CP Economics ALL Test Questions and
Answers Final Review (Verified Answers
100%)
Suppose an economist says that "Other things equal, the lower the price of
bananas, the greater the amount of bananas purchased." This statement
indicates that:
All factors other than the price of bananas (for example, consumer tastes and incomes)
are assumed to be constant
The economizing problem is essentially one of deciding how to make the best
use of:
Limited resources to satisfy unlimited economic wants
Which of the following would cause this production possibilities curve to shift
outward?
Developing a more efficient steelmaking process
An economy is efficient when it has achieved:
Both full employment and full production
If there is an increase in the resources available within the economy, which of the
following MUST be true?
The economy will be capable of producing more goods and services
With productive efficiency:
There is production of any particular mix of goods and services in the least costly way
With allocative efficiency:
There is production of that particular mix of goods and services most wanted by society
Economic growth is best represented by:
A shift of the entire frontier line to A
The shape of this frontier line tells us that:
Larger and larger amounts of tea must be given up to produce just a little more
crumpets
If a certain combination of goods or services lies outside the production
possibilities curve of an economy, which of the following is true?
Resources are not available to achieve that combination of goods or services
Value of the best alternative that is foregone when a decision is made defines:
Opportunity cost
The law of increasing opportunity costs exists because:
Resources are not equally efficient in producing various goods (not all resources are
equally suited to producing all things)
Which situation would most likely cause a nation's production possibilities curve
to shift inward?
Going to war with another nation and then suffering a major defeat
Suppose an economy is producing two products, product A and product B. An
example of the opportunity cost of producing an additional unit of product A is:
The amount of product B that cannot now be produced because of product A
, Which of the following would cause an outward or rightward shift in the
production possibility curve?
An increase in capital equipment
Which statement best illustrates the concept of diminishing marginal utility?
A typical consumer will receive less satisfaction from the second hamburger consumed
as compared to the first hamburger
If there is an increase in demand, what will happen to the equilibrium price and
quantity of the good?
Price = Increase and Quantity = Increase
An increase in the price of ice cream shifts the demand for ice cream cones in
which direction?
To the left, because the ice cream and ice cream cones are usually used together
If average income increases then there will be:
A shift of the demand curve
Four of the five events described below would cause the demand curve for beef
to shift. One would not shift the curve. Which is the single exception?
A fall in the price of beef
Assume that Blu-Ray Players double in price. What will most likely happen to the
equilibrium price and quantity of Blu-ray Discs?
Price = Decrease, Quantity = Decrease
If two goods are substitutes for each other, an increase in the price of one will
necessarily:
Increase the demand for the other
Which of the following could cause a decrease in quantity demanded for product
X?
An increase in the price of product X
Which factor will decrease demand for a product?
A decrease in the number of buyers
The law of supply states, that other things being constant, as price increase:
Quantity supplied increases
A decrease in the supply of a product would most likely be caused by:
An increase in the cost of resources needed to produce the product
If the quantity supplied of a product is greater than the quantity demanded for a
product, then:
There is a surplus of the product
Assume that for consumers, pears and apple are substitutes. It is announced that
pesticides used on most apples may be dangerous to consumers' health. As a
result of this announcement, which of the following market changes is most likely
to occur in the short run in the pear market?
Demand shifts to the right
An increase in demand and a decrease in supply will affect equilibrium price and
quantity in what way?
Price = Increase, Quantity = Indetermintate
Suppose that a more efficient way to produce a good is discovered, thus lowering
production costs for the good. This will cause a(n):
Increase in supply, or a rightward shift of the supply curve
Answers Final Review (Verified Answers
100%)
Suppose an economist says that "Other things equal, the lower the price of
bananas, the greater the amount of bananas purchased." This statement
indicates that:
All factors other than the price of bananas (for example, consumer tastes and incomes)
are assumed to be constant
The economizing problem is essentially one of deciding how to make the best
use of:
Limited resources to satisfy unlimited economic wants
Which of the following would cause this production possibilities curve to shift
outward?
Developing a more efficient steelmaking process
An economy is efficient when it has achieved:
Both full employment and full production
If there is an increase in the resources available within the economy, which of the
following MUST be true?
The economy will be capable of producing more goods and services
With productive efficiency:
There is production of any particular mix of goods and services in the least costly way
With allocative efficiency:
There is production of that particular mix of goods and services most wanted by society
Economic growth is best represented by:
A shift of the entire frontier line to A
The shape of this frontier line tells us that:
Larger and larger amounts of tea must be given up to produce just a little more
crumpets
If a certain combination of goods or services lies outside the production
possibilities curve of an economy, which of the following is true?
Resources are not available to achieve that combination of goods or services
Value of the best alternative that is foregone when a decision is made defines:
Opportunity cost
The law of increasing opportunity costs exists because:
Resources are not equally efficient in producing various goods (not all resources are
equally suited to producing all things)
Which situation would most likely cause a nation's production possibilities curve
to shift inward?
Going to war with another nation and then suffering a major defeat
Suppose an economy is producing two products, product A and product B. An
example of the opportunity cost of producing an additional unit of product A is:
The amount of product B that cannot now be produced because of product A
, Which of the following would cause an outward or rightward shift in the
production possibility curve?
An increase in capital equipment
Which statement best illustrates the concept of diminishing marginal utility?
A typical consumer will receive less satisfaction from the second hamburger consumed
as compared to the first hamburger
If there is an increase in demand, what will happen to the equilibrium price and
quantity of the good?
Price = Increase and Quantity = Increase
An increase in the price of ice cream shifts the demand for ice cream cones in
which direction?
To the left, because the ice cream and ice cream cones are usually used together
If average income increases then there will be:
A shift of the demand curve
Four of the five events described below would cause the demand curve for beef
to shift. One would not shift the curve. Which is the single exception?
A fall in the price of beef
Assume that Blu-Ray Players double in price. What will most likely happen to the
equilibrium price and quantity of Blu-ray Discs?
Price = Decrease, Quantity = Decrease
If two goods are substitutes for each other, an increase in the price of one will
necessarily:
Increase the demand for the other
Which of the following could cause a decrease in quantity demanded for product
X?
An increase in the price of product X
Which factor will decrease demand for a product?
A decrease in the number of buyers
The law of supply states, that other things being constant, as price increase:
Quantity supplied increases
A decrease in the supply of a product would most likely be caused by:
An increase in the cost of resources needed to produce the product
If the quantity supplied of a product is greater than the quantity demanded for a
product, then:
There is a surplus of the product
Assume that for consumers, pears and apple are substitutes. It is announced that
pesticides used on most apples may be dangerous to consumers' health. As a
result of this announcement, which of the following market changes is most likely
to occur in the short run in the pear market?
Demand shifts to the right
An increase in demand and a decrease in supply will affect equilibrium price and
quantity in what way?
Price = Increase, Quantity = Indetermintate
Suppose that a more efficient way to produce a good is discovered, thus lowering
production costs for the good. This will cause a(n):
Increase in supply, or a rightward shift of the supply curve
