ECON-101 Test 1

A) Scarcity

1) _____________ exists because unlimited wants exceed the limited resources available to fulfill those wants. A) Scarcity B)Productive efficiency C) The command economy D) Economic growth

B) Point B

10) Refer to Figure 2-1. _____________ is (are) technically efficient. A) Point A B) Point B C) Point C D) Points B and C

C) Point C

11) Refer to Figure 2-1. ______________ is (are) unattainable with current resources. A) Point A B) Point B C) Point C D) Points A and C

D) productively inefficient

12) In a production possibilities frontier model, a point inside the frontier is A) allocatively efficient. B) productively efficient. C) productively and allocatively inefficient. D) productively inefficient.

C) 25 pedicures

13) Carmelita can perform either a combination of 35 manicures and 70 pedicures or a combination of 50 manicures and 45 pedicures. If she now performs 35 manicures and 70 pedicures, what is the opportunity cost of performing an additional 15 manicures? A) 5 pedicures B) 20 pedicures C) 25 pedicures D) 45 pedicures

D) opportunity costs are constant as more of one good is produced

14) If the production possibilities frontier is linear, then A) opportunity costs are decreasing as more of one good is produced. B) it is easy to efficiently produce output. C) opportunity costs are increasing as more of one good is produced. D) opportunity costs are constant as more of one good is produced.

B) 2.5 dozen roses

15) Refer to Figure 2-2. What is the opportunity cost of one dozen orchids? A) 0.4 dozen roses B) 2.5 dozen roses C) 7.25 dozen roses D) 16 dozen roses

A) 0.4 dozen orchids

16) Refer to Figure 2-2. What is the opportunity cost of one dozen roses? A) 0.4 dozen orchids B) 2.5 dozen orchids C) 7.25 dozen orchids D) 16 dozen orchids

D) 150 dozen roses

17) Refer to Figure 2-2. Suppose Vidalia is currently producing 20 dozen orchids per period. How many roses is it also producing, assuming that resources are fully utilized? A) 30 dozen roses B) 50 dozen roses C) 100 dozen roses D) 150 dozen roses

C) 100 dozen roses

18) Refer to Figure 2-2. If Vidalia chooses to produce 40 dozen orchids, how many roses can it produce to maximize production? A) 30 dozen roses B) 50 dozen roses C) 100 dozen roses D) 150 dozen roses

B) 50 dozen roses

19) Refer to Figure 2-2. If Vidalia chooses to produce 60 dozen orchids, how many roses can it produce to maximize production? A) 30 dozen roses B) 50 dozen roses C) 100 dozen roses D) 150 dozen roses

B) face a trade-off, because producing more of one model means producing less of the other.

2) To compete in the automobile market, Tesla must make many strategic decisions such as whether to introduce a new car model, how to sell and service its cars, and where to advertise. At Tesla's Fremont, California plant, managers must decide on the monthly production quantities of their S and X models. In making this decision, the managers A)face no trade-off because the Fremont plant only produces these two models of the many Tesla models produced worldwide. B) face a trade-off, because producing more of one model means producing less of the other. C) will choose to only produce the quantity of S and X models where marginal cost equals zero. D) will always decide on production quantities in which revenues are maximized.

C) 60 dozen orchids

20) Refer to Figure 2-2. If Vidalia chooses to produce 50 dozen roses, how many orchids can it produce to maximize production? A) 20 dozen orchids B) 40 dozen orchids C) 60 dozen orchids D) 80 dozen orchids

B) 48 dozen orchids

21) Refer to Figure 2-2. If Vidalia chooses to produce 80 dozen roses, how many orchids can it produce to maximize production? A) 24 dozen orchids B) 48 dozen orchids C) 60 dozen orchids D) 74 dozen orchids

C) the tradeoff between roses and orchids is constant

22) Refer to Figure2-2. The linear production possibilities frontier in the figure indicates that A) Vidalia has a comparative advantage in the production of orchids. B) Vidalia has a comparative disadvantage in the production of roses. C) the tradeoff between roses and orchids is constant. D) it is progressively more expensive to produce orchids.

C) bowed outward

23) A production possibilities frontier with a shape indicates increasing opportunity costs as more and more of one good is produced. A) linear B) bowed inward C) bowed outward D) perfectly horizontal

C) some factors of production are not equally suited to producing both

24) Increasing opportunity cost along a bowed-out production possibilities frontier occurs because A) of inefficient production. B) of ineffective management by entrepreneurs. C) some factors of production are not equally suited to producing both goods or services. D) of the scarcity of factors of production.

D) opportunity cost

25) The slope of a production possibilities frontier measures the ____________ of producing one more unit of a good. A) marginal revenue B) total revenue C) marginal cost D) opportunity cost

B) opportunity cost

3) The principle of _____________ is that the economic cost of using a factor of production is the alternative use of that factor that is given up. A) marginal cost B) opportunity cost C) normative economics D) entrepreneurship

B) the maximum attainable combinations of two products that maybe produced in a particular time period with available resources

4) The production possibilities frontier shows A) the various products that can be produced now and in the future. B) the maximum attainable combinations of two products that maybe produced in a particular time period with available resources. C) what an equitable distribution of products among citizens would be. D) what people want firms to produce in a particular time period.

D) The production possibilities frontier model

5) ___________ shows that if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good. A) Comparative advantage B) Absolute advantage C) The mixed market system D) The production possibilities frontier model

C) any level of the two products that the economy produces is currently possible

6) The production possibilities frontier model assumes all of the following except A) labor, capital, land and natural resources are fixed in quantity. B) the economy produces only two products. C) any level of the two products that the economy produces is currently possible. D) the level of technology is fixed and unchanging.

A) attainable

7)The ____________ production points on a production possibilities frontier are the points along and inside the production possibilities frontier. A) attainable B) unattainable C) productively efficient D) allocatively efficient

D) the points outside the production possibilities frontier

8) The unattainable points in a production possibilities diagram are A) the points within the production possibilities frontier. B) the points along the production possibilities frontier. C) the points of the horizontal and vertical intercepts. D) the points outside the production possibilities frontier.

A) Point A

9) Refer to Figure 2-1. ______________ is (are) inefficient in that not all resources are being used. A) Point A B) Point B C) Point C D) Points A and C

c. Exists when additional resources required to produce an additional unit remains the same as more output is produced

Constant opportunity cost: a. Exists when additional resources require producing an additional unit increase as more output is produced. b. Exists when additional resources require producing an additional unit decrease as more output is produced. c. Exists when additional resources required to produce an additional unit remains the same as more output is produced. d. Is likely to occur when people are not identical in their skills.

c. A demand for normal goods will shift right

If income increases, then a. A demand for normal goods will shift left b. A demand for inferior goods will shift right c. A demand for normal goods will shift right d. A supply for inferior goods will shift left

b. Excess supply

If the number of sellers increases, then what would happen at the original equilibrium price? a. Excess demand b. Excess supply c. Both excess demand and excess supply d. None of the above

a. A shortage of 64 units

If the price is 1 USD, then there will be a. A shortage of 64 units b. A shortage of 44 units c. A surplus of 64 units d. A surplus of 44 units

c. Equilibrium quantity will decrease while the equilibrium price will increase

If the prices of inputs increase, then a. Equilibrium quantity and price will increase b. Equilibrium quantity will increase while the equilibrium price will decrease c. Equilibrium quantity will decrease while the equilibrium price will increase d. Equilibrium quantity and price will decrease

b. Efficient but unattainable

Producing 2 of X and 75 of Y is a. Efficient and attainable b. Efficient but unattainable c. Inefficient and unattainable d. Inefficient but attainable

d. Inefficient but attainable

Producing 3 of X and 30 of Y is a. Efficient and attainable b. Efficient but unattainable c. Inefficient and unattainable d. Inefficient but attainable

c. 3 USD

The equilibrium price is a. 1 USD b. 2 USD c. 3 USD d. 4 USD

c. Increasing

The opportunity cost of Y is: a. Constant b. Decreasing c. Increasing d. Unknown

b. 1/10 units of X

The opportunity cost of the 100th unit of Y is : a. 10 units of X b. 1/10 units of X c. 10 units of Y d. 1/10 units of Y

a. Constant, constant

The slope of the demand curve is and the slope of the supply curve is a. Constant, constant b. Constant, increasing c. Increasing, constant d. Increasing, increasing

d. A decrease in expected price

Which of the following may lead to an increase in the price and equilibrium quantity for cars? a. Reducing the number of drivers b. A decrease in oil prices c. A decrease in bus fairs d. A decrease in expected price

b. Economics is the study of the allocation and use of limited resources to satisfy unlimited human wants

Which of the following statements is TRUE: a. Economics is the study of the allocation and use of limited resources to satisfy limited human wants b. Economics is the study of the allocation and use of limited resources to satisfy unlimited human wants c. Economics is the study of the allocation and use of unlimited resources to satisfy unlimited human wants d. Economics is the study of the allocation and use of unlimited resources to satisfy limited human wants