1. A highly paid business executive will take his or her car to a garage for repairs whereas a

teenager will typically fix it himself or herself. This is because the teenager's:

Group of answer choices

a. Car is older.

b. Life expectancy is longer.

c. Opportunity costs are lower.

d. Mechanical ability is greater.

e. Need for a car is greater.

2. The basic idea of Adam Smith's "invisible hand" is that

Group of answer choices

a. A free, competitive economy cannot allocate resources efficiently without government planning.

b. The pursuit of private interests by individuals and firms can lead to socially desirable ends

c. Dire poverty and income inequalities are inevitably a part of a free market.

d. There is a force inherent in government with seeks to achieve social usefulness.

e. Population increase is an important determinant of a country's development.

3. This question is based on the following table.

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Household Income Average number of car per household

$0 --- $29,999 1.2

30,000 --- 49,999 1.4

50,000 --- 74,999 1.6

75,000 --- 99,999 2.2

100,000 --- 149,999 2.6

150,000 and over 3.1

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The relationship between household income and average number of car per household is:

Group of answer choices

a. Indirect.

b. Direct.

c. Nonexistent.

d. Fluctuating.

e. Terminal.

4. This question is based on the following table which shows the output combinations

of food and clothing available to an isolated city:

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Possibilities Clothing (tons) Food (tons)

A 0 900

B 100 750

C 200 600

D 300 450

E 400 300

F 500 150

G 600 0

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From the given information, the opportunity cost of 100 tons of clothing is:

Group of answer choices

a. 50 tons of food.

b. 100 tons of food.

c. 150 tons of food.

d. 300 tons of food.

e. 400 tons of food.

5. For a market to exhibit a surplus,

Group of answer choices

a. The actual price must above the equilibrium price.

b. Demand must exceed supply.

c. The demand curve must slope upward.

d. The supply curve must slope downward.

e. None of these above.

6. Which of the following excluded from GDP?

Group of answer choices

a. Gasoline purchased for the family car.

b. Services performed by municipal law enforcement officials.

c. Goods and services sold to foreigners.

d. Steel sold to a refrigerator manufactures.

e. Purchase of cloth by a homemaker to make draperies for the bedroom.

7. Gross Domestic Product (GDP) expressed in constant (real) dollars is called

Group of answer choices

a. A price index.

b. Permanent income.

c. Capital accumulation.

d. Gross National Product (GNP).

e. Real GDP.

8. In general, an increase in productive capacity

Group of answer choices

a. Leaves the aggregate demand and supply curves unchanged.

b. Causes the aggregate supply curve to become vertical.

c. Causes the aggregate demand curve to become horizontal.

d. Shifts the aggregate demand curve to the left and pushes up price levels.

e. Shifts the aggregate supply curve to the right and increases real output.