MicroEconomics Unit 1 Sample Questions – Flashcards
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1. The crucial problem of economics is
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(D) allocating scarce productive resources to satisfy wants.
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2. When one decision is made, the next best alter- native not selected is called
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(B) opportunity cost.
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3. Which of the following is true if the produc- tion possibilities curve is a curved line concave to the origin?
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(E) As more of one good is produced,more and more of the other good must be given up.
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4. Which of the following is true of the concept of increasing opportunity cost?
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(B) It suggests that the use of resources to pro- duce a set of goods and services means that as more of one is produced, some of the other must be sacrificed.
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5. To be considered scarce, an economic resource must be which of the following?
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(D)I and III only Limited and Desirable
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6. The basic economic problem is reflected in which of the following concepts?
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(C) I and II only Opportunity cost and Production Possibilities
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7. Which of the following goods would be considered scarce?
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(E) I, II and III
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8. The value of the best alternative forgone when a decision is made defines
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(B) opportunity cost.
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9. Which of the following problems do all economic systems face?
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(B) I and IV only How to allocate scarce resources among unlimited wants & How to decide what to produce, how to produce and for whom to produce
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10. In which way does a straight-line production possibilities curve differ from a concave pro- duction possibilities curve?
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(B) A straight-line production possibilities curve has a constant opportunity cost
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11. The law of increasing opportunity cost is reflected in the shape of the
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(A) production possibilities curve concave to the origin.
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12. If the country is currently producing at Point C, it can produce more computers by doing which of the following?
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(C) Moving to Point D
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13. Which of the following statements about the production possibilities curve is true?
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(C) The relative position of Points C and D reflect production alternatives rather than relative prices.
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14. How might Point E be attained?
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(C) If improvements in technology occurred in either the computer sector or the farm-products sector
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15. The production possibilities curve of the country would be most likely to shift to the right if the country were currently producing at which of the following points?
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(D) Point D
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16. If the country is currently producing at Point C, it can produce more capital goods by moving in the direction of
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(C) Point D.
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17. If the country moves from Point C to Point D, future economic growth will
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(B) increase.
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18. Which of the following is most likely to cause the production possibilities curve to shift outward toward Point W?
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(C) Improving the technology for the production of either consumer or capital goods
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19. The opportunity cost of producing an additional unit of product A is
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(D)the amount of product B that cannot now be produced because of product A.
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20. Which of the following would cause a leftward shift of the production possibilities curve?
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(E) A decrease in working-age population
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21. Which of the following would cause an outward or rightward shift in the production possibilities curve?
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(C) An increase in capital equipment
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22. In Mars, the opportunity cost of obtaining the first two units of food is how many units of clothing?
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(C) 6
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23. In Venus, the opportunity cost of the first unit of
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(A) food is two units of clothing.
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24. Which of the following statementsis correct based on the concept of comparative advantage?
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(C) Mars should specialize in the production of clothing.
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25. The table below shows the number of hours needed to produce one bushel of soybeans and one bushel of rice in each of two countries. Which of the following statements must be true?
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(C) I and IV only
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26. A rational decision maker will choose to act only if
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(B) the marginal benefit of the action is greater than the marginal cost of that action.
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27. According to the theory of comparative advantage, a good should be produced where
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(B) its opportunity costs are least.
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28. Which of the following statements violates the economic concept of matching marginal benefits with marginal costs in test taking?
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(B) "My grade going into the final examination for math is B-plus. The final exam constitutes half of the course grade, so I'm going to study more for the final in this class than in solid-state genetics, where I have a solid A."
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29. "If you want to have anything done correctly, you have to do it yourself." This quote violates the principle of which of the following economic concepts?
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(C) Comparative advantage
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30. After graduating with an accounting degree, you decide to become a rock star. Your opportunity costs include which of the following?
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(E) I and III only Goods forgone to build and furnish a home studio in which to practice and record & Forgone income as an accountant
