Chapter 01 Testbank
Student: ___________________________________________________________________________
1. The economising problem is essentially one of deciding how to make the best use of:
A. virtually unlimited resources, to satisfy virtually unlimited wants.
B. limited resources, to satisfy virtually unlimited wants.
C. unlimited resources, to satisfy limited wants.
D. limited resources, to satisfy limited wants.
2. The concept of economic efficiency is primarily concerned with:
A. the limited wants and unlimited resources dilemma.
B. considerations of equity in the distribution of wealth.
C. obtaining the maximum output from available resources.
D. the conservation of irreplaceable natural resources.
3. The fundamental problem of economics is:
A. to establish an equitable system of personal and business taxation.
B. to establish a democratic political framework for the provision of social goods and services.
C. the establishment of prices that accurately reflect the relative scarcities of products and resources.
D. the scarcity of productive resources relative to material wants.
,4. The scarcity problem:
A. persists only because countries have failed to achieve continuous full employment.
B. persists because material wants exceed available productive resources.
C. has been solved in all industrialised nations.
D. has been eliminated in affluent societies such as Australia.
5. An ‘increase in efficiency' suggests that an economy:
A. is using more costly production techniques.
B. has decided to produce more consumer goods and fewer capital goods.
C. is able to obtain fewer goods and services from a given amount of resources.
D. is able to obtain more goods and services from a given amount of resources.
6. Economic resources are also called:
A. free gifts of nature.
B. consumption goods.
C. units of money capital.
D. factors of production.
7. The idea of ‘allocative efficiency' refers to:
A. the use of the least-cost method of production.
B. the production of the product-mix most wanted by society.
C. the full employment of all available resources.
D. production, at some point, inside of the production possibilities curve.
,8. ‘Productive efficiency' refers to:
A. the use of the least-cost method of production.
B. the production of the product-mix most wanted by society.
C. the full employment of all available resources.
D. production, at some point, inside of the production possibilities curve.
9. The production possibilities curve illustrates the basic principle that:
A. the larger production of a particular good, in time, will require smaller and smaller sacrifices from other goods.
B. an economy will automatically seek a level of output so that all of its resources are employed.
C. if all the resources of an economy are in use, more of one good can be produced if less of another good is
produced.
D. an economy has the capacity to produce increases in proportion to its population size.
10. Which of the following will not entail an outward shift of the production possibilities curve?
A. an upgrading of the quality of a nation's human resources.
B. the reduction of unemployment.
C. an increase in the quantity of a society's labour force.
D. the improvement of a society's technological knowledge.
11. The production possibilities curve is bowed out from the origin because:
A. of increasing opportunity cost.
B. economic resources are perfectly substitutable in the production of the two products.
C. of underemployment.
D. equal quantities of both products are produced at each possible point on the curve.
, 12. Refer to the data in the table. If the economy is producing at production option C, the opportunity cost of the tenth
unit of consumer goods will be:
A. 4 units of capital goods.
B. 2 units of capital goods.
C. 3 units of capital goods.
D. of a unit of capital goods.
13. Refer to the data in the table. When compared with production option D, the choice of option C would:
A. tend to generate a more rapid growth rate.
B. be unattainable.
C. entail unemployment.
D. tend to generate a slower growth rate.
14. Refer to the data in the table. In this illustration, the law of increasing opportunity costs is reflected in the fact that:
A. human wants in the aggregate are insatiable and all the combinations of consumer goods and capital goods the
economy can produce are finite amounts.
B. the amount of consumer goods that must be sacrificed to get more capital goods diminishes beyond a point.
C. larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods.
D. the production possibilities data would graph as a straight, down-sloping line.
Student: ___________________________________________________________________________
1. The economising problem is essentially one of deciding how to make the best use of:
A. virtually unlimited resources, to satisfy virtually unlimited wants.
B. limited resources, to satisfy virtually unlimited wants.
C. unlimited resources, to satisfy limited wants.
D. limited resources, to satisfy limited wants.
2. The concept of economic efficiency is primarily concerned with:
A. the limited wants and unlimited resources dilemma.
B. considerations of equity in the distribution of wealth.
C. obtaining the maximum output from available resources.
D. the conservation of irreplaceable natural resources.
3. The fundamental problem of economics is:
A. to establish an equitable system of personal and business taxation.
B. to establish a democratic political framework for the provision of social goods and services.
C. the establishment of prices that accurately reflect the relative scarcities of products and resources.
D. the scarcity of productive resources relative to material wants.
,4. The scarcity problem:
A. persists only because countries have failed to achieve continuous full employment.
B. persists because material wants exceed available productive resources.
C. has been solved in all industrialised nations.
D. has been eliminated in affluent societies such as Australia.
5. An ‘increase in efficiency' suggests that an economy:
A. is using more costly production techniques.
B. has decided to produce more consumer goods and fewer capital goods.
C. is able to obtain fewer goods and services from a given amount of resources.
D. is able to obtain more goods and services from a given amount of resources.
6. Economic resources are also called:
A. free gifts of nature.
B. consumption goods.
C. units of money capital.
D. factors of production.
7. The idea of ‘allocative efficiency' refers to:
A. the use of the least-cost method of production.
B. the production of the product-mix most wanted by society.
C. the full employment of all available resources.
D. production, at some point, inside of the production possibilities curve.
,8. ‘Productive efficiency' refers to:
A. the use of the least-cost method of production.
B. the production of the product-mix most wanted by society.
C. the full employment of all available resources.
D. production, at some point, inside of the production possibilities curve.
9. The production possibilities curve illustrates the basic principle that:
A. the larger production of a particular good, in time, will require smaller and smaller sacrifices from other goods.
B. an economy will automatically seek a level of output so that all of its resources are employed.
C. if all the resources of an economy are in use, more of one good can be produced if less of another good is
produced.
D. an economy has the capacity to produce increases in proportion to its population size.
10. Which of the following will not entail an outward shift of the production possibilities curve?
A. an upgrading of the quality of a nation's human resources.
B. the reduction of unemployment.
C. an increase in the quantity of a society's labour force.
D. the improvement of a society's technological knowledge.
11. The production possibilities curve is bowed out from the origin because:
A. of increasing opportunity cost.
B. economic resources are perfectly substitutable in the production of the two products.
C. of underemployment.
D. equal quantities of both products are produced at each possible point on the curve.
, 12. Refer to the data in the table. If the economy is producing at production option C, the opportunity cost of the tenth
unit of consumer goods will be:
A. 4 units of capital goods.
B. 2 units of capital goods.
C. 3 units of capital goods.
D. of a unit of capital goods.
13. Refer to the data in the table. When compared with production option D, the choice of option C would:
A. tend to generate a more rapid growth rate.
B. be unattainable.
C. entail unemployment.
D. tend to generate a slower growth rate.
14. Refer to the data in the table. In this illustration, the law of increasing opportunity costs is reflected in the fact that:
A. human wants in the aggregate are insatiable and all the combinations of consumer goods and capital goods the
economy can produce are finite amounts.
B. the amount of consumer goods that must be sacrificed to get more capital goods diminishes beyond a point.
C. larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods.
D. the production possibilities data would graph as a straight, down-sloping line.
