Question 1

74)Which of the following will not produce an outward shift of the production possibilities?

Accepted Answer

the reduction of unemployment

Question 2

75) Unemployment

Accepted Answer

is illustrated by a point inside the production possibilities curve.

Question 3

76)If the production possibilities curve is a straight line:

Accepted Answer

economic resources are perfectly substitutable between the production of the two products.

Question 4

77. A production possibilities curve illustrates:

Accepted Answer

scarcity

Question 5

78.A production possibilities curve shows:

Accepted Answer

the maximum amounts of two goods that can be produced, assuming the full use of available resources.

Question 6

79. A nation's production possibilities curve is bowed out from the origin because:

Accepted Answer

resources are not generally equally efficient in producing every good.

Question 7

80. Refer to the above table. If the economy is producing at production alternative C, the opportunity cost of the tenth unit of consumer goods will be:

Accepted Answer

. 1/3 of a unit of capital goods.

Question 8

81. Refer to the above table. As compared to production alternative D, the choice of alternative C would:

Accepted Answer

tend to generate a more rapid growth rate.

Question 9

82. Refer to the above table. A total output of 3 units of capital goods and 4 units of consumer goods:

Accepted Answer

would involve an inefficient use of the economy's scarce resources.

Question 10

83. Refer to the above table. For this economy to produce a total output of 3 units of capital goods and 13 units of consumer goods it must:

Accepted Answer

achieve economic growth.

Question 11

84. Refer to the above table. For these data the law of increasing opportunity costs is reflected in the fact that:

Accepted Answer

larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods.

Question 12

85. When an economy is operating under conditions of full employment, the production of more of commodity A will mean the production of less of commodity B because:

Accepted Answer

C. resources are limited.

Question 13

86. The production possibilities curve:

Accepted Answer

is a frontier between all combinations of two goods that can be produced and those combinations that cannot be produced.

Question 14

87. Any point inside the production possibilities curve indicates:

Accepted Answer

that more output could be produced with available resources.

Question 15

88. Refer to the above diagram. Other things equal, this economy will achieve the most rapid rate of growth if:

Accepted Answer

D. it chooses point A.

Question 16

89. Refer to the above diagram. This economy will experience unemployment if it produces at point:

Accepted Answer

D.

Question 17

90. Which of the following is assumed in constructing a typical production possibilities curve?

Accepted Answer

production technology is fixed.

Question 18

91. The typical production possibilities curve is:

Accepted Answer

a downsloping line that is bowed out from the origin.

Question 19

92. Assume an economy is incurring unemployment. The effect of resolving this problem will be to:

Accepted Answer

move the level of actual output on to the economy's production possibilities curve.

Question 20

93. Which of the following is not correct? A typical production possibilities curve:

Accepted Answer

specifies how much of each product society should produce.

Question 21

94. Refer to the above diagram. This production possibilities curve is constructed so that:

Accepted Answer

the opportunity cost of both bread and tractors increases as more of each is produced.

Question 22

95. Refer to the above diagram. Starting at point A, the opportunity cost of producing each

Accepted Answer

2, 4, 6, and 8 units of bread.

Question 23

96. Refer to the above diagram. Starting at point E, the production of successive units of bread will cost

Accepted Answer

1/8, 1/6, 1/4, and 1/2 units of tractors.

Question 24

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

Accepted Answer

to produce more of one product we must do with less of another.

Question 25

98.If an economy is operating on its production possibilities curve for consumer goods and capital goods, this means that:

Accepted Answer

. more consumer goods can only be produced at the cost of fewer capital goods.

Question 26

99.The construction of a production possibilities curve assumes:

Accepted Answer

technology is fixed.

Question 27

100. If an economy is operating inside its production possibilities curve for consumer goods and capital goods, it:

Accepted Answer

can produce more of both consumer goods and capital goods by using resources that are currently idle.

Question 28

101. . Refer to the above diagram. Points A, B, C, D, and E show:

Accepted Answer

combinations of bicycles and computers that society can produce by using its resources efficiently.

Question 29

102. Refer to the above diagram. If society is currently producing 9 units of bicycles and 4 units of computers and it now decides to increase computer output to 6, the cost:

Accepted Answer

will be 2 units of bicycles.

Question 30

103. Refer to the above diagram. The combination of computers and bicycles shown by point G is:

Accepted Answer

unattainable, given currently available resources and technology.

Question 31

104. Refer to the above diagram. If society is currently producing the combination of bicycles and computers shown by point D, the production of 2 more units of bicycles:

Accepted Answer

will cost 1 unit of computers.

Question 32

105. Refer to the above diagram. The combination of computers and bicycles shown by point F:

Accepted Answer

is attainable, but implies that the economy is not using all its resources.

Question 33

106. Refer to the above diagram. The movement down the production possibilities curve from point A to point E suggests that the production of:

Accepted Answer

both bicycles and computers are subject to increasing opportunity costs.

Question 34

107. The law of increasing opportunity costs states that:

Accepted Answer

if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of another good to do so.

Question 35

108. The concept of opportunity cost:

Accepted Answer

suggests that the use of resources in any particular line of production means that alternative outputs must be forgone.

Question 36

109. The law of increasing opportunity costs is reflected in a production possibilities curve that is:

Accepted Answer

bowed out from the origin.

Question 37

110. The marginal benefit curve is:

Accepted Answer

downsloping because successive units of a specific product yield less and less extra benefit.

Question 38

111. The marginal cost curve is:

Accepted Answer

upsloping because of increasing marginal opportunity costs.

Question 39

112. If the output of product X is such that marginal benefit equals marginal cost:

Accepted Answer

the correct amount of resources is being allocated to X's production.

Question 40

113. Refer to the above diagram for athletic shoes. The optimal output of shoes is:

Accepted Answer

Q2

Question 41

Refer to the above diagram for athletic shoes. If the current output of shoes is Q1, then:

Accepted Answer

society would consider additional units of shoes to be more valuable than alternative uses of those resources.

Question 42

Refer to the above diagram for athletic shoes. If the current output of shoes is Q3, then:

Accepted Answer

society would consider additional units of shoes to be less valuable than alternative products.

Question 43

Suppose that an economy is producing on its production possibilities curve, but is not producing quantities of each good where the marginal benefit equals the marginal cost for each good. This economy:

Accepted Answer

. can improve its allocation by producing more of one good and less of the other.

Question 44

118. The optimal allocation of resources is found:

Accepted Answer

where MB = MC.

Question 45

The basic difference between consumer goods and capital goods is that

Accepted Answer

consumer goods satisfy wants directly while capital goods satisfy wants indirectly.

Question 46

120. Which of the following will shift the production possibilities curve to the right?

Accepted Answer

D. a technological advance that allows farmers to produce more output from given inputs

Question 47

121. Other things equal, which of the following would shift an economy's production possibilities curve to the left?

Accepted Answer

C. a law requiring mandatory retirement from the labor force at age 55

Question 48

122. Refer to the above diagram. The concept of opportunity cost is best represented by the:

Accepted Answer

C. move from B on PP1 to C on PP1.

Question 49

123. Refer to the above diagram. Other things equal, which of the following positions relative to PP1 would be the most likely to result in a future production possibilities curve of PP3, rather than PP2?

Accepted Answer

A. shift the production possibilities curve from PP1 to PP2.

Question 50

125. Refer to the above diagram. Which one of the following would shift the production possibilities curve from PP1 to PP2?

Accepted Answer

B. immigration of skilled workers into the economy

Question 51

126. Which of the following statements, if any, is correct for a nation that is producing only consumer and capital goods?

Accepted Answer

B. Other things equal, the more capital goods a nation produces, the greater will be its future growth rate.

Question 52

127. (Consider This) A direct cost of going to college is:

Accepted Answer

C. tuition, while an indirect cost (opportunity cost) is forgone income while in college

Question 53

128. (Consider This) An exception to the advice go to college, stay in college, and earn a degree occurs when:

Accepted Answer

B. the opportunity cost of attending college is extraordinarily high.

Question 54

129. If we say that two variables are directly related, this means that:

Accepted Answer

C. an increase in one variable is associated with an increase in the other variable.

Question 55

130. If we say that two variables are inversely related, this means that:

Accepted Answer

B. an increase in one variable is associated with a decrease in the other.

Question 56

131. Which of the following statements is correct?

Accepted Answer

B. The value of the dependent variable is determined by the value of the independent variable.

Question 57

132. If two variables are inversely related, then as the value of one variable:

Accepted Answer

C. increases, the value of the other decreases.

Question 58

133. If a positive relationship exists between x and y:

Accepted Answer

C. the relationship will graph as an upsloping line.

Question 59

134. The slope of a straight line can be determined by:

Accepted Answer

B. comparing the absolute vertical change to the absolute horizontal change between two points on the line.

Question 60

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

Accepted Answer

B. directly related.

Question 61

136. Refer to the above diagram. The vertical intercept:

Accepted Answer

B. is 50.

Question 62

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

Accepted Answer

B. is + 1/4.

Question 63

138. Refer to the above diagram. The equation that shows the relationship between Y and X is:

Accepted Answer

A. Y = 50 + 1/4 X.

Question 64

139. Assume a household would consume $100 worth of goods and services per week if its weekly income were zero and would spend an additional $80 per week for each $100 of additional income. Letting C represent consumption and Y represent income, the equation that summarizes this relationship is:

Accepted Answer

B. C = 100 + .8Y.

Chapter 1 Microeconomics

Unlock all answers in this set

Haven't found what you need?