Question 1

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

Accepted Answer

A)   Limited resources to satisfy limited economic wants
B)   Unlimited resources to satisfy unlimited economic wants
C)   Unlimited resources to satisfy limited economic wants
D)   Limited resources to satisfy unlimited economic wants

Question 2

Economic growth is a result of:

Accepted Answer

A)   A reduction in the unemployment rate
B)   An increase in the opportunity costs of production
C)   A decrease in the demand for resources
D)   An increase in the supply of resources

Question 3

Imagine an ideal scenario where world peace prevails and all nations are led by peace-minded leaders. In such a world, the:

Accepted Answer

A)   MB for defense goods would shift left
B)   MB for defense goods would shift right
C)   MC for defense goods would shift left
D)   MC for defense goods would shift right

Question 4

A point or combination that is on the production possibilities curve is:

Accepted Answer

A)   Attainable and resources are fully employed
B)   Attainable, but some resources are unemployed
C)   Unattainable, but some resources are unemployed
D)   Attainable only if we get additional resources

Question 5

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 6

The economizing problem for individuals is a consequence of the fact that:

Accepted Answer

A)   Economic means or incomes are greater than economic wants
B)   Economic wants are greater than economic means or incomes
C)   Positive economics is more important than normative economics
D)   Normative economics is more important than positive economics

Question 7

Money is not considered to be an economic resource because:

Accepted Answer

A)   As such it is not productive
B)   Money is not a free gift of nature
C)   Money is made by man
D)   Idle money balances do not earn interest income

Question 8

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. Refer to the information given above. If the consumer decides to buy 4 apples, how many bananas can she also buy with the remainder of her budget?

Accepted Answer

A)   8 bananas
B)   4 bananas
C)   6 bananas
D)   10 bananas

Question 9

A nation can increase its production possibilities by:

Accepted Answer

A)   Shifting resources to produce more consumer goods and less investment goods
B)   Shifting resources from private goods to public goods
C)   Improving labor productivity
D)   Eliminating unemployment

Question 10

If the marginal benefit of a good is less than its marginal cost, then the nation should:

Accepted Answer

A)   Produce more of that good
B)   Maintain the current level of production of that good
C)   Reduce the marginal benefit of that good
D)   Reduce the production of that good

Question 11

A nation that devotes more of its resources to the production of capital goods is likely to:

Accepted Answer

A)   Cause its production possibilities curve to shift outward
B)   Cause its production possibilities curve to shift inward
C)   Increase the slope of its production possibilities curve
D)   Decrease the slope of its production possibilities curve

Question 12

The fundamental economic problem faced by a society is that productive resources are so varied and versatile, that it is hard to decide what to do with them.

Accepted Answer

A) True 
 B)False

Question 13

The following graph is the production possibilities curve of a nation:  Refer to the above graph. Which of the following combinations would be unattainable?

Accepted Answer

A)   8 drill presses and 1 bread
B)   7 drill presses and 2 bread
C)   10 drill presses and 4 bread
D)   2 drill presses and 3 bread

Question 14

An economic model is a purposeful simplification of reality, whose function includes:

Accepted Answer

A)   Understanding the full complexity of the real world
B)   Predicting the behavior of each and every individual or organization
C)   Analyzing the behavior of a typical or average consumer or firm
D)   Forecasting economic random events with a high level of accuracy

Question 15

The study of economics is not useful for consumers because economic analysis focuses only on businesses and the economy.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following illustrates a macroeconomic question?

Accepted Answer

A)   Should the salaries of financial executives be regulated by the government?
B)   Are increasing wage demands by workers contributing to price inflation?
C)   What is the least costly way to produce automobiles and trucks in the United States?
D)   Will the introduction of a new computer chip change the demand for computers?

Question 17

Economic growth may be represented by:

Accepted Answer

A)   A movement from one end of the production possibilities curve to the other
B)   An upward-sloping production possibilities curve
C)   A movement from a point inside to a point on the production possibilities curve
D)   A rightward shift of the production possibilities curve

Question 18

If the marginal benefits are greater than the marginal cost of an activity, then society should allocate fewer resources to this activity.

Accepted Answer

A) True 
 B)False

Question 19

The graph above shows the production possibilities curve for an economy producing two goods, X and Y. Which of the points on the graph indicate unemployed resources?

Accepted Answer

A)   D only
B)   E and A only
C)   B and A only
D)   B and C only

Question 20

The slope of line (2)  on the above graph is:

Accepted Answer

A)   0
B)   12
C)   18
D)   Infinite

Exam 1: Limits, Alternatives, and Choices

Correct Answer
verified

If the marginal benefits are greater than the marginal cost of an activity, then society should allocate fewer resources to this activity.

Correct Answer
verified

Economic growth may be represented by:

Correct Answer
verified

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

Correct Answer
verified

A point or combination that is on the production possibilities curve is:

Correct Answer
verified

The study of economics is not useful for consumers because economic analysis focuses only on businesses and the economy.

Correct Answer
verified

Which of the following illustrates a macroeconomic question?

Correct Answer
verified

Economic growth is a result of:

Correct Answer
verified

Money is not considered to be an economic resource because:

Correct Answer
verified

The following graph is the production possibilities curve of a nation: Refer to the above graph. Which of the following combinations would be unattainable?

Correct Answer
verified

Imagine an ideal scenario where world peace prevails and all nations are led by peace-minded leaders. In such a world, the:

Correct Answer
verified

The slope of line (2) on the above graph is:

Correct Answer
verified

A nation can increase its production possibilities by:

Correct Answer
verified

If the marginal benefit of a good is less than its marginal cost, then the nation should:

Correct Answer
verified

The economizing problem for individuals is a consequence of the fact that:

Correct Answer
verified

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

Correct Answer
verified

An economic model is a purposeful simplification of reality, whose function includes:

Correct Answer
verified

The fundamental economic problem faced by a society is that productive resources are so varied and versatile, that it is hard to decide what to do with them.

Correct Answer
verified

The graph above shows the production possibilities curve for an economy producing two goods, X and Y. Which of the points on the graph indicate unemployed resources?

Correct Answer
verified

A nation that devotes more of its resources to the production of capital goods is likely to:

Correct Answer
verified

Exam 1: Limits, Alternatives, and Choices

Correct AnswerverifiedShow Answer

If the marginal benefits are greater than the marginal cost of an activity, then society should allocate fewer resources to this activity.

Correct AnswerverifiedShow Answer

Economic growth may be represented by:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A point or combination that is on the production possibilities curve is:

Correct AnswerverifiedShow Answer

The study of economics is not useful for consumers because economic analysis focuses only on businesses and the economy.

Correct AnswerverifiedShow Answer

Which of the following illustrates a macroeconomic question?

Correct AnswerverifiedShow Answer

Economic growth is a result of:

Correct AnswerverifiedShow Answer

Money is not considered to be an economic resource because:

Correct AnswerverifiedShow Answer

The following graph is the production possibilities curve of a nation: Refer to the above graph. Which of the following combinations would be unattainable?

Correct AnswerverifiedShow Answer

Imagine an ideal scenario where world peace prevails and all nations are led by peace-minded leaders. In such a world, the:

Correct AnswerverifiedShow Answer

The slope of line (2) on the above graph is:

Correct AnswerverifiedShow Answer

A nation can increase its production possibilities by:

Correct AnswerverifiedShow Answer

If the marginal benefit of a good is less than its marginal cost, then the nation should:

Correct AnswerverifiedShow Answer

The economizing problem for individuals is a consequence of the fact that:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An economic model is a purposeful simplification of reality, whose function includes:

Correct AnswerverifiedShow Answer

The fundamental economic problem faced by a society is that productive resources are so varied and versatile, that it is hard to decide what to do with them.

Correct AnswerverifiedShow Answer

The graph above shows the production possibilities curve for an economy producing two goods, X and Y. Which of the points on the graph indicate unemployed resources?

Correct AnswerverifiedShow Answer

A nation that devotes more of its resources to the production of capital goods is likely to:

Correct AnswerverifiedShow Answer

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Correct Answer
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