Following is the production possibilities frontier for an economy producing two goods Good A and Good B. Identify the correct statement. Production Possibilities Schedule Good A Good B Choice 1 100 0 Choice 2 90 20 Choice 3 70 40 Choice 4 40 60 Choice 5 0 80 Select one: a. The opportunity cost of producing more of A decreases as A increases. b. The opportunity cost of producing more of B decreases as B increases. c. If this economy fully and efficiently employs all its resources, it can produce 100 units of A and 80 units of B. d. This economy can produce 70 units of A and 40 units of B. e. This economy can produce 100 units of A and 20 units of B. Question 2 Which of the following conditions will be true for a nation operating at a point lying inside its production possibilities frontier? Select one: a. The nation is not utilizing its resources efficiently. b. The nation is producing the maximum output that can be produced with a limited quantity of resources. c. The nation is producing the maximum output that can be produced with its unlimited quantity of resources. d. The nation is clearly utilizing its resources efficiently. e. The nation has experienced a technological breakthrough in one of its key industries. Question 3 A point outside the production possibilities frontier [PPF] Select one: a. is attainable if all resources are used efficiently b. will never be attainable, even if the quantity of resources increases c. represents inefficient use of resources d. represents more resources than are currently available e. may be due to unemployment Question 4 If the production (supply) of two goods is complementary, a decrease in the price of one will Select one: a. decrease supply of the other b. increase supply of the other c. decrease the price of the other d. increase the quantity supplied of the other Question 5 Demand for goods and services (feedstocks) that go into final products (such as milk into ice cream) is Select one: a. direct demand b. utility c. derived demand d. product demand Question 6 The effect on sales of a decrease in price is an increase in Select one: a. the quantity demanded b. demand c. the quantity supplied d. supply Question 7 Economics is the study of how people cope with Select one: a. limited time and unlimited income b. limited human wants c. unlimited resources d. greed e. scarcity Question 8 A shift in the demand curve expresses a relation between the quantity and Select one: a. price b. a price that is 50% above the average pricing of comparable items c. All of the above d. income levels Question 9 Arc price elasticity measures elasticity Select one: a. at a spot/point on a function b. using an arithmetic average of two point elasticities c. before nonprice effects d. over a given range along a price function Question 10 A demand curve expresses the relation between the quantity demanded and Select one: a. advertising b. income c. price d. All of the above Question 11 Which of the following is a microeconomic concern? Select one: a. The unemployment level for a country b. The rate of economic growth in the United States c. How to maintain or improve the profits of a particular firm d. The national output of the United States e. Inflation Question 12 Given today’s fierce global competitive environment, a decrease in mandatory payments by employers to health care companies and providers for overhead health care benefits for workers would lead to an increase in the Select one: a. the quantity supplied of workers b. demand for workers c. supply of workers d. the quantity demanded of workers Question 13 The amount of a product that people are willing and able to purchase at a specific price is referred to as the Select one: a. consumption function b. demand c. purchasing power d. law of demand e. quantity demanded Question 14 If you have a choice of consuming two apples plus three oranges, or one candy bar, the opportunity cost of the candy bar is Select one: a. two apples or three oranges, whichever you value more b. three oranges c. two apples d. two apples and three oranges e. the difference in the prices of the three options Question 15 Demand is the total quantity of a good or service that customers Select one: a. are willing and able to purchase b. need c. are willing to purchase d. are able to purchase Question 16 Supply is the total quantity of a good or service that producers Select one: a. are willing and able to purchase b. are willing to supply c. are willing and technologically/economically able to supply d. are able to purchase Question 17 In its most fundamental sense, economics is the study of Select one: a. externality and public goods b. production and cost c. supply and demand d. specialization and trade e. scarcity and choice Question 18 In competitive market equilibrium, social welfare is measured by the Select one: a. difference of net benefits derived by consumers and producers b. benefits derived by producers c. benefits derived by consumers d. sum of net benefits derived by consumers and producers Question 19 Archie can paint 5 backyard fences or repair 2 cars in 8 hours, while Austin can paint 4 backyard fences or repair 2 cars in 8 hours. Identify the correct statement. Select one: a. Archie and Austin are equally good in painting fences. b. Archie is relatively better in repairing cars. c. Neither Archie nor Austin are good in repairing cars. d. Austin is relatively better in painting fences. e. Archie is relatively better in painting fences. Question 20 Which of the following determines the quantity demanded of a commodity? Select one: a. The number of buyers b. Consumers’ expectations c. The income levels of consumers d. The price of the commodity e. The prices of related commodities
