1.In general, the production possibilities frontier (PPF) is bowed out from the origin because

a)economic growth is occurring.

b)the law of increasing costs holds.

c)the economy cannot produce outside its bounds.

d)the economy is inefficient.

2.If consumers foresee the price of electric car will drop significantly in the near future, then the current market _______ of electric car will _______.

a)demand; increase

b)demand; decrease

c)supply; decrease

d) price; increase

3.In the United States, which of the following accounts for the greatest portion of GDP?

a)Household consumption

b)Business investment

c)Government spending

d)Net exports.

4.Which of the following costs will always increase as output increase?

a)Total costs (TC)

b)Average total costs (ATC)

c)Marginal costs (MC)

d)Fixed costs (FC)

5.Which of the following is NOT included in the U.S. GDP?

a.The construction of a highway in Texas.

b.The unemployment benefits paid to an unemployed worker in Texas

c.The purchase of West Virginia coal by a Japanese factory.

d.The production of Ohio automobiles by a Germany company.

6When the unit price is $10, I can sell 12 units; when the unit price rises to $12, I can only sell 10 units." Given the information, we conclude that the salesman faces _______ demand.

a)elastic

b)inelastic

c)unitarily elastic

d)upward-slopping

7.The following table shows the hypothetical data for a country, its nominal GDP is equal to _______ and its net exports are equal to _______.

Consumption expenditures on good and services 5300

exports 700

government spending on goods and services 2400

Imports 900

investment 1100.

a)$10,400; $200

b)$10,400; $200

c)$8,600; $200

d)$8,600; $200

8.Diamonds are more expensive than water because

a)they yield higher total utility.

b)they yield higher marginal utility.

c)they are rare.

d)market does not reflect water's value.

9.Which of the following can be referred as the fixed cost in TV manufacturing?

a.Electric power bill

b.Salary of workers

c.Costs of raw materials

d.Mortgage payment of equipment

10.If the exchange rate between U.S. and Japan changes from $1= 100 to $1= 110, then we can conclude that

a.U.S. dollar depreciates.

b.Japanese yen depreciates.

c.U.S. has the advantage in export to Japan.

d.Japan has the advantage to import U.S. products