Part I. Multiple Choice Questions. Please circle the right answer (one mark each)
1. Which of the following are economic goods?
a. Atlantic Ocean sea water.
b. Iowa farm land.
c. California coast line.
d. All of the above.
e. All of the above, except a.
2. The three fundamental questions of economic organization are:
a. closely related to the concept of scarcity.
b. not nearly as important today as they were at the dawn of civilization.
c. what, how, and why.
d. land, labor, and capital.
e. all of the above.
3. Which of the following statements applies to a mixed economy?
a. There is confusion and a lack of organization.
b. The allocation of resources changes from production period to production period.
c. There are no real examples of truly mixed economies.
d. Mixed economies include aspects of both market and command economies.
e. None of the above statements apply.
4. Capital is:
a. the same as money.
b. the headquarters of economic planning.
c. both an input and an output.
d. all of the above.
e. none of the above.
5. Land, labor, and capital are:
a. available only in finite amounts.
b. used to produce outputs.
c. the primary factors of production.
d. combined with technology in the production process.
e. all of the above.
6. Which of the statements below does not apply to the production-possibility frontier, or PPF?
a. The PPF is closely related to the concept of scarcity.
b. Quantities of inputs are measured along the axes of the PPF.
c. The PPF may shift over time.
d. Movements along the PPF may occur as the allocation of resources changes.
e. Technology may change the shape of the PPF.
7. Which of the statements below is a reason why an economy might produce a level of output that is beneath its production-possibility frontier?
a. The available resources are not equally suited to the production of both outputs.
b. The available body of technological knowledge is not being fully utilized.
c. Society prefers one product over the other.
d. In reality, economies produce thousands of goods not just two.
e. There are no frontiers left anymore.
8. In order to shift the PPF out (above and to the right), an economy would have to:
a. somehow increase its stock of inputs.
b. remove some incompetent bureaucrats from their jobs.
c. eliminate the sources of significant abuse of monopoly power.
d. all of the above.
e. none of the above.
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9. Sana notices that no matter how many paper cups she buys, she always pays the same price per cup. This means that the supply curve which confronts her is:
a. perfectly inelastic.
b. perfectly elastic.
c. unit-elastic.
d. elastic, but not necessarily perfectly elastic.
e. none of these things, necessarily
10. A perfectly inelastic supply curve would be shown in the ordinary supply-and-demand graph as a:
a. vertical line.
b. horizontal line.
c. straight line, but neither horizontal nor vertical.
d. curved line.
e. any of the above.
