Question 1

The production possibilities curve tells us

Accepted Answer

A)   the specific combination of two products that is most desired by society.
B)   that costs do not change as society varies its output.
C)   that costs are irrelevant in a society that has fixed resources.
D)   the combinations of two goods that can be produced with society's available resources.E) B) and C)
F) C) and D)

Question 2

If all discrimination in the United States were eliminated, the economy would

Accepted Answer

A)   have a less concave production possibilities curve.
B)   produce at some point closer to its production possibilities curve.
C)   be able to produce at some point outside of its production possibilities curve.
D)   produce more consumer goods and fewer investment goods.E) B) and C)
F) A) and D)

Question 3

If A is the dependent variable and B is the independent variable, then a change in A results in a change in B.

Accepted Answer

A) True 
 B)False

Question 4

Economic resources are also called

Accepted Answer

A)   free gifts of nature.
B)   consumption goods.
C)   units of money capital.
D)   factors of production.E) None of the above
F) All of the above

Question 5

A production possibilities curve illustrates

Accepted Answer

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

Question 6

The question below is based on the following four sets of data-pairs: (1)  A and B, (2)  C and D, (3)  E and F, and (4)  G and H. In each set, the independent variable is in the left column and the dependent variable is in the right column.  The slope of the linear graph that pictures data set 2 above is

Accepted Answer

A)   .10.
B)   20.
C)   5.
D)   10.E) B) and C)
F) All of the above

Question 7

Cuba is a command economy that suffered a decline in economic growth because of a cut in the aid provided by the former Soviet Union when the latter collapsed. As a consequence, Cuba

Accepted Answer

A)   experienced an outward shift of its production possibilities curve.
B)   experienced an inward shift of its production possibilities curve.
C)   moved from one point to another along its existing production possibilities curve.
D)   went to a point inside its production possibilities curve.E) All of the above
F) B) and C)

Question 8

In a graph showing the relationship between variables X and Y, ceteris paribus means that

Accepted Answer

A)   X is inversely related to Y.
B)   X is positively related to Y.
C)   X and Y are independent.
D)   other variables not shown are held constant.E) A) and B)
F) A) and C)

Question 9

Assume that a consumer has a given budget or income of $12 and that she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.75. This means that, in order to buy two bananas, this consumer must forgo

Accepted Answer

A)   1 apple.
B)   1.5 apples.
C)   0.5 apple.
D)   0.75 apple.E) B) and D)
F) A) and D)

Question 10

An increase in immigration would shift the production possibilities curve to the left.

Accepted Answer

A) True 
 B)False

Question 11

Economists have difficulty applying the scientific method because

Accepted Answer

A)   economics has a short history.
B)   the scientific method does not really apply to economics.
C)   people are the focus of economics, and their behavior is highly predictable.
D)   controlled laboratory experiments in economics are often not feasible.E) A) and D)
F) A) and C)

Question 12

(Consider This)  At fast-food restaurants

Accepted Answer

A)   consumers enjoy complete and accurate information.
B)   decisions are usually made by trial and error.
C)   decisions entail comparisons of marginal costs and marginal benefits.
D)   benefits always exceed costs.E) B) and D)
F) A) and B)

Question 13

Any point inside the production possibilities curve indicates

Accepted Answer

A)   the presence of technological change.
B)   that resources are imperfectly substitutable among alternative uses.
C)   the presence of inflationary pressures.
D)   that more output could be produced with the available resources.E) None of the above
F) B) and C)

Question 14

Increasing the share of your income that you save is good for you. Therefore, it would be good for the whole economy if everyone saved more. This exemplifies the

Accepted Answer

A)   post hoc fallacy.
B)   fallacy of composition.
C)   use of loaded terminology.
D)   confusion between correlation and causation.E) C) and D)
F) B) and D)

Question 15

Answer the question on the basis of the following data.  The data suggest that

Accepted Answer

A)   consumption varies inversely with after-tax income.
B)   consumption varies directly with after-tax income.
C)   consumption and after-tax income are unrelated.
D)   a tax increase will increase consumption.E) None of the above
F) B) and C)

Question 16

The output of digital music players should be

Accepted Answer

A)   reduced if marginal benefits exceed marginal costs.
B)   reduced if marginal costs exceed marginal benefits.
C)   increased if marginal costs exceed marginal benefits.
D)   reduced to zero if their unit costs exceed the unit costs of alternative products.E) A) and B)
F) All of the above

Question 17

The production possibilities curve shows

Accepted Answer

A)   the various combinations of two goods that can be produced when society employs all of its scarce resources.
B)   the minimum outputs of two goods that will sustain a society.
C)   the various combinations of two goods that can be produced when some resources are unemployed.
D)   the ideal, but unattainable, combinations of two goods that would maximize consumer satisfaction.E) C) and D)
F) All of the above

Question 18

The negative slope of the production possibilities curve is a graphical way of indicating that

Accepted Answer

A)   any economy "can have its cake and eat it too."
B)   to produce more of one product, we must do with less of another.
C)   the principle of increasing opportunity costs applies to only parts of the economy.
D)   consumers buy more when prices are low than when prices are high.E) A) and B)
F) All of the above

Question 19

The economizing problem faced by society is essentially one of deciding how to make the best use of

Accepted Answer

A)   limited economic resources to satisfy limited wants.
B)   unlimited economic resources to satisfy unlimited wants.
C)   unlimited economic resources to satisfy limited wants.
D)   limited economic resources to satisfy unlimited economic wants.E) All of the above
F) A) and B)

Question 20

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule.  In moving stepwise from possibility A to B to C … to F, the marginal opportunity cost of a unit of steel in terms of wheat

Accepted Answer

A)   increases.
B)   decreases.
C)   remains constant.
D)   increases at first, then decreases.E) A) and B)
F) C) and D)

Exam 1: Limits, Alternatives, and Choices

An increase in immigration would shift the production possibilities curve to the left.

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The economizing problem faced by society is essentially one of deciding how to make the best use of

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Any point inside the production possibilities curve indicates

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The negative slope of the production possibilities curve is a graphical way of indicating that

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Assume that a consumer has a given budget or income of $12 and that she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.75. This means that, in order to buy two bananas, this consumer must forgo

Correct AnswerverifiedShow Answer

Cuba is a command economy that suffered a decline in economic growth because of a cut in the aid provided by the former Soviet Union when the latter collapsed. As a consequence, Cuba

Correct AnswerverifiedShow Answer

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule. In moving stepwise from possibility A to B to C … to F, the marginal opportunity cost of a unit of steel in terms of wheat

Correct AnswerverifiedShow Answer

Economic resources are also called

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Answer the question on the basis of the following data. The data suggest that

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(Consider This) At fast-food restaurants

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If A is the dependent variable and B is the independent variable, then a change in A results in a change in B.

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The output of digital music players should be

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In a graph showing the relationship between variables X and Y, ceteris paribus means that

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If all discrimination in the United States were eliminated, the economy would

Correct AnswerverifiedShow Answer

A production possibilities curve illustrates

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Correct AnswerverifiedShow Answer

The production possibilities curve shows

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Economists have difficulty applying the scientific method because

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The production possibilities curve tells us

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Increasing the share of your income that you save is good for you. Therefore, it would be good for the whole economy if everyone saved more. This exemplifies the

Correct AnswerverifiedShow Answer

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