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1 | |
The economizing problem in society exists because of... |
| | A) | Unlimited resources and unlimited human wants |
| | B) | Limited resources and limited human wants |
| | C) | Limited resources and unlimited human wants |
| | D) | Unlimited resources and limited human wants |
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2 | |
Valerie has just won $1,500 in a fashion design competition. She is now faced with one of three choices: (a) Take a trip to Vancouver to see her boyfriend, (b) Purchase a used car, or (c) Purchase a new computer system. Each of the three options would cost Valerie the entire $1,500. If she decides to purchase the computer system, her opportunity cost is... |
| | A) | The $1,500 given up |
| | B) | The trip to Vancouver |
| | C) | The trip to Vancouver and the used car, since both are given up |
| | D) | None of the above |
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3 | |
Referring to the question above, suppose that Valerie decides to purchase the computer system. She also tells us that she prefers the trip to Vancouver to the used car. Valerie's opportunity cost of purchasing the computer system is... |
| | A) | The $1,500 spent on the computer system |
| | B) | The trip to Vancouver |
| | C) | The used car |
| | D) | All of the above |
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4 | |
Which of the following statements regarding the production possibilities curve (ppc) is true? |
| | A) | It represents combinations of outputs of two goods that can be produced with fixed amount of resources and technology |
| | B) | It represents a boundary between allocations that are attainable, given current resources and technology, and those that are unattainable. |
| | C) | It can shift outward over time as the economy grows. |
| | D) | All of the above |
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5 | |
Which of the following basic economic concepts is not illustrated by the production possibilities model? |
| | A) | Scarcity |
| | B) | Opportunity cost |
| | C) | Productive efficiency |
| | D) | Allocative efficiency |
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6 | |
If good X is on the x-axis and good Y is on the y-axis, suppose an economy is initially producing only good Y. Assuming the production possibilities curve is bowed outward, which of the following occurs as we move downward along this production possibilities curve? |
| | A) | The amount of resources employed, such as land, labour, and capital are increasing |
| | B) | There is an improvement in the technology used to produce good X |
| | C) | The opportunity cost of good Y is increasing |
| | D) | Resources are being transferred away from good Y to good X |
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7 | |
Which of the following is not an assumption of the production possibilities model? |
| | A) | Consumers will maximize their utility by consuming an equal amount of the two goods produced. |
| | B) | The amount of resources used during the analysis remains fixed |
| | C) | The economy exhibits productive efficiency and full employment |
| | D) | There are only two goods being produced by the economy |
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8 | |
An economy produces only apples (a) and oranges (o), in kg/hour. The production possibilities table is shown below:The opportunity cost of increasing the production of oranges from 20 Kg/hour to 35 Kg/hour is... |
| | A) | 10 kg of apples/hr |
| | B) | 10 kg of oranges/hr |
| | C) | 20 kg of apples/hr |
| | D) | 30 kg of apples/hr |
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9 | |
Referring to the production possibilities table above, the opportunity cost of producing the first kg of apples is... |
| | A) | 10 kg of oranges |
| | B) | 0.5 kg of oranges |
| | C) | 2 kg of oranges |
| | D) | 5 kg of oranges |
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10 | |
Refer to the production possibilities table above. If this economy specializes in the production of oranges, it will produce... |
| | A) | 40 kg of oranges |
| | B) | 45 kg of oranges |
| | C) | 50 kg of oranges |
| | D) | None of the above |
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11 | |
With reference to the previous production possibilities table, consider an allocation of A(40 oranges, 20 apples). Which of the following is true? |
| | A) | The allocation is attainable, but does not exhibit productive efficiency |
| | B) | All resources are fully employed. |
| | C) | The allocation is unattainable, given current resources and technology. |
| | D) | None of the above |
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12 | |
Thinking of the production possibilities model, suppose the assumption of full employment and productive efficiency is dropped, all else equal. This means... |
| | A) | There will be a movement along the ppc from one point to another. |
| | B) | There will be a movement from a point on the ppc to one inside the ppc |
| | C) | The ppc will shift outward. |
| | D) | None of the above |
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13 | |
Which of the following will cause the ppc to shift outward? |
| | A) | An increase of immigration of skilled workers into Canada |
| | B) | An increase in computer technology available to Canadian firms. |
| | C) | A tax credit which encourages Canadian firms to purchase large amounts of capital machinery |
| | D) | All of the above |
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14 | |
Which of the following is not a consumer good? |
| | A) | Hamburgers |
| | B) | Running shoes |
| | C) | SUVs (sports utility vehicles) |
| | D) | A limousine owned by a chauffer service. |
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15 | |
Two economies, X and Y, produce a given number of consumer and capital goods. The economy that experiences the fastest outward shift of its production possibilities curve over time is... |
| | A) | The one that allocates more resources to capital goods and fewer resources to consumption goods |
| | B) | The one that allocates more resources to consumption goods and fewer resources to capital goods. |
| | C) | The one that allocates an equal number of resources to both consumer and capital goods |
| | D) | None of the above |
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16 | |
Considering the last question, what is the opportunity cost of shifting out an economy's ppc over time to achieve economic growth? |
| | A) | Greater consumption of goods and services in the future |
| | B) | Reduced consumption of goods and services now |
| | C) | Greater investment in capital goods now |
| | D) | None of the above |
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17 | |
Why is the production possibilities curve bowed outward from the origin for a typical economy? |
| | A) | Since the opportunity cost of producing more of any given good increases as we produce more of that good |
| | B) | Because some resources are good at producing one type of good, while other resources are good at producing other types of goods. |
| | C) | Because of the Law of Increasing Costs |
| | D) | All of the above |
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18 | |
Which of the following explanations might reveal why the output of private rental housing remains low, even though everyone agrees it is necessary? Keep in mind that rental housing is less profitable to producers than other types of housing, say condominiums. |
| | A) | For private producers, the marginal benefit of producing rental housing exceeds the marginal cost |
| | B) | For private producers, the marginal benefit of producing rental hosing is equal to the marginal cost. |
| | C) | For private producers, the marginal cost of producing rental housing exceeds the marginal benefit. |
| | D) | None of the above is true |
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19 | |
Consider the last question. From the point of view of the poor, which of the following is true? |
| | A) | The marginal benefit of rental housing exceeds the marginal cost |
| | B) | The marginal benefit of rental housing equals the marginal cost |
| | C) | The marginal cost of rental housing exceeds the marginal benefit. |
| | D) | None of the above |
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20 | |
According to the "Circular Flow Model", |
| | A) | There are two basic markets, the product market and the resource market |
| | B) | Money flows clockwise |
| | C) | Goods flow counterclockwise |
| | D) | All of the above are correct |
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21 | |
In the "Circular Flow Model", |
| | A) | Firms represent the demand side in the resource markets, while households represent the demand side in the product market |
| | B) | Firms represent the supply side in the resource markets, while households represent the supply in the product market |
| | C) | Households represent the demand side in the resource markets, while firms represent the supply side in the product markets. |
| | D) | All of the above |
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22 | |
A system in which a central planning board makes decisions is called... |
| | A) | A free-market economy |
| | B) | A command economy |
| | C) | A mixed economy |
| | D) | None of the above |
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23 | |
A decision by the provincial government to give more tax cuts means that less income will be available for health care spending. This statement is an example of which of the following basic economic concepts? |
| | A) | Scarcity |
| | B) | Choice |
| | C) | Opportunity cost |
| | D) | All of the above |
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24 | |
If the U.S. economy has a lower unemployment rate than the Canadian economy, this likely means... |
| | A) | That the U.S. is at an allocation further below its ppc than is Canada |
| | B) | That Canada is at an allocation further below its PPC than is the U.S. |
| | C) | That both Canada and the U.S. are operating at an allocation on their respective ppcs. |
| | D) | None of the above |
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25 | |
In moving from a point inside the production possibilities curve to a point on the production possibilities curve, nothing is given up. By reallocating resources to make them productively efficient, the economy is able to produce more of both goods. This means... |
| | A) | There is a high opportunity cost of moving from a point inside the ppc to a point on the ppc. |
| | B) | There is a low opportunity cost of moving from a point inside the ppc to a point on the ppc |
| | C) | There is no opportunity cost of moving from a point inside the ppc to a point on the ppc. |
| | D) | None of the above is correct |
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2002 McGraw-Hill Higher Education