Macro-Econ:Ch1 Limits, Alternatives and Choices

Which of the following statements, if any, is correct for a nation that is producing only consumer and capital goods? a. Other things equal, the more consumer goods a nation produces, the greater will be its future growth rate. b. Other things equal, the more capital goods a nation produces, the greater will be its future growth rate. c. There is no general relationship between the current division of output between consumer and capital goods and the future growth rate. d. None of these statements is correct.

Other things equal, the more capital goods a nation produces, the greater will be its future growth rate.

Refer to the above graph. Which of the following schedules correctly reflects "DEMAND"?

P- $12, 10,8,6,4,2 Qd- 0,0,10,20,30,40

Refer to the above graph. Which of the following schedules correctly reflects "SUPPLY"?

P-$12,10,8,6,4,2 Qs-50,40,30,20,10,0

The production possibilities curve shows various combinations of two products that an economy can produce when achieving full employment. True Or False

True

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:

achieve economic growth.

Which of the following will enable a nation to obtain a combination of consumer goods and capital goods outside its production possibilities curve? a. full employment. b. international specialization and trade. c. full production. d. productive efficiency.

international specialization and trade.

Answer the next question(s) on the basis of the data given in the following production possibilities table: Refer to the above table. For these data the law of increasing opportunity costs is reflected in the fact that:

larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods.

(Last Word) A caller to a radio talk show states that oil companies are "greedy price gougers." This is an example of:

loaded terminology.

Which of the following is NOT a main function of the entrepreneur? a. make routine pricing decisions. b. innovate. c. assume the risk of economic losses. d. makes strategic business decisions.

make routine pricing decisions.

(Last Word) "The government deregulated the electricity industry in California and a shortage of electricity soon occurred. It is clear that the deregulation caused the shortage." This statement needs careful analysis because it may reflect the:

post hoc, ergo propter hoc fallacy.

Which of the following is assumed in constructing a typical production possibilities curve? a. the economy is using its resources inefficiently. b. resources are perfectly shiftable among alternative uses. c. production technology is fixed. d. the economy is engaging in international trade.

production technology is fixed.

The law of increasing opportunity costs exists because:

resources are not equally efficient in producing various goods.

Which of the following is a land resource? a. a computer programmer b. a computer c. silicon (sand) used to make computer chips d. a piece of software used by a firm

silicon (sand) used to make computer chips

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.

Refer to the budget line shown in the diagram above. If the consumer's money income is $20, which of the following combinations of goods is unattainable? a. 4 units of C, and 6 units of D. Correct b. 5 units of C, and no units of D. c. 1 unit of C, and 8 units of D. d. 2 units of C, and 6 units of D.

4 units of C, and 6 units of D.

An economic model is an ideal or utopian type of economy that society should strive to obtain through economic policy. True or False

False

Answer the next question(s) on the basis of the following five data sets wherein it is assumed that the variable shown on the left is the independent variable and the one on the right is the dependent variable. Assume in graphing these data that the independent variable is shown on the horizontal axis and the dependent variable on the vertical axis. (Picture) Refer to the above data sets. Which of the data sets would graph as an upsloping line?

The correct answer is: 1, 2, and 5 only.

The term "other things equal" means that:

a number of relevant variables are assumed to be constant.

Economic theories:

are generalizations based on a careful observation of facts.

If the production possibilities curve is a straight line:

economic resources are perfectly substitutable between the production of the two products.