Question 1

The economy can produce 15X and 15Y,10X and 20Y,5X and 25Y,or 0X and 30Y.It follows that opportunity cost of 1X is ___Y.

Accepted Answer

A)  4.0 
B)  5.0 
C)  2.5 
D)  1.0 
E)  none of the above 
A)  4.0 
B)  5.0 
C)  2.5 
D)  1.0 
E)  none of the above

Question 2

Economic growth causes the PPF to

Accepted Answer

A)  shift leftward. 
B)  shift rightward. 
C)  remain constant. 
D)  go from a straight line to a curve. 
A)  shift leftward. 
B)  shift rightward. 
C)  remain constant. 
D)  go from a straight line to a curve.

Question 3

Some of our farm fields are being left unused.Does this have any implications for the economy's PPF diagram (with agricultural products on one axis and all other products on the other axis)?

Accepted Answer

A)  No implications, because the PPF deals only with resources in use. 
B)  The PPF cannot be drawn if some resources are idle. 
C)  With unemployed resources, we are at a point below the PPF. 
D)  The PPF would be upward sloping. 
A)  No implications, because the PPF deals only with resources in use. 
B)  The PPF cannot be drawn if some resources are idle. 
C)  With unemployed resources, we are at a point below the PPF. 
D)  The PPF would be upward sloping.

Question 4

Productive efficiency implies that

Accepted Answer

A)  it is impossible to obtain gains in one area without losses in another. 
B)  it is possible 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 impossible to obtain gains in one area without losses in another. 
B)  it is possible 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 5

Which of the following statements is false?

Accepted Answer

A)  If there are only two goods, guns and butter, it is possible to produce more of both goods through economic growth. 
B)  If there are only two goods, guns and butter, it is possible to produce more of both goods if the economy is currently operating at a productive inefficient point. 
C)  If there are only two goods, guns and butter, it is possible to produce more of both goods if the economy is currently operating at a productive efficient point. 
D)  If there are only two goods, guns and butter, producing more of one means producing less of the other if the economy is currently operating at a productive efficient point. 
A)  If there are only two goods, guns and butter, it is possible to produce more of both goods through economic growth. 
B)  If there are only two goods, guns and butter, it is possible to produce more of both goods if the economy is currently operating at a productive inefficient point. 
C)  If there are only two goods, guns and butter, it is possible to produce more of both goods if the economy is currently operating at a productive efficient point. 
D)  If there are only two goods, guns and butter, producing more of one means producing less of the other if the economy is currently operating at a productive efficient point.

Question 6

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

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 7

It is possible through trade for a country to consume a combination of goods that lies beyond its production possibilities frontier.

Accepted Answer

A) True 
 B)False

Question 8

In the production possibilities framework,economic growth is depicted by the PPF

Accepted Answer

A)  shifting leftward (toward the origin). 
B)  shifting rightward (away from the origin). 
C)  becoming a straight line rather than a bowed outward curve. 
D)  becoming bowed outward rather than a straight line. 
A)  shifting leftward (toward the origin). 
B)  shifting rightward (away from the origin). 
C)  becoming a straight line rather than a bowed outward curve. 
D)  becoming bowed outward rather than a straight line.

Question 9

Exhibit 2-6
  
-Refer to Exhibit 2-6. Which graph depicts the result of an increase in the unemployment rate?

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 10

Productive efficiency implies that

Accepted Answer

A)  all consumers' wants are satisfied. 
B)  no advance in technology will occur in the future. 
C)  the attainable region is greater than the unattainable region. 
D)  gains are impossible in one area without losses in another. 
E)  all of the above 
A)  all consumers' wants are satisfied. 
B)  no advance in technology will occur in the future. 
C)  the attainable region is greater than the unattainable region. 
D)  gains are impossible in one area without losses in another. 
E)  all of the above

Question 11

Give a definition of an advance in technology.Suppose that you are drawing a PPF for civilian goods and military goods,describe the effect on the PPF of an advance in technology in both civilian goods and military goods. How would the impact on the PPF be different if the technological improvement only helped in the production of military goods,but not civilian goods?

Accepted Answer

An advance in technology commonly refers

Question 12

Which of the following is an illustration of the law of increasing opportunity costs?

Accepted Answer

A)  As more cars are produced, the opportunity cost of each additional car is greater than for the preceding unit. 
B)  As more cars are produced, the opportunity cost of each additional car is less than for the preceding unit. 
C)  As more cars are produced, the opportunity cost of each additional car is the same as for the preceding unit. 
D)  People pay lower prices for cars the higher the costs of producing cars. 
A)  As more cars are produced, the opportunity cost of each additional car is greater than for the preceding unit. 
B)  As more cars are produced, the opportunity cost of each additional car is less than for the preceding unit. 
C)  As more cars are produced, the opportunity cost of each additional car is the same as for the preceding unit. 
D)  People pay lower prices for cars the higher the costs of producing cars.

Question 13

Exhibit 2-7
  
-Refer to Exhibit 2-7.For which of the following is the statement "In order to get more civilian goods,we have to forfeit some military goods" true?

Accepted Answer

A)  a movement from A to C 
B)  a movement from B to D 
C)  a movement from C to D 
D)  a movement from F to D 
E)  none of the above 
A)  a movement from A to C 
B)  a movement from B to D 
C)  a movement from C to D 
D)  a movement from F to D 
E)  none of the above

Question 14

A production possibilities frontier separates an attainable region from an unattainable region.

Accepted Answer

A) True 
 B)False

Question 15

Using your own words,describe the law of increasing opportunity costs. Be sure to explain why this phenomenon occurs and how it helps to contribute to the shape of the production possibilities frontier.

Accepted Answer

People (and other resources)have varying

Question 16

If there is an increase in the amount of good B foregone as every additional unit of good A is produced,the PPF between goods A and B would

Accepted Answer

A)  be a straight line. 
B)  be a bowed-outward curve. 
C)  be a bowed-inward curve. 
D)  not exist. 
A)  be a straight line. 
B)  be a bowed-outward curve. 
C)  be a bowed-inward curve. 
D)  not exist.

Question 17

Within the production possibilities frontier (PPF)framework,choice is depicted by the

Accepted Answer

A)  PPF itself. 
B)  PPF being bowed outward. 
C)  need to select among the points making up the PPF. 
D)  straight-line PPF. 
A)  PPF itself. 
B)  PPF being bowed outward. 
C)  need to select among the points making up the PPF. 
D)  straight-line PPF.

Question 18

The law of increasing opportunity cost results from the varying ability of resources to adapt to the production of different goods and it helps to explain why production possibilities curves are typically bowed outward.

Accepted Answer

A) True 
 B)False

Question 19

The economy can produce 15X and 15Y,10X and 20Y,5X and 25Y,or OX and 30Y.It follows that the production possibility frontier (PPF)is

Accepted Answer

A)  a downward-sloping straight line. 
B)  an upward-sloping straight line. 
C)  a downward-sloping convex curve. 
D)  a downward-sloping concave curve. 
A)  a downward-sloping straight line. 
B)  an upward-sloping straight line. 
C)  a downward-sloping convex curve. 
D)  a downward-sloping concave curve.

Question 20

When an economy is not using all of its resources,it is producing at a point below its production possibilities frontier.

Accepted Answer

A) True 
 B)False

Exam 2: Production Possibilities Frontier Framework

The economy can produce 15X and 15Y,10X and 20Y,5X and 25Y,or 0X and 30Y.It follows that opportunity cost of 1X is ___Y.

Economic growth causes the PPF to

Some of our farm fields are being left unused.Does this have any implications for the economy's PPF diagram (with agricultural products on one axis and all other products on the other axis)?

Productive efficiency implies that

Which of the following statements is false?

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

It is possible through trade for a country to consume a combination of goods that lies beyond its production possibilities frontier.

In the production possibilities framework,economic growth is depicted by the PPF

Exhibit 2-6 -Refer to Exhibit 2-6. Which graph depicts the result of an increase in the unemployment rate?

Productive efficiency implies that

Which of the following is an illustration of the law of increasing opportunity costs?

Exhibit 2-7 -Refer to Exhibit 2-7.For which of the following is the statement "In order to get more civilian goods,we have to forfeit some military goods" true?

A production possibilities frontier separates an attainable region from an unattainable region.

Using your own words,describe the law of increasing opportunity costs. Be sure to explain why this phenomenon occurs and how it helps to contribute to the shape of the production possibilities frontier.

If there is an increase in the amount of good B foregone as every additional unit of good A is produced,the PPF between goods A and B would

Within the production possibilities frontier (PPF)framework,choice is depicted by the

The law of increasing opportunity cost results from the varying ability of resources to adapt to the production of different goods and it helps to explain why production possibilities curves are typically bowed outward.

The economy can produce 15X and 15Y,10X and 20Y,5X and 25Y,or OX and 30Y.It follows that the production possibility frontier (PPF)is

When an economy is not using all of its resources,it is producing at a point below its production possibilities frontier.

What Economics Is About

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Agriculture: Problems, Policies, and Unintended Effects

Filters