Question 1

Consumers might leave a fast-food restaurant without being served because:

Accepted Answer

A)   they are misinformed about the marginal cost and marginal benefits of the food being served.
B)   they conclude that the marginal cost (monetary plus time costs)  exceeds the marginal benefit.
C)   the environment is not conducive to a rational choice.
D)   the lines waiting for service are not of equal length.E) A) and D)
F) None of the above

Question 2

-Refer to the above graph. Which of the following schedules correctly reflects "demand"?

Accepted Answer

A)   schedule (
A)  
B)   schedule (
B)  
C)   schedule (
C)  
D)   schedule (
D)  E) None of the above
F) All of the above

Question 3

Marginal costs exist because:

Accepted Answer

A)   the decision to produce more of some product means the sacrifice of other products.
B)   wants are scarce relative to resources.
C)   households and businesses make rational decisions.
D)   most decisions do not involve sacrifices or tradeoffs.E) C) and D)
F) A) and B)

Question 4

The law of increasing opportunity costs states that:

Accepted Answer

A)   if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of other goods to do so.
B)   the sum of the costs of producing a particular good cannot rise above the current market price of that good.
C)   if the sum of the costs of producing a particular good rises by a specified percent, the price of that good must rise by a greater relative amount.
D)   if the prices of all the resources devoted to the production of goods increase, the cost of producing any particular good will increase at the same rate.E) B) and D)
F) A) and C)

Question 5

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

Accepted Answer

A)   both 2 and 4.
B)   3 only.
C)   2 only.
D)   1.E) A) and B)
F) A) and C)

Question 6

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

Question 7

The budget line shows:

Accepted Answer

A)   the amount of product A which a consumer is willing to give up to obtain one more unit of product B
B)   all possible combinations of two goods which can be purchased, given money income and the prices of the goods.
C)   all equilibrium points on an indifference map.
D)   all possible combinations of two goods which yield the same level of utility to the consumer.E) B) and C)
F) A) and C)

Question 8

Certain inherently desirable products such as education and health care should be produced so long as resources are available.

Accepted Answer

A) True 
 B)False

Question 9

In constructing models, economists:

Accepted Answer

A)   make simplifying assumptions.
B)   include all available information.
C)   must use mathematical equations.
D)   attempt to duplicate the real world.E) All of the above
F) A) and B)

Question 10

The output of blu ray 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) C) and D)
F) All of the above

Question 11

Concern about the general level of prices in an economy is primarily a concern about the economic goal of:

Accepted Answer

A)   economic efficiency.
B)   economic security.
C)   price-level stability.
D)   equity.E) B) and D)
F) A) and D)

Question 12

Macroeconomics approaches the study of economics from the viewpoint of:

Accepted Answer

A)   the entire economy.
B)   governmental units.
C)   the operation of specific product and resource markets.
D)   individual firms.E) All of the above
F) A) and C)

Question 13

-Refer to the above diagram. Which line(s)  show(s)  a negative vertical intercept?

Accepted Answer

A)   C only
B)   both C and E
C)   B, C, and E
D)   both B and CE) A) and D)
F) C) and D)

Question 14

The production possibilities curve has:

Accepted Answer

A)   a positive slope which increases as we move along it from left to right.
B)   a negative slope which increases as we move along it from left to right.
C)   a negative slope which decreases as we move along it from left to right.
D)   a negative slope which is constant as we move along it from left to right.E) B) and C)
F) B) and D)

Question 15

All of the following could immediately or eventually lead to an inward shift of a nation's production possibilities curve, except:

Accepted Answer

A)   an increase in the amount of discrimination.
B)   a decline in the birth rate.
C)   an increase in the average skill level of all occupational groups.
D)   depletion and reduced availability of major energy resources.E) A) and B)
F) All of the above

Question 16

The production possibilities curve tells us:

Accepted Answer

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

Question 17

"Economics is concerned with using scarce productive resources efficiently in attempting to satisfy society's material wants." This statement is:

Accepted Answer

A)   positive, but incorrect.
B)   positive and correct.
C)   normative, but incorrect.
D)   normative and correct.E) None of the above
F) A) and D)

Question 18

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

Question 19

-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) B) and D)
F) B) and C)

Question 20

The individual's limited income problem:

Accepted Answer

A)   persists only because countries have failed to achieve continuous full employment.
B)   exists because material wants are limited.
C)   has been solved in all industrialized nations.
D)   has been eliminated in affluent societies such as Canada and the United States.E) A) and D)
F) B) and C)

Exam 1: Limits, Alternatives, and Choices

The individual's limited income problem:

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Economic resources are also called:

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In moving along a given budget line:

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The production possibilities curve has:

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The production possibilities curve tells us:

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Macroeconomics approaches the study of economics from the viewpoint of:

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-Refer to the above graph. Which of the following schedules correctly reflects "demand"?

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-Refer to the above diagram. The vertical intercept:

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The output of blu ray players should be:

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Marginal costs exist because:

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The budget line shows:

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All of the following could immediately or eventually lead to an inward shift of a nation's production possibilities curve, except:

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Concern about the general level of prices in an economy is primarily a concern about the economic goal of:

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

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"Economics is concerned with using scarce productive resources efficiently in attempting to satisfy society's material wants." This statement is:

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-Refer to the above diagram. Which line(s) show(s) a negative vertical intercept?

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Consumers might leave a fast-food restaurant without being served because:

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The law of increasing opportunity costs states that:

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Certain inherently desirable products such as education and health care should be produced so long as resources are available.

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In constructing models, economists:

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