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- 1. Multiple Choice
The crucial problem of economics is
Establishing a fair tax system.
Providing social goods and services
Developing a price mechanism that reflects the relative scarcities of products and resources.
Allocating scarce productive resources to satisfy wants
Enacting a set of laws that protects resources from overuse.
- 2. Multiple Choice
When one decision is made, the next best alternative not selected is called
economic resources
opportunity cost
scarcity
comparative disadvantage
production
- 3. Multiple Choice
Which of the following is true if the PPC is concave to the origin?
Resources are perfectly substitutable
It's possible to produce more of both products
Both products are equally capable of satisfying consumer wants
The price of the two products are the same
As more of one good is produced, increasing amounts of the other good must be given up.
- 4. Multiple Choice
In which way does a straight-line production possibilities curve differ from a concave production possibilities curve?
A straight-line production possibilities curve has a decreasing opportunity cost.
A straight-line production possibilities curve has a constant opportunity cost.
A straight-line production possibilities curve has an increasing opportunity cost.
A straight-line production possibilities curve does not show opportunity cost
Upward-sloping production possibilities curve.
- 5. Multiple Choice
The law of increasing opportunity cost is reflected in the shape of the
Production possibilities curve concave to the origin (“bowed-out”)
Production possibilities curve convex to the origin (“bowed-in”)
Horizontal production possibilities curve
Straight-line production possibilities curve
Upward-sloping production possibilities curve
- 6. Multiple Choice
Which of the following would cause an inward shift of the production possibilities curve?
An increase in unemployment
An increase in inflation
An increase in capital equipment
A decrease in consumer demand
A decrease in the population
- 7. Multiple Choice
Which of the following would cause an outward shift in the production possibilities curve?
An increase in unemployment
An increase in inflation
An increase in capital equipment
A decrease in natural resources
A decrease in the number of workers
- 8. Multiple Choice
What is the opportunity cost of moving from point B to C on the curve?
30 tons of wheat
30 tons of steel
5 tons of wheat
5 tons of steel
75 tons of wheat
- 9. Multiple Choice
Ford can produce 200 Mustangs or 400 Escapes in their factory. What is the opportunity cost of making each Mustang?
1/2 Escape
1/2 Mustang
2 Escapes
2 Mustangs
400 Escapes
- 10. Multiple Choice
Which country has the absolute advantage in producing cars?
United States: 50 Cars and 2 Planes
Great Britain: 40 Cars and 2 Planes
United States
Great Britian
Neither
Both
Not enough information
- 11. Multiple Choice
When a point lies inside of the PPC it can be said that
Resources are under employed
Resources are fully utilized
Production is beyond the resource potential
Opportunity cost of production is constant
Allocative efficiency is achieved
- 12. Multiple Choice
If a natural disaster strikes, the production possibilities curve will:
No shift
shift outward
shift inward
operate inside the PPC
operate outside the PPC
- 13. Multiple Choice
What can cause a production possibilities curve to move outward?
thousands of people move out of the country
a drought destroys many crops
new technology
the population is growing older
a recession occurs
- 14. Multiple Choice
Which of the following is true?
Sarah has a comparative advantage in cakes
Mari has a comparative advantage in cakes
none of the answers
Mari has an absolute advantage in paper
Sarah has an absolute advantage in cake
- 15. Multiple Choice
The diagram shows the production possibilities curve for Country Y. Which of the following statements is true?
If Country Y is producing at point C, it is using all its resources efficiently
The opportunity cost of producing more machines is constant
Country Y cannot produce at point E
The most efficient point of production is point D
Productive efficiency occurs at Point E
- 16. Multiple Choice
What is the marginal utility of consuming the third unit?
60
10
20
40
0
- 17. Multiple Choice
If you have $40, what combination of movies and go-carts will maximize your utility?
3 movies and 2 go-carts
1 movie and 2 go-carts
4 movies and 2 go-carts
4 go-carts
2 movies
- 18. Multiple ChoiceIf total utility increases from 150 to 210 utils after consuming a 4th candy bar, then what's the marginal utility per dollar of the 4th candy bar if the price is $2?60 utils per dollar110 utils per dollar30 utils per dollar75 utils per dollar
- 19. Multiple Choice
Which economic system provides private ownership of property and resources?
Traditional Economy
Free Market Capitalism
Communism
Command Economy
- 20. Multiple Choice
A basic difference between a market and command economy is:
Who owns the factors of production
How often goods will be delivered to the marketplace
The technology used in production
Whether the economy faces scarcity
The structure of the national legislature
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