Essay, Case,
ZEEZDM
Economics 165 Final Exam
Spring 1995
1. Economic models or theories
a. are limited to variables that are directly (positively) related
* b. are simplifications of the real world they represent
c. cannot be tested empirically
d. are limited to variables that are inversely related
2. Allocative efficiency means that
a. opportunity cost has been reduced to zero
* b. resources are allocated to the use which has the highest value to society
c. technological efficiency has not been achieved
d. only relative scarcity exists
3. Operating inside a society's production possibilities frontier is a:
a. drawback of capitalism relative to socialism
* b. symptom of inefficiency or idle resources
c. way to build reserves to stimulate investment and growth
d. result whenever the capital stock depreciates rapidly
4. Which event will shift the butter/guns production possibilities frontier outward?
* a. a new and superior method of producing butter
b. a decrease in the resources devoted to the production of investment goods
c. an increase in the production of guns
d. a reduction in the production of butter
5. Which of the following is correct with respect to a firm's supply of a given product? The supply curve shows
a. the amount of profit that will be earned for various output levels
* b. the amount of a good that will be available for sale at various prices
c. an inverse relationship between price and quantity supplied
d. the amounts of a good that will be sold at various prices
6. If the real income of a consumer decreases and, as a result, his demand for product X increases, it can be concluded that product X is a/an
a. complementary good
b. normal good
* c. inferior good
d. substitute good
7. If beer and pretzels are complementary goods, then an increase in the price of beer will result in:
a. an increase in the demand for pretzels
b. an increase in the demand for beer
* c. a decrease in the demand for pretzels
d. a
Economics 165 Final Exam
Spring 1995
1. Economic models or theories
a. are limited to variables that are directly (positively) related
* b. are simplifications of the real world they represent
c. cannot be tested empirically
d. are limited to variables that are inversely related
2. Allocative efficiency means that
a. opportunity cost has been reduced to zero
* b. resources are allocated to the use which has the highest value to society
c. technological efficiency has not been achieved
d. only relative scarcity exists
3. Operating inside a society's production possibilities frontier is a:
a. drawback of capitalism relative to socialism
* b. symptom of inefficiency or idle resources
c. way to build reserves to stimulate investment and growth
d. result whenever the capital stock depreciates rapidly
4. Which event will shift the butter/guns production possibilities frontier outward?
* a. a new and superior method of producing butter
b. a decrease in the resources devoted to the production of investment goods
c. an increase in the production of guns
d. a reduction in the production of butter
5. Which of the following is correct with respect to a firm's supply of a given product? The supply curve shows
a. the amount of profit that will be earned for various output levels
* b. the amount of a good that will be available for sale at various prices
c. an inverse relationship between price and quantity supplied
d. the amounts of a good that will be sold at various prices
6. If the real income of a consumer decreases and, as a result, his demand for product X increases, it can be concluded that product X is a/an
a. complementary good
b. normal good
* c. inferior good
d. substitute good
7. If beer and pretzels are complementary goods, then an increase in the price of beer will result in:
a. an increase in the demand for pretzels
b. an increase in the demand for beer
* c. a decrease in the demand for pretzels
d. a