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-Refer to the above graph. Using Q<sub>d</sub> for quantity demanded and P for price, which of the following equations correctly states the demand for this product? A) P = Q<sub>d</sub>/10. B) P = 50 - P/2. C) P = 10 - .2Q<sub>d</sub>. D) P = 10 - 2Q<sub>d</sub>. -Refer to the above graph. Using Qd for quantity demanded and P for price, which of the following equations correctly states the demand for this product?


A) P = Qd/10.
B) P = 50 - P/2.
C) P = 10 - .2Qd.
D) P = 10 - 2Qd.

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

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Which of the following statements is not correct?


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) None of the above
F) A) and B)

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A point inside a production possibilities curve may indicate:


A) unemployment.
B) the inefficient use of resources.
C) failure to use the best available technology.
D) all of the above.

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

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-Refer to the above diagram. The variables X and Y are: A) inversely related. B) directly related. C) unrelated. D) negatively related. -Refer to the above diagram. The variables X and Y are:


A) inversely related.
B) directly related.
C) unrelated.
D) negatively related.

E) B) and C)
F) None of the above

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Money is not considered to be an economic resource because:


A) money, as such, is not productive.
B) idle money balances do not earn interest income.
C) the terms of trade can be determined in non-monetary terms.
D) money is a free gift of nature.

E) C) and D)
F) None of the above

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The process by which capital goods are accumulated is known as investment.

A) True
B) False

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-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: 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. -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:


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) B) and C)

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The production possibilities curve represents which of the following?


A) the amount of goods attainable with variable resources
B) the maximum amount of goods attainable with variable resources
C) maximum combinations of goods attainable with fixed resources
D) the amount of goods attainable if prices decline

E) C) and D)
F) A) and B)

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If the equation y = 5 + 6x was graphed, the:


A) slope would be -5.
B) slope would be +5.
C) slope would be +6.
D) vertical intercept would be +.6.

E) A) and B)
F) C) and D)

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The price ratio of the two products is the:


A) marginal rate of substitution.
B) slope of the budget line.
C) point of tangency for equilibrium.
D) elasticity of demand for the two products.

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

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The individuals and society both face an economic problem. This problem arises from the fact that:


A) wants are limited but the resources are not.
B) resources are scarce relative to individual's wants.
C) individuals and institutions behave only in their self-interest.
D) both wants and resources are unlimited.

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

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The measured slope of a line:


A) is independent of how the two variables are denominated.
B) will be affected by how the two variables are denominated.
C) necessarily diminishes as one moves rightward on the line.
D) necessarily increases as one moves rightward on the line.

E) None of the above
F) B) and C)

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Production possibilities tables for two countries, North Cantina and South Cantina: North Cantina Production possibilities (alternatives) Production possibilities tables for two countries, North Cantina and South Cantina: North Cantina Production possibilities (alternatives) South Cantina Production possibilities (alternatives) -Refer to the above tables. If North Cantina is producing at production alternative B, the opportunity cost of the eleventh unit of consumer goods will be: A) 10 units of capital goods. B) <sup>1</sup>/<sub>4</sub> of a unit of capital goods. C) 8 units of capital goods. D) <sup>1</sup>/<sub>8</sub> of a unit of capital goods. South Cantina Production possibilities (alternatives) Production possibilities tables for two countries, North Cantina and South Cantina: North Cantina Production possibilities (alternatives) South Cantina Production possibilities (alternatives) -Refer to the above tables. If North Cantina is producing at production alternative B, the opportunity cost of the eleventh unit of consumer goods will be: A) 10 units of capital goods. B) <sup>1</sup>/<sub>4</sub> of a unit of capital goods. C) 8 units of capital goods. D) <sup>1</sup>/<sub>8</sub> of a unit of capital goods. -Refer to the above tables. If North Cantina is producing at production alternative B, the opportunity cost of the eleventh unit of consumer goods will be:


A) 10 units of capital goods.
B) 1/4 of a unit of capital goods.
C) 8 units of capital goods.
D) 1/8 of a unit of capital goods.

E) None of the above
F) All of the above

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Which situation would most likely cause a nation's production possibilities curve to shift inward?


A) the construction of more capital goods
B) a decrease in discrimination based on race
C) an increase in the number of skilled immigrant workers
D) the destruction from bombing and warfare in a losing military conflict

E) None of the above
F) C) and D)

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The slope of the typical production possibilities curve:


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

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Microeconomics:


A) is concerned with the aggregate or total levels of income, employment, and output.
B) is not concerned with details, but only with the overall "big picture" of the economy.
C) is concerned with individual economic units and specific markets.
D) describes the aggregate flows of output and income.

E) All of the above
F) B) and C)

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The "economic perspective" entails:


A) rational behaviour by individuals and institutions.
B) a comparison of marginal benefits and marginal costs in decision making.
C) the altering of behaviour when marginal benefits and marginal costs change.
D) all of the above.

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

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The production possibilities curve:


A) shows all of those levels of production which are consistent with a stable price level.
B) indicates that any combination of goods lying outside the curve is economically inefficient.
C) is a frontier between all combinations of two goods which can be produced and those combinations which cannot be produced.
D) shows all of those combinations of two goods which are most preferred by society.

E) A) and D)
F) None of the above

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

A) True
B) False

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-The law of increasing opportunity costs exists because: A) resources are not equally efficient in producing various goods. B) the value of the dollar has diminished historically because of persistent inflation. C) wage rates invariably rise as the economy approaches full employment. D) consumers tend to value any good more highly when they have little of it. -The law of increasing opportunity costs exists because:


A) resources are not equally efficient in producing various goods.
B) the value of the dollar has diminished historically because of persistent inflation.
C) wage rates invariably rise as the economy approaches full employment.
D) consumers tend to value any good more highly when they have little of it.

E) All of the above
F) None of the above

Correct Answer

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