Question 1

-Refer to the table above, which gives five points on a nation's PPF. As we increase the production of X,

Accepted Answer

A)  the output of Y increases. 
B)  unemployment increases. 
C)  the opportunity cost of each new unit of X increases. 
D)  the opportunity cost of each new unit of X decreases. 
A)  the output of Y increases. 
B)  unemployment increases. 
C)  the opportunity cost of each new unit of X increases. 
D)  the opportunity cost of each new unit of X decreases.

Question 2

Compare and contrast production efficiency and allocative efficiency.

Accepted Answer

Production efficiency means that we are

Question 3

Country A Country B  
-A country that has an absolute advantage in producing all goods will ________.

Accepted Answer

A)  have a comparative advantage in some goods but not all 
B)  produce all goods at lowest opportunity cost 
C)  have a comparative advantage in all goods 
D)  not gain from specialization and trade 
A)  have a comparative advantage in some goods but not all 
B)  produce all goods at lowest opportunity cost 
C)  have a comparative advantage in all goods 
D)  not gain from specialization and trade

Question 4

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. Georgia's change in spending would be shown as

Accepted Answer

A)  a movement up along the PPF. 
B)  a movement down along the PPF. 
C)  a shift out of the PPF. 
D)  a shift in of the PPF. 
A)  a movement up along the PPF. 
B)  a movement down along the PPF. 
C)  a shift out of the PPF. 
D)  a shift in of the PPF.

Question 5

Which of the following describes comparative advantage?

Accepted Answer

A)  To produce a bushel of wheat Farmer John must give up 2 bushels of corn whereas Farmer Ben must give up 3 bushels of corn. 
B)  Company A can produce 4 boxes of cereal in a day whereas Company B can produce 5 boxes of cereal in a day. 
C)  Firm A can produce a good at a cost of $3 and Firm B can produce the good at a cost of $4. 
D)  Jane can type 50 words per minute and Joe can type 60 words per minute. 
A)  To produce a bushel of wheat Farmer John must give up 2 bushels of corn whereas Farmer Ben must give up 3 bushels of corn. 
B)  Company A can produce 4 boxes of cereal in a day whereas Company B can produce 5 boxes of cereal in a day. 
C)  Firm A can produce a good at a cost of $3 and Firm B can produce the good at a cost of $4. 
D)  Jane can type 50 words per minute and Joe can type 60 words per minute.

Question 6

An increase in the nation's capital stock will

Accepted Answer

A)  shift the PPF outward. 
B)  cause a movement along the PPF up and to the left. 
C)  cause a movement along the PPF down and to the right. 
D)  move the nation from producing within the PPF to producing at a point closer to the PPF. 
A)  shift the PPF outward. 
B)  cause a movement along the PPF up and to the left. 
C)  cause a movement along the PPF down and to the right. 
D)  move the nation from producing within the PPF to producing at a point closer to the PPF.

Question 7

If Hong Kong continues to devote more resources to accumulating capital than the United States, Hong Kong will continue to grow more rapidly than the United States.

Accepted Answer

A) True 
 B)False

Question 8

The opportunity cost of producing one ton of wheat for Country Gamma is 4 tons of corn. The opportunity cost of producing one ton of wheat for Country Beta is 8 tons of corn. Which country has the comparative advantage in the production of wheat?

Accepted Answer

A)  Gamma 
B)  Beta 
C)  Neither country has a comparative advantage. 
D)  Both countries have the comparative advantage. 
A)  Gamma 
B)  Beta 
C)  Neither country has a comparative advantage. 
D)  Both countries have the comparative advantage.

Question 9

-In the figure above, an economy would grow fastest if it produces at point

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 10

-The Hobbits of the Shire are trying to decide how much bread and how much wine to produce. They ask you to be their economic consultant and give you the information in the first table above about different combinations of wine and bread that they can produce if they are fully employed and doing their best. The Hobbits also give you the information in the second table above about their willingness to pay for wine depending on how much wine they already have. To help the Hobbits solve their problem:
a) Draw the Shire's production possibilities frontier. Put wine on the horizontal axis.
b) What is the opportunity cost of the first two thousand bottles of wine? What is the marginal cost of the 3,000th bottle of wine? What is the marginal cost of the 3,000th loaf of bread?
c) Draw the marginal cost of wine curve. What happens to the marginal cost if production of wine increases? Why?
d) Draw the marginal benefit from wine curve on the same figure on which you put the marginal cost curve. Describe the relationship between the quantity of wine produced and the marginal benefit from wine.
e) What combination of bread and wine will you recommend the Hobbits to produce? Why? Explain to the Hobbits why they would be worse off by producing a different combination of bread and wine.

Accepted Answer

@#IMG-DLM& a) The figure above shows the Shire's p

Question 11

Economic growth

Accepted Answer

A)  creates unemployment. 
B)  has no opportunity cost. 
C)  shifts the PPF outward. 
D)  makes it more difficult for a nation to produce on its PPF. 
A)  creates unemployment. 
B)  has no opportunity cost. 
C)  shifts the PPF outward. 
D)  makes it more difficult for a nation to produce on its PPF.

Question 12

The tradeoff between current consumption and the production of capital goods also reflects a tradeoff between

Accepted Answer

A)  the future production of capital goods and future consumption of goods. 
B)  economic growth and technological change. 
C)  satisfying today the needs of the poor and the wants of the wealthy. 
D)  current consumption and future consumption. 
A)  the future production of capital goods and future consumption of goods. 
B)  economic growth and technological change. 
C)  satisfying today the needs of the poor and the wants of the wealthy. 
D)  current consumption and future consumption.

Question 13

President Obama has proposed a goal that everyone complete at least one year of formal education or training beyond high school. This policy would ________ the production of current consumption goods and services and ________ the future production of consumption goods and services.

Accepted Answer

A)  decrease; increase 
B)  increase; decrease 
C)  not change; increase 
D)  increase; increase 
A)  decrease; increase 
B)  increase; decrease 
C)  not change; increase 
D)  increase; increase

Question 14

-In the figure above, how can the economy represented by the production possibilities frontier move from point C to point F?

Accepted Answer

A)  Increase the available amount of resources. 
B)  Increase the level of technology. 
C)  Redistribute the existing resources to produce more apples and fewer oranges. 
D)  First move to point B and then move to point F. 
A)  Increase the available amount of resources. 
B)  Increase the level of technology. 
C)  Redistribute the existing resources to produce more apples and fewer oranges. 
D)  First move to point B and then move to point F.

Question 15

-The above figure illustrates Mary's production possibilities frontier. If Mary wants to move from point d to point c, she must

Accepted Answer

A)  improve technology. 
B)  increase her accumulation of capital. 
C)  give up some of good X in order to obtain more of good Y. 
D)  give up some of good Y in order to obtain more of good X. 
A)  improve technology. 
B)  increase her accumulation of capital. 
C)  give up some of good X in order to obtain more of good Y. 
D)  give up some of good Y in order to obtain more of good X.

Question 16

-The figure above illustrates Mary's production possibilities frontier. If Mary wants to move from point b to point c, she must

Accepted Answer

A)  improve technology. 
B)  increase the accumulation of capital. 
C)  give up some of good Y in order to obtain more of good X. 
D)  give up some of good X in order to obtain more of good Y. 
A)  improve technology. 
B)  increase the accumulation of capital. 
C)  give up some of good Y in order to obtain more of good X. 
D)  give up some of good X in order to obtain more of good Y.

Question 17

The quantity of shoes produced is measured along the horizontal axis of a PPF and the quantity of shirts is measured along the vertical axis. As you move down toward the right along the PPF, the marginal cost of

Accepted Answer

A)  shoes decreases. 
B)  shoes increases. 
C)  shirts increases. 
D)  shoes and shirts is equal at the midpoint between the vertical and horizontal axis. 
A)  shoes decreases. 
B)  shoes increases. 
C)  shirts increases. 
D)  shoes and shirts is equal at the midpoint between the vertical and horizontal axis.

Question 18

Specialization and trade allow countries to consume beyond their PPFs.

Accepted Answer

A) True 
 B)False

Question 19

The production possibilities frontier

Accepted Answer

A)  depicts the boundary between those combinations of goods and services that can be produced and those that cannot given resources and the current state of technology. 
B)  shows how many goods and services are consumed by each person in a country. 
C)  is a model that assumes there is no scarcity and no opportunity cost. 
D)  is a graph with price on the vertical axis and income on the horizontal axis. 
A)  depicts the boundary between those combinations of goods and services that can be produced and those that cannot given resources and the current state of technology. 
B)  shows how many goods and services are consumed by each person in a country. 
C)  is a model that assumes there is no scarcity and no opportunity cost. 
D)  is a graph with price on the vertical axis and income on the horizontal axis.

Question 20

Ted can study for his economics exam or go to a concert. He decides to study for his economics exam instead of going to the concert. The concert he will miss is Ted's ________ of studying for the exam.

Accepted Answer

A)  opportunity cost 
B)  explicit cost 
C)  implicit cost 
D)  discretionary cost 
A)  opportunity cost 
B)  explicit cost 
C)  implicit cost 
D)  discretionary cost

Exam 2: The Economic Problem

-Refer to the table above, which gives five points on a nation's PPF. As we increase the production of X,

Compare and contrast production efficiency and allocative efficiency.

Country A Country B -A country that has an absolute advantage in producing all goods will ________.

Which of the following describes comparative advantage?

An increase in the nation's capital stock will

If Hong Kong continues to devote more resources to accumulating capital than the United States, Hong Kong will continue to grow more rapidly than the United States.

The opportunity cost of producing one ton of wheat for Country Gamma is 4 tons of corn. The opportunity cost of producing one ton of wheat for Country Beta is 8 tons of corn. Which country has the comparative advantage in the production of wheat?

-In the figure above, an economy would grow fastest if it produces at point

Economic growth

The tradeoff between current consumption and the production of capital goods also reflects a tradeoff between

President Obama has proposed a goal that everyone complete at least one year of formal education or training beyond high school. This policy would ________ the production of current consumption goods and services and ________ the future production of consumption goods and services.

-In the figure above, how can the economy represented by the production possibilities frontier move from point C to point F?

-The above figure illustrates Mary's production possibilities frontier. If Mary wants to move from point d to point c, she must

-The figure above illustrates Mary's production possibilities frontier. If Mary wants to move from point b to point c, she must

The quantity of shoes produced is measured along the horizontal axis of a PPF and the quantity of shirts is measured along the vertical axis. As you move down toward the right along the PPF, the marginal cost of

Specialization and trade allow countries to consume beyond their PPFs.

The production possibilities frontier

Ted can study for his economics exam or go to a concert. He decides to study for his economics exam instead of going to the concert. The concert he will miss is Ted's ________ of studying for the exam.

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

President Obama has proposed a goal that everyone complete at least one year of formal education or training beyond high school. This policy would the production of current consumption goods and services and the future production of consumption goods and services.