Question 1

If resources are better suited toward the production of one good than toward the other good,then the PPF for those two goods is

Accepted Answer

A)  a straight line. 
B)  bowed outward. 
C)  upward sloping. 
D)  any of the above 
A)  a straight line. 
B)  bowed outward. 
C)  upward sloping. 
D)  any of the above B

Question 2

Which of the following statements is true?

Accepted Answer

A)  In a world of efficiently used scarce resources, more of one good necessarily means less of some other good. 
B)  The law of increasing opportunity costs assumes that all people have the same ability to produce goods. 
C)  Efficiency implies that it is impossible to get more of one good without getting less of another. 
D)  Even if a country has unemployed resources, it can still be operating on its production possibilities frontier (PPF). 
E)  a and c 
A)  In a world of efficiently used scarce resources, more of one good necessarily means less of some other good. 
B)  The law of increasing opportunity costs assumes that all people have the same ability to produce goods. 
C)  Efficiency implies that it is impossible to get more of one good without getting less of another. 
D)  Even if a country has unemployed resources, it can still be operating on its production possibilities frontier (PPF). 
E)  a and c E

Question 3

Explain how a technological advancement in one sector of the economy can lead to a change in the number of people who work in another sector of the economy. Give an example to help support your answer.

Accepted Answer

A technological advancement in one sector of the economy can lead to fewer people being needed to produce the goods in that sector. This will release people from that sector and allow them to take jobs in other sectors of the economy. This is what happened in the farming industry during the 20th century. As more and more farming tasks that had once been performed by people were being performed by machinery and computers,the former farmers were then free to find jobs in fields such as manufacturing and service industries.

Question 4

The economy is currently on its production possibilities frontier (PPF).A politician says that it is possible to get more of everything---more infrastructure,more schools,more national defense,more spending on social programs,and so on.The politician is

Accepted Answer

A)  correct if he is assuming a rightward-shifting PPF. 
B)  incorrect if he is assuming a rightward-shifting PPF. 
C)  incorrect if he is assuming a PPF that does not change. 
D)  correct if he is assuming a PPF that does not change. 
E)  a and c 
A)  correct if he is assuming a rightward-shifting PPF. 
B)  incorrect if he is assuming a rightward-shifting PPF. 
C)  incorrect if he is assuming a PPF that does not change. 
D)  correct if he is assuming a PPF that does not change. 
E)  a and c

Question 5

Exhibit 2-6
  
-Refer to Exhibit 2-6.Which graph best depicts the consequence of a large-scale natural disaster?

Accepted Answer

A)  (1) 
B)  (2) 
C)  (3) 
D)  (4) 
E)  none of the above 
A)  (1) 
B)  (2) 
C)  (3) 
D)  (4) 
E)  none of the above

Question 6

Exhibit 2-8
  
-Refer to Exhibit 2-8. If Maria and Maya each specialize in the good in which she has a comparative advantage and then engage in trade,____________________ can consume a combination of goods that lies beyond her PPF.

Accepted Answer

A)  Maria, but not Maya, 
B)  Maya, but not Maria, 
C)  both Maria and Maya 
D)  neither Maria nor Maya 
A)  Maria, but not Maya, 
B)  Maya, but not Maria, 
C)  both Maria and Maya 
D)  neither Maria nor Maya

Question 7

Exhibit 2-8
  
-Refer to Exhibit 2-8.Who has the comparative advantage in the production of good X?

Accepted Answer

A)  Maria 
B)  Maya 
C)  Both Maria and Maya 
D)  Neither Maria nor Maya 
A)  Maria 
B)  Maya 
C)  Both Maria and Maya 
D)  Neither Maria nor Maya

Question 8

Productive inefficiency implies that

Accepted Answer

A)  it is possible to obtain gains in one area without losses in another. 
B)  it is impossible to obtain gains in one area without losses in another. 
C)  there are too many resources. 
D)  there are too few resources. 
E)  none of the above 
A)  it is possible to obtain gains in one area without losses in another. 
B)  it is impossible to obtain gains in one area without losses in another. 
C)  there are too many resources. 
D)  there are too few resources. 
E)  none of the above

Question 9

Exhibit 2-1
  
-Refer to Exhibit 2-1.The opportunity cost of moving from point A to B is

Accepted Answer

A)  10,000 units of butter. 
B)  20,000 units of butter. 
C)  20,000 units of guns. 
D)  10,000 units of guns. 
A)  10,000 units of butter. 
B)  20,000 units of butter. 
C)  20,000 units of guns. 
D)  10,000 units of guns.

Question 10

A PPF is a straight line as a result of

Accepted Answer

A)  constant opportunity costs. 
B)  increasing opportunity costs. 
C)  decreasing opportunity costs. 
D)  scarcity. 
E)  choice. 
A)  constant opportunity costs. 
B)  increasing opportunity costs. 
C)  decreasing opportunity costs. 
D)  scarcity. 
E)  choice.

Question 11

Country 1 produces two goods,A and B.Country 2 produces the same two goods.Currently,country 1 produces 100A and 200B and country 2 produces 300A and 700B.Which of the following statements is true?

Accepted Answer

A)  If country 1 is on its production possibilities frontier, then country 2 must be on its PPF, too. 
B)  The PPF for country 1 is necessarily closer to the origin (or further to the left) than the PPF for country 2. 
C)  If country 1 is productive inefficient, then so is country 2. 
D)  Country 2 is operating on its PPF, but country 1 is clearly not operating on its PPF. 
E)  none of the above 
A)  If country 1 is on its production possibilities frontier, then country 2 must be on its PPF, too. 
B)  The PPF for country 1 is necessarily closer to the origin (or further to the left) than the PPF for country 2. 
C)  If country 1 is productive inefficient, then so is country 2. 
D)  Country 2 is operating on its PPF, but country 1 is clearly not operating on its PPF. 
E)  none of the above

Question 12

Exhibit 2-5
  
-Refer to Exhibit 2-5.Given available resources and technology,this economy can produce 50,000 television sets and 50,000 fax machines only if it chooses to

Accepted Answer

A)  have an equal distribution of goods. 
B)  operate at both points C and D. 
C)  combine points C and D. 
D)  none of the above 
A)  have an equal distribution of goods. 
B)  operate at both points C and D. 
C)  combine points C and D. 
D)  none of the above

Question 13

Exhibit 2-5
  
-Refer to Exhibit 2-5.The opportunity cost of moving from point D to point C is

Accepted Answer

A)  5,000 televisions. 
B)  5,000 fax machines. 
C)  10,000 televisions. 
D)  10,000 fax machines. 
A)  5,000 televisions. 
B)  5,000 fax machines. 
C)  10,000 televisions. 
D)  10,000 fax machines.

Question 14

Points inside (below)the production possibilities frontier (PPF)are

Accepted Answer

A)  unattainable. 
B)  attainable, but productive inefficient. 
C)  preferable to points that lie on the PPF. 
D)  attainable and productive efficient. 
A)  unattainable. 
B)  attainable, but productive inefficient. 
C)  preferable to points that lie on the PPF. 
D)  attainable and productive efficient.

Question 15

Exhibit 2-2
  
-Refer to Exhibit 2-2. The production possibilities frontiers shown in this exhibit depict _______________ opportunity costs.

Accepted Answer

A)  constant 
B)  increasing 
C)  decreasing 
D)  There is not enough information provided to answer this question. 
A)  constant 
B)  increasing 
C)  decreasing 
D)  There is not enough information provided to answer this question.

Question 16

Suppose the economy goes from a point on its production possibilities frontier (PPF)to a point below that PPF.Assuming that the PPF has not shifted,this could be due to

Accepted Answer

A)  a gain of resources. 
B)  a loss of resources. 
C)  technological improvement in the production of both goods. 
D)  a new law that interferes with economic efficiency. 
A)  a gain of resources. 
B)  a loss of resources. 
C)  technological improvement in the production of both goods. 
D)  a new law that interferes with economic efficiency.

Question 17

Exhibit 2-1
  
-Refer to Exhibit 2-1.Scarcity exists

Accepted Answer

A)  at point C but not at point A. 
B)  neither at point C nor at point A. 
C)  at both point C and at point A. 
D)  at point A but not at point C. 
A)  at point C but not at point A. 
B)  neither at point C nor at point A. 
C)  at both point C and at point A. 
D)  at point A but not at point C.

Question 18

Jose has one evening in which to prepare for two exams and can employ two possible strategies:
 
The opportunity cost of receiving a 94 on the Economics exam in terms of the number of points on the Statistics exam is

Accepted Answer

A)  79. 
B)  17. 
C)  11. 
D)  90. 
A)  79. 
B)  17. 
C)  11. 
D)  90.

Question 19

Exhibit 2-9
  
-Refer to Exhibit 2-9.If Alex and Adam each specialize in the good in which he has a comparative advantage and then engage in trade,____________________ can consume a combination of goods that lies beyond his PPF.

Accepted Answer

A)  Alex, but not Adam, 
B)  Adam, but not Alex 
C)  Alex and Adam 
D)  neither Alex nor Adam 
A)  Alex, but not Adam, 
B)  Adam, but not Alex 
C)  Alex and Adam 
D)  neither Alex nor Adam

Question 20

Suppose Andrea is taking just two courses and is at a point inside her PPF of grades for those two courses. If Andrea changes her work habits then it is impossible for

Accepted Answer

A)  either one of her grades to rise. 
B)  both of her grades to rise. 
C)  both of her grades to fall. 
D)  either one of her grades to rise while the other grade remains constant. 
E)  none of the above is impossible in this situation 
A)  either one of her grades to rise. 
B)  both of her grades to rise. 
C)  both of her grades to fall. 
D)  either one of her grades to rise while the other grade remains constant. 
E)  none of the above is impossible in this situation

Exam 2: Production Possibilities Frontier Framework

If resources are better suited toward the production of one good than toward the other good,then the PPF for those two goods is

Which of the following statements is true?

Explain how a technological advancement in one sector of the economy can lead to a change in the number of people who work in another sector of the economy. Give an example to help support your answer.

The economy is currently on its production possibilities frontier (PPF).A politician says that it is possible to get more of everything---more infrastructure,more schools,more national defense,more spending on social programs,and so on.The politician is

Exhibit 2-6 -Refer to Exhibit 2-6.Which graph best depicts the consequence of a large-scale natural disaster?

Exhibit 2-8 -Refer to Exhibit 2-8. If Maria and Maya each specialize in the good in which she has a comparative advantage and then engage in trade,____________________ can consume a combination of goods that lies beyond her PPF.

Exhibit 2-8 -Refer to Exhibit 2-8.Who has the comparative advantage in the production of good X?

Productive inefficiency implies that

Exhibit 2-1 -Refer to Exhibit 2-1.The opportunity cost of moving from point A to B is

A PPF is a straight line as a result of

Country 1 produces two goods,A and B.Country 2 produces the same two goods.Currently,country 1 produces 100A and 200B and country 2 produces 300A and 700B.Which of the following statements is true?

Exhibit 2-5 -Refer to Exhibit 2-5.Given available resources and technology,this economy can produce 50,000 television sets and 50,000 fax machines only if it chooses to

Exhibit 2-5 -Refer to Exhibit 2-5.The opportunity cost of moving from point D to point C is

Points inside (below)the production possibilities frontier (PPF)are

Exhibit 2-2 -Refer to Exhibit 2-2. The production possibilities frontiers shown in this exhibit depict _______________ opportunity costs.

Suppose the economy goes from a point on its production possibilities frontier (PPF)to a point below that PPF.Assuming that the PPF has not shifted,this could be due to

Exhibit 2-1 -Refer to Exhibit 2-1.Scarcity exists

Jose has one evening in which to prepare for two exams and can employ two possible strategies: The opportunity cost of receiving a 94 on the Economics exam in terms of the number of points on the Statistics exam is

Exhibit 2-9 -Refer to Exhibit 2-9.If Alex and Adam each specialize in the good in which he has a comparative advantage and then engage in trade,____________________ can consume a combination of goods that lies beyond his PPF.

Suppose Andrea is taking just two courses and is at a point inside her PPF of grades for those two courses. If Andrea changes her work habits then it is impossible for

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