1.Economics is the sciences of

human relationship in an economic setting.

business and prices.

scarcity.

goods and services.

2.Scarcity exists

in only poor countries of the world

in all countries of the world

only when society does not employ all its resources in an efficient way.

only when society produces too many frivolous or silly goods.

3.Which of the following statements is true ?

both a millionaire and a poor person must deal with scarcity.

people would have to make choice even if scarcity did not exist.

scarcity is a relatively new problem in the world's history; it has not always existed.

it is like that one day scarcity will no longer exist.

4.A theory

is a simplified abstract representation of the real world.

incorporates critical factors or variables.

is an accurate and complete description of reality.

a and b

5.If an economist tests his or her theory and finds that it predicts accurately, he or she would likely say that the

evidence fails to reject the theory.

theory has been proved correct.

the theory is true.

the theory is better than alternative theories.

6.Ceteris paribus means:

the correct relationship specified.

there are too many variables considered in the theory.

all other things held constant or nothing else changes.

assuming that people are rational human beings.

7.Which of the following is an example of positive statement?

if you drop a quarter off the top of the sears building in chicago, it will fall to the ground.

the minimum wage should be raised to eight dollars an hour.

there is too much crime in the united states; something should be done about it.

people should learn to get along with each other.

8.'Productive resources'' include which of the following ?

land, labor, money, management

land, labor, money, entrepreneurship

land, labor, capital, entrepreneurship

land, labor, natural resources, entrepreneurship

9.Which of the following statements is true?

the production possibilities frontier is always bowed outward.

the production possibilities frontier is usually bowed outward.

the production possibilities frontier is never bowed outward.

the production possibilities frontier is usually a straight line.

10.Which of the following statements is false?

a straight-line production possibilities frontier represents increasing costs.

a bowed outward production possibilities frontier represents constant costs.

an efficient point is located on the production possibilities frontier.

a and b

11.Consider two points on the production possibilities frontier : point X, at which there are 100 cars and 78 trucks, an point Y, at which there are 90 cars and 70 trucks. If the economy is currently at point X, the opportunity cost of moving to point Y is?

12 cars.

1 trucks.

10 cars.

79 trucks.

none of the above.

12.The production possibilities frontier represents the possible combinations of two goods that an economy can produce.

in a certain time

in a certain time, under the condition of a given state of resources.

given that there are not unemployed resources.

under the condition of efficient production.

none of the answer is complete enough.

13.When the economy exhibits inefficiency, it is not producing the

maximum output with the available resources and technology.

minimum output with minimum resources and technology.

the goods and services consumers wish to buy.

b and c.

14.The three economic questions that must be answered by every society are

how will the goods be produced? What goods will be produced? What services will be produced?

for whom will the goods be produced? what goods will be produced? how will the goods be produced?

what goods will be produced? how will the goods be produced? for what purpose will the goods be produced?

what goods will be produced? Who will produced the goods? Why are the goods produced?

15.The law of demand states that

price and demand are inversely related, ceteris paribus

price and demand are directly related, ceteris paribus

price and quantity demanded are directly related, ceteris paribus.

price and quantity demanded are inversely related,ceteris paribus.

16.Which of the following is a land resource?

A) a computer programmerC)silicon (sand) used to make computer chips

B) a computerD)a piece of software used by a firm

17.The output of compact disc players should be:

A) reduced if marginal benefits exceed marginal costs.

B) reduced if marginal costs exceed marginal benefits.

C) increased if marginal costs exceed marginal benefits.

D) reduced to zero if their unit costs exceed the unit costs of alternative products.

Refer to the above diagram. Curve B is a:

A) production possibilities curve indicating constant opportunity costs.

B) production possibilities curve indicating increasing opportunity costs.

C) demand curve indicating that the quantity of consumer goods demanded increases as the price of capital falls.

D) technology frontier curve.

20.The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____.

A) direct, inverseB) inverse, directC) inverse, inverseD) direct, direct

21.An economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bicycles. This prediction is based on the assumption that:

A) there are many goods that are substitutes for bicycles.

B) there are many goods that are complementary to bicycles.

C) there are few goods that are substitutes for bicycles.

D) bicycles are normal goods.

22.The location of the product supply curve depends on:

A) production technology.C)the tastes of buyers.

B) the number of buyers in the market.D)the location of the demand curve.

23.Suppose that at prices of $5, $4, $3, $2, and $1 for product Z, the corresponding quantities supplied are 3, 4, 5, 6, and 7 units, respectively. Which of the following would increase the quantities supplied of Z to, say, 6, 8, 10, 12, and 14 units at these prices?

A) improved technology for producing Z

B) an increase in the prices of the resources used to make Z

C) an increase in the excise tax on product Z

D) increases in the incomes of the buyers of Z

24.An increase in demand that exceeds an increase in supply will:

A) increase both equilibrium price and equilibrium quantity.

B) increase equilibrium price and reduce equilibrium quantity.

C) decrease equilibrium price and increase equilibrium quantity.

D) decrease both equilibrium price and quantity.

25. Which of the following is a positive statement?

A. The humidity is too high today.

B. It is too hot to jog today.

C. The temperature is 92 degrees today.

D. Summer evenings are nice when it cools off.

26. When the price of a product increases, a consumer is able to buy less of it with a given money income.This describes the:

A. cost effect.

B. inflationary effect.

C. income effect.

D. substitution effect.

27. Which of the following will not cause the demand for product K to change?

A. a change in the price of close-substitute product J

B. an increase in incomes of buyers of product K

C. a change in the price of K

D. a change in consumer tastes for K

28. If the demand for steak (a normal good) shifts to the left, the most likely reason is that:

A. consumer incomes have fallen.

B. cattle production has declined.

C. the price of steak has risen.

D. the price of cattle feed has gone up.

29. Assume product A is an input in the production of product B. In turn product B is a complement toproduct C. We can expect a decrease in the price of A to:

A. increase the supply of B and increase the demand for C.

B. decrease the supply of B and increase the demand for C.

C. decrease the supply of B and decrease the demand for C.

D. increase the supply of B and decrease the demand for C.

Final Econ A170 39. Production is efficient if the economy is producing at a point a. on the production possibilities frontier. b. outside the production possibilities frontier. c. on or inside the production possibilities frontier. d. inside the production possibilities frontier