Limits Alternatives and Choices

Transcription

1 Limits Alternatives and Choices Student: 1. Economics is a social science concerned with: A. Increasing the level of productive resources so there is maximum output in society B. Increasing the level of productive resources so there is a minimum level of income C. The best use of scarce resources to achieve the maximum satisfaction of economic wants D. The best use of scarce resources paid for at the minimum level of cost to consumers and businesses 2. Opportunity cost is best defined as: A. Marginal cost minus marginal benefit B. The time spent on an economic activity C. The value of the best foregone alternative D. The money cost of an economic decision 3. 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 favorite 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: A. $300 B. $450 C. $500 D. $ One major feature of the economic perspective is: A. That scarcity is more important than choice B. That costs are more important than benefits C. The assumption of rational self-interest by individuals D. The recognition of economic resources in the economy 5. Which expression is another way of saying "marginal cost"? A. Total cost B. Additional cost C. Rational behavior D. Scarcity 6. When producers maximize their profits from the production of a good or service, they are: A. Testing a hypothesis B. Exhibiting rational behavior C. Assuming that all other things are equal D. Making a tradeoff between economic efficiency and economic freedom 7. Which question is an illustration of a macroeconomic question? A. What is the amount of profit for Intel and other makers of microchips? B. How does a cut in the business tax rate increase business investment in the economy? C. What will be the level of stock market and bond market prices at the end of the year? D. How does the supply of fruits and vegetables change when there is bad weather affecting crops? 8. Clara states that "there is a high correlation between the level of people's education and the level of their income." Ellie replies that the correlation occurs because "more education is the best way to earn more income in this country." A. Both Clara's and Ellie's statements are positive B. Both Clara's and Ellie's statements are normative C. Clara's statement is normative and Ellie's statement is positive D. Clara's statement is positive and Ellie's statement is normative

2 9. Which would be a normative economic statement? A. The poverty rate hit a new high last year B. Prices are increasing at a rate of 3 percent a year C. This administration should raise taxes to pay for childcare programs D. Retail sales were flat last month and continue on their downward trend 10. If a consumer purchases just two goods, good X and good Y. The ratio of the price of good Y to good X is the: A. Intercept for the Y axis of the budget line B. Intercept for the X axis of the budget line C. Size of the shift in the budget line D. Slope of the budget line Assume that a consumer has $12 in income and she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $ If the consumer spent all of her money on either apples or bananas, how many apples or how many bananas would she be able to buy? A. 12 apples or 8 bananas B. 8 apples and 12 bananas C. 16 apples and 12 bananas D. 8 apples and 16 bananas 12. What is the slope of the budget line for apples and bananas if apples were graphed on the horizontal axis and bananas were graphed on the vertical axis? A B C D For this consumer, the opportunity cost of buying two bananas is A. 1 apple B. 2 apples C. 3 apples D. 4 apples 14. Assume that a consumer purchases only two products and there is a decrease in the consumer's income. The prices of the two products stay the same. The change in income will result in a A. Shift inward in the budget line B. Shift outward in the budget line C. A decrease in the slope of the budget line D. An increase in the slope of the budget line 15. The individual who brings together economic resources and assumes the risk in a capitalist economy is called the: A. Manager B. Entrepreneur C. Stockbroker D. Banker 16. Which is the correct match of an economic resource and payment for that resource? A. Land and profit B. Labor and rental income C. Capital and interest income D. Entrepreneurial ability and wages

3 17. Which isnot considered to be an economic resource? A. Land (or natural resources) B. Money C. Labor D. Tools and machinery 18. The role of the entrepreneur in society is to: A. Bring the factors of production together and take the risks of producing B. Provide capital to the firm which the management combines with labor C. Control the land upon which all production takes place to get the most rent D. Work with other elected officials to determine what goods are produced 19. The production possibilities curve represents: A. The maximum amount of labor and capital available for production B. Combinations of goods and services among which consumers are indifferent C. Maximum combinations of products available with fixed resources and technology D. The maximum rate of growth of capital and labor in an economy (The following economy produces two products.) 20. Refer to the above table. Thetotal opportunity cost of the three units of steel is: A. 15 units of wheat B. 20 units of wheat C. 45 units of wheat D. 55 units of wheat (The following economy produces two products.) 21. Refer to the above table. The opportunity cost of each additional tank in terms of autos: A. Remains constant B. Falls as more tanks are produced C. Increases as more tanks are produced D. Cannot be measured because there is no currency 22. A movement along the production possibilities curve would imply that: A. The labor force has grown B. Productivity has increased C. Productivity has declined D. Society has chosen a different set of outputs The production possibilities curve below shows the hypothetical relationship between the production of capital goods and consumer goods in an economy. 23. What is the total opportunity cost of producing the second unit of capital goods? A. 4 units of consumer goods B. 5 units of consumer goods C. 9 units of consumer goods D. 13 units of consumer goods

4 24. The law of increasing opportunity costs says that: A. Costs of production increase and then decrease B. Increases in wages cause increases in the costs of production C Along a production possibilities curve, increases in the production of one type of good require larger. D. and larger sacrifices of the other type of good Along a production possibilities curve, decreases in the production of one type of good require larger and larger sacrifices of the other type of good 25. The law of increasing opportunity costs indicates that: A. Resources are perfectly mobile except for transportation costs B. The sum of all costs cannot rise above the market price of a product C. To produce more of one good, society must sacrifice larger and larger amounts of alternative goods D If the prices of all the resources involved in the production of goods increase, the cost of producing. those goods will increase at the same rate 26. If economic resources are perfectly interchangeable between the two products shown on a production possibilities graph: A. The economy will always be at full employment B. More of one product can be produced without producing less of the other product C. The production possibilities curve would be a straight line D. The two products are of equal value to the economy 27. If an economy is operating at a point inside the production possibilities curve, it indicates that: A. Society's resources are being poorly utilized B. The production decisions are made by government C. Unlimited resources must satisfy scarce desires of people D. There is a scarcity of resources relative to human wants 28. Which of the following is correct? A. If two variables are directly related, they will graph as a downsloping line B. If two variables are inversely related, they will graph as an upsloping line C. Price and quantity supplied are inversely related and price and quantity demanded are directly related D. If two variables are inversely related, they will graph as a downsloping line 29. Variables X and Y in the above table are: A. Positively related B. Negatively related C. Independent D. Nonlinear

5 30. In line (1) on the above graph, the variables x and y are: A. Nonlinearly related B. Positively related C. Negatively related D. Inversely related