Question 1

The increased production of lamps comes at constant opportunity costs in terms of bookshelves.This means

Accepted Answer

A)  that it takes more resources to produce a lamp than a bookshelf. 
B)  that it takes fewer resources to produce a lamp than a bookshelf. 
C)  that for every lamp produced, a constant number of bookshelves is forfeited. 
D)  that for every lamp produced, a different number of bookshelves is forfeited. 
A)  that it takes more resources to produce a lamp than a bookshelf. 
B)  that it takes fewer resources to produce a lamp than a bookshelf. 
C)  that for every lamp produced, a constant number of bookshelves is forfeited. 
D)  that for every lamp produced, a different number of bookshelves is forfeited.

Question 2

The economy was at point A producing 100X and 200Y.It moved to point B where it produces 200X and 300Y.It follows that

Accepted Answer

A)  point A may have been a point below the economy's PPF, while point B may lie on the PPF. 
B)  the economy's PPF could have shifted outward and point A was a point on the economy's old PPF. 
C)  the economy has moved from one point on its PPF to another point on the same PPF. 
D)  a or b 
E)  a or c 
A)  point A may have been a point below the economy's PPF, while point B may lie on the PPF. 
B)  the economy's PPF could have shifted outward and point A was a point on the economy's old PPF. 
C)  the economy has moved from one point on its PPF to another point on the same PPF. 
D)  a or b 
E)  a or c

Question 3

Productive efficiency implies

Accepted Answer

A)  the possibility of gains in one area without losses in another. 
B)  that more output has been produced. 
C)  the impossibility of gains in one area without losses in another. 
D)  that prices are stable. 
E)  c and d 
A)  the possibility of gains in one area without losses in another. 
B)  that more output has been produced. 
C)  the impossibility of gains in one area without losses in another. 
D)  that prices are stable. 
E)  c and d

Question 4

An economy can produce the following combinations of goods: 50X and 0Y,40X and 10Y,30X and 20Y,20X and 30Y,10X and 40Y,and 0X and 50Y.The production possibilities frontier (PPF)for the economy is

Accepted Answer

A)  concave downward because the opportunity cost of producing the 10th unit of Y is greater than the opportunity cost of producing the first unit of Y. 
B)  a straight (downward-sloping) line because the opportunity cost of producing the two goods is constant. 
C)  concave downward because the opportunity cost of producing the 40th unit of Y is less than the opportunity cost of producing the 10th unit of Y. 
D)  a straight (downward-sloping) line because the opportunity cost of producing the 10th unit of X is greater than the opportunity cost of producing the 40th unit of X. 
E)  a straight (downward-sloping) line because the opportunity cost of producing the 30th unit of Y is greater than the opportunity cost of producing the 30th unit of X. 
A)  concave downward because the opportunity cost of producing the 10th unit of Y is greater than the opportunity cost of producing the first unit of Y. 
B)  a straight (downward-sloping) line because the opportunity cost of producing the two goods is constant. 
C)  concave downward because the opportunity cost of producing the 40th unit of Y is less than the opportunity cost of producing the 10th unit of Y. 
D)  a straight (downward-sloping) line because the opportunity cost of producing the 10th unit of X is greater than the opportunity cost of producing the 40th unit of X. 
E)  a straight (downward-sloping) line because the opportunity cost of producing the 30th unit of Y is greater than the opportunity cost of producing the 30th unit of X.

Question 5

Exhibit 2-9
  
-Refer to Exhibit 2-9.For Adam,the opportunity cost of producing one unit of good B is ____________ unit(s)of good A.

Accepted Answer

A)  3.00 
B)  0.33 
C)  0.75 
D)  1.33 
A)  3.00 
B)  0.33 
C)  0.75 
D)  1.33

Question 6

A PPF is more likely to be a downward-sloping curve that is bowed outward than a downward-sloping straight line because most resources are

Accepted Answer

A)  better suited for the production of some goods than others. 
B)  used efficiently. 
C)  relatively cheap at low levels of output. 
D)  used to produce consumption goods. 
A)  better suited for the production of some goods than others. 
B)  used efficiently. 
C)  relatively cheap at low levels of output. 
D)  used to produce consumption goods.

Question 7

Exhibit 2-5
  
-Refer to Exhibit 2-5."In order to produce one more television set,we must forfeit the production of one fax machine." This statement describes a movement from

Accepted Answer

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

Question 8

The point where the PPF intersects the horizontal axis is

Accepted Answer

A)  unattainable. 
B)  attainable and productive efficient. 
C)  attainable but productive inefficient. 
D)  attainable and neither productive efficient nor productive inefficient. 
A)  unattainable. 
B)  attainable and productive efficient. 
C)  attainable but productive inefficient. 
D)  attainable and neither productive efficient nor productive inefficient.

Question 9

Exhibit 2-8
  
-Refer to Exhibit 2-8.For Maria,the opportunity cost of producing one unit of good Y is ___________ unit(s)of good X.

Accepted Answer

A)  2.00 
B)  1.00 
C)  10.00 
D)  0.50 
A)  2.00 
B)  1.00 
C)  10.00 
D)  0.50

Question 10

A decrease in unemployment causes the PPF to shift outward (to the right).

Accepted Answer

A) True 
 B)False

Question 11

Exhibit 2-2
  
-Refer to Exhibit 2-2.If PPF? is the relevant production possibilities frontier,then point __________ illustrates productive inefficiency.

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  J 
E)  a, b, or c 
A)  A 
B)  B 
C)  C 
D)  J 
E)  a, b, or c

Question 12

Why is the production possibilities frontier (PPF)typically bowed-outward? Under what circumstances would the PPF be a straight line?

Accepted Answer

The PPF is typically bowed-outward due t

Question 13

Consider the following combinations of guns and butter that can be produced: 0 guns,20,000 units of butter; 5,000 guns,15,000 units of butter; 10,000 guns,10,000 units of butter; 15,000 guns,5,000 units of butter; 20,000 guns,0 units of butter.The PPF between guns and butter is

Accepted Answer

A)  a downward-sloping bowed-out curve. 
B)  a downward-sloping straight line. 
C)  an upward-sloping straight line. 
D)  It is impossible to answer this question without knowing which good would be plotted on the vertical axis. 
A)  a downward-sloping bowed-out curve. 
B)  a downward-sloping straight line. 
C)  an upward-sloping straight line. 
D)  It is impossible to answer this question without knowing which good would be plotted on the vertical axis.

Question 14

Consider two straight-line PPFs.They have the same vertical intercept,but curve I is flatter than curve II.The opportunity cost of producing the good on the horizontal axis

Accepted Answer

A)  is greater along curve I. 
B)  is greater along curve II. 
C)  is the same along both curves. 
D)  cannot be compared for the two curves without more information. 
A)  is greater along curve I. 
B)  is greater along curve II. 
C)  is the same along both curves. 
D)  cannot be compared for the two curves without more information.

Question 15

If an economy can produce a maximum of 10 units of good X and the opportunity cost of 1X is always 2Y,then what is the maximum units of good Y the economy can produce?

Accepted Answer

A)  5 
B)  200 
C)  20 
D)  500 
E)  none of the above 
A)  5 
B)  200 
C)  20 
D)  500 
E)  none of the above

Question 16

If an economy can produce a maximum of 100 units of good X and the opportunity cost of 1X is always 5Y,then what is the maximum number of units of good Y the economy can produce?

Accepted Answer

A)  250 
B)  100 
C)  20 
D)  500 
E)  none of the above 
A)  250 
B)  100 
C)  20 
D)  500 
E)  none of the above

Question 17

Exhibit 2-1
  
-Refer to Exhibit 2-1.The PPF illustrates

Accepted Answer

A)  constant opportunity costs between guns and butter. 
B)  that guns are more important than butter. 
C)  increasing opportunity costs between guns and butter. 
D)  the opportunity cost of one unit of guns is four units of butter. 
E)  none of the above 
A)  constant opportunity costs between guns and butter. 
B)  that guns are more important than butter. 
C)  increasing opportunity costs between guns and butter. 
D)  the opportunity cost of one unit of guns is four units of butter. 
E)  none of the above

Question 18

According to the text,farming today in the U.S.is __________ productive compared to a century ago,resulting in there being __________ farmers today than at the turn of the previous century.

Accepted Answer

A)  about as; fewer 
B)  about as; more 
C)  much more; fewer 
D)  much more; more 
A)  about as; fewer 
B)  about as; more 
C)  much more; fewer 
D)  much more; more

Question 19

If the PPF for two goods is a downward-sloping straight line,the resources used to produce those goods are equally well suited to the production of both goods.

Accepted Answer

A) True 
 B)False

Question 20

Exhibit 2-4
  
-Refer to Exhibit 2-4.As more fax machines are produced,the opportunity cost of producing them

Accepted Answer

A)  increases. 
B)  decreases. 
C)  remains constant. 
D)  first decreases and then increases. 
A)  increases. 
B)  decreases. 
C)  remains constant. 
D)  first decreases and then increases.

Exam 2: Production Possibilities Frontier Framework

The increased production of lamps comes at constant opportunity costs in terms of bookshelves.This means

The economy was at point A producing 100X and 200Y.It moved to point B where it produces 200X and 300Y.It follows that

Productive efficiency implies

An economy can produce the following combinations of goods: 50X and 0Y,40X and 10Y,30X and 20Y,20X and 30Y,10X and 40Y,and 0X and 50Y.The production possibilities frontier (PPF)for the economy is

Exhibit 2-9 -Refer to Exhibit 2-9.For Adam,the opportunity cost of producing one unit of good B is ____________ unit(s)of good A.

A PPF is more likely to be a downward-sloping curve that is bowed outward than a downward-sloping straight line because most resources are

Exhibit 2-5 -Refer to Exhibit 2-5."In order to produce one more television set,we must forfeit the production of one fax machine." This statement describes a movement from

The point where the PPF intersects the horizontal axis is

Exhibit 2-8 -Refer to Exhibit 2-8.For Maria,the opportunity cost of producing one unit of good Y is ___________ unit(s)of good X.

A decrease in unemployment causes the PPF to shift outward (to the right).

Exhibit 2-2 -Refer to Exhibit 2-2.If PPF? is the relevant production possibilities frontier,then point __________ illustrates productive inefficiency.

Why is the production possibilities frontier (PPF)typically bowed-outward? Under what circumstances would the PPF be a straight line?

Consider the following combinations of guns and butter that can be produced: 0 guns,20,000 units of butter; 5,000 guns,15,000 units of butter; 10,000 guns,10,000 units of butter; 15,000 guns,5,000 units of butter; 20,000 guns,0 units of butter.The PPF between guns and butter is

Consider two straight-line PPFs.They have the same vertical intercept,but curve I is flatter than curve II.The opportunity cost of producing the good on the horizontal axis

If an economy can produce a maximum of 10 units of good X and the opportunity cost of 1X is always 2Y,then what is the maximum units of good Y the economy can produce?

If an economy can produce a maximum of 100 units of good X and the opportunity cost of 1X is always 5Y,then what is the maximum number of units of good Y the economy can produce?

Exhibit 2-1 -Refer to Exhibit 2-1.The PPF illustrates

According to the text,farming today in the U.S.is __________ productive compared to a century ago,resulting in there being __________ farmers today than at the turn of the previous century.

If the PPF for two goods is a downward-sloping straight line,the resources used to produce those goods are equally well suited to the production of both goods.

Exhibit 2-4 -Refer to Exhibit 2-4.As more fax machines are produced,the opportunity cost of producing them

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According to the text,farming today in the U.S.is productive compared to a century ago,resulting in there being farmers today than at the turn of the previous century.