Question 1

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities schedule.  According to the production possibilities schedule, a combination of 4 tanks and 650 autos is

Accepted Answer

A)   attainable and involves an efficient use of society's resources.
B)   attainable but would not be in the best interests of a strong national defense.
C)   less than (or below)  the maximum attainable output combination.
D)   not attainable because the nation does not have sufficient resources.E) C) and D)
F) A) and D)

Question 2

The production possibilities curve is a graph of

Accepted Answer

A)   the maximum amounts of labor and capital resources available for production.
B)   various combinations of goods and services among which consumers are indifferent in terms of preference.
C)   the maximum combinations of products that can be produced with the available resources.
D)   the maximum amount of capital and labor that the economy can employ.E) B) and D)
F) B) and C)

Question 3

Answer the question on the basis of the following production possibilities tables for two countries, North Cantina and South Cantina.  Refer to the tables. If South Cantina is producing at production alternative D, the opportunity cost of the third unit of capital goods will be

Accepted Answer

A)   3 units of consumer goods.
B)   4 units of consumer goods.
C)   5 units of consumer goods.
D)   6 units of consumer goods.E) A) and B)
F) All of the above

Question 4

Which of the following is a microeconomic statement?

Accepted Answer

A)   The real domestic output increased by 1.6 percent last year.
B)   Unemployment was 5.2 percent of the labor force last year.
C)   The price of smartphones declined 2.8 percent last year.
D)   The general price level increased by 1.1 percent last year.E) A) and D)
F) A) and C)

Question 5

The term "other things equal" means that

Accepted Answer

A)   the associated statement is normative.
B)   many variables affect the variable under consideration.
C)   a number of relevant variables are assumed to be constant.
D)   when variable X increases, so does related variable Y.E) None of the above
F) A) and B)

Question 6

If society has overallocated resources to a particular activity, then the marginal benefits of the activity would be less than the marginal costs.

Accepted Answer

A) True 
 B)False

Question 7

A person observes that consumer prices often fall when a nation experiences economic growth. The person then concludes that falling consumer prices lead to economic growth. This would be an example of

Accepted Answer

A)   the fallacy of composition.
B)   biases.
C)   confusing correlation and causation.
D)   the use of loaded terminology.E) All of the above
F) B) and D)

Question 8

The notion of "purposeful behavior" in the economic perspective suggests that

Accepted Answer

A)   people will tend to stick with a particular choice for a long period of time.
B)   economic analysis will provide people with a single "right" way to behave.
C)   economists do not believe that people can sometimes behave impulsively.
D)   one person's choice may differ from another's if their circumstances and information differ.E) A) and B)
F) A) and C)

Question 9

The law of increasing opportunity costs states that

Accepted Answer

A)   if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of another good to do so.
B)   the sum of the costs of producing a particular good cannot rise above the current market price of that good.
C)   if the sum of the costs of producing a particular good rises by a specified percentage, the price of that good must rise by a greater relative amount.
D)   if the prices of all the resources used to produce goods increase, the cost of producing any particular good will increase at the same rate.E) None of the above
F) A) and B)

Question 10

Because economic generalizations are simplifications from reality, they are impractical and useless.

Accepted Answer

A) True 
 B)False

Question 11

Suppose that Scoobania, which has full employment, can obtain 1 unit of capital goods by sacrificing 2 units of consumer goods domestically but can obtain 1 unit of capital goods from another country by trading 1 unit of consumer goods for it. This reality illustrates

Accepted Answer

A)   a rightward (outward)  shift of the production possibilities curve.
B)   increasing opportunity costs.
C)   achieving points beyond the production possibilities curve through international specialization and trade.
D)   productive efficiency.E) All of the above
F) B) and C)

Question 12

Answer the question on the basis of the following information. 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 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 information. Which of the following is an accurate verbal statement of the described relationship?

Accepted Answer

A)   There is no regular or dependable relationship between business investment and the interest rate.
B)   The amount of business investment is unaffected by changes in the interest rate.
C)   Investment spending by businesses varies inversely with the interest rate.
D)   Investment spending by businesses varies directly with the interest rate.E) All of the above
F) A) and B)

Question 13

If an economy is operating on its production possibilities curve for consumer goods and capital goods, this means that

Accepted Answer

A)   it is impossible to produce more consumer goods.
B)   resources cannot be reallocated between the two goods.
C)   it is impossible to produce more capital goods.
D)   more consumer goods can only be produced at the cost of fewer capital goods.E) A) and B)
F) A) and C)

Question 14

A reduction in the level of unemployment would have which effect with respect to the nation's production possibilities curve?

Accepted Answer

A)   It would shift the curve to the right.
B)   It would shift the curve to the left.
C)   It would not shift the curve; it would be represented by a movement from a point inside the curve toward a point on the curve.
D)   It would not shift the curve; it would be represented by a movement from a point on the curve to a point outside the curve.E) C) and D)
F) A) and D)

Question 15

The marginal cost curve is

Accepted Answer

A)   upsloping because of increasing marginal opportunity costs.
B)   upsloping because successive units of a specific product yield less and less extra utility.
C)   downsloping because of increasing marginal opportunity costs.
D)   downsloping because successive units of a specific product yield less and less extra utility.E) B) and C)
F) A) and D)

Question 16

Economic theories

Accepted Answer

A)   are useless because they are not based on laboratory experimentation.
B)   that are true for individual economic units are never true for the economy as a whole.
C)   are generalizations based on hypotheses tested and supported with observed facts.
D)   are abstractions and therefore of no application to real situations.E) B) and C)
F) A) and C)

Question 17

The process of observing real-world behavior, developing hypotheses, testing them against facts, then using the results to construct theories is called

Accepted Answer

A)   opportunity cost estimation.
B)   the scientific method.
C)   marginal analysis.
D)   normative analysis.E) A) and B)
F) A) and C)

Question 18

According to Emerson: "Want is a growing giant whom the coat of Have was never large enough to cover." According to economists, "Want" exceeds "Have" because

Accepted Answer

A)   people are greedy.
B)   productive resources are limited.
C)   human beings are inherently insecure.
D)   people are irrational.E) All of the above
F) C) and D)

Question 19

Answer the question on the basis of the data given in the following production possibilities table.  Refer to the table. If the economy is producing at production alternative C, the opportunity cost of the 10th 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)   ⅓ of a unit of capital goods.E) A) and C)
F) All of the above

Question 20

Rational individuals may make different choices because their preferences and circumstances differ.

Accepted Answer

A) True 
 B)False

Exam 1: Limits, Alternatives, and Choices

A person observes that consumer prices often fall when a nation experiences economic growth. The person then concludes that falling consumer prices lead to economic growth. This would be an example of

Correct Answer
verified

If society has overallocated resources to a particular activity, then the marginal benefits of the activity would be less than the marginal costs.

Correct Answer
verified

Suppose that Scoobania, which has full employment, can obtain 1 unit of capital goods by sacrificing 2 units of consumer goods domestically but can obtain 1 unit of capital goods from another country by trading 1 unit of consumer goods for it. This reality illustrates

Correct Answer
verified

The marginal cost curve is

Correct Answer
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Which of the following is a microeconomic statement?

Correct Answer
verified

Correct Answer
verified

According to Emerson: "Want is a growing giant whom the coat of Have was never large enough to cover." According to economists, "Want" exceeds "Have" because

Correct Answer
verified

A reduction in the level of unemployment would have which effect with respect to the nation's production possibilities curve?

Correct Answer
verified

The production possibilities curve is a graph of

Correct Answer
verified

Rational individuals may make different choices because their preferences and circumstances differ.

Correct Answer
verified

The term "other things equal" means that

Correct Answer
verified

If an economy is operating on its production possibilities curve for consumer goods and capital goods, this means that

Correct Answer
verified

Because economic generalizations are simplifications from reality, they are impractical and useless.

Correct Answer
verified

Economic theories

Correct Answer
verified

The notion of "purposeful behavior" in the economic perspective suggests that

Correct Answer
verified

The law of increasing opportunity costs states that

Correct Answer
verified

Answer the question on the basis of the following production possibilities tables for two countries, North Cantina and South Cantina. Refer to the tables. If South Cantina is producing at production alternative D, the opportunity cost of the third unit of capital goods will be

Correct Answer
verified

Answer the question on the basis of the data given in the following production possibilities table. Refer to the table. If the economy is producing at production alternative C, the opportunity cost of the 10th unit of consumer goods will be

Correct Answer
verified

The process of observing real-world behavior, developing hypotheses, testing them against facts, then using the results to construct theories is called

Correct Answer
verified

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities schedule. According to the production possibilities schedule, a combination of 4 tanks and 650 autos is

Correct Answer
verified

Exam 1: Limits, Alternatives, and Choices

A person observes that consumer prices often fall when a nation experiences economic growth. The person then concludes that falling consumer prices lead to economic growth. This would be an example of

Correct AnswerverifiedShow Answer

If society has overallocated resources to a particular activity, then the marginal benefits of the activity would be less than the marginal costs.

Correct AnswerverifiedShow Answer

Suppose that Scoobania, which has full employment, can obtain 1 unit of capital goods by sacrificing 2 units of consumer goods domestically but can obtain 1 unit of capital goods from another country by trading 1 unit of consumer goods for it. This reality illustrates

Correct AnswerverifiedShow Answer

The marginal cost curve is

Correct AnswerverifiedShow Answer

Which of the following is a microeconomic statement?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

According to Emerson: "Want is a growing giant whom the coat of Have was never large enough to cover." According to economists, "Want" exceeds "Have" because

Correct AnswerverifiedShow Answer

A reduction in the level of unemployment would have which effect with respect to the nation's production possibilities curve?

Correct AnswerverifiedShow Answer

The production possibilities curve is a graph of

Correct AnswerverifiedShow Answer

Rational individuals may make different choices because their preferences and circumstances differ.

Correct AnswerverifiedShow Answer

The term "other things equal" means that

Correct AnswerverifiedShow Answer

If an economy is operating on its production possibilities curve for consumer goods and capital goods, this means that

Correct AnswerverifiedShow Answer

Because economic generalizations are simplifications from reality, they are impractical and useless.

Correct AnswerverifiedShow Answer

Economic theories

Correct AnswerverifiedShow Answer

The notion of "purposeful behavior" in the economic perspective suggests that

Correct AnswerverifiedShow Answer

The law of increasing opportunity costs states that

Correct AnswerverifiedShow Answer

Answer the question on the basis of the following production possibilities tables for two countries, North Cantina and South Cantina. Refer to the tables. If South Cantina is producing at production alternative D, the opportunity cost of the third unit of capital goods will be

Correct AnswerverifiedShow Answer

Answer the question on the basis of the data given in the following production possibilities table. Refer to the table. If the economy is producing at production alternative C, the opportunity cost of the 10th unit of consumer goods will be

Correct AnswerverifiedShow Answer

The process of observing real-world behavior, developing hypotheses, testing them against facts, then using the results to construct theories is called

Correct AnswerverifiedShow Answer

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities schedule. According to the production possibilities schedule, a combination of 4 tanks and 650 autos is

Correct AnswerverifiedShow Answer

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