Question 1

-Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. There can be gains from exchange

Accepted Answer

A)  if Agnes specializes in the production of X and Brenda specializes in the production of Y. 
B)  if Agnes specializes in the production of Y and Brenda specializes in the production of X. 
C)  only if Agnes becomes faster at producing X. 
D)  only if Brenda becomes faster at producing X or Y. 
A)  if Agnes specializes in the production of X and Brenda specializes in the production of Y. 
B)  if Agnes specializes in the production of Y and Brenda specializes in the production of X. 
C)  only if Agnes becomes faster at producing X. 
D)  only if Brenda becomes faster at producing X or Y.

Question 2

Blue Violet's Orange Rose's
production possibilities production possibilities  
-Two countries, Blue Violet and Orange Rose, produce only two goods: teapots and coffeepots. The table above gives their production possibilities. ________ has a comparative advantage in teapots and ________ has a comparative advantage in coffeepots.

Accepted Answer

A)  Orange Rose; Blue Violet 
B)  Blue Violet; Orange Rose 
C)  Blue Violet; Blue Violet 
D)  Orange Rose; Orange Rose 
A)  Orange Rose; Blue Violet 
B)  Blue Violet; Orange Rose 
C)  Blue Violet; Blue Violet 
D)  Orange Rose; Orange Rose

Question 3

-The data in the above table demonstrates that gains from trade can be captured if

Accepted Answer

A)  the United States produced both goods. 
B)  the United States produced steel in exchange for concrete produced in France. 
C)  the United States produced concrete in exchange for steel produced in France. 
D)  each country became self-sufficient, produced both goods for itself, and did not engage in trade. 
A)  the United States produced both goods. 
B)  the United States produced steel in exchange for concrete produced in France. 
C)  the United States produced concrete in exchange for steel produced in France. 
D)  each country became self-sufficient, produced both goods for itself, and did not engage in trade.

Question 4

-The figure above represents the production possibilities frontier for a country.
a) The nation is currently producing at point B and wants to move to point C. What is the opportunity cost of the move?
b) The nation is currently producing at point B and wants to move to point A. What is the opportunity cost of the move?

Accepted Answer

a) By moving from point B to point C, th

Question 5

Country A Country B  
-In the table above, country A is producing 4 units of X and 8 units of Y and country B is producing 4 units of X and 6 units of Y. The opportunity cost of producing more of

Accepted Answer

A)  good X is the same for both countries. 
B)  good Y is the same for both countries. 
C)  good X is lower in country A. 
D)  good Y is lower in country A. 
A)  good X is the same for both countries. 
B)  good Y is the same for both countries. 
C)  good X is lower in country A. 
D)  good Y is lower in country A.

Question 6

A key factor that leads to economic growth is

Accepted Answer

A)  human capital accumulation. 
B)  increasing current consumption. 
C)  avoiding the opportunity cost of investment. 
D)  Both answers A and B are correct. 
A)  human capital accumulation. 
B)  increasing current consumption. 
C)  avoiding the opportunity cost of investment. 
D)  Both answers A and B are correct.

Question 7

The principle of decreasing marginal benefit means that as the quantity of a good consumed

Accepted Answer

A)  decreases, its marginal benefit decreases. 
B)  increases, its marginal benefit decreases. 
C)  increases, its total benefit decreases. 
D)  None of the above answers is correct. 
A)  decreases, its marginal benefit decreases. 
B)  increases, its marginal benefit decreases. 
C)  increases, its total benefit decreases. 
D)  None of the above answers is correct.

Question 8

-Victor currently produces nuts and bolts at point a in the figure. Victor's marginal cost of producing an additional nut is ________.

Accepted Answer

A)  1 bolt per nut 
B)  1/2 bolt per nut 
C)  8/6 bolts per nut 
D)  8 bolts per nut 
A)  1 bolt per nut 
B)  1/2 bolt per nut 
C)  8/6 bolts per nut 
D)  8 bolts per nut

Question 9

Economic growth

Accepted Answer

A)  leads to less consumption in the present and increased consumption in the future. 
B)  is free. 
C)  is the major reason we face scarcity. 
D)  allows us to increase our consumption in the present and in the future. 
A)  leads to less consumption in the present and increased consumption in the future. 
B)  is free. 
C)  is the major reason we face scarcity. 
D)  allows us to increase our consumption in the present and in the future.

Question 10

As we move along a bowed-out production possibility frontier, producing more tacos and less pizza, the opportunity cost of a pizza ________.

Accepted Answer

A)  increases 
B)  remains the same 
C)  decreases 
D)  increases and then decreases 
A)  increases 
B)  remains the same 
C)  decreases 
D)  increases and then decreases

Question 11

-Refer to the production possibilities frontier in the figure above. Which production point indicates that resources are NOT fully utilized or are misallocated?

Accepted Answer

A)  Point a 
B)  Point b 
C)  Point c 
D)  Point e 
A)  Point a 
B)  Point b 
C)  Point c 
D)  Point e

Question 12

A point inside a production possibilities frontier

Accepted Answer

A)  could indicate that some resources are unemployed. 
B)  is unattainable. 
C)  is more efficient than points on the production possibilities frontier. 
D)  implies that too much capital and not enough labor are being used. 
A)  could indicate that some resources are unemployed. 
B)  is unattainable. 
C)  is more efficient than points on the production possibilities frontier. 
D)  implies that too much capital and not enough labor are being used.

Question 13

-The country whose production possibilities frontier is illustrated above is currently at position A on the production possibilities frontier. If it wishes to move to position B, it will

Accepted Answer

A)  find this change impossible to achieve given the resources it currently possesses. 
B)  have to employ all currently unemployed resources to accomplish this. 
C)  incur an opportunity cost of having to give up some butter in order to make the additional amount of guns desired. 
D)  be able to make the desired switch only if there is a significant improvement in the technology available to the nation. 
A)  find this change impossible to achieve given the resources it currently possesses. 
B)  have to employ all currently unemployed resources to accomplish this. 
C)  incur an opportunity cost of having to give up some butter in order to make the additional amount of guns desired. 
D)  be able to make the desired switch only if there is a significant improvement in the technology available to the nation.

Question 14

-The above table shows production combinations on a country's production possibilities frontier. A movement from ________ involves the greatest opportunity cost of increasing the production of good Y.

Accepted Answer

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

Question 15

-The table above lists six points on the production possibilities frontier for grain and cars. What is the opportunity cost of producing the 26th car?

Accepted Answer

A)  2 tons of grain per car 
B)  4 tons of grain per car 
C)  0.25 tons of grain per car 
D)  0.5 tons of grain per car 
A)  2 tons of grain per car 
B)  4 tons of grain per car 
C)  0.25 tons of grain per car 
D)  0.5 tons of grain per car

Question 16

-In the above figure, the curve labeled a is the ________ curve and the curve labeled b is the ________ curve.

Accepted Answer

A)  marginal cost; marginal benefit 
B)  marginal cost; trade line 
C)  marginal benefit; trade line 
D)  production possibilities frontier; trade line 
A)  marginal cost; marginal benefit 
B)  marginal cost; trade line 
C)  marginal benefit; trade line 
D)  production possibilities frontier; trade line

Question 17

Marginal benefit is the benefit

Accepted Answer

A)  that your activity provides to someone else. 
B)  of producing a good or service when the total benefit from the good or service exceeds its total cost. 
C)  that is received from consuming one more unit of a good or service. 
D)  of consuming another good or service divided by the total number of goods or services produced. 
A)  that your activity provides to someone else. 
B)  of producing a good or service when the total benefit from the good or service exceeds its total cost. 
C)  that is received from consuming one more unit of a good or service. 
D)  of consuming another good or service divided by the total number of goods or services produced.

Question 18

-In the above figure, curve b shows the

Accepted Answer

A)  bottles of soda that people are willing to forgo to get another bicycle. 
B)  bottles of soda that people must forgo to get another bicycle. 
C)  benefits of producing more bicycles is greater than the benefits of producing more soda. 
D)  benefits of producing more soda is greater than the benefits of producing more bicycles. 
A)  bottles of soda that people are willing to forgo to get another bicycle. 
B)  bottles of soda that people must forgo to get another bicycle. 
C)  benefits of producing more bicycles is greater than the benefits of producing more soda. 
D)  benefits of producing more soda is greater than the benefits of producing more bicycles.

Question 19

If a country must decrease current consumption to increase the amount of capital goods it produces today, then it must

Accepted Answer

A)  be using resources inefficiently today, but will be more efficient in the future. 
B)  be producing along the production possibilities frontier today and its production possibilities frontier will shift outward if it produces more capital goods. 
C)  must be producing outside the production possibilities frontier and will continue to do so in the future. 
D)  must not have private ownership of property and will have to follow planning authorities' decisions today and in the future. 
A)  be using resources inefficiently today, but will be more efficient in the future. 
B)  be producing along the production possibilities frontier today and its production possibilities frontier will shift outward if it produces more capital goods. 
C)  must be producing outside the production possibilities frontier and will continue to do so in the future. 
D)  must not have private ownership of property and will have to follow planning authorities' decisions today and in the future.

Question 20

-At the current point of production on a nation's production possibilities frontier, the marginal benefit of a slice of pizza is 500 tacos per slice of pizza while the marginal cost of producing a slice of pizza is 750 tacos per slice of pizza. To be allocatively efficient, what should be done?

Accepted Answer

The marginal benefit of a slic

Exam 2: The Economic Problem

-Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. There can be gains from exchange

-The data in the above table demonstrates that gains from trade can be captured if

Country A Country B -In the table above, country A is producing 4 units of X and 8 units of Y and country B is producing 4 units of X and 6 units of Y. The opportunity cost of producing more of

A key factor that leads to economic growth is

The principle of decreasing marginal benefit means that as the quantity of a good consumed

-Victor currently produces nuts and bolts at point a in the figure. Victor's marginal cost of producing an additional nut is ________.

Economic growth

As we move along a bowed-out production possibility frontier, producing more tacos and less pizza, the opportunity cost of a pizza ________.

-Refer to the production possibilities frontier in the figure above. Which production point indicates that resources are NOT fully utilized or are misallocated?

A point inside a production possibilities frontier

-The country whose production possibilities frontier is illustrated above is currently at position A on the production possibilities frontier. If it wishes to move to position B, it will

-The above table shows production combinations on a country's production possibilities frontier. A movement from ________ involves the greatest opportunity cost of increasing the production of good Y.

-The table above lists six points on the production possibilities frontier for grain and cars. What is the opportunity cost of producing the 26th car?

-In the above figure, the curve labeled a is the ________ curve and the curve labeled b is the ________ curve.

Marginal benefit is the benefit

-In the above figure, curve b shows the

If a country must decrease current consumption to increase the amount of capital goods it produces today, then it must

-At the current point of production on a nation's production possibilities frontier, the marginal benefit of a slice of pizza is 500 tacos per slice of pizza while the marginal cost of producing a slice of pizza is 750 tacos per slice of pizza. To be allocatively efficient, what should be done?

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

Filters

-In the above figure, the curve labeled a is the curve and the curve labeled b is the curve.