Some Questions 1

Some Questions

1

Economics is a social science concerned with: A. Increasing the level of productive resources

so there is maximum output in societyB. Increasing the level of productive resources

so there is a minimum level of incomeC. The best use of scarce resources to achieve

the maximum satisfaction of economic wantsD. The best use of scarce resources paid for at

the minimum level of cost to consumers and businesses

2

• 2. The study of economics is primarily concerned with: A. Expanding the production of goods and servicesB. Making the best use of scarce productive resourcesC. Equalizing the distribution of consumer income and wealthD. Reallocating resources from consumption to production in the economy

3

• 3. The key economic concept that serves as the basis for the study of economics is: A. InflationB. UnemploymentC. MoneyD. Scarcity

4

• 4. A recurring theme in economics is: A. Unlimited resources and unlimited economic wantsB. People can increase resources by limiting their economic wantsC. People have limited economic wants and limited resourcesD. People have unlimited economic wants, but limited resources

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5

• 5. As a consequence of the condition of scarcity: A. There is never enough of anythingB. Production has to be planned by governmentC. Things which are plentiful have relatively high pricesD. Individuals have to make choices from among alternatives

9

• 9. What is the economic meaning of the expression that "there is no such thing as a free lunch"? A. It refers to "free-riders," who do not pay for the cost of a product, but who receive the benefit from itB. It means that economic freedom is limited by the amount of income available to the consumerC. It means that there is an opportunity cost when resources are used to provide "free" productsD. It indicates that products only have value because people are willing to pay for them

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12

• 12. Opportunity cost is best defined as: A. Marginal cost minus marginal benefitB. The time spent on an economic activityC. The value of the best foregone alternativeD. The money cost of an economic decision

15

• 15. The value of the best alternative to any action you undertake is referred to as its: A. Production costB. Opportunity costC. Resource costD. Increasing cost

18

• 18. After graduating from high school, Ron Willis plans to go to college. The college tuition is $15,000 a year. But, instead of going to college, Ron could take a full-time job paying $20,000. If Ron decides to go to college, what is his opportunity cost for attending for one year? A. $5,000B. $15,000C. $20,000D. $35,000

23

• 23. Which expression is another way of saying "marginal cost"? A. Total costB. Additional costC. Rational behaviorD. Scarcity

25

• 25. Henry wants to buy a book. The economic perspective suggests that Henry will buy the book if: A. Positive economics is more important than normative economics in the decision makingB. Normative economics is more important than positive economics in the decision makingC. The marginal cost of the book is greater than its marginal benefitD. The marginal benefit of the book is greater than its marginal cost

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29

• 29. When an economist says that there is "too much of a good thing," the economist is suggesting that: A. Economic goals are conflictingB. Economic goals are complementaryC. The marginal cost of the thing is less than the marginal benefitD. The marginal benefit of the thing is less than the marginal cost

33

• 33. The process of developing hypotheses, testing them against facts, and using the results to construct theories is called: A. Opportunity cost calculationB. The scientific methodC. Marginal analysisD. Microeconomics

39

• 39. The role of an assumption in an economic theory is to: A. Add realismB. Prove the theoryC. Cover special casesD. Simplify the theory

40

• 40. The ceteris paribus assumption is employed in economic analysis to: A. State economic goalsB. Simplify the complex worldC. Evaluate an economic systemD. Approximate real-world conditions

110

• 110. The production possibilities curve represents which of the following? A. The amount of goods attainable with variable resourcesB. The maximum amount of goods attainable with variable resourcesC. Maximum combinations of goods attainable with fixed resourcesD. The amount of goods attainable if prices decline

111

• 111. The production possibilities curve represents: A. The maximum amount of labor and capital available for productionB. Combinations of goods and services among which consumers are indifferentC. Maximum combinations of products available with fixed resources and technologyD. The maximum rate of growth of capital and labor in an economy

112

• 112. On a production possibilities curve, the single optimal or best combination of output for any society: A. Is at a point near the top of the curveB. Is at the precise midpoint of the curveC. Is at a point near the bottom of the curveD. Depends upon the preferences of society

114

• 114. Refer to the above table. The total opportunity cost of the three units of steel is: A. 15 units of wheatB. 20 units of wheatC. 45 units of wheatD. 55 units of wheat

115

• 115. Refer to the above table. The marginal opportunity cost of the third unit of steel is: A. 10 units of wheatB. 15 units of wheatC. 20 units of wheatD. 30 units of wheat

116

• 116. Refer to the above table. A change from possibility C to B means that: A. 1 unit of steel is given up to get 75 units of wheatB. 2 units of steel are given up to get 75 units of wheatC. 1 unit of steel is given up to get 15 more units of wheatD. 2 units of steel are given up to get 15 more units of wheat

117

• 117. Refer to the above table. In moving from possibility C to D, the cost of a unit of steel in terms of a unit of wheat is: A. 10B. 20C. 25D. 30

118

• 118. Refer to the above table. A change from possibility B to C means that: A. 10 units of wheat are given up to get one more unit of steelB. 15 units of wheat are given up to get one more unit of steelC. 15 units of wheat are equal to one unit of steelD. 75 units of wheat are equal to one unit of steel

119

• 119. Refer to the above table. In moving from possibility A to F, the cost of a unit of steel in terms of a unit of wheat: A. IncreasesB. DecreasesC. Remains constantD. Increases from A to B, and decreases from B to F

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126

• 126. Refer to the graph. The total opportunity cost of nine drill presses is: A. 1 unit of breadB. 2 units of breadC. 3 units of breadD. 4 units of bread

127

• 127. Refer to the graph. The marginal opportunity cost of the fourth unit of bread is: A. 1 unit of drill pressesB. 2 units of drill pressesC. 3 units of drill pressesD. 4 units of drill presses

128

• 128. A point inside the production possibilities curve is: A. Attainable and the economy is efficientB. Attainable, but the economy is inefficientC. Unattainable, but the economy is inefficientD. Unattainable and the economy is efficient

129

• 129. A point on the frontier of the production possibilities curve is: A. Attainable and resources are fully employedB. Attainable, but resources are unemployedC. Unattainable, but resources are unemployedD. Unattainable and resources are fully employed

130

• 130. A point outside the production possibilities curve is: A. Attainable, but there is not full employmentB. Attainable, but there is not optimal allocationC. Unattainable because the economy is inefficientD. Unattainable because of limited resources

132

• 132. In a production possibilities graph with just two products in an economy, the graph shows the quantity of: A. Both products on the horizontal axisB. One product on the horizontal axis and the price of the other product on the vertical axisC. One product on the vertical axis and the price of the other product on the horizontal axisD. One product on the vertical axis and the quantity of the another product on the horizontal axis

• 133. A movement along the production possibilities curve would imply that: A. The labor force has grownB. Productivity has increasedC. Productivity has declinedD. Society has chosen a different set of outputs

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134

• 134. A point outside (to the right of) the production possibilities curve of a nation: A. Is not attainable for this nationB. Will shift the production possibilities boundary outwardC. Implies that there are unemployed resources in this nationD. Implies that this nation is using its resources efficiently

139

• 139. Points C, D, E, and H on the above graph show: A. An inefficient allocation of society's scarce resourcesB. A constant tradeoff between food and clothingC. Possible combinations of food and clothingD. Unattainable combinations of food and clothing

140

• 140. The combination of food and clothing shown by point G on the above graph: A. Is not attainable, given society's available resources and technologyB. Can be attained only if some of society's resources are unemployedC. Suggests that the law of increasing relative costs is not relevant in this caseD. Results only because society allocates its resources inefficiently

Answers

• 1 c, 2 b,3d,4d, 5d, 9c, 12c, 15b, 18d, 23b, 25d, 29d, 33b, 39d, 40b, 110c, 111c, 112d, 114c, 115c, 116c, 117b, 118b, 119a, 126c, 127d, 128b, 129a, 130d, 132d, 133d, 134a, 139c, 140a