarcity means that:

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Laissez-faire suggests that:

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