Multiple Choice Questions

Refer to the above diagram. The variables X and Y are:
  • B. is 50.
  • D. it chooses point A.
  • B. +21/2.
  • B. directly related.
Refer to the above table. For this economy to produce a total output of 3 units of capital goods and 13 units of consumer goods it must:
  • A. Y = 50 + 1/4 X.
  • D. it chooses point A.
  • achieve economic growth.
  • tend to generate a more rapid growth rate.
The basic difference between consumer goods and capital goods is that
  • consumer goods satisfy wants directly while capital goods satisfy wants indirectly.
  • B. The value of the dependent variable is determined by the value of the independent variable.
  • B. an increase in one variable is associated with a decrease in the other.
  • D. a technological advance that allows farmers to produce more output from given inputs
Suppose that an economy is producing on its production possibilities curve, but is not producing quantities of each good where the marginal benefit equals the marginal cost for each good. This economy:
  • the correct amount of resources is being allocated to X's production.
  • B. an increase in one variable is associated with a decrease in the other.
  • C. an increase in one variable is associated with an increase in the other variable.
  • . can improve its allocation by producing more of one good and less of the other.
The negative slope of the production possibilities curve is a graphical way of indicating that:
  • resources are not generally equally efficient in producing every good.
  • the correct amount of resources is being allocated to X's production.
  • to produce more of one product we must do with less of another.
  • the opportunity cost of both bread and tractors increases as more of each is produced.
Refer to the above diagram for athletic shoes. If the current output of shoes is Q1, then:
  • bowed out from the origin.
  • would involve an inefficient use of the economy's scarce resources.
  • society would consider additional units of shoes to be more valuable than alternative uses of those resources.
  • combinations of bicycles and computers that society can produce by using its resources efficiently.
98.If an economy is operating on its production possibilities curve for consumer goods and capital goods, this means that:
  • . more consumer goods can only be produced at the cost of fewer capital goods.
  • move the level of actual output on to the economy's production possibilities curve.
  • B. the opportunity cost of attending college is extraordinarily high.
  • can produce more of both consumer goods and capital goods by using resources that are currently idle.
Refer to the above diagram. The combination of computers and bicycles shown by point G is:
  • unattainable, given currently available resources and technology.
  • the opportunity cost of both bread and tractors increases as more of each is produced.
  • both bicycles and computers are subject to increasing opportunity costs.
  • B. immigration of skilled workers into the economy
Which of the following is not correct? A typical production possibilities curve:
  • specifies how much of each product society should produce.
  • to produce more of one product we must do with less of another.
  • production technology is fixed.
  • C. increases, the value of the other decreases.
(Consider This) An exception to the advice "go to college, stay in college, and earn a degree" occurs when:
  • . more consumer goods can only be produced at the cost of fewer capital goods.
  • the opportunity cost of both bread and tractors increases as more of each is produced.
  • B. immigration of skilled workers into the economy
  • B. the opportunity cost of attending college is extraordinarily high.
Refer to the above diagram. Other things equal, which of the following positions relative to PP1 would be the most likely to result in a future production possibilities curve of PP3, rather than PP2?
  • is attainable, but implies that the economy is not using all its resources.
  • A. shift the production possibilities curve from PP1 to PP2.
  • both bicycles and computers are subject to increasing opportunity costs.
  • will cost 1 unit of computers.
The typical production possibilities curve is:
  • to produce more of one product we must do with less of another.
  • a downsloping line that is bowed out from the origin.
  • where MB = MC.
  • A. 4 and -11/3 respectively.
Refer to the above diagram. The slope of curve ZZ at point B is:
  • C. -22/5.
  • B. is 50.
  • B. zero.
  • B. +21/2.
The slope of a straight line can be determined by:
  • B. comparing the absolute vertical change to the absolute horizontal change between two points on the line.
  • economic resources are perfectly substitutable between the production of the two products.
  • downsloping because successive units of a specific product yield less and less extra benefit.
  • suggests that the use of resources in any particular line of production means that alternative outputs must be forgone.
Refer to the above diagram. The slope of the line:
  • B. is 50.
  • 1/8, 1/6, 1/4, and 1/2 units of tractors.
  • D. it chooses point A.
  • B. is + 1/4.
Refer to the above diagram. This economy will experience unemployment if it produces at point:
  • D.
  • C. -22/5.
  • D. it chooses point A.
  • 2, 4, 6, and 8 units of bread.
Refer to the above diagram. The slope of curve ZZ at point C is approximately:
  • C. -22/5.
  • B. +21/2.
  • D.
  • B. immigration of skilled workers into the economy
Refer to the above diagram for athletic shoes. The optimal output of shoes is:
  • D.
  • B. zero.
  • Q2
  • C. -22/5.
76)If the production possibilities curve is a straight line:
  • B. an increase in one variable is associated with a decrease in the other.
  • C. an increase in one variable is associated with an increase in the other variable.
  • downsloping because successive units of a specific product yield less and less extra benefit.
  • economic resources are perfectly substitutable between the production of the two products.
Refer to the above diagram. Starting at point A, the opportunity cost of producing each
  • . 1/3 of a unit of capital goods.
  • C. move from B on PP1 to C on PP1.
  • 2, 4, 6, and 8 units of bread.
  • tend to generate a more rapid growth rate.
Refer to the above diagram. If society is currently producing the combination of bicycles and computers shown by point D, the production of 2 more units of bicycles:
  • A. Y = 50 + 1/4 X.
  • achieve economic growth.
  • will cost 1 unit of computers.
  • tend to generate a more rapid growth rate.
. Refer to the above diagram. Points A, B, C, D, and E show:
  • combinations of bicycles and computers that society can produce by using its resources efficiently.
  • society would consider additional units of shoes to be less valuable than alternative products.
  • C. tuition, while an indirect cost (opportunity cost) is forgone income while in college
  • society would consider additional units of shoes to be more valuable than alternative uses of those resources.
99.The construction of a production possibilities curve assumes:
  • C. infinite.
  • C. inversely related.
  • a downsloping line that is bowed out from the origin.
  • technology is fixed.
If the equation y = -10 + 2.5x was plotted
  • C. inversely related.
  • A. the vertical intercept would be -10.
  • C. the relationship will graph as an upsloping line.
  • D. slope would be -4.
74)Which of the following will not produce an outward shift of the production possibilities?
  • production technology is fixed.
  • D. a technological advance that allows farmers to produce more output from given inputs
  • 2, 4, 6, and 8 units of bread.
  • the reduction of unemployment
The concept of opportunity cost:
  • suggests that the use of resources in any particular line of production means that alternative outputs must be forgone.
  • downsloping because successive units of a specific product yield less and less extra benefit.
  • C. tuition, while an indirect cost (opportunity cost) is forgone income while in college
  • B. Other things equal, the more capital goods a nation produces, the greater will be its future growth rate.
The slope of a line parallel to the vertical axis is:
  • B. is 50.
  • B. is + 1/4.
  • A. y = 4 - 11/3 x.
  • C. infinite.
(Consider This) A direct cost of going to college is:
  • C. tuition, while an indirect cost (opportunity cost) is forgone income while in college
  • D. a technological advance that allows farmers to produce more output from given inputs
  • downsloping because successive units of a specific product yield less and less extra benefit.
  • C. the relationship will graph as an upsloping line.
If an economy is operating inside its production possibilities curve for consumer goods and capital goods, it:
  • can produce more of both consumer goods and capital goods by using resources that are currently idle.
  • to produce more of one product we must do with less of another.
  • . more consumer goods can only be produced at the cost of fewer capital goods.
  • larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods.
The marginal cost curve is:
  • to produce more of one product we must do with less of another.
  • A. the vertical intercept would be -10.
  • downsloping because successive units of a specific product yield less and less extra benefit.
  • upsloping because of increasing marginal opportunity costs.
If a positive relationship exists between x and y:
  • A. the vertical intercept would be -10.
  • C. the relationship will graph as an upsloping line.
  • C. increases, the value of the other decreases.
  • B. The value of the dependent variable is determined by the value of the independent variable.
Refer to the above diagram. The combination of computers and bicycles shown by point F:
  • larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods.
  • C. move from B on PP1 to C on PP1.
  • unattainable, given currently available resources and technology.
  • is attainable, but implies that the economy is not using all its resources.
Refer to the above diagram. Starting at point E, the production of successive units of bread will cost
  • unattainable, given currently available resources and technology.
  • B. immigration of skilled workers into the economy
  • 2, 4, 6, and 8 units of bread.
  • 1/8, 1/6, 1/4, and 1/2 units of tractors.
The law of increasing opportunity costs is reflected in a production possibilities curve that is:
  • bowed out from the origin.
  • C. move from B on PP1 to C on PP1.
  • society would consider additional units of shoes to be less valuable than alternative products.
  • society would consider additional units of shoes to be more valuable than alternative uses of those resources.
In the above diagram the vertical intercept and slope are:
  • C. increases, the value of the other decreases.
  • A. 4 and -11/3 respectively.
  • A. the vertical intercept would be -10.
  • C. an increase in one variable is associated with an increase in the other variable.
If we say that two variables are directly related, this means that:
  • B. an increase in one variable is associated with a decrease in the other.
  • C. tuition, while an indirect cost (opportunity cost) is forgone income while in college
  • D. a technological advance that allows farmers to produce more output from given inputs
  • C. an increase in one variable is associated with an increase in the other variable.
Which of the following is assumed in constructing a typical production possibilities curve?
  • D. it chooses point A.
  • tend to generate a more rapid growth rate.
  • the reduction of unemployment
  • production technology is fixed.
Refer to the above diagram. If society is currently producing 9 units of bicycles and 4 units of computers and it now decides to increase computer output to 6, the cost:
  • D. it chooses point A.
  • will be 2 units of bicycles.
  • 1/8, 1/6, 1/4, and 1/2 units of tractors.
  • tend to generate a more rapid growth rate.
The production possibilities curve:
  • B. comparing the absolute vertical change to the absolute horizontal change between two points on the line.
  • the maximum amounts of two goods that can be produced, assuming the full use of available resources.
  • downsloping because successive units of a specific product yield less and less extra benefit.
  • is a frontier between all combinations of two goods that can be produced and those combinations that cannot be produced.
If the output of product X is such that marginal benefit equals marginal cost:
  • the correct amount of resources is being allocated to X's production.
  • D. a technological advance that allows farmers to produce more output from given inputs
  • C. increases, the value of the other decreases.
  • resources are not generally equally efficient in producing every good.
The movement from line A to line A' represents a change in:
  • B. the intercept only.
  • if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of another good to do so.
  • bowed out from the origin.
  • society would consider additional units of shoes to be less valuable than alternative products.
Refer to the above diagram. The slope of curve ZZ at point A is approximately:
  • B. zero.
  • B. +21/2.
  • D. it chooses point A.
  • 1/8, 1/6, 1/4, and 1/2 units of tractors.
Which of the following statements, if any, is correct for a nation that is producing only consumer and capital goods?
  • B. The value of the dependent variable is determined by the value of the independent variable.
  • D. a technological advance that allows farmers to produce more output from given inputs
  • A. shift the production possibilities curve from PP1 to PP2.
  • B. Other things equal, the more capital goods a nation produces, the greater will be its future growth rate.
Refer to the above diagram. The movement down the production possibilities curve from point A to point E suggests that the production of:
  • would involve an inefficient use of the economy's scarce resources.
  • unattainable, given currently available resources and technology.
  • both bicycles and computers are subject to increasing opportunity costs.
  • A. shift the production possibilities curve from PP1 to PP2.
Refer to the above diagram. Other things equal, this economy will achieve the most rapid rate of growth if:
  • 2, 4, 6, and 8 units of bread.
  • unattainable, given currently available resources and technology.
  • B. immigration of skilled workers into the economy
  • D. it chooses point A.
Refer to the above diagram. The vertical intercept:
  • B. is 50.
  • B. is + 1/4.
  • A. zero.
  • D. it chooses point A.
A nation's production possibilities curve is bowed out from the origin because:
  • B. the opportunity cost of attending college is extraordinarily high.
  • resources are not generally equally efficient in producing every good.
  • C. an increase in one variable is associated with an increase in the other variable.
  • is attainable, but implies that the economy is not using all its resources.
In the above diagram variables x and y are:
  • A. the vertical intercept would be -10.
  • C. inversely related.
  • B. directly related.
  • C. the relationship will graph as an upsloping line.
Refer to the above diagram. The equation that shows the relationship between Y and X is:
  • A. Y = 50 + 1/4 X.
  • achieve economic growth.
  • B. is 50.
  • B. +21/2.
Refer to the above table. If the economy is producing at production alternative C, the opportunity cost of the tenth unit of consumer goods will be:
  • . 1/3 of a unit of capital goods.
  • D. it chooses point A.
  • 2, 4, 6, and 8 units of bread.
  • 1/8, 1/6, 1/4, and 1/2 units of tractors.
Assume an economy is incurring unemployment. The effect of resolving this problem will be to:
  • is attainable, but implies that the economy is not using all its resources.
  • C. an increase in one variable is associated with an increase in the other variable.
  • the opportunity cost of both bread and tractors increases as more of each is produced.
  • move the level of actual output on to the economy's production possibilities curve.
If two variables are inversely related, then as the value of one variable:
  • the correct amount of resources is being allocated to X's production.
  • C. increases, the value of the other decreases.
  • C. the relationship will graph as an upsloping line.
  • C. an increase in one variable is associated with an increase in the other variable.
Other things equal, which of the following would shift an economy's production possibilities curve to the left?
  • B. immigration of skilled workers into the economy
  • both bicycles and computers are subject to increasing opportunity costs.
  • C. a law requiring mandatory retirement from the labor force at age 55
  • A. shift the production possibilities curve from PP1 to PP2.
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Multiple Choice Questions
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