Question 1

-According to the diagram in the above figure, what is the marginal benefit of consuming the 3 millionth gallon of gasoline per month?

Accepted Answer

A)  5 pounds of shrimp per gallon of gasoline 
B)  3 pounds of shrimp per gallon of gasoline 
C)  2 pounds of shrimp per gallon of gasoline 
D)  1 pound of shrimp per gallon of gasoline 
A)  5 pounds of shrimp per gallon of gasoline 
B)  3 pounds of shrimp per gallon of gasoline 
C)  2 pounds of shrimp per gallon of gasoline 
D)  1 pound of shrimp per gallon of gasoline

Question 2

Suppose Joe can prepare 10 sandwiches or 5 pizzas in an hour and Beth can produce 12 sandwiches or 9 pizzas. Which of the following is true?

Accepted Answer

A)  Beth should produce pizza because she has a higher opportunity cost of producing pizza than does Joe. 
B)  Beth should produce pizza because she has a lower opportunity cost of producing pizza than does Joe. 
C)  Joe should produce pizza because he has a higher opportunity cost of producing pizza than does Beth. 
D)  Joe should produce pizza because he has a lower opportunity cost of producing pizza than does Beth. 
A)  Beth should produce pizza because she has a higher opportunity cost of producing pizza than does Joe. 
B)  Beth should produce pizza because she has a lower opportunity cost of producing pizza than does Joe. 
C)  Joe should produce pizza because he has a higher opportunity cost of producing pizza than does Beth. 
D)  Joe should produce pizza because he has a lower opportunity cost of producing pizza than does Beth.

Question 3

-The table above lists seven points on the production possibilities frontier for pizza and CDs. Graph the PPF. What is the opportunity cost of producing the first four pizzas? What is the opportunity cost of producing the 10th pizza. What is the opportunity cost of producing the first 12 CDs? What is the opportunity cost of producing the 26th CD?

Accepted Answer

@#IMG-DLM& The PPF graph is shown above. The oppor

Question 4

-The opportunity cost of producing a unit of consumption at point b in the figure ________ point a.

Accepted Answer

A)  is greater than at 
B)  is less than at 
C)  cannot be compared with 
D)  is the same as 
A)  is greater than at 
B)  is less than at 
C)  cannot be compared with 
D)  is the same as

Question 5

The most anyone is willing to pay for another purse is $30. Currently the price of a purse is $40, and the cost of producing another purse is $50. The marginal benefit of a purse is

Accepted Answer

A)  $50. 
B)  $40. 
C)  $30. 
D)  an amount not given in the answers above. 
A)  $50. 
B)  $40. 
C)  $30. 
D)  an amount not given in the answers above.

Question 6

BAE, a British defense company, has the contract to produce Tornado aircraft for the Royal Air Force. BAE is producing the aircraft at the lowest possible cost. If the RAF orders one more Tornado, there will be

Accepted Answer

A)  a decrease in opportunity costs as average costs decrease. 
B)  a misallocation of resources. 
C)  an increase in opportunity cost for Tornados. 
D)  an outward shift in the PPF. 
A)  a decrease in opportunity costs as average costs decrease. 
B)  a misallocation of resources. 
C)  an increase in opportunity cost for Tornados. 
D)  an outward shift in the PPF.

Question 7

Any production point outside the production possibilities frontier is

Accepted Answer

A)  unattainable. 
B)  associated with unused resources. 
C)  attainable only if prices fall. 
D)  attainable only if prices rise. 
A)  unattainable. 
B)  associated with unused resources. 
C)  attainable only if prices fall. 
D)  attainable only if prices rise.

Question 8

-In the production possibilities frontier depicted in the figure above, which of the following combinations of hats and bananas is inefficient?

Accepted Answer

A)  4 million pounds of bananas and 4 million hats 
B)  2 million pounds of bananas and 5 million hats 
C)  0 pounds of bananas and 6 million hats 
D)  1 million pounds of bananas and 3 million hats 
A)  4 million pounds of bananas and 4 million hats 
B)  2 million pounds of bananas and 5 million hats 
C)  0 pounds of bananas and 6 million hats 
D)  1 million pounds of bananas and 3 million hats

Question 9

-In the figure above, the point labeled C in the production possibilities frontier

Accepted Answer

A)  is unattainable; it is beyond the productive capability of this country. 
B)  represents a highly desirable output level in the long run, because it conserves scarce resources. 
C)  represents either unemployed or inefficiently utilized resources. 
D)  represents the maximum sustainable output level for this nation in the long run. 
A)  is unattainable; it is beyond the productive capability of this country. 
B)  represents a highly desirable output level in the long run, because it conserves scarce resources. 
C)  represents either unemployed or inefficiently utilized resources. 
D)  represents the maximum sustainable output level for this nation in the long run.

Question 10

-In one day, Brandon can either plow 10 acres or plant 20 acres. In one day, Christopher can either plow 14 acres or plant 14 acres. Which of the following statements about comparative advantage is correct?

Accepted Answer

A)  Brandon has a comparative advantage in both plowing and planting. 
B)  Brandon has a comparative advantage only in plowing. 
C)  Brandon has a comparative advantage only in planting. 
D)  Christopher has a comparative advantage in both plowing and planting. 
A)  Brandon has a comparative advantage in both plowing and planting. 
B)  Brandon has a comparative advantage only in plowing. 
C)  Brandon has a comparative advantage only in planting. 
D)  Christopher has a comparative advantage in both plowing and planting.

Question 11

At one point along a PPF, 50 tons of coffee and 100 tons of bananas are produced. At another point along the same PPF, 30 tons of coffee and 140 tons of bananas are produced. The opportunity cost of a ton of coffee between these points is

Accepted Answer

A)  7/5 of a ton of bananas per ton of coffee. 
B)  1/2 of a ton of bananas per ton of coffee. 
C)  5/7 of a ton of bananas per ton of coffee. 
D)  2 tons of bananas per ton of coffee. 
A)  7/5 of a ton of bananas per ton of coffee. 
B)  1/2 of a ton of bananas per ton of coffee. 
C)  5/7 of a ton of bananas per ton of coffee. 
D)  2 tons of bananas per ton of coffee.

Question 12

On the vertical axis, the production possibilities frontier shows ________; on the horizontal axis, the production possibilities frontier shows ________.

Accepted Answer

A)  the quantity of a good; the number of workers employed to produce the good 
B)  the quantity of a good; the price of the good 
C)  the quantity of a good; a weighted average of resources used to produce the good 
D)  the quantity of one good; the quantity of another good 
A)  the quantity of a good; the number of workers employed to produce the good 
B)  the quantity of a good; the price of the good 
C)  the quantity of a good; a weighted average of resources used to produce the good 
D)  the quantity of one good; the quantity of another good

Question 13

China's State Council has encouraged more spending to "improve transportation links and other infrastructure...." It will also "step up its spending on vocational training and other educational programs for adults." www.nytimes.com, Keith Bradsher, October 19, 2008
Suppose that capital goods are on the vertical axis while consumption goods are on the horizontal axis of China's PPF. As a result of enacting the policies, we would expect
I. an expansion of China's production possibilities.
II. capital accumulation.
III. an increase in human capital.

Accepted Answer

A)  I and II only 
B)  I, II and III 
C)  I and III only 
D)  II and III only 
A)  I and II only 
B)  I, II and III 
C)  I and III only 
D)  II and III only

Question 14

-The figure above shows Prakash's and Gail's production possibilities frontiers for writing books and magazine articles.
a) What is Prakash's opportunity cost of a book? What is Gail's opportunity cost? Who has the comparative advantage in writing books?
b) Who has the comparative advantage in writing magazine articles?
c) According to their comparative advantages, who should write books and who should write magazine articles?

Accepted Answer

a) In a year, Prakash can write 2 books

Question 15

Claire and Dag are farmers who produce beef and corn. In a year, Claire can produce 16 tons of beef or 40 bushels of corn, while Dag can produce 5 tons of beef or 25 bushels of corn. The opportunity cost of producing a ton of beef is

Accepted Answer

A)  10 bushels of corn for Dag and 8 bushels of corn for Claire. 
B)  5 bushels of corn for Dag and 2.5 bushels of corn for Claire. 
C)  20 bushels of corn for Dag and 50 bushels of corn for Claire. 
D)  36.5 days for Dag and 45.6 days for Claire. 
A)  10 bushels of corn for Dag and 8 bushels of corn for Claire. 
B)  5 bushels of corn for Dag and 2.5 bushels of corn for Claire. 
C)  20 bushels of corn for Dag and 50 bushels of corn for Claire. 
D)  36.5 days for Dag and 45.6 days for Claire.

Question 16

Why is it likely that the United States has an absolute advantage in goods and yet it still ends up importing them from other countries?

Accepted Answer

The United States might have an absolute

Question 17

We measure the marginal ________ of a good by what a ________ for another unit of the good.

Accepted Answer

A)  benefit; person must pay 
B)  cost; person is willing to pay 
C)  benefit; person is willing to pay 
D)  cost; person's preferences are 
A)  benefit; person must pay 
B)  cost; person is willing to pay 
C)  benefit; person is willing to pay 
D)  cost; person's preferences are

Question 18

-Molly just graduated from high school. The figure shows her possibilities frontier. If Molly goes to college, she will move from point M to point K. In terms of consumption goods, Molly's opportunity cost of going to college is

Accepted Answer

A)  MK. 
B)  OL. 
C)  KL. 
D)  LM. 
A)  MK. 
B)  OL. 
C)  KL. 
D)  LM.

Question 19

Which of the following does NOT help organize trade?

Accepted Answer

A)  property rights 
B)  markets 
C)  the production possibilities frontier 
D)  None of the above because all these answers given help organize trade. 
A)  property rights 
B)  markets 
C)  the production possibilities frontier 
D)  None of the above because all these answers given help organize trade.

Question 20

One point on a PPF shows production levels at 50 tons of coffee and 100 tons of bananas. Remaining on the PPF, an increase of banana production to 140 tons shows coffee production at 30 tons. Still remaining on the PPF, coffee production at 10 tons allows banana production at 160 tons. The opportunity cost of a ton of bananas is

Accepted Answer

A)  constant because coffee production decreased by the same amount each time. 
B)  decreasing, since the increase in banana production is less at each point considered. 
C)  16 to 1, that is every 1 ton of coffee given up will result in 16 more tons of bananas. 
D)  increasing from 1/2 ton of coffee per ton of bananas to 1 ton of coffee per ton of bananas. 
A)  constant because coffee production decreased by the same amount each time. 
B)  decreasing, since the increase in banana production is less at each point considered. 
C)  16 to 1, that is every 1 ton of coffee given up will result in 16 more tons of bananas. 
D)  increasing from 1/2 ton of coffee per ton of bananas to 1 ton of coffee per ton of bananas.

Exam 2: The Economic Problem

-According to the diagram in the above figure, what is the marginal benefit of consuming the 3 millionth gallon of gasoline per month?

Suppose Joe can prepare 10 sandwiches or 5 pizzas in an hour and Beth can produce 12 sandwiches or 9 pizzas. Which of the following is true?

-The opportunity cost of producing a unit of consumption at point b in the figure ________ point a.

The most anyone is willing to pay for another purse is $30. Currently the price of a purse is $40, and the cost of producing another purse is $50. The marginal benefit of a purse is

BAE, a British defense company, has the contract to produce Tornado aircraft for the Royal Air Force. BAE is producing the aircraft at the lowest possible cost. If the RAF orders one more Tornado, there will be

Any production point outside the production possibilities frontier is

-In the production possibilities frontier depicted in the figure above, which of the following combinations of hats and bananas is inefficient?

-In the figure above, the point labeled C in the production possibilities frontier

-In one day, Brandon can either plow 10 acres or plant 20 acres. In one day, Christopher can either plow 14 acres or plant 14 acres. Which of the following statements about comparative advantage is correct?

At one point along a PPF, 50 tons of coffee and 100 tons of bananas are produced. At another point along the same PPF, 30 tons of coffee and 140 tons of bananas are produced. The opportunity cost of a ton of coffee between these points is

On the vertical axis, the production possibilities frontier shows ________; on the horizontal axis, the production possibilities frontier shows ________.

Claire and Dag are farmers who produce beef and corn. In a year, Claire can produce 16 tons of beef or 40 bushels of corn, while Dag can produce 5 tons of beef or 25 bushels of corn. The opportunity cost of producing a ton of beef is

Why is it likely that the United States has an absolute advantage in goods and yet it still ends up importing them from other countries?

We measure the marginal ________ of a good by what a ________ for another unit of the good.

-Molly just graduated from high school. The figure shows her possibilities frontier. If Molly goes to college, she will move from point M to point K. In terms of consumption goods, Molly's opportunity cost of going to college is

Which of the following does NOT help organize trade?

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

On the vertical axis, the production possibilities frontier shows ; on the horizontal axis, the production possibilities frontier shows .

We measure the marginal of a good by what a for another unit of the good.