ECO 365T Wk 1 – Apply Summative Assessment Quiz

Camille is at the candy store with Grandma Mary, who offers to buy her $10 worth of candy. If lollipops are $2 each and candy bars are $3 each, what combination of candy can Camille’s Grandma Mary buy her?

Multiple Choice

• five lollipops and three candy bars
• two lollipops and two candy bars
• two lollipops and three candy bars
• four lollipop and one candy bars

Answer the question based on the following information: Suppose 30 units of product A can be produced by employing just labor and capital in the four ways shown below. Assume the prices of labor and capital are $2 and $3, respectively.

Production Techniques

1     2     3     4

Labor      4     3     2     5

Capital    2     3     5     1

Which technique is economically most efficient in producing A?

Multiple Choice

• 2
• 4
• 1
• 3

Which of the following statements about self-interest in a market system is false?

Multiple Choice

• In a market system, consumers are motivated by self-interest to seek the lowest prices for the products they want.
• Self-interest applies to businesses as they attempt to maximize their production costs.
• Self-interest of entrepreneurs implies seeking maximum profits or minimum losses.
• Self-interest usually motivates an individual to deliver something of value to others.

Suppose that Julia receives a $20 gift card for the local coffee shop, where she only buys lattes and muffins. If the price of a latte is $2 and the price of a muffin is $1, then we can conclude that Julia

Multiple Choice

• should only buy muffins.
• should only buy lattes.
• can buy 10 lattes or 20 muffins if she chooses to buy only one of the two goods.
• can buy 10 lattes and 20 muffins with her $20 gift card.

A nation can produce two products: tanks and autos. The table below is the nation’s production possibilities schedule.

Production Possibilities

Product   A     B     C     D     E     F

Tanks      0     1     2     3     4     5

Autos      1,000      950  850  650  350  0

The marginal opportunity cost of the fourth unit of tanks is

Multiple Choice

• 3 units of tanks.
• 300 units of autos.
• 350 units of autos.
• 650 units of autos.

Assume that a consumer has a given budget or income of $12 and that she can buy only two goods, apples or bananas. The price of an apple is $1.50 and the price of a banana is $0.75. What is the slope of the budget line if the quantity of apples were measured on the horizontal axis and bananas on the vertical axis?

Multiple Choice

• −0.5
• −0.8
• −1.6
• −2

A nation can produce two products: tanks and autos. The table below is the nation’s production possibilities schedule.

Production Possibilities

Product   A     B     C     D     E     F

Tanks      0     1     2     3     4     5

Autos      1,000      950  850  650  350  0

The total opportunity cost of three unit(s) of tanks is

Multiple Choice

• 200 units of autos.
• 350 units of autos.
• 650 units of autos.
• 1,000 units of autos.

Assume that a consumer has a given budget or income of $10 and that she can buy only two goods, apples or bananas. The price of an apple is $1.00 and the price of a banana is $0.50. If the consumer decides to buy 4 apples, how many bananas can she also buy with the remainder of her budget, assuming she exhausts her income?

Multiple Choice

• 12 bananas
• 5 bananas
• 8 bananas
• 15 bananas

Refer to the diagram. If society is currently producing the combination of bicycles and computers shown by point D, the production of 2 more units of bicycles

Multiple Choice

• cannot be achieved because resources are fully employed.
• will cost 1 unit of computers.
• will cost 2 units of computers.
• will cause some resources to become unemployed

The following graph is the production possibilities curve of a nation.

Which of the following combinations would be unattainable?

Multiple Choice

• 4 drill presses and 2 bread
• 7 drill presses and 2 bread
• 4 drill presses and 4 bread
• 6 drill presses and 2 bread

Which of the following is a characteristic of a sole proprietorship?

Multiple Choice

• It is owned and managed by two or more people.
• It is owned and managed by one person.
• It is an independent legal entity on its own.
• The owner bears no personal responsibility for the debts of the business.

Answer the question on the basis of the following production possibilities table for two countries, North Cantina and South Cantina.

North Cantina Production Possibilities

A     B     C     D     E     F

Capital Goods 5     4     3     2     1     0

Consumer Goods    0     10    18    24    28    30

South Cantina Production Possibilities

A     B     C     D     E     F

Capital Goods 5     4     3     2     1     0

Consumer Goods    0     8     15    21    25    27

Refer to the table. If South Cantina is producing at production alternative E, the opportunity cost of the second unit of capital goods will be

Multiple Choice

• 1/4 of a unit of consumer goods.
• 1 unit of consumer goods.
• 6 units of consumer goods.
• 4 units of consumer goods.

The following graph is the production possibilities curve of a nation.

The total opportunity cost of 4 drill presses is

Multiple Choice

• 1/4 of a unit of bread.
• 6 units of drill presses.
• 1 unit of bread.
• 4 units of drill presses.

Refer to the diagram. An improvement in technology will

Multiple Choice

shift the production possibilities curve from PP2 to PP3.

shift the production possibilities curve from PP3 to PP2.

move the economy from B to A along PP1.

move the economy from A, B, or C on PP1 to D.

Assume the price of product Y (the quantity of which is on the vertical axis) is $10 and the price of product X (the quantity of which is on the horizontal axis) is $5. Also assume that money income is $30. The absolute value of the slope of the resulting budget line is

Multiple Choice

• 2.
• 1/2.
• 3.
• 6.

Which of the following is one of the Five Fundamental Questions?

Multiple Choice

• Which products should be taxed?
• How will the goods and services be produced?
• How much should society save?
• Which products should be subsidized?

A nation can produce two products: steel and wheat. The table below is the nation’s production possibilities schedule.

Production Possibilities

Product   A     B     C     D     E     F

Steel       0     1     2     3     4     5

Wheat     100  90    75    55    30    0

The opportunity cost of producing the 1st unit of wheat is approximately

Multiple Choice

• 30 units of steel.
• 0 units of steel.
• 1 unit of steel.
• 1/30 of a unit of steel.

Refer to the diagram. The concept of opportunity cost is best represented by the

Multiple Choice

shift of the production possibilities curve from PP1 to PP2.

move from A on PP1 to E on PP2.

move from B on PP1 to A on PP1.

move from D inside PP1 to A on PP1.

If the total costs of producing 1,500 units of output is $15,000 and this output sold to consumers for a total of $16,500, then the firm would earn economic profits of

Multiple Choice

• $1,500.
• $15,000.
• $21,000.
• $31,500.
• $16,500.

Answer the question on the basis of the following production possibilities tables for two countries, North Cantina and South Cantina.

North Cantina Production Possibilities

A     B     C     D     E     F

Capital Goods 5     4     3     2     1     0

Consumer Goods    0     10    18    24    28    30

South Cantina Production Possibilities

A     B     C     D     E     F

Capital Goods 5     4     3     2     1     0

Consumer Goods    0     8     15    21    25    27

Refer to the tables. If North Cantina is producing at production alternative B, the opportunity cost of the eleventh unit of consumer goods will be

Multiple Choice

• 10 units of capital goods.
• 1/4 of a unit of capital goods.
• 8 units of capital goods.
• 1/8 of a unit of capital goods.