Exam 2: The Economic Problem

The principle of decreasing marginal benefit implies that the

-Employees at Bank of America are good at providing banking services and workers at Ben & Jerry's are good at making ice cream. The figure above shows the marginal cost and marginal benefit curves for ice cream. As Ben & Jerry's increases production from 1 to 2 million gallons of ice cream, the

How can a combination of goods be unattainable?

-In the figure above, if Mac and Izzie both completely specialized and traded with one another, their joint output would be

Marginal cost is the

-The table above lists six points on the production possibilities frontier for grain and cars. From this information you can conclude that production is inefficient if this economy produces

-In the figure above, how can the economy represented by the production possibilities frontier move from point C to point F ?

The marginal benefit of a good or service is measured by

When the opportunity cost of producing more of a good is increasing, the marginal cost of producing more of the good is

BAe, a British defense company, has the contract to produce Tornado aircraft for the Royal Air Force. BAe is producing the aircraft at the lowest possible cost. If the RAF orders one more Tornado, there will be

Betty and Ann live on a desert island. With a day's labor, Ann can produce 8 fish or 4 coconuts; Betty can produce 6 fish or 2 coconuts. Ann's opportunity cost of producing 1 coconut is and she should specialize in the production of .

While producing on the production possibilities frontier, if additional units of a good could be produced at a constant opportunity cost, the production possibilities frontier would be

-The table above presents the production possibilities of Farmer Brown. Use these data to calculate Farmer Brown's opportunity cost of additional beef as Farmer Brown moves from point A to B to C to D. Also use the data to calculate Farmer Brown's opportunity cost of additional wheat as Farmer Brown moves from point D to C to B to A. Based on these costs, does Farmer Brown use resources that are more productive in one activity than the other? Explain your answer.

-According to the diagram in the above figure, what is the marginal benefit of consuming the 3 millionth gallon of gasoline per month?

-In the production possibilities frontier depicted in the figure above, which of the following combinations of hats and bananas is inefficient?

-The above figure illustrates Mary's production possibilities frontier. Which of the following movements show opportunity costs increasing?

-Refer to the production possibilities frontier figure above. Which of the following movements requires the largest opportunity cost, in terms of good X forgone, per extra unit of good Y?

The state of Georgia offers free college tuition to high school students with a "B" average. In 2007, the state raised the requirement so that fewer students qualified for the scholarship. At the same time, Georgia increased state spending on health care. Suppose that college education is on the vertical axis and health care is on the horizontal axis of a PPF. Georgia's change in spending would be shown as

-Refer to the table above, which gives five points on a nation's PPF. The opportunity cost of increasing the production of Y from 16 to 36 units is a total of

A president of the United States promises to produce more defense goods without any decreases in the production of other goods. This promise can be valid