Question 1

Suppose the United States discovers a way to produce clean nuclear fuel. The effect of this discovery would be to

Accepted Answer

A)  force the United States to produce at a point inside its PPF. 
B)  shift the U.S. PPF inward. 
C)  shift the U.S. PPF outward. 
D)  lead the United States to produce less nuclear fuel. 
A)  force the United States to produce at a point inside its PPF. 
B)  shift the U.S. PPF inward. 
C)  shift the U.S. PPF outward. 
D)  lead the United States to produce less nuclear fuel.

Question 2

Most students attending college pay tuition and are unable to hold a full- time job. For these students, tuition is

Accepted Answer

A)  part of the opportunity cost of going to college. So are their forgone earnings from not holding a full- time job. 
B)  not part of the opportunity cost of going to college. Neither are their forgone earnings from not holding a full- time job. 
C)  not part of the opportunity cost of going to college, but their forgone earnings from not holding a full- time job are part of the opportunity cost of attending college. 
D)  part of the opportunity cost of going to college. Their forgone earnings from not holding a full- time job are not part of the opportunity cost of attending college. 
A)  part of the opportunity cost of going to college. So are their forgone earnings from not holding a full- time job. 
B)  not part of the opportunity cost of going to college. Neither are their forgone earnings from not holding a full- time job. 
C)  not part of the opportunity cost of going to college, but their forgone earnings from not holding a full- time job are part of the opportunity cost of attending college. 
D)  part of the opportunity cost of going to college. Their forgone earnings from not holding a full- time job are not part of the opportunity cost of attending college.

Question 3

-In the figure above, at the allocatively efficient level of computer production the marginal cost of producing a computer is

Accepted Answer

A)  3 televisions per computer. 
B)  between 0 and 3 televisions per computer. 
C)  0 televisions per computer. 
D)  more than 3 televisions per computer. 
A)  3 televisions per computer. 
B)  between 0 and 3 televisions per computer. 
C)  0 televisions per computer. 
D)  more than 3 televisions per computer.

Question 4

-In the above figure, if 4000 bicycles are produced per month,

Accepted Answer

A)  the marginal cost of production is 2 bottles of soda per bicycle. 
B)  fewer bicycles should be produced to reach the allocatively efficient level of output. 
C)  marginal benefit is greater than marginal cost. 
D)  Both answers A and B are correct. 
A)  the marginal cost of production is 2 bottles of soda per bicycle. 
B)  fewer bicycles should be produced to reach the allocatively efficient level of output. 
C)  marginal benefit is greater than marginal cost. 
D)  Both answers A and B are correct.

Question 5

According to the principle of comparative advantage, if a rich country trades with a poor country, then

Accepted Answer

A)  the rich country will benefit and the poor country will lose. 
B)  the rich country will lose and the poor country will benefit. 
C)  both countries will benefit. 
D)  neither of the countries will benefit. 
A)  the rich country will benefit and the poor country will lose. 
B)  the rich country will lose and the poor country will benefit. 
C)  both countries will benefit. 
D)  neither of the countries will benefit.

Question 6

Which graph shows the impact of scientists developing a more powerful fertilizer?

Accepted Answer

A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D 
A)  Figure A 
B)  Figure B 
C)  Figure C 
D)  Figure D

Question 7

In the figure above, moving from point B to point D

Accepted Answer

A)  requires an increase in technology. 
B)  has an opportunity cost of one ton of butter per month. 
C)  has an opportunity cost of one ton of guns per month. 
D)  is impossible. 
A)  requires an increase in technology. 
B)  has an opportunity cost of one ton of butter per month. 
C)  has an opportunity cost of one ton of guns per month. 
D)  is impossible.

Question 8

-As Rainclouds Inc. moves downward along its production possibilities frontier, illustrated in the figure above, the opportunity cost of a raincoat .

Accepted Answer

A)  increases 
B)  decreases 
C)  remains the same 
D)  depends on the initial quantity produced 
A)  increases 
B)  decreases 
C)  remains the same 
D)  depends on the initial quantity produced

Question 9

The PPF shifts if

Accepted Answer

A)  the unemployment rate falls. 
B)  the prices of the goods and services produced rise. 
C)  the resources available to the nation change. 
D)  people decide they want more of one good and less of another. 
A)  the unemployment rate falls. 
B)  the prices of the goods and services produced rise. 
C)  the resources available to the nation change. 
D)  people decide they want more of one good and less of another.

Question 10

-Suppose that, for given resources and production technology, the above shows the production relationship between soda and pizza. For the sake of simplicity, assume the relationship is linear. What is the opportunity cost of producing an additional unit of pizza?

Accepted Answer

A)  1 pizza 
B)  4 sodas 
C)  3 sodas 
D)  Cannot be calculated with the information provided (the prices for both products are not given). 
A)  1 pizza 
B)  4 sodas 
C)  3 sodas 
D)  Cannot be calculated with the information provided (the prices for both products are not given).

Question 11

Allocative efficiency occurs when

Accepted Answer

A)  we cannot produce more of any one good without giving up some other good. 
B)  marginal benefit exceeds marginal cost. 
C)  opportunity costs are decreasing. 
D)  we cannot produce more of any good without giving up some other good that we value more highly. 
A)  we cannot produce more of any one good without giving up some other good. 
B)  marginal benefit exceeds marginal cost. 
C)  opportunity costs are decreasing. 
D)  we cannot produce more of any good without giving up some other good that we value more highly.

Question 12

As we increase the production of computers, we find that we must give up larger and larger amounts of DVD players per computer.

Accepted Answer

A)  DVD players will be more highly regarded by consumers than computers. 
B)  This situation illustrates increasing opportunity cost. 
C)  The production possibilities frontier for computers and DVD players is a straight line. 
D)  As a result, we should specialize in the production of DVD players. 
A)  DVD players will be more highly regarded by consumers than computers. 
B)  This situation illustrates increasing opportunity cost. 
C)  The production possibilities frontier for computers and DVD players is a straight line. 
D)  As a result, we should specialize in the production of DVD players.

Question 13

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

Question 14

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 15

Tom takes 20 minutes to burn a CD and 5 minutes to make a sandwich. Jerry takes 15 minutes to burn a CD and 3 minutes to make a sandwich. Tom has a comparative advantage in and Jerry has a comparative advantage in _ .

Accepted Answer

A)  burning CDs; making sandwiches 
B)  making sandwiches; burning CDs 
C)  neither of these activities; both activities 
D)  both activities; neither of these activities 
A)  burning CDs; making sandwiches 
B)  making sandwiches; burning CDs 
C)  neither of these activities; both activities 
D)  both activities; neither of these activities

Question 16

The principle of decreasing marginal benefit means that as the quantity of a good consumed

Accepted Answer

A)  increases, its total benefit decreases. 
B)  decreases, its marginal benefit decreases. 
C)  increases, its marginal benefit decreases. 
D)  None of the above answers is correct. 
A)  increases, its total benefit decreases. 
B)  decreases, its marginal benefit decreases. 
C)  increases, its marginal benefit decreases. 
D)  None of the above answers is correct.

Question 17

"If an economy is producing at a point on its PPF, it has achieved allocative efficiency." True or false? Explain.

Accepted Answer

If an economy is producing at a point on

Question 18

Missouri can produce 10,000 tons of pecans per year or 5,000 tons of pears per year. Washington can produce 12,000 tons of pecans per year or 48,000 tons of pears per year. Which of the following statements is true?

Accepted Answer

A)  Washington has a comparative advantage in the production of both pecans and pears. 
B)  Washington has an absolute advantage in the production of both pecans and pears. 
C)  Washington has a comparative advantage in producing pecans and Missouri has a comparative advantage in producing pears. 
D)  Both answers A and C are correct. 
A)  Washington has a comparative advantage in the production of both pecans and pears. 
B)  Washington has an absolute advantage in the production of both pecans and pears. 
C)  Washington has a comparative advantage in producing pecans and Missouri has a comparative advantage in producing pears. 
D)  Both answers A and C are correct.

Question 19

Jake takes 40 minutes to fry a chicken and 10 minutes to toast a slice of bread. His brother Elwood takes 60 minutes to fry a chicken and 4 minutes to toast a slice of bread. Calculate each brother's opportunity cost. Who has a comparative advantage in which activity? Explain. Will the brothers gain if they specialize?

Accepted Answer

Jake can spend an hour to fry 1.5 chicke

Question 20

-In the figure above, moving from production at point d to production at point a requires

Accepted Answer

A)  a decrease in unemployment. 
B)  technological change. 
C)  decreasing the output of consumer goods in order to boost the output of capital goods. 
D)  both capital accumulation and a decrease in unemployment. 
A)  a decrease in unemployment. 
B)  technological change. 
C)  decreasing the output of consumer goods in order to boost the output of capital goods. 
D)  both capital accumulation and a decrease in unemployment.

Suppose the United States discovers a way to produce clean nuclear fuel. The effect of this discovery would be to

Most students attending college pay tuition and are unable to hold a full- time job. For these students, tuition is

-In the figure above, at the allocatively efficient level of computer production the marginal cost of producing a computer is

-In the above figure, if 4000 bicycles are produced per month,

According to the principle of comparative advantage, if a rich country trades with a poor country, then

Which graph shows the impact of scientists developing a more powerful fertilizer?

In the figure above, moving from point B to point D

-As Rainclouds Inc. moves downward along its production possibilities frontier, illustrated in the figure above, the opportunity cost of a raincoat .

The PPF shifts if

-Suppose that, for given resources and production technology, the above shows the production relationship between soda and pizza. For the sake of simplicity, assume the relationship is linear. What is the opportunity cost of producing an additional unit of pizza?

Allocative efficiency occurs when

As we increase the production of computers, we find that we must give up larger and larger amounts of DVD players per computer.

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

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?

Tom takes 20 minutes to burn a CD and 5 minutes to make a sandwich. Jerry takes 15 minutes to burn a CD and 3 minutes to make a sandwich. Tom has a comparative advantage in and Jerry has a comparative advantage in _ .

The principle of decreasing marginal benefit means that as the quantity of a good consumed

"If an economy is producing at a point on its PPF, it has achieved allocative efficiency." True or false? Explain.

Missouri can produce 10,000 tons of pecans per year or 5,000 tons of pears per year. Washington can produce 12,000 tons of pecans per year or 48,000 tons of pears per year. Which of the following statements is true?

-In the figure above, moving from production at point d to production at point a requires

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

Suppose the United States discovers a way to produce clean nuclear fuel. The effect of this discovery would be to

Most students attending college pay tuition and are unable to hold a full- time job. For these students, tuition is

-In the figure above, at the allocatively efficient level of computer production the marginal cost of producing a computer is

-In the above figure, if 4000 bicycles are produced per month,

According to the principle of comparative advantage, if a rich country trades with a poor country, then

Which graph shows the impact of scientists developing a more powerful fertilizer?

In the figure above, moving from point B to point D

-As Rainclouds Inc. moves downward along its production possibilities frontier, illustrated in the figure above, the opportunity cost of a raincoat .

The PPF shifts if

-Suppose that, for given resources and production technology, the above shows the production relationship between soda and pizza. For the sake of simplicity, assume the relationship is linear. What is the opportunity cost of producing an additional unit of pizza?

Allocative efficiency occurs when

As we increase the production of computers, we find that we must give up larger and larger amounts of DVD players per computer.

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

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?

Tom takes 20 minutes to burn a CD and 5 minutes to make a sandwich. Jerry takes 15 minutes to burn a CD and 3 minutes to make a sandwich. Tom has a comparative advantage in and Jerry has a comparative advantage in _ .

The principle of decreasing marginal benefit means that as the quantity of a good consumed

"If an economy is producing at a point on its PPF, it has achieved allocative efficiency." True or false? Explain.

Missouri can produce 10,000 tons of pecans per year or 5,000 tons of pears per year. Washington can produce 12,000 tons of pecans per year or 48,000 tons of pears per year. Which of the following statements is true?

-In the figure above, moving from production at point d to production at point a requires

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