Question 1

-Refer to the above diagram.The vertical intercept:

Accepted Answer

A)   is 40.
B)   is 50.
C)   is 60.
D)   cannot be determined from the information given.E) A) and D)
F) B) and C)

Question 2

-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 3

Suppose an economist says that "Other things equal,the lower the price of bananas,the greater the amount of bananas purchased." This statement indicates that:

Accepted Answer

A)   the quantity of bananas purchased determines the price of bananas.
B)   all factors other than the price of bananas (for example,consumer tastes and incomes) are assumed to be constant.
C)   economists can conduct controlled laboratory experiments.
D)   one cannot generalize about the relationship between the price of bananas and the quantity purchased.E) A) and C)
F) B) and D)

Question 4

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

Accepted Answer

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

Question 5

-The linear equation for line (3) on the above graph is:

Accepted Answer

A)   y = 24 - 1.5x.
B)   y = 16 - .5x.
C)   y = 24 - .66x.
D)   y = 24 - .75x.E) None of the above
F) A) and B)

Question 6

-Refer to the above production possibilities curves.Curve (a) is the current curve for the economy.The movement from curve (a) to curve (b) suggests:

Accepted Answer

A)   a movement from unemployment to full employment.
B)   an improvement in capital goods technology but not in consumer goods technology.
C)   an improvement in consumer goods technology but not in capital goods technology.
D)   a decline in the total output of this society.E) A) and C)
F) C) and D)

Question 7

The economic perspective used in customer decision making at fast-food restaurants is reflected in:

Accepted Answer

A)   customers selecting the shortest line.
B)   customers leaving rather than waiting if all lines are long.
C)   all customer lines tending to be of equal length.
D)   all of the above.E) A) and C)
F) A) and B)

Question 8

-Refer to the above table.A total output of 3 units of capital goods and 4 units of consumer goods:

Accepted Answer

A)   is irrelevant because the economy is capable of producing a larger total output.
B)   will result in the maximum rate of growth available to this economy.
C)   would involve an inefficient use of the economy's scarce resources.
D)   is unobtainable in this economy.E) None of the above
F) A) and D)

Question 9

-Refer to the above table.For this economy to produce a total output of 3 units of capital goods and 13 units of consumer goods it must:

Accepted Answer

A)   achieve economic growth.
B)   use its resources more efficiently than the data in the table now indicate.
C)   allocate its available resources most efficiently among alternative uses.
D)   achieve the full employment of available resources.E) None of the above
F) C) and D)

Question 10

Specialization and trade are beneficial to society because:

Accepted Answer

A)   the output of economic goods may be increased with no increase in resources.
B)   scarce resources are utilized more efficiently.
C)   a division of labour lowers prices for products.
D)   all of the above are correct.E) C) and D)
F) All of the above

Question 11

Economists:

Accepted Answer

A)   always put the independent variable on the horizontal axis and the dependent variable on the vertical axis.
B)   always put the dependent variable on the horizontal axis and the independent variable on the vertical axis.
C)   are somewhat arbitrary in assigning independent and dependent variables to the horizontal and vertical axes.
D)   measure the slope of a line differently than do mathematicians.E) B) and C)
F) A) and B)

Question 12

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) A) and D)
F) A) and B)

Question 13

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-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) A) and B)
F) A) and C)

Question 14

The main function of the entrepreneur is to:

Accepted Answer

A)   make routine pricing decisions.
B)   innovate.
C)   purchase capital.
D)   create market demand.E) A) and C)
F) None of the above

Question 15

Choices entail marginal costs because resources are scarce.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is a macroeconomic statement?

Accepted Answer

A)   The gross profits of all Canadian businesses were $70 billion last year.
B)   The price of beef declined by 3 percent last year.
C)   General Motors' profits increased in 2012.
D)   The productivity of steelworkers increased by 1 percent in 2012.E) B) and D)
F) All of the above

Question 17

Which of the following is a normative statement?

Accepted Answer

A)   The temperature is high today.
B)   The humidity is high today.
C)   It is too hot to play tennis today.
D)   It will cool off later this evening.E) C) and D)
F) A) and D)

Question 18

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) A) and B)
F) A) and C)

Question 19

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 accept less of another.
C)   the principle of increasing opportunity costs does not apply to the economy as a whole.
D)   consumers buy more when prices are low than they do when prices are high.E) None of the above
F) A) and C)

Question 20

Other things equal,which of the following would shift an economy's production possibilities curve to the left?

Accepted Answer

A)   the discovery of a low-cost means of generating and storing solar energy
B)   the entrance of more women into the labour force
C)   a law requiring mandatory retirement from the labour force at age 55
D)   an increase in the proportion of total output which consists of capital or investment goodsE) All of the above
F) B) and C)

Exam 1: Limits, Alternatives, and Choices

-Refer to the above table.For this economy to produce a total output of 3 units of capital goods and 13 units of consumer goods it must:

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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 economic perspective used in customer decision making at fast-food restaurants is reflected in:

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

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The main function of the entrepreneur is to:

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Choices entail marginal costs because resources are scarce.

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-Refer to the above table.A total output of 3 units of capital goods and 4 units of consumer goods:

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Other things equal,which of the following would shift an economy's production possibilities curve to the left?

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Specialization and trade are beneficial to society because:

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

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-Refer to the above production possibilities curves.Curve (a) is the current curve for the economy.The movement from curve (a) to curve (b) suggests:

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Which of the following is a macroeconomic statement?

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Which of the following is a normative statement?

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-The linear equation for line (3) on the above graph is:

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-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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-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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Economists:

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-Refer to the above diagram.The vertical intercept:

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Suppose an economist says that "Other things equal,the lower the price of bananas,the greater the amount of bananas purchased." This statement indicates that:

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