Question 1

A point inside a production possibilities frontier

Accepted Answer

A)  could indicate that resources are misallocated. 
B)  implies that too much labor and not enough capital is being used. 
C)  reflects the fact that more technology needs to be developed to fully employ all resources. 
D)  is more efficient than a point on the production possibilities frontier. 
A)  could indicate that resources are misallocated. 
B)  implies that too much labor and not enough capital is being used. 
C)  reflects the fact that more technology needs to be developed to fully employ all resources. 
D)  is more efficient than a point on the production possibilities frontier.

Question 2

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

Question 3

-In the above figure, which of the following is TRUE regarding the movements from point A to B
And from point C to D?
I. The movement from point A to B shows that the economy has chosen to produce 100 more jets.
II. The movement from point C to D shows that the economy has chosen to produce 100 more jets.
III. The movement from point A to B and from point C to D have the same opportunity cost.

Accepted Answer

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

Question 4

The fact that individual productive resources are NOT equally useful in all activities

Accepted Answer

A)  implies a linear production possibilities frontier. 
B)  follows from the law of demand. 
C)  implies that a production possibilities frontier will be bowed outward. 
D)  implies that gain from specialization and trade is unlikely. 
A)  implies a linear production possibilities frontier. 
B)  follows from the law of demand. 
C)  implies that a production possibilities frontier will be bowed outward. 
D)  implies that gain from specialization and trade is unlikely.

Question 5

-The figure above shows Prakash's and Gail's production possibilities frontiers for writing books and magazine a
a) What is Prakash's opportunity cost of a book? What is Gail's opportunity cost? Who has the comparative adv 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 article

Accepted Answer

a) In a year, Prakash can write 2 books

Question 6

The production possibilities frontier separates _ _.

Accepted Answer

A)  the quantities of goods and services that can be produced from those that cannot be produced 
B)  the combinations of goods that people value and those that they don't 
C)  the types of goods that can be attained from those that can't be attained 
D)  the goods and services that people want from those that they do not want 
A)  the quantities of goods and services that can be produced from those that cannot be produced 
B)  the combinations of goods that people value and those that they don't 
C)  the types of goods that can be attained from those that can't be attained 
D)  the goods and services that people want from those that they do not want

Question 7

-The above table shows production points on Sweet- Tooth Land's production possibilities frontier. Which of the following is an example of a point that is inefficient?

Accepted Answer

A)  38 chocolate bars and 0 cans of cola 
B)  0 chocolate bars and 100 cans of cola 
C)  20 chocolate bars and 80 cans of cola 
D)  32 chocolate bars and 40 cans of cola 
A)  38 chocolate bars and 0 cans of cola 
B)  0 chocolate bars and 100 cans of cola 
C)  20 chocolate bars and 80 cans of cola 
D)  32 chocolate bars and 40 cans of cola

Question 8

-In the above figure, in order for this country to move from production possibilities frontier PPF1 to
PPF2, it might

Accepted Answer

A)  put all unemployed resources to work producing desired output. 
B)  increase the skills and productivity of its work force. 
C)  increase the average level of prices for all goods produced and consumed. 
D)  engage in exchange with other nations. 
A)  put all unemployed resources to work producing desired output. 
B)  increase the skills and productivity of its work force. 
C)  increase the average level of prices for all goods produced and consumed. 
D)  engage in exchange with other nations.

Question 9

A country possesses a comparative advantage in the production of a good if

Accepted Answer

A)  it possesses an absolute advantage in the production of this good. 
B)  the opportunity cost in terms of forgone output of alternative goods is lower for this country than it is for its trading partners. 
C)  it is able to produce more of this good per hour than can any other country. 
D)  all of the above 
A)  it possesses an absolute advantage in the production of this good. 
B)  the opportunity cost in terms of forgone output of alternative goods is lower for this country than it is for its trading partners. 
C)  it is able to produce more of this good per hour than can any other country. 
D)  all of the above

Question 10

Production efficiency requires that

Accepted Answer

A)  production is at a point on the PPF. 
B)  resources are assigned to the task for which they are the best match. 
C)  it is impossible to produce more of one good without producing less of some other good. 
D)  All of the above answers are correct. 
A)  production is at a point on the PPF. 
B)  resources are assigned to the task for which they are the best match. 
C)  it is impossible to produce more of one good without producing less of some other good. 
D)  All of the above answers are correct.

Question 11

"When a person can produce more of a good or service than another person, the first person has the comparative advantage in producing the good." Is this assertion correct or incorrect? Explain your answer.

Accepted Answer

The assertion is incorrect. The statemen

Question 12

-In the figure above, point E could be obtained if

Accepted Answer

A)  society's resources increased. 
B)  resources were used more efficiently. 
C)  resources were shifted from education to health care. 
D)  resources were shifted from health care to education. 
A)  society's resources increased. 
B)  resources were used more efficiently. 
C)  resources were shifted from education to health care. 
D)  resources were shifted from health care to education.

Question 13

When resources are assigned to inappropriate tasks, that is, tasks for which they are not the best match, the result will be producing at a point

Accepted Answer

A)  where the slope of the PPF is zero. 
B)  outside the PPF. 
C)  inside the PPF. 
D)  where the slope of the PPF is positive. 
A)  where the slope of the PPF is zero. 
B)  outside the PPF. 
C)  inside the PPF. 
D)  where the slope of the PPF is positive.

Question 14

In March a factory used new technology to produce its output. Then in August a fire destroys half the factory. The new technology shifted the factory's PPF _ and the fire shifted it _.

Accepted Answer

A)  outward; outward 
B)  inward; outward 
C)  outward; inward 
D)  inward; inward 
A)  outward; outward 
B)  inward; outward 
C)  outward; inward 
D)  inward; inward

Question 15

When economists state that the opportunity cost of a product increases as more of it is produced, what do they mean? What is the opportunity cost?

Accepted Answer

In general, the opportunity cost of incr

Question 16

Marginal cost usually

Accepted Answer

A)  increases as more is produced. 
B)  remains constant as more is produced. 
C)  decreases as marginal benefits decrease. 
D)  decreases as more is produced. 
A)  increases as more is produced. 
B)  remains constant as more is produced. 
C)  decreases as marginal benefits decrease. 
D)  decreases as more is produced.

Question 17

-In the above figure, the curve labeled a is the _ curve and the curve labeled b is the
Curve.

Accepted Answer

A)  marginal cost; trade line 
B)  production possibilities frontier; trade line 
C)  marginal cost; marginal benefit 
D)  marginal benefit; trade line 
A)  marginal cost; trade line 
B)  production possibilities frontier; trade line 
C)  marginal cost; marginal benefit 
D)  marginal benefit; trade line

Question 18

Mary takes 4 minutes to make a sandwich and 6 minutes to mix a cocktail. Her sister Ash takes 4 minutes to make a sandwich and 4 minutes to mix a cocktail. Calculate each sister's opportunity cost. Which of the two sisters has an absolute advantage in making sandwiches? In mixing cocktails? Which of the two has a comparative advantage in making sandwiches? In mixing cocktails?

Accepted Answer

Mary can spend an hour to make 15 sandwi

Question 19

-The figure above shows Freda's PPF. Freda currently produces 10 packets of fudge and no cookies. If Freda decides to produce 1 packet of cookies, her opportunity cost of the packet of cookies is
Of fudge.

Accepted Answer

A)  1/2 packet 
B)  2 packets 
C)  0 packets 
D)  1 packet 
A)  1/2 packet 
B)  2 packets 
C)  0 packets 
D)  1 packet

Question 20

In order to societies to reap the gains from trade, it is necessary to

Accepted Answer

A)  define and enforce property rights. 
B)  foster economic growth. 
C)  achieve productive efficiency. 
D)  distribute resources equally. 
A)  define and enforce property rights. 
B)  foster economic growth. 
C)  achieve productive efficiency. 
D)  distribute resources equally.

A point inside a production possibilities frontier

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

The fact that individual productive resources are NOT equally useful in all activities

The production possibilities frontier separates _ _.

-The above table shows production points on Sweet- Tooth Land's production possibilities frontier. Which of the following is an example of a point that is inefficient?

-In the above figure, in order for this country to move from production possibilities frontier PPF₁to PPF₂, it might

A country possesses a comparative advantage in the production of a good if

Production efficiency requires that

"When a person can produce more of a good or service than another person, the first person has the comparative advantage in producing the good." Is this assertion correct or incorrect? Explain your answer.

-In the figure above, point E could be obtained if

When resources are assigned to inappropriate tasks, that is, tasks for which they are not the best match, the result will be producing at a point

In March a factory used new technology to produce its output. Then in August a fire destroys half the factory. The new technology shifted the factory's PPF _ and the fire shifted it _.

When economists state that the opportunity cost of a product increases as more of it is produced, what do they mean? What is the opportunity cost?

Marginal cost usually

-In the above figure, the curve labeled a is the _ curve and the curve labeled b is the Curve.

-The figure above shows Freda's PPF. Freda currently produces 10 packets of fudge and no cookies. If Freda decides to produce 1 packet of cookies, her opportunity cost of the packet of cookies is Of fudge.

In order to societies to reap the gains from trade, it is necessary to

What Is Economics

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: They Keynesian Model

U.S. Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 2: The Economic Problem

A point inside a production possibilities frontier

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

The fact that individual productive resources are NOT equally useful in all activities

The production possibilities frontier separates _ _.

-The above table shows production points on Sweet- Tooth Land's production possibilities frontier. Which of the following is an example of a point that is inefficient?

-In the above figure, in order for this country to move from production possibilities frontier PPF1 to PPF2, it might

A country possesses a comparative advantage in the production of a good if

Production efficiency requires that

"When a person can produce more of a good or service than another person, the first person has the comparative advantage in producing the good." Is this assertion correct or incorrect? Explain your answer.

-In the figure above, point E could be obtained if

When resources are assigned to inappropriate tasks, that is, tasks for which they are not the best match, the result will be producing at a point

In March a factory used new technology to produce its output. Then in August a fire destroys half the factory. The new technology shifted the factory's PPF _ and the fire shifted it _.

When economists state that the opportunity cost of a product increases as more of it is produced, what do they mean? What is the opportunity cost?

Marginal cost usually

-In the above figure, the curve labeled a is the _ curve and the curve labeled b is the Curve.

-The figure above shows Freda's PPF. Freda currently produces 10 packets of fudge and no cookies. If Freda decides to produce 1 packet of cookies, her opportunity cost of the packet of cookies is Of fudge.

In order to societies to reap the gains from trade, it is necessary to

What Is Economics

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: They Keynesian Model

U.S. Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

-In the above figure, in order for this country to move from production possibilities frontier PPF₁to PPF₂, it might