Exam 1: Limits, Alternatives, and Choices

A nation can produce two products: steel and wheat. The table below is the nation's production possibilities schedule: Refer to the above table. In moving stepwise from possibility A to B to C … to F, the opportunity cost of a unit of steel in terms of wheat:

In a graph of the relationship between income and saving, economists generally consider:

The idea in economics that "there is no free lunch" means that:

The process of observing real-world behavior, developing hypotheses, testing them against facts, then using the results to construct theories is called:

Assume that a consumer purchases only two products. Suppose that the consumer's money income doubles, and the prices of the two products also double. These changes in income and prices will result in:

Assume that a consumer spends a given budget on only two goods, and that the prices of the two goods are constant. The budget line in this case would:

Which one of the following is a normative economic statement?

The production possibilities curve is a graph of:

Suppose there are two economies, Alpha and Beta, which have the same production possibilities curves. If Beta devotes more resources to produce capital goods than consumer goods as compared to Alpha, then in the future:

Which of the following suggests a direct relationship between x and y?

"The role of government in the economy should be kept to a minimum" is an example of a positive economic statement.

Assume that a consumer purchases only two products and there is a decrease in the consumer's income. The prices of the two products stay constant. The decrease in income will result in a:

A point inside the production possibilities curve is ____ while a point outside the curve is ____.

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities: Refer to the above table. According to the production possibilities schedule, a combination of 4 tanks and 650 autos is:

The opportunity cost to a consumer who smokes cigarettes consists of the:

A nation's consumption is strictly limited by its production possibilities, even with international trade.

The vertical intercept of line (3) on the above graph is:

Which of the following is a normative economic statement?

Cuba is a command economy that suffered a decline in economic growth because of a cut in the aid provided by the former Soviet Union when the latter collapsed. As a consequence, Cuba:

Specialization and international trade allows a nation to: