Question 1

-In the figure above, at the allocatively efficient level of computer production consumers are willing to give up

Accepted Answer

A)  0 televisions per computer. 
B)  between 0 and 3 televisions per computer. 
C)  3 televisions per computer. 
D)  more than 3 televisions per computer. 
A)  0 televisions per computer. 
B)  between 0 and 3 televisions per computer. 
C)  3 televisions per computer. 
D)  more than 3 televisions per computer.

Question 2

-In the figure above, which of the following movements has the largest opportunity cost?

Accepted Answer

A)  from point C to point B 
B)  from point C to point A 
C)  from point B to point A 
D)  from point A to point E 
A)  from point C to point B 
B)  from point C to point A 
C)  from point B to point A 
D)  from point A to point E

Question 3

-In the figure above, point E could be obtained if

Accepted Answer

A)  resources were shifted from education to health care. 
B)  resources were used more efficiently. 
C)  society's resources increased. 
D)  resources were shifted from health care to education. 
A)  resources were shifted from education to health care. 
B)  resources were used more efficiently. 
C)  society's resources increased. 
D)  resources were shifted from health care to education.

Question 4

Considering a PPF with health care services on the vertical axis and other goods and services on the horizontal axis, the increasing production of health care services in the United States as a result of the aging population represents

Accepted Answer

A)  a movement upward along the PPF. 
B)  an outward shift of the PPF from the vertical axis. 
C)  an outward shift of the PPF from the horizontal axis. 
D)  a movement downward along the PPF. 
A)  a movement upward along the PPF. 
B)  an outward shift of the PPF from the vertical axis. 
C)  an outward shift of the PPF from the horizontal axis. 
D)  a movement downward along the PPF.

Question 5

-Based on the above, which figure shows the impact of a decrease in the population available to work?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D

Question 6

Missouri can produce 10,000 tons of pecans per year or 5,000 tons of pears per year. Washington can produce 12,000 tons of pecans per year or 48,000 tons of pears per year. Which of the following statements about opportunity cost is correct?

Accepted Answer

A)  The opportunity cost of a ton of pecans is 2 tons of pears per ton of pecans for Missouri and 1/4 ton of pears per ton of pecans for Washington. 
B)  The opportunity cost of a ton of pears is 2 tons of pecans per ton of pears for Missouri and 1/4 ton of pecans per ton of pears for Washington. 
C)  The opportunity cost of a ton of pecans is 1/2 ton of pears per ton of pecans for Missouri and 4 tons of pears per ton of pecans for Washington. 
D)  Both answers B and C are correct. 
A)  The opportunity cost of a ton of pecans is 2 tons of pears per ton of pecans for Missouri and 1/4 ton of pears per ton of pecans for Washington. 
B)  The opportunity cost of a ton of pears is 2 tons of pecans per ton of pears for Missouri and 1/4 ton of pecans per ton of pears for Washington. 
C)  The opportunity cost of a ton of pecans is 1/2 ton of pears per ton of pecans for Missouri and 4 tons of pears per ton of pecans for Washington. 
D)  Both answers B and C are correct.

Question 7

Moving downward along a PPF, the opportunity cost of another unit of the good measured along the horizontal axis decreases.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements regarding the production possibilities frontier is true?

Accepted Answer

A)  Points outside the frontier are attainable. 
B)  Points inside the frontier are attainable. 
C)  Points on the frontier are less efficient than points inside the frontier. 
D)  None of the above because all of the above statements are false. 
A)  Points outside the frontier are attainable. 
B)  Points inside the frontier are attainable. 
C)  Points on the frontier are less efficient than points inside the frontier. 
D)  None of the above because all of the above statements are false.

Question 9

When the production possibilities frontier bows outward from the origin,

Accepted Answer

A)  some of society's resources are unemployed. 
B)  opportunity costs are constant. 
C)  opportunity costs are increasing. 
D)  opportunity costs are decreasing. 
A)  some of society's resources are unemployed. 
B)  opportunity costs are constant. 
C)  opportunity costs are increasing. 
D)  opportunity costs are decreasing.

Question 10

Country A Country B  
-Homer and Teddy are stranded on a desert island. To feed themselves each day they can either catch fish or pick fruit. In a day, Teddy could pick 60 pieces of fruit or catch 20 fish. Homer could pick 100 pieces of fruit or catch 150 fish. Which of the following statements is correct?

Accepted Answer

A)  Homer has an absolute advantage in catching fish and Teddy has an absolute advantage in picking fruit. 
B)  Homer has an absolute advantage in picking fruit and Teddy has an absolute advantage in catching fish. 
C)  Homer has an absolute advantage in both catching fish and picking fruit. 
D)  Teddy has an absolute advantage in both catching fish and picking fruit. 
A)  Homer has an absolute advantage in catching fish and Teddy has an absolute advantage in picking fruit. 
B)  Homer has an absolute advantage in picking fruit and Teddy has an absolute advantage in catching fish. 
C)  Homer has an absolute advantage in both catching fish and picking fruit. 
D)  Teddy has an absolute advantage in both catching fish and picking fruit.

Question 11

By specialization and trade, two individuals can

Accepted Answer

A)  consume at a point beyond their individual production possibilities frontiers. 
B)  increase their comparative advantage. 
C)  increase their absolute advantage. 
D)  shift their individual production possibilities frontiers outward. 
A)  consume at a point beyond their individual production possibilities frontiers. 
B)  increase their comparative advantage. 
C)  increase their absolute advantage. 
D)  shift their individual production possibilities frontiers outward.

Question 12

Production efficiency occurs when production ________.

Accepted Answer

A)  is at a point beyond the production possibilities frontier 
B)  is on the production possibilities frontier or inside it 
C)  is at any attainable point 
D)  is on the production possibilities frontier 
A)  is at a point beyond the production possibilities frontier 
B)  is on the production possibilities frontier or inside it 
C)  is at any attainable point 
D)  is on the production possibilities frontier

Question 13

-Refer to the production possibilities frontier in the figure above. If the country moves from point a to point c, the opportunity cost of the move is

Accepted Answer

A)  30 million capital goods. 
B)  20 million capital goods. 
C)  10 million capital goods. 
D)  10 million consumption goods. 
A)  30 million capital goods. 
B)  20 million capital goods. 
C)  10 million capital goods. 
D)  10 million consumption goods.

Question 14

A tradeoff is

Accepted Answer

A)  represented by a point inside a PPF. 
B)  represented by a point outside a PPF. 
C)  a constraint that requires giving up one thing to get another. 
D)  a transaction at a price either above or below the equilibrium price. 
A)  represented by a point inside a PPF. 
B)  represented by a point outside a PPF. 
C)  a constraint that requires giving up one thing to get another. 
D)  a transaction at a price either above or below the equilibrium price.

Question 15

-Harry usually spends 10 hours a week playing Quidditch. However, his Defense Against the Dark Arts exam is coming and he needs more time to study for the exam. If he does not study at all, the lowest grade he will receive is 55. But Harry realizes that this grade is unacceptable and so he has to give up some of his Quidditch time. But how much? He asks his friend Hermione, who is very good at Magical Economics, to help him figure this out. Together, they come up with the schedules of Harry's possibilities and values in the tables above. Then Hermione quickly finds the solution. But Harry still looks puzzled. Help Hermione to explain her solution to Harry.
a) Draw Harry's production possibilities frontier with the Quidditch hours on the horizontal axis and Harry's grade, starting at 55, on the vertical axis.
b) What is the opportunity cost of the first two hours of Quidditch? What is the marginal cost of the 5th hour?
c) What is Harry's opportunity cost of raising his grade from 82 points to 87 points?
d) Draw Harry's marginal cost of playing Quidditch curve. What happens to the marginal cost if Harry spends more time playing Quidditch?
e) Draw Harry's marginal benefit from playing Quidditch curve. Describe the relationship between Harry's time spent playing Quidditch and the marginal benefit from playing Quidditch.
f) For how many extra hours did Hermione recommend Harry to study? Why? If Harry follows her advice, what grade will he expect? What do you think Hermione said when Harry asked why he should not spend more time playing Quidditch?

Accepted Answer

@#IMG-DLM& a) The figure above shows Harry's produ

Question 16

-In the figure above, the marginal cost of the second computer is

Accepted Answer

A)  2 television sets per computer. 
B)  3 television sets per computer. 
C)  5 television sets per computer. 
D)  30 television sets per computer. 
A)  2 television sets per computer. 
B)  3 television sets per computer. 
C)  5 television sets per computer. 
D)  30 television sets per computer.

Question 17

Moving from one point on the production possibilities frontier to another

Accepted Answer

A)  involves a tradeoff but does not incur an opportunity cost. 
B)  involves an opportunity cost but no tradeoff. 
C)  involves a tradeoff and incurs an opportunity cost. 
D)  involves no tradeoff but it does incur an opportunity cost. 
A)  involves a tradeoff but does not incur an opportunity cost. 
B)  involves an opportunity cost but no tradeoff. 
C)  involves a tradeoff and incurs an opportunity cost. 
D)  involves no tradeoff but it does incur an opportunity cost.

Question 18

The state of Georgia offers free college tuition to high school students with a "B" average. In 2007, the state raised the requirement so that fewer students qualified for the scholarship. At the same time, Georgia increased state spending on health care. Suppose that college education is on the vertical axis and health care is on the horizontal axis of a PPF. These changes

Accepted Answer

A)  are example of a tradeoff. 
B)  are an example of incentives. 
C)  will cause a shift out of the PPF. 
D)  will cause a shift in the of the PPF. 
A)  are example of a tradeoff. 
B)  are an example of incentives. 
C)  will cause a shift out of the PPF. 
D)  will cause a shift in the of the PPF.

Question 19

Production points inside the production possibilities frontier

Accepted Answer

A)  are unattainable. 
B)  are attainable only with the full utilization of all resources. 
C)  are associated with unused or misallocated resources. 
D)  result in more rapid growth. 
A)  are unattainable. 
B)  are attainable only with the full utilization of all resources. 
C)  are associated with unused or misallocated resources. 
D)  result in more rapid growth.

Question 20

"Allocative efficiency in the production of cherries means that consumers can eat all of the cherries they desire." Is this statement true or false?

Accepted Answer

Allocative efficiency means that we are

Exam 2: The Economic Problem

-In the figure above, at the allocatively efficient level of computer production consumers are willing to give up

-In the figure above, which of the following movements has the largest opportunity cost?

-In the figure above, point E could be obtained if

Considering a PPF with health care services on the vertical axis and other goods and services on the horizontal axis, the increasing production of health care services in the United States as a result of the aging population represents

-Based on the above, which figure shows the impact of a decrease in the population available to work?

Missouri can produce 10,000 tons of pecans per year or 5,000 tons of pears per year. Washington can produce 12,000 tons of pecans per year or 48,000 tons of pears per year. Which of the following statements about opportunity cost is correct?

Moving downward along a PPF, the opportunity cost of another unit of the good measured along the horizontal axis decreases.

Which of the following statements regarding the production possibilities frontier is true?

When the production possibilities frontier bows outward from the origin,

By specialization and trade, two individuals can

Production efficiency occurs when production ________.

-Refer to the production possibilities frontier in the figure above. If the country moves from point a to point c, the opportunity cost of the move is

A tradeoff is

-In the figure above, the marginal cost of the second computer is

Moving from one point on the production possibilities frontier to another

Production points inside the production possibilities frontier

"Allocative efficiency in the production of cherries means that consumers can eat all of the cherries they desire." Is this statement true or false?

What Is Economics

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices and Public Goods

Externalities and the Environment

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

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