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1	Refer to the graph above. We can infer from the graph that this society:
		A)	prefers B to C.
		B)	prefers C to B.
		C)	is indifferent between C and B.
		D)	is not using its resources efficiently.


2	Refer to the graph above. The graph indicates that with the resources and technology it has available, Ricardia:
		A)	can produce both 20 units of rye and 10 units of eggs.
		B)	can produce both 40 units of rye and 20 units of eggs.
		C)	cannot produce both 20 units of rye and 10 units of eggs.
		D)	cannot produce both 10 units of rye and 10 units of eggs.


3	The principle of increasing marginal opportunity costs states that initial opportunity costs are __________ and they __________ the more you concentrate on the activity
		A)	high; decrease
		B)	low; increase
		C)	high; increase
		D)	low; decrease


4	Which of the following would most likely generate a negative externality?
		A)	Education.
		B)	A lighthouse.
		C)	Cigarette smoke.
		D)	Employment.


5	Marginal opportunity cost is increasing if:
		A)	all inputs are equally adaptable to the production of all goods.
		B)	the production possibility curve is a downward sloping straight line.
		C)	all inputs are not equally adaptable to the production of all goods.
		D)	each input can be used to produce more than one good.


6	Given a production possibility curve for good X (on the x-axis) and good Y (on the y-axis), the opportunity cost of increasing good X is smallest when the slope of the production possibility curve is:
		A)	-6
		B)	-4
		C)	6
		D)	4


7	Suppose a single firm gains control of an industry by preventing other firms from entering the industry. As a result, the price charged by the single firm is much higher than the price that would be charged by many different firms producing this product in a competitive market. This situation can best be described as:
		A)	a market failure.
		B)	a government failure.
		C)	an efficient outcome.
		D)	a competitive outcome.


8	If no resource had a comparative advantage in the production of any good, the production possibility curve would be most likely to have:
		A)	an increasingly negative slope.
		B)	an increasingly positive slope.
		C)	a negative but constant slope.
		D)	a positive but constant slope.


9	Market failures:
		A)	can always be corrected through government action.
		B)	can never be corrected through government action.
		C)	are sometimes made worse by government failures.
		D)	lead to a desired allocation of resources.


10	Refer to the graph above. Given the following production possibility table for growing broccoli and asparagus in a 320 square foot garden in one season, the relevant production possibility curve is:
		A)	A
		B)	B
		C)	C
		D)	D