Some Questions

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Economics is a social science concerned with: A. Increasing the level of productive resources so there is maximum output in society B. Increasing the level of productive resources so there is a minimum level of income C. The best use of scarce resources to achieve the maximum satisfaction of economic wants D. The best use of scarce resources paid for at the minimum level of cost to consumers and businesses

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2. The study of economics is primarily concerned with: A. Expanding the production of goods and services B. Making the best use of scarce productive resources C. Equalizing the distribution of consumer income and wealth D. Reallocating resources from consumption to production in the economy

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3. The key economic concept that serves as the basis for the study of economics is: A. Inflation B. Unemployment C. Money D. Scarcity

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4. A recurring theme in economics is: A. Unlimited resources and unlimited economic wants B. People can increase resources by limiting their economic wants C. People have limited economic wants and limited resources D. People have unlimited economic wants, but limited resources

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5. As a consequence of the condition of scarcity: A. There is never enough of anything B. Production has to be planned by government C. Things which are plentiful have relatively high prices D. Individuals have to make choices from among alternatives

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9. What is the economic meaning of the expression that "there is no such thing as a free lunch"? A. It refers to "free-riders," who do not pay for the cost of a product, but who receive the benefit from it B. It means that economic freedom is limited by the amount of income available to the consumer C. It means that there is an opportunity cost when resources are used to provide "free" products D. It indicates that products only have value because people are willing to pay for them

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12. Opportunity cost is best defined as: A. Marginal cost minus marginal benefit B. The time spent on an economic activity C. The value of the best foregone alternative D. The money cost of an economic decision

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15. The value of the best alternative to any action you undertake is referred to as its: A. Production cost B. Opportunity cost C. Resource cost D. Increasing cost

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18. After graduating from high school, Ron Willis plans to go to college. The college tuition is $15,000 a year. But, instead of going to college, Ron could take a full-time job paying $20,000. If Ron decides to go to college, what is his opportunity cost for attending for one year? A. $5,000 B. $15,000 C. $20,000 D. $35,000

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23. Which expression is another way of saying "marginal cost"? A. Total cost B. Additional cost C. Rational behavior D. Scarcity

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25. Henry wants to buy a book. The economic perspective suggests that Henry will buy the book if: A. Positive economics is more important than normative economics in the decision making B. Normative economics is more important than positive economics in the decision making C. The marginal cost of the book is greater than its marginal benefit D. The marginal benefit of the book is greater than its marginal cost

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29. When an economist says that there is "too much of a good thing," the economist is suggesting that: A. Economic goals are conflicting B. Economic goals are complementary C. The marginal cost of the thing is less than the marginal benefit D. The marginal benefit of the thing is less than the marginal cost

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33. The process of developing hypotheses, testing them against facts, and using the results to construct theories is called: A. Opportunity cost calculation B. The scientific method C. Marginal analysis D. Microeconomics

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39. The role of an assumption in an economic theory is to: A. Add realism B. Prove the theory C. Cover special cases D. Simplify the theory

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40. The ceteris paribus assumption is employed in economic analysis to: A. State economic goals B. Simplify the complex world C. Evaluate an economic system D. Approximate real-world conditions

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110. The production possibilities curve represents which of the following? A. The amount of goods attainable with variable resources B. The maximum amount of goods attainable with variable resources C. Maximum combinations of goods attainable with fixed resources D. The amount of goods attainable if prices decline

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111. The production possibilities curve represents: A. The maximum amount of labor and capital available for production B. Combinations of goods and services among which consumers are indifferent C. Maximum combinations of products available with fixed resources and technology D. The maximum rate of growth of capital and labor in an economy

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112. On a production possibilities curve, the single optimal or best combination of output for any society: A. Is at a point near the top of the curve B. Is at the precise midpoint of the curve C. Is at a point near the bottom of the curve D. Depends upon the preferences of society

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114. Refer to the above table. The total opportunity cost of the three units of steel is: A. 15 units of wheat B. 20 units of wheat C. 45 units of wheat D. 55 units of wheat

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115. Refer to the above table. The marginal opportunity cost of the third unit of steel is: A. 10 units of wheat B. 15 units of wheat C. 20 units of wheat D. 30 units of wheat

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116. Refer to the above table. A change from possibility C to B means that: A. 1 unit of steel is given up to get 75 units of wheat B. 2 units of steel are given up to get 75 units of wheat C. 1 unit of steel is given up to get 15 more units of wheat D. 2 units of steel are given up to get 15 more units of wheat

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117. Refer to the above table. In moving from possibility C to D, the cost of a unit of steel in terms of a unit of wheat is: A. 10 B. 20 C. 25 D. 30

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118. Refer to the above table. A change from possibility B to C means that: A. 10 units of wheat are given up to get one more unit of steel B. 15 units of wheat are given up to get one more unit of steel C. 15 units of wheat are equal to one unit of steel D. 75 units of wheat are equal to one unit of steel

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119. Refer to the above table. In moving from possibility A to F, the cost of a unit of steel in terms of a unit of wheat: A. Increases B. Decreases C. Remains constant D. Increases from A to B, and decreases from B to F

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126. Refer to the graph. The total opportunity cost of nine drill presses is: A. 1 unit of bread B. 2 units of bread C. 3 units of bread D. 4 units of bread

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127. Refer to the graph. The marginal opportunity cost of the fourth unit of bread is: A. 1 unit of drill presses B. 2 units of drill presses C. 3 units of drill presses D. 4 units of drill presses

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128. A point inside the production possibilities curve is: A. Attainable and the economy is efficient B. Attainable, but the economy is inefficient C. Unattainable, but the economy is inefficient D. Unattainable and the economy is efficient

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129. A point on the frontier of the production possibilities curve is: A. Attainable and resources are fully employed B. Attainable, but resources are unemployed C. Unattainable, but resources are unemployed D. Unattainable and resources are fully employed

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130. A point outside the production possibilities curve is: A. Attainable, but there is not full employment B. Attainable, but there is not optimal allocation C. Unattainable because the economy is inefficient D. Unattainable because of limited resources

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132. In a production possibilities graph with just two products in an economy, the graph shows the quantity of: A. Both products on the horizontal axis B. One product on the horizontal axis and the price of the other product on the vertical axis C. One product on the vertical axis and the price of the other product on the horizontal axis D. One product on the vertical axis and the quantity of the another product on the horizontal axis

 133. A movement along the production possibilities curve would imply that: A. The labor force has grown B. Productivity has increased C. Productivity has declined D. Society has chosen a different set of outputs

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134. A point outside (to the right of) the production possibilities curve of a nation: A. Is not attainable for this nation B. Will shift the production possibilities boundary outward C. Implies that there are unemployed resources in this nation D. Implies that this nation is using its resources efficiently

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139. Points C, D, E, and H on the above graph show: A. An inefficient allocation of society's scarce resources B. A constant tradeoff between food and clothing C. Possible combinations of food and clothing D. Unattainable combinations of food and clothing

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140. The combination of food and clothing shown by point G on the above graph: A. Is not attainable, given society's available resources and technology B. Can be attained only if some of society's resources are unemployed C. Suggests that the law of increasing relative costs is not relevant in this case D. Results only because society allocates its resources inefficiently

Answers
1 c, 2 b,3d,4d, 5d, 9c, 12c, 15b, 18d, 23b, 25d, 29d, 33b, 39d, 40b, 110c, 111c, 112d, 114c, 115c, 116c, 117b, 118b, 119a, 126c, 127d, 128b, 129a, 130d, 132d, 133d, 134a, 139c, 140a