TEST12019
TEST12019
TEST12019
INSTRUCTIONS:
*ANSWER ALL QUESTIONS FROM THIS SECTION.
* USE THE SPECIAL ANSWER SHEET PROVIDED
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A. Prices allocate resources equally among competing industries and sectors in the
economy.
B. Prices indicate relative scarcities and costs of production.
C. Relative price changes are a determinant of firms’ profits and therefore encourage
or discourage production.
D. Prices are measures of consumers’ willingness to pay for goods and services.
E. Prices signal to consumers how much they must sacrifice to obtain a commodity.
11. Complete the following statement. Households sell their ____________ in the
__________ market. They then use their income to buy __________ in the __________
market.
A. the maximum combination of inputs that can be used to produce output in a typical
economy.
B. the maximum revenue that can be generated from the sale of output produced by
limited resources in an economy.
C. the minimum quantities of commodities that can be produced from limited but fully-
employed resources in an economy.
D. the maximum quantities of commodities that can be produced from limited but fully-
employed resources in an economy.
13. With reference to the above production possibilities curve, we can say that
A. the opportunity cost of producing 0a hospitals is 0b submarines.
B. the production of both submarines and hospitals appears to require similar resources
in similar proportions.
C. the opportunity cost of producing one more hospital is higher at f than at g.
D. the opportunity cost of producing one more submarine is higher at g than at f.
E. the opportunity cost of producing 0a hospitals is cb submarines.
A.
Use the diagram below, which shows production possibilities for cigars and cameras, to
answer the question 14 below.
14. The opportunity cost of producing an additional kilogram of cigars would be greatest at
A. A.
B. B.
C. C.
D. D.
E. The opportunity cost of producing an additional kilogram of cigars would be equal at
A, B, C and D.
15. If the production possibility curve for a two-good economy is a straight line, then
A. opportunity costs increase as production of one good rises.
B. opportunity costs fall as production of one good rises.
C. the goods must make use of inputs in similar proportions.
D. the economy must be producing at a point where there is inefficient use of resources.
E. the economy must be experiencing economic growth.
B.
To answer question 16 , refer to the production possibility curve below.
16. As the output of Good Y increases along the curve, which of the following changes
involves the largest opportunity cost?
A. 0 to 5 units.
B. 5 to 10 units.
C. 10 to 15 units.
D. 15 to 20 units.
E. The opportunity cost is the same in each case.
17. Which of the following statements about quantity demanded is not true? Quantity
demanded is:
B. effective demand, or the amount people are willing to buy at a particular price.
19. Which of the following will NOT, all else equal, cause demand for good A to change?
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