,Exam
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) A small landscaping firm purchases a tractor that, in one day, is capable of drilling 60 fence-post 1)
holes or removing 12 tree stumps (or some intermediate combination). For this landscaper, what is
the opportunity cost of removing one extra tree stump?
A) 1/12th of the cost of the tractor
B) there is no opportunity cost
C) drilling 5 fence-post holes
D) drilling 12 fence-post holes
E) 1/5 of the cost of the tractor
Answer: C
Explanation: A)
B)
C)
D)
E)
2) Scarcity arises from limited resources. For this reason, all economic choices involve 2)
A) greed.
B) an opportunity cost.
C) complementary ends.
D) pride.
E) a value judgement.
Answer: B
Explanation: A)
B)
C)
D)
E)
1
, FIGURE 1-5
3) Refer to Figure 1-5. Suppose that the relevant production possibilities boundary is the one labelled 3)
B. This boundary implies that
A) consumer goods are preferred to capital goods.
B) the concept of opportunity cost is not at work in this economy.
C) capital goods are preferred to consumer goods.
D) the opportunity cost of producing either capital goods or consumer goods does not depend on
how much of each good is produced.
E) in this society the resources are not efficiently employed.
Answer: D
Explanation: A)
B)
C)
D)
E)
2
, With a budget of $500 000, a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate
combination) for use in classrooms.
Figure 1-2
4) Refer to Figure 1-2. Suppose the school board chooses to allocate all $500 000 to the purchase of 4)
laptop computers. What is the opportunity cost of this entire purchase?
A) The opportunity cost is $0.
B) The opportunity cost is 20,000 textbooks.
C) There is no opportunity cost because the purchase was made within the available budget.
D) The opportunity cost is 2000 laptops.
E) The opportunity cost is uncertain.
Answer: B
Explanation: A)
B)
C)
D)
E)
5) Economists usually assume that households and firms, respectively, maximize 5)
A) savings and profits.
B) expenditures and profits.
C) utility and profits.
D) income and sales.
E) wages and revenues.
Answer: C
Explanation: A)
B)
C)
D)
E)
3
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) A small landscaping firm purchases a tractor that, in one day, is capable of drilling 60 fence-post 1)
holes or removing 12 tree stumps (or some intermediate combination). For this landscaper, what is
the opportunity cost of removing one extra tree stump?
A) 1/12th of the cost of the tractor
B) there is no opportunity cost
C) drilling 5 fence-post holes
D) drilling 12 fence-post holes
E) 1/5 of the cost of the tractor
Answer: C
Explanation: A)
B)
C)
D)
E)
2) Scarcity arises from limited resources. For this reason, all economic choices involve 2)
A) greed.
B) an opportunity cost.
C) complementary ends.
D) pride.
E) a value judgement.
Answer: B
Explanation: A)
B)
C)
D)
E)
1
, FIGURE 1-5
3) Refer to Figure 1-5. Suppose that the relevant production possibilities boundary is the one labelled 3)
B. This boundary implies that
A) consumer goods are preferred to capital goods.
B) the concept of opportunity cost is not at work in this economy.
C) capital goods are preferred to consumer goods.
D) the opportunity cost of producing either capital goods or consumer goods does not depend on
how much of each good is produced.
E) in this society the resources are not efficiently employed.
Answer: D
Explanation: A)
B)
C)
D)
E)
2
, With a budget of $500 000, a school board can choose to purchase 20 000 textbooks or 2000 laptop computers (or some intermediate
combination) for use in classrooms.
Figure 1-2
4) Refer to Figure 1-2. Suppose the school board chooses to allocate all $500 000 to the purchase of 4)
laptop computers. What is the opportunity cost of this entire purchase?
A) The opportunity cost is $0.
B) The opportunity cost is 20,000 textbooks.
C) There is no opportunity cost because the purchase was made within the available budget.
D) The opportunity cost is 2000 laptops.
E) The opportunity cost is uncertain.
Answer: B
Explanation: A)
B)
C)
D)
E)
5) Economists usually assume that households and firms, respectively, maximize 5)
A) savings and profits.
B) expenditures and profits.
C) utility and profits.
D) income and sales.
E) wages and revenues.
Answer: C
Explanation: A)
B)
C)
D)
E)
3
