Question 1

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

Accepted Answer

A)  0 television sets per computer. 
B)  4 television sets per computer. 
C)  20 television sets per computer. 
D)  35 television sets per computer. 
A)  0 television sets per computer. 
B)  4 television sets per computer. 
C)  20 television sets per computer. 
D)  35 television sets per computer.

Question 2

The social arrangements that govern the ownership, use, and disposal of property are referred to as

Accepted Answer

A)  the double coincidence of wants. 
B)  capitalism. 
C)  private enterprise. 
D)  property rights. 
A)  the double coincidence of wants. 
B)  capitalism. 
C)  private enterprise. 
D)  property rights.

Question 3

Increasing opportunity cost occurs along a production possibilities frontier because

Accepted Answer

A)  resources are not equally productive in all activities. 
B)  increasing wants need to be satisfied. 
C)  in order to produce more of one good decreasing amounts of another good must be sacrificed. 
D)  production takes time. 
A)  resources are not equally productive in all activities. 
B)  increasing wants need to be satisfied. 
C)  in order to produce more of one good decreasing amounts of another good must be sacrificed. 
D)  production takes time.

Question 4

Most students attending college pay tuition and are unable to hold a full-time job. For these students, tuition is

Accepted Answer

A)  part of the opportunity cost of going to college. So are their forgone earnings from not holding a full-time job. 
B)  part of the opportunity cost of going to college. Their forgone earnings from not holding a full-time job are not part of the opportunity cost of attending college. 
C)  not part of the opportunity cost of going to college, but their forgone earnings from not holding a full-time job are part of the opportunity cost of attending college. 
D)  not part of the opportunity cost of going to college. Neither are their forgone earnings from not holding a full-time job. 
A)  part of the opportunity cost of going to college. So are their forgone earnings from not holding a full-time job. 
B)  part of the opportunity cost of going to college. Their forgone earnings from not holding a full-time job are not part of the opportunity cost of attending college. 
C)  not part of the opportunity cost of going to college, but their forgone earnings from not holding a full-time job are part of the opportunity cost of attending college. 
D)  not part of the opportunity cost of going to college. Neither are their forgone earnings from not holding a full-time job.

Question 5

Tom and Di grow tomatoes and turnips. Tom has a comparative advantage in growing tomatoes if ________.

Accepted Answer

A)  Tom can grow more tomatoes than Di can 
B)  his opportunity cost of tomatoes is less than Di's opportunity cost of tomatoes 
C)  his opportunity cost of tomatoes is less than his opportunity cost of turnips 
D)  his marginal benefit from tomatoes is greater than Di's 
A)  Tom can grow more tomatoes than Di can 
B)  his opportunity cost of tomatoes is less than Di's opportunity cost of tomatoes 
C)  his opportunity cost of tomatoes is less than his opportunity cost of turnips 
D)  his marginal benefit from tomatoes is greater than Di's

Question 6

If Sam is producing at a point on his production possibilities frontier, then he

Accepted Answer

A)  cannot produce any more of either good. 
B)  can produce more of one good only by producing less of the other. 
C)  will be unable to gain from trade. 
D)  is not subject to scarcity. 
A)  cannot produce any more of either good. 
B)  can produce more of one good only by producing less of the other. 
C)  will be unable to gain from trade. 
D)  is not subject to scarcity.

Question 7

The nation's production possibilities frontier is bowed outward. Suppose that the government decides to increase the production of armaments by $20 billion, and that as a result the output of consumer goods falls by $20 billion. If a further $20 billion increase beyond the initial $20 billion increase in armaments output is sought, we can expect that the output of consumer goods and services will fall further by

Accepted Answer

A)  less than $20 billion. 
B)  $20 billion. 
C)  more than $20 billion. 
D)  There is not enough information to determine the answer. 
A)  less than $20 billion. 
B)  $20 billion. 
C)  more than $20 billion. 
D)  There is not enough information to determine the answer.

Question 8

When a nation has a comparative advantage in the production of a particular good,

Accepted Answer

A)  the nation tends to avoid specialization. 
B)  the comparative advantage encourages self-sufficiency. 
C)  the opportunity cost of producing that good is higher than that of other goods. 
D)  the nation can gain from trade. 
A)  the nation tends to avoid specialization. 
B)  the comparative advantage encourages self-sufficiency. 
C)  the opportunity cost of producing that good is higher than that of other goods. 
D)  the nation can gain from trade.

Question 9

An opportunity cost of economic growth is

Accepted Answer

A)  essentially zero because economic growth leads to such large gains in the long run. 
B)  the decrease in production of consumption goods in the present time period. 
C)  decreased by the creation of capital goods rather than consumption goods. 
D)  so high that places such as Hong Kong have had to do without it. 
A)  essentially zero because economic growth leads to such large gains in the long run. 
B)  the decrease in production of consumption goods in the present time period. 
C)  decreased by the creation of capital goods rather than consumption goods. 
D)  so high that places such as Hong Kong have had to do without it.

Question 10

-The above table shows production combinations on a country's production possibilities frontier. Which of the following points signifies efficient production?

Accepted Answer

A)  0 units of good X and 40 units of good Y 
B)  3 units of good X and 25 units of good Y 
C)  10 units of good X and 16 units of good Y 
D)  12 units of good X and 1 unit of good Y 
A)  0 units of good X and 40 units of good Y 
B)  3 units of good X and 25 units of good Y 
C)  10 units of good X and 16 units of good Y 
D)  12 units of good X and 1 unit of good Y

Question 11

Opportunity cost is illustrated in a production possibilities frontier (PPF) by a movement

Accepted Answer

A)  from the region within the PPF to a point on the PPF. 
B)  from the region within the PPF to the region outside of the PPF. 
C)  from the region outside of the PPF to a point on the PPF. 
D)  along the PPF where to gain more of one good it is necessary to give some of another good. 
A)  from the region within the PPF to a point on the PPF. 
B)  from the region within the PPF to the region outside of the PPF. 
C)  from the region outside of the PPF to a point on the PPF. 
D)  along the PPF where to gain more of one good it is necessary to give some of another good.

Question 12

If the marginal benefit of a good exceeds its marginal cost,

Accepted Answer

A)  we've achieved efficient resource use. 
B)  we should produce more to achieve the allocatively efficient use of resources. 
C)  we should produce less to achieve the allocatively efficient use of resources. 
D)  we cannot tell if more or less should be produced to achieve the allocatively efficient use of resources. 
A)  we've achieved efficient resource use. 
B)  we should produce more to achieve the allocatively efficient use of resources. 
C)  we should produce less to achieve the allocatively efficient use of resources. 
D)  we cannot tell if more or less should be produced to achieve the allocatively efficient use of resources.

Question 13

A bowed outward production possibilities frontier occurs when

Accepted Answer

A)  opportunity costs are constant. 
B)  resources are not scarce. 
C)  as more of a good is produced, producing additional units of it require greater reductions in the other good. 
D)  the society is operating on the production possibilities frontier. 
A)  opportunity costs are constant. 
B)  resources are not scarce. 
C)  as more of a good is produced, producing additional units of it require greater reductions in the other good. 
D)  the society is operating on the production possibilities frontier.

Question 14

Allocative efficiency occurs when it is

Accepted Answer

A)  possible to produce more of one good without giving up the production of some other good. 
B)  possible to produce more of all goods. 
C)  not possible to produce more of one good without giving up the production of some other good that is valued less highly. 
D)  not possible to produce more of one good without giving up the production of some other good that is valued more highly. 
A)  possible to produce more of one good without giving up the production of some other good. 
B)  possible to produce more of all goods. 
C)  not possible to produce more of one good without giving up the production of some other good that is valued less highly. 
D)  not possible to produce more of one good without giving up the production of some other good that is valued more highly.

Question 15

-In the above figure, which point represents an attainable but inefficient production point?

Accepted Answer

A)  Point C 
B)  Point N 
C)  Point L 
D)  Point D 
A)  Point C 
B)  Point N 
C)  Point L 
D)  Point D

Question 16

Intellectual property

Accepted Answer

A)  is protected by common law rather than by written laws. 
B)  is protected by people's sense of decency rather than by written laws. 
C)  belongs to everyone with the necessary human capital to use it. 
D)  is often protected by copyrights and patents. 
A)  is protected by common law rather than by written laws. 
B)  is protected by people's sense of decency rather than by written laws. 
C)  belongs to everyone with the necessary human capital to use it. 
D)  is often protected by copyrights and patents.

Question 17

-The bowed-outward shape of a PPF

Accepted Answer

A)  is due to capital accumulation. 
B)  reflects the unequal application of technology in production. 
C)  illustrates the fact that no opportunity cost is incurred for increasing the production of the good measured on the horizontal axis but it is incurred to increase production of the good measured along the vertical axis. 
D)  is due to the existence of increasing opportunity cost. 
A)  is due to capital accumulation. 
B)  reflects the unequal application of technology in production. 
C)  illustrates the fact that no opportunity cost is incurred for increasing the production of the good measured on the horizontal axis but it is incurred to increase production of the good measured along the vertical axis. 
D)  is due to the existence of increasing opportunity cost.

Question 18

In the movie Cast Away, Tom Hanks plays a FedEx efficiency expert stranded on a deserted island. While on the island, he divides his time between catching fish, gathering coconuts, painting, and building a raft. Suppose that these were Mr. Hanks' only activities. Did he face an opportunity cost from pursuing any of these activities? Why or why not?

Accepted Answer

Yes, Mr. Hanks faces an opportunity cost

Question 19

When the opportunity cost of producing more of a good is increasing, the marginal cost of producing more of the good is

Accepted Answer

A)  decreasing. 
B)  constant. 
C)  increasing. 
D)  More information is needed to answer the question. 
A)  decreasing. 
B)  constant. 
C)  increasing. 
D)  More information is needed to answer the question.

Question 20

-Mary takes 4 minutes to make a sandwich and 6 minutes to mix a cocktail. Her sister Ash takes 4 minutes to make a sandwich and 4 minutes to mix a cocktail. Calculate each sister's opportunity cost. Which of the two sisters has an absolute advantage in making sandwiches? In mixing cocktails? Which of the two has a comparative advantage in making sandwiches? In mixing cocktails?

Accepted Answer

Mary can spend an hour to make 15 sandwi

Exam 2: The Economic Problem

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

The social arrangements that govern the ownership, use, and disposal of property are referred to as

Increasing opportunity cost occurs along a production possibilities frontier because

Most students attending college pay tuition and are unable to hold a full-time job. For these students, tuition is

Tom and Di grow tomatoes and turnips. Tom has a comparative advantage in growing tomatoes if ________.

If Sam is producing at a point on his production possibilities frontier, then he

When a nation has a comparative advantage in the production of a particular good,

An opportunity cost of economic growth is

-The above table shows production combinations on a country's production possibilities frontier. Which of the following points signifies efficient production?

Opportunity cost is illustrated in a production possibilities frontier (PPF) by a movement

If the marginal benefit of a good exceeds its marginal cost,

A bowed outward production possibilities frontier occurs when

Allocative efficiency occurs when it is

-In the above figure, which point represents an attainable but inefficient production point?

Intellectual property

-The bowed-outward shape of a PPF

When the opportunity cost of producing more of a good is increasing, the marginal cost of producing more of the good is

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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