Practice Test I

Practice Test I - Practice Test I Multiple Choice Identify...

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Practice Test I Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. If an increase in consumer incomes leads to a decrease in the demand for camping equipment, then camping equipment is a. A complementary good b. A substitute good c. A normal good d. None of the above are correct. ____ 2. A typical society strives to get the most it can from its scarce resources. At the same time, the society attempts to distribute the benefits of those resources to the members of the society in a fair manner. In other words, the society faces a tradeoff between a. guns and butter. b. efficiency and equity. c. inflation and unemployment. d. work and leisure. ____ 3. Maurice receives $100 as a birthday gift. In deciding how to spend the money, he narrows his options down to four choices: Option A, Option B, Option C, and Option D. Each option costs $100. Finally he decides on Option B. The opportunity cost of this decision is a. the value to Maurice of the option he would have chosen had Option B not been available. b. the value to Maurice of Options A, C and D combined. c. $100. d. $300. Figure 2-3 ____ 5. Refer to Figure 2-3 . Efficient production is represented by which point or points? a. B, E b. A, B, E c. D d. C
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Table 2-1. Production Possibilities for Toyland Dolls Fire Trucks 400 0 300 200 200 350 100 450 0 500 ____ 6. Refer to Table 2-1 . What is the opportunity cost to Toyland of increasing the production of dolls from 200 to 300? a. 200 fire trucks b. 150 fire trucks c. 100 fire trucks d. It is impossible to tell what the opportunity cost is since in this example costs are not constant. ____ 8. Which of the following is the most accurate statement about production possibilities? a. An economy can produce only on the production possibilities frontier. b. An economy can produce at any point inside or outside a production possibilities frontier. c. An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier. d. An economy can produce at any point inside the production possibilities frontier, but not on or outside the frontier. ____ 9. An economic outcome is said to be efficient if the economy is a. using all of the resources it has available. b. conserving on resources, rather than using all available resources. c. getting all it can get from the scarce resources it has available. d. able to produce more than what is currently being produced without additional resources. For the following question(s), use the accompanying table. Table 3-2 Labor Hours needed to make one Amount produced in 90 hours: Quilt Dress Quilts Dresses Helen 50 10 1.8 9 Carolyn 90 45 1 2 ____ 10. Refer to Table 3-2 . Helen has a comparative advantage in a. quilts and Carolyn has an absolute advantage in neither good. b.
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This note was uploaded on 05/01/2011 for the course ECON 2100 taught by Professor Darrinv.gulla during the Summer '08 term at Morehouse.

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Practice Test I - Practice Test I Multiple Choice Identify...

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