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Multiple Choice Quiz
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1

Economics is primarily the study of:
A)how scarcity can be eliminated
B)how firms manipulate prices
C)how government influence resource allocation decisions
D)the problem of scarce resources relative to human wants
2

The production possibilities curve:
A)shows all combinations of goods that society most desires
B)indicates that any combination of goods lying outside the curve is attainable
C)separates all combinations of two goods that can be produced from those that cannot
D)shows only those combinations of two goods that reflect "full production"
3

Moving from left to right, the typical production possibilities curve has:
A)an increasingly steep negative slope
B)a decreasingly steep negative slope
C)an increasingly steep positive slope
D)a constant and negative slope
4

Refer to the following:

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The above is a circular flow model of the economy.  In the diagram, consumer expenditures are represented by:
A)Flow 1
B)Flow 2
C)Flow 3
D)Flow 4
5

When constructing a typical production possibilities curve, economists assume:
A)economic resources are underutilized
B)resources are equally productive in many alternative uses
C)all available resources are employed efficiently
D)production technology is allowed to vary
6

Answer the next question on the basis of the data given in the following production possibilities table:

 Production possibilities (alternatives)
 ABCDEF
Capital goods543  2  1  0
Consumer goods059121415

Refer to the above table.  These data indicate that increasing production of capital goods requires:
A)increasing sacrifices of consumer goods
B)decreasing sacrifices of consumer goods
C)constant sacrifices of consumer goods
D)no sacrifices of consumer goods
7

A nation's production possibilities curve is "bowed out" from the origin because:
A)resources are not perfectly shiftable between production of the two goods
B)capital goods and consumer goods utilize the same production technology
C)resources are scarce relative to human wants
D)opportunity costs are decreasing
8

The negative slope of the production possibilities curve illustrates that:
A)some resources are always unemployed
B)an economy can produce more of one thing only by producing less of something else
C)opportunity costs are constant
D)business can sell more when prices are low
9

Of the following countries, the one that best exemplifies a centrally planned economy is:
A)Germany
B)Canada
C)North Korea
D)Sweden
10

The scarcity problem:
A)can be eliminated if all countries adopt laissez-faire capitalism
B)will persist so long as productive resources are limited
C)persists only in the developing countries
D)will be eliminated if full employment is achieved





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