Economics elective
What government should do to help poor families' is an example of a normative economic statement.
TRUE
When the demand for good A increases as a result of an increase in income, good A is considered an inferior good.
FALSE
A point inside the production possibilities curve is ________, while a point outside the curve is ____________. a. Unattainable; attainable b. The maximum possible; below the maximum possible c. Attainable; unattainable d. Below the maximum possible; the maximum possible
C. Attainable; unattainable
A decreasing opportunity cost explains why the PPF curve is a straight line.
FALSE
A price ceiling policy leads to a loss in consumer surplus.
FALSE
Absolute pricing measure the values of A in terms of the value of good B.
FALSE
Advancement in communications technology shifts the PPF curve inward.
FALSE
Advancement in information and communication technology shifts the PPF curve inward
FALSE
At the market equilibrium, the producer surplus is zero.
FALSE
Due to constant opportunity cost, the shape of PPF is concave or is bowed outward.
FALSE
Future expectations on the condition of the economy do not affect consumer demand
FALSE
Good A is a normal good if its demand is inversely related to income.
FALSE
Positive economics deals with 'what should be' statements.
FALSE
Research and development leads to innovation and therefore does not shift the PPF
FALSE
The PPF shows what is both feasible and non-feasible input options
FALSE
The effects of a community quarantine can be prudently addressed by using normative economic analysis only in government policy decisions.
FALSE
The global pandemic has no impact on either the demand or supply of food items.
FALSE
The law of demand states that the demand for A increases as price of A decreases.
FALSE
The law of supply states an inverse relationship between quantity supplied and price.
FALSE
There are no gains from specialization and trade.
FALSE
When point A lies below the PPF curve, there is an over-employment in the economy at that point.
FALSE
The PPF highlights the importance of substitution between goods.
TRUE
The circular flow diagram or model show the interactions between firms and households.
TRUE
The circular flow model is another simplified model of an economy.
TRUE
The study of microeconomics focuses on the actions of individual households and businesses.
TRUE
We study Economics because we find solutions to satisfy unlimited human wants.
TRUE
A shortage is a condition in the market where quantity demanded is higher relative to quantity supplied.
TRUE
Adam Smith first put forward the notion of innovation that led to division of labor and specialization in production.
TRUE
An increase in the price of good X does not shift the demand for good X
TRUE
Deadweight loss occurs when there is a loss in the total surplus.
TRUE
Economic growth Shifts the PPF outward.
TRUE
Economics is a social science that studies human behaviour.
TRUE
Government policies on price controls lead to a loss in total surplus.
TRUE
In a market-driven economy, pricing is used as a rationing tool to allocate resources efficiently.
TRUE
Increasing labor cost in the economy leads to a loss in producer surplus.
TRUE
Technological innovation expands the attainable region of the PPF curve.
TRUE
What is the production possibilities frontier? a. A graph that shows how efficient an economy can produce a combination of 2 goods. b. A graph that shows how much tax the government can collect. c. A graph that shows the opportunity a country has to give up in order to gain something else. d. A visual representation of how land, labor, capital, entrepreneurs are distributed.
a. A graph that shows how efficient an economy can produce a combination of 2 goods.
An economy's total surplus is equal to a. Consumer surplus plus producer surplus b. Consumer surplus plus the deadweight loss of producer c. Producer surplus plus the deadweight loss of consumer d. Both (b) and (c)
a. Consumer surplus plus producer surplus
The production possibilities curve is an illustration of what? a. Opportunity costs and trade-offs b. Only opportunity costs c. Only trade-offs d. none of the above
a. Opportunity costs and trade-offs
Opportunity cost is defined as a. The value of the next best alternative that is given up due to the choice you made b. The price you pay to purchase something c. The benefit you gain by making a decision d. The amount of debt you take on by making a decision
a. The value of the next best alternative that is given up due to the choice you made
If a point lies on the curve this means the company/country/individual is being efficient. If a point lies inside the curve, what does that tell? a. There is an idle, or unproductive, use of resources. b. They are being over efficient. c. It is not impossible with the given resources. d. They are still efficient, just at another point.
a. There is an idle, or unproductive, use of resources.
What is the production possibilities curve? a. a graph that shows how efficient an economy can produce a combination of 2 goods b. a graph that shows how much money something is c. a graph that shows the opportunity a country has to give up in order to lose something else d. a visual representation of how land, labor, capital, entrepreneurs are distributed
a. a graph that shows how efficient an economy can produce a combination of 2 goods
What is the definition of the economic term Opportunity Cost? a. the value of the next best alternative that is given up due to the choice you made b. the price you pay to purchase something c. the benefit you gain by making a decision d. the amount of debt you take on by making a decision
a. the value of the next best alternative that is given up due to the choice you made
The opportunity cost of increasing production from 4 to 9 trucks is 5 boats. This is an example of a. Absolute pricing b. Relative pricing c. Marginal cost pricing d. None of the above
b. Relative pricing
What is the fundamental economic problem of every society? a. Lower wages b. Scarcity c. Economic imbalance d. Market instability
b. Scarcity
What is the fundamental problem of every society? a. Labor costs b. Scarcity c. Economic independence d. Market fluctuation
b. Scarcity
1. Economic growth affects the PPF by ________. a. Shifting it inward b. Shifting it outward c. Causing no change at all d. Turning it into a straight line
b. Shifting it outward
Economic growth affects the PPF by... a. Shifting it inward b. Shifting it outward c. causing no change at all d. turning it into a straight line
b. Shifting it outward
Point D lies below the PPF curve. This implies that a. The economy is being over efficient b. There is an idle or unproductive use of resources c. It is not impossible with the given resources The economy is still efficient, just another point
b. There is an idle or unproductive use of resources
If a point lies on the curve this means the company/country/individual is being efficient. If a point lies inside the curve, what does that tell? a. They are being over efficient. b. There is an idle, or unproductive, or use of resources. c. It is not impossible with the given resources. d. They are still efficient, just at another point
b. There is an idle, or unproductive, or use of resources.
The supply curve is upward sloping because of the a. law of demand. b. law of supply. c. increasing opportunity cost nature of the PPF curve. d. both (b) and (c).
b. law of supply.
The opportunity cost of increasing production from 4,000 to 7,000 boats is a. 1,000 boats b. 2,000 boats c. 2,000 trucks d. 3,000 trucks
c. 2,000 trucks
1. The demand for good A increases as the result of an increase in the price of good B. Which of the statements below is correct? a. A is a more superior good than B. b. A is a more inferior good than good B. c. B is a substitute good of A. d. B is a complementary good of A.
c. B is a substitute good of A.
Would it be possible for the economy to produce combination E? a. Yes, if there is technological innovation in both consumer goods and capital goods. b. Yes, if the economy engages in trade and specialization. c. Both a and b d. None of the above
c. Both a and b
A demand curve is downward sloping because of a. Constant marginal utility b. Increasing marginal utility c. Diminishing marginal utility d. None of the above
c. Diminishing marginal utility
The PPF below shows (refer to figure above) a. Constant opportunity cost b. Decreasing opportunity cost c. Increasing opportunity cost
c. Increasing opportunity cost
A deadweight loss represents an economic waste of benefits that could have been attributed to the society. Which of the following statements is correct? a. There is no deadweight loss when government interferes through the use of price controls. b. There is no deadweight loss when government increases taxes on inputs to production. c. There is deadweight loss when government interferes through the use of price controls. d. None of the above.
c. There is deadweight loss when government interferes through the use of price controls.
If opportunity costs are constant, the production possibilities frontier is graphed as a a. positively sloped straight line b. negatively sloped curve bowed in toward the origin c. negatively sloped straight line. d. ray from the origin
c. negatively sloped straight line.
The opportunity cost of increasing production from 7,000 to 9,000 trucks is (refer tp figure above) a. Scarcity b. 2,000 boats c. 2,000 trucks d. 3,000 boats
d. 3,000 boats
1. Which of the following affects the demand for good A? a. Income of buyers b. Price of a complementary good B. c. Price of a substitute good d. All of the above
d. All of the above
Which of the following is illustrated by a production possibilities frontier? a. Scarcity b. Opportunity cost c. Choice d. All of the above
d. All of the above
At the market equilibrium price, there is no tendency for buyers and seller to move away from this point. a. This statement is true because buyers and sellers have agreed to this price. b. This statement is true because auction is at work under this condition. c. This statement is true because the equilibrium price is considered fair by both buyers and sellers. d. All of the above. e. None of the above.
d. All of the above.
What does point B represent? a. Production at greater than the country's minimum potential b. Production is less than the country's minimum potential c. Production is greater than the country's maximum potential d. Production at the country's maximum potential
d. Production at the country's maximum potential
What does point A represent if lied along the PPF curve? a. Production at the country's minimum potential. b. Production is less than the country's minimum potential. c. Production is greater than the country's maximum potential. d. Production at the country's maximum potential.
d. Production at the country's maximum potential.
1. Which of the following supply condition/s ensure/s that a market equilibrium price can be effectively determined? a. positively sloped supply curve b. vertical supply curve c. negatively sloped supply curve d. a) and (b) e. all of the above
d. a) and (b)
A point inside the production possibilities curve is ________, while a point along the curve is ____________. a. unattainable; attainable b. the maximum possible; below the maximum possible c. attainable; unattainable d. below the maximum possible; the maximum possible
d. below the maximum possible; the maximum possible
An excess demand for good A is the result when a. there is no deadweight loss. b. there is price floor for good A. c. the quantity demanded of good A is determined by the market equilibrium forces. d. there is a price ceiling for good A.
d. there is a price ceiling for good A.
Points A, B, and C are on the PPF curve. Point E is above the PPF curve. Point D is below the PPF curve. Which of the following statement is correct? a. The economy is better off at point A than at point D. b. The economy is worse off at point B than at point D. c. Point B is feasible. d. Point C is within the attainable region. e. (a), (c), and (d).
e. (a), (c), and (d).
16. Given a production possibilities curve for military goods and non-military goods, which of the following is not true? a. A production point outside the curve _______ b. may be attained if new resources are discovered. c. may be attained by acquiring new technology. d. may be attained by shifting resources to defense goods e. may be attained by acquiring both new technology and greater resources. f. cannot be attained with the current level of resources and technology.
e. may be attained by acquiring both new technology and greater resources.
On a given production possibilities frontier, which of the following is not assumed to be fixed? a. the amount of labor available b. the amount of capital available c. the level of technology d. the amount of land and natural resources available e. production of the goods under consideration
e. production of the goods under consideration
Under the ceteris paribus assumption on PPF analysis, which of the following is not assumed to be fixed? a. the amount of labor available b. the amount of capital available c. the level of technology d. the amount of land and natural resources available e. production of the goods under consideration
e. production of the goods under consideration