Microeconomics Test 1 Questions and
Answers
6. Opportunity cost is:
a. Only measured in dollars and cents.
b. The dollar cost to society of producing the goods.
c. The difficulty associated with using one good in place of another.
d. The alternative that must be given up in order to get something else. - ANSWER-
d. The alternative that must be given up in order to get something else.
7. The opportunity cost of studying for an economics test is:
a. Negative, since it may improve your grade.
b. Zero, because you knew when you registered for the class that studying would be
required. c. The money you spent on tuition for the class.
d. The best alternative use of your time. - ANSWER-d. The best alternative use of
your time.
8. A production-possibilities curve indicates the:
a. Combinations of goods and services an economy is actually producing.
b. Maximum combinations of goods and services an economy can produce given its
available resources and technology.
c. Maximum combinations of goods and services an economy can produce given
unlimited resources.
d. Average combinations of goods and services an economy can produce given its
available resources and technology. - ANSWER-b. Maximum combinations of goods
and services an economy can produce given its available resources and technology.
9. A point on a nation's production-possibilities curve represents:
a. An undesirable combination of goods and services.
b. Combinations of production that are unattainable, given current technology and
resources. c. Levels of production that will cause both unemployment and inflation.
d. The full employment of resources to achieve a particular combination of goods
and services. - ANSWER-d. The full employment of resources to achieve a particular
combination of goods and services.
10. According to the law of increasing opportunity costs:
a. Greater production leads to greater inefficiency.
b. Greater production means factor prices rise.
c. Greater production of one good requires increasingly larger sacrifices of other
goods. d. Higher opportunity costs induce higher output per unit of input. - ANSWER-
c. Greater production of one good requires increasingly larger sacrifices of other
goods.
11. If the United States decides to convert automobile factories to tank production,
as it did during World War II, but finds that some auto manufacturing facilities are not
well suited to tank production, then:
, a. The production-possibilities curve between tanks and automobiles will appear as a
straight line.
b. The production-possibilities curve between tanks and automobiles will shift
outward.
c. Decreasing opportunity costs will occur with greater automobile production. d.
Increasing opportunity costs will occur with greater tank production. - ANSWER-d.
Increasing opportunity costs will occur with greater tank production.
12. When an economy is producing efficiently it is:
a. Producing a combination of goods and services beyond the production-
possibilities curve.
b. Getting the most goods and services from the available resources.
c. Experiencing decreasing opportunity costs.
d. Producing equal amounts of all goods. - ANSWER-b. Getting the most goods and
services from the available resources.
13. The points on a production-possibilities curve show: a. Desired output.
b. Actual output.
c. Potential output.
d. All of the above. - ANSWER-c. Potential output.
14. If an economy is producing inside the production-possibilities curve, then: a.
There is full employment of resources.
b. It is operating efficiently.
c. It can produce more of one good without giving up some of another good. d. There
are not enough resources available to produce more output. - ANSWER-c. It can
produce more of one good without giving up some of another good.
15. Which of the following events would allow the production-possibilities curve to
shift outward? a. The economy's capital stock declines
b. More teenagers enter the labor force
c. Technology is lost
d. People begin to retire at earlier ages - ANSWER-b. More teenagers enter the
labor force
16. Which of the following will cause the production-possibilities curve to shift
inward? a. An increase in population
b. A decrease in the size of the labor force
c. A technological advance
d. An increase in knowledge - ANSWER-b. A decrease in the size of the labor force
17. In a market economy, the people who receive the goods and services that are
produced are those who: a. Need the goods and services the most.
b. Have the most political power.
c. Want the goods and services the most.
d. Are willing to pay the highest price. - ANSWER-d. Are willing to pay the highest
price.
18. The market mechanism:
Answers
6. Opportunity cost is:
a. Only measured in dollars and cents.
b. The dollar cost to society of producing the goods.
c. The difficulty associated with using one good in place of another.
d. The alternative that must be given up in order to get something else. - ANSWER-
d. The alternative that must be given up in order to get something else.
7. The opportunity cost of studying for an economics test is:
a. Negative, since it may improve your grade.
b. Zero, because you knew when you registered for the class that studying would be
required. c. The money you spent on tuition for the class.
d. The best alternative use of your time. - ANSWER-d. The best alternative use of
your time.
8. A production-possibilities curve indicates the:
a. Combinations of goods and services an economy is actually producing.
b. Maximum combinations of goods and services an economy can produce given its
available resources and technology.
c. Maximum combinations of goods and services an economy can produce given
unlimited resources.
d. Average combinations of goods and services an economy can produce given its
available resources and technology. - ANSWER-b. Maximum combinations of goods
and services an economy can produce given its available resources and technology.
9. A point on a nation's production-possibilities curve represents:
a. An undesirable combination of goods and services.
b. Combinations of production that are unattainable, given current technology and
resources. c. Levels of production that will cause both unemployment and inflation.
d. The full employment of resources to achieve a particular combination of goods
and services. - ANSWER-d. The full employment of resources to achieve a particular
combination of goods and services.
10. According to the law of increasing opportunity costs:
a. Greater production leads to greater inefficiency.
b. Greater production means factor prices rise.
c. Greater production of one good requires increasingly larger sacrifices of other
goods. d. Higher opportunity costs induce higher output per unit of input. - ANSWER-
c. Greater production of one good requires increasingly larger sacrifices of other
goods.
11. If the United States decides to convert automobile factories to tank production,
as it did during World War II, but finds that some auto manufacturing facilities are not
well suited to tank production, then:
, a. The production-possibilities curve between tanks and automobiles will appear as a
straight line.
b. The production-possibilities curve between tanks and automobiles will shift
outward.
c. Decreasing opportunity costs will occur with greater automobile production. d.
Increasing opportunity costs will occur with greater tank production. - ANSWER-d.
Increasing opportunity costs will occur with greater tank production.
12. When an economy is producing efficiently it is:
a. Producing a combination of goods and services beyond the production-
possibilities curve.
b. Getting the most goods and services from the available resources.
c. Experiencing decreasing opportunity costs.
d. Producing equal amounts of all goods. - ANSWER-b. Getting the most goods and
services from the available resources.
13. The points on a production-possibilities curve show: a. Desired output.
b. Actual output.
c. Potential output.
d. All of the above. - ANSWER-c. Potential output.
14. If an economy is producing inside the production-possibilities curve, then: a.
There is full employment of resources.
b. It is operating efficiently.
c. It can produce more of one good without giving up some of another good. d. There
are not enough resources available to produce more output. - ANSWER-c. It can
produce more of one good without giving up some of another good.
15. Which of the following events would allow the production-possibilities curve to
shift outward? a. The economy's capital stock declines
b. More teenagers enter the labor force
c. Technology is lost
d. People begin to retire at earlier ages - ANSWER-b. More teenagers enter the
labor force
16. Which of the following will cause the production-possibilities curve to shift
inward? a. An increase in population
b. A decrease in the size of the labor force
c. A technological advance
d. An increase in knowledge - ANSWER-b. A decrease in the size of the labor force
17. In a market economy, the people who receive the goods and services that are
produced are those who: a. Need the goods and services the most.
b. Have the most political power.
c. Want the goods and services the most.
d. Are willing to pay the highest price. - ANSWER-d. Are willing to pay the highest
price.
18. The market mechanism:
