TEST BANK FOR CHAPTER 1: Economic Models

19. The solution to the simultaneous equations 5X – Y = 10 and 10X + Y = 35 is

a. X = 15, Y = 0.

b. X = 3, Y = 5.

c. X = 5, Y = 3.

d. None of these.

20. Graphically, the solution to a system of two independent linear equations is usually

a. the average of the slopes.

b. the average of the intercepts.

c. a single point.

d. None of these.

21. Let QD = -5P + 54 and QS = P – 6. Equilibrium can be found at

a. Q = 4; P = 10

b. Q = 6; P = 10

c. P = 6; Q = 0

d. Q =.gif”>; P = 2

22. If the production possibilities frontier can be expressed as 4X2 + Y2 = 16 then the point X = 1; Y = 4 is

a. outside the production possibilities frontier

b. on the production possibilities frontier

c. inside the production possibilities frontier

d. in the wrong quadrant to be on the graph

23. If the production possibilities frontier can be expressed as 4X2 + Y2 = 16 then the point X =.gif”>; Y = 2 is

a. outside the production possibilities frontier

b. on the production possibilities frontier

c. inside the production possibilities frontier

d. in the wrong quadrant to be on the graph

24. Suppose a production possibilities frontier can be expressed as 9X2 + Y2 = 81 what is the opportunity cost of going from 1 unit of X to 2 units of X (in terms of units of Y)?

a. 45

b. .gif”>

c. .gif”> -.gif”>

d. 1

25. Suppose a production possibilities frontier can be expressed as 9X2 + Y2 = 81 what is the opportunity cost of going from 2 units of X to 3 units of X (in terms of units of Y)?

a. .gif”> c. 1

b. .gif”> d. 0

26. An increase in the technology used in the production of only one of the two goods in a society will

a. eliminate scarcity

b. move the production possibilities frontier out in all directions

c. move the production possibilities frontier in all directions

d. leave one corner of the production possibilities frontier fixed and swing out from the other

27. Suppose right (R) and left (L) shoes are only useful if produced in equal proportion and societal happiness is expressed as min(R,L). The contour lines would be

a. downward sloping lines

b. upward sloping lines

c. L-shaped

d. backward L-shaped

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