Question 1

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

Question 2

The slope of the typical production possibilities curve:

Accepted Answer

A)  is positive.
B)  increases as one moves southeast along the curve.
C)  is constant as one moves down the curve.
D)  decreases as one moves southeast along the curve.E) A) and D)
F) A) and C)

Question 3

Refer to the above diagram.The variables X and Y are:

Accepted Answer

A)  inversely related.
B)  directly related.
C)  unrelated.
D)  negatively related.E) A) and C)
F) B) and C)

Question 4

1/4. B) is +1/4. C) is .40. D) cannot be determined from the information given." class="answers-bank-image d-inline" rel="preload" > Refer to the above diagram.The slope of the line:

Accepted Answer

A)  is -1/4.
B)  is +1/4.
C)  is .40.
D)  cannot be determined from the information given.E) None of the above
F) B) and C)

Question 5

A production possibilities curve shows:

Accepted Answer

A)  that resources are unlimited.
B)  that people prefer one of the goods more than the other.
C)  the maximum amounts of two goods which can be produced assuming the full and efficient use of available resources.
D)  combinations of capital and labour necessary to produce specific levels of output.E) C) and D)
F) A) and B)

Question 6

Tammie makes $150 a day as a bank clerk.She takes off two days of work without pay to fly to another city to attend the concert of her favourite music group.The cost of transportation for the trip is $250.The cost of the concert ticket is $50.The opportunity cost of Tammie's trip to the concert is:

Accepted Answer

A)  $300
B)  $450
C)  $500
D)  $600E) A) and B)
F) B) and C)

Question 7

Refer to the above production possibilities curve.At the onset of World War II Canada had large amounts of idle human and property resources.Its economic adjustment from peacetime to wartime can best be described by the movement from point:

Accepted Answer

A)  c to point b.
B)  b to point c.
C)  a to point b.
D)  c to point d.E) All of the above
F) A) and B)

Question 8

Refer to the above production possibilities curves.Curve (a)  is the current curve for the economy.Other things being equal, society's current choice of point P on curve (a)  will:

Accepted Answer

A)  allow it to achieve more rapid economic growth than would the choice of point N.
B)  entail a slower rate of economic growth than would the choice of point N.
C)  entail the same rate of growth as would the choice of point N.
D)  be unobtainable because it exceeds the productive capacity of the economy.E) C) and D)
F) A) and B)

Question 9

One of the basic economic defences of economic growth rests on the conclusion that:

Accepted Answer

A)  growth makes workers less obsolete and more secure in employment.
B)  growth reduces the cost of "common property" resources to society.
C)  growth makes the gap between unlimited wants and scarce resources less acute.
D)  a growth-oriented society has a relatively equitable income distribution.E) B) and C)
F) B) and D)

Question 10

Refer to the above production possibilities curves.The movement from curve (a) to curve (b) implies an increase in the quantity and/or quality of society's productive resources.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A)  0
B)  .66.
C)  .75.
D)  1.50.E) A) and B)
F) A) and C)

Question 12

Which of the following statements is not correct?

Accepted Answer

A)  A reduction in money income will shift the budget line to the right.
B)  A reduction in money income accompanied by an increase in product prices will necessarily shift the budget line to the left.
C)  An increase in product prices will shift the budget line to the left.
D)  An increase in money income will shift the budget line to the right.E) A) and D)
F) A) and C)

Question 13

Marginal analysis means that decision-makers compare the extra benefits with the extra costs of a specific choice.

Accepted Answer

A) True 
 B)False

Question 14

An economy will always operate at some point on its production possibilities curve.

Accepted Answer

A) True 
 B)False

Question 15

Answer on the basis of the relationships shown in the above four figures.The amount of Y is directly related to the amount of X in:

Accepted Answer

A)  both 1 and 3.
B)  both 1 and 2.
C)  2 only.
D)  l only.E) A) and D)
F) B) and D)

Question 16

In moving along a given budget line:

Accepted Answer

A)  the prices of both products and money income are assumed to be constant.
B)  each point on the line will be equally satisfactory to consumers.
C)  money income varies, but the prices of the two goods are constant.
D)  the prices of both products are assumed to vary, but money income is constant.E) All of the above
F) B) and D)

Question 17

The budget line shift from cd to ab in the below figure is consistent with:

Accepted Answer

A)  decreases in the prices of both M and N.
B)  an increase in the price of M and a decrease in the price of N.
C)  a decrease in money income.
D)  an increase in money income.E) A) and C)
F) All of the above

Question 18

The basic difference between consumer goods and capital goods is that:

Accepted Answer

A)  consumer goods are produced in the private sector and capital goods are produced in the public sector.
B)  an economy that commits a relatively large proportion of its resources to capital goods must accept a lower growth rate.
C)  the production of capital goods is not subject to the law of increasing opportunity costs.
D)  consumer goods satisfy wants directly while capital goods satisfy wants indirectly.E) None of the above
F) B) and C)

Question 19

As a consequence of the condition of scarcity:

Accepted Answer

A)  there is always enough of everything.
B)  production has to be centrally planned.
C)  things which are plentiful have relatively high prices.
D)  individuals and communities have to make choices among alternatives.E) A) and C)
F) None of the above

Question 20

In a linear equation relating income and consumption, you know that the intercept is $1,000 and the slope of the line is.4.If income is $20,000, then consumption is:

Accepted Answer

A)  $8,000
B)  $9,000
C)  $10,000
D)  $11,000E) None of the above
F) B) and D)

Exam 1: B: Limits, Alternatives, and Choices

As a consequence of the condition of scarcity:

Correct AnswerverifiedShow Answer

Refer to the above diagram.The slope of the line:

Correct AnswerverifiedShow Answer

Refer to the above diagram.The variables X and Y are:

Correct AnswerverifiedShow Answer

Tammie makes $150 a day as a bank clerk.She takes off two days of work without pay to fly to another city to attend the concert of her favourite music group.The cost of transportation for the trip is $250.The cost of the concert ticket is $50.The opportunity cost of Tammie's trip to the concert is:

Correct AnswerverifiedShow Answer

An economy will always operate at some point on its production possibilities curve.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The budget line shift from cd to ab in the below figure is consistent with:

Correct AnswerverifiedShow Answer

Refer to the above production possibilities curves.The movement from curve (a) to curve (b) implies an increase in the quantity and/or quality of society's productive resources.

Correct AnswerverifiedShow Answer

Refer to the above production possibilities curves.Curve (a) is the current curve for the economy.Other things being equal, society's current choice of point P on curve (a) will:

Correct AnswerverifiedShow Answer

Marginal analysis means that decision-makers compare the extra benefits with the extra costs of a specific choice.

Correct AnswerverifiedShow Answer

The slope of the typical production possibilities curve:

Correct AnswerverifiedShow Answer

Refer to the above production possibilities curve.At the onset of World War II Canada had large amounts of idle human and property resources.Its economic adjustment from peacetime to wartime can best be described by the movement from point:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In moving along a given budget line:

Correct AnswerverifiedShow Answer

One of the basic economic defences of economic growth rests on the conclusion that:

Correct AnswerverifiedShow Answer

A production possibilities curve shows:

Correct AnswerverifiedShow Answer

The basic difference between consumer goods and capital goods is that:

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

In a linear equation relating income and consumption, you know that the intercept is $1,000 and the slope of the line is.4.If income is $20,000, then consumption is:

Correct AnswerverifiedShow Answer

Answer on the basis of the relationships shown in the above four figures.The amount of Y is directly related to the amount of X in:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified