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1 | |
The fundamental problem of economics implies that: |
| | A) | governments must be relied upon to supply essential goods and services |
| | B) | inflation and unemployment are unavoidable |
| | C) | growing populations will deplete natural resources |
| | D) | individuals and communities must make choices among competing alternatives |
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2 | |
An economy that has achieved "full production" has achieved: |
| | A) | Both allocative and productive efficiency |
| | B) | Allocative but not productive efficiency |
| | C) | Productive but not allocative efficiency |
| | D) | Neither allocative nor productive efficiency |
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3 | |
Government authorities have managed to reduce the unemployment rate from 6% to 4% in a hypothetical economy. As a result: |
| | A) | the economy's production possibilities curve has shifted outward |
| | B) | the economy has moved downward along its production possibilities curve |
| | C) | the economy has moved from a point inside to a point closer to its production possibilities curve |
| | D) | the economy's production possibilities curve has become steeper |
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4 | |
Consider an economy that can produce either capital goods or consumer goods. If the opportunity cost of consumer goods is always 5 capital goods, then: |
| | A) | the production possibilities curve is a straight line |
| | B) | the opportunity cost of capital goods is always 5 consumer goods |
| | C) | the production possibilities curve is upward sloping |
| | D) | the production possibilities curve is bowed inward |
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5 | |
Which of the following would most likely shift the production possibilities curve for a nation outward? |
| | A) | A reduction in unemployment |
| | B) | An increase in the production of capital goods |
| | C) | A reduction in discrimination |
| | D) | An increase in the production of consumer goods |
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6 | |
Margaret decides to stay home and study for her exam rather than going out with her friends to a movie. Her dilemma is an example of: |
| | A) | the economic perspective |
| | B) | marginal analysis |
| | C) | allocative efficiency |
| | D) | opportunity cost |
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7 | |
Refer to the following:
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Which of the points on the production possibilities curve in the diagram is currently unattainable given the economy's resources? |
| | A) | Point A |
| | B) | Point B |
| | C) | Point C |
| | D) | Point D |
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8 | |
Refer to the following:
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The concave shape of the production possibilities curve illustrates: |
| | A) | Increasing opportunity costs for both goods |
| | B) | Increasing opportunity cost for good X but not for good Y |
| | C) | Increasing opportunity cost for good Y but not for good X |
| | D) | Constant opportunity costs for both goods |
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9 | |
A nation achieves "allocative efficiency" if: |
| | A) | it produces at a point on, rather than inside, its production possibilities curve |
| | B) | it produces that combination of goods most desired by society |
| | C) | all available resources are fully employed |
| | D) | marginal benefit exceeds marginal cost for every possible good |
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10 | |
In the circular flow diagram, firms: |
| | A) | receive revenue and supply resources in the resource market |
| | B) | receive revenue and demand resources in the product market |
| | C) | incur costs and demand resources in the resource market |
| | D) | incur costs and supply goods and services in the product market |
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