Question 1

The production possibilities frontier

Accepted Answer

A)  depicts the boundary between those combinations of goods and services that can be produced and those that cannot given resources and the current state of technology. 
B)  is a graph with price on the vertical axis and income on the horizontal axis. 
C)  is a model that assumes there is no scarcity and no opportunity cost. 
D)  shows how many goods and services are consumed by each person in a country. 
A)  depicts the boundary between those combinations of goods and services that can be produced and those that cannot given resources and the current state of technology. 
B)  is a graph with price on the vertical axis and income on the horizontal axis. 
C)  is a model that assumes there is no scarcity and no opportunity cost. 
D)  shows how many goods and services are consumed by each person in a country. A

Question 2

As long as technology increases, economic growth is free.

Accepted Answer

A) True 
 B)False  False

Question 3

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

Accepted Answer

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

Question 4

$\quad\quad\quad\quad\text { Country A }$$\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Country B }$
$\begin{array}{|l|l|l|l|}
\hline \begin{array}{l}
\text { Good } X \
(\text { units of } X)
\end{array} & \begin{array}{l}
\text { Good } Y \
(\text { units of } Y)
\end{array} & \begin{array}{l}
\text { Good } X \
\text { (units of } X)
\end{array} & \begin{array}{l}
\text { Good } Y \
(\text { units of } Y)
\end{array} \\hline 0 & 16 & 0 & 12 \
\hline 2 & 12 & 2 & 9 \
\hline 4 & 8 & 4 & 6 \
\hline 6 & 4 & 6 & 3 \
\hline 8 & 0 & 8 & 0 \
\hline
\end{array}$
-In the table above, country A is producing 4 units of X and 8 units of Y and country B is producing 4 units of X and 6 units of Y. Regarding the production of good X

Accepted Answer

A)  country A has an absolute advantage. 
B)  country B has a comparative advantage. 
C)  country A has a comparative advantage. 
D)  country B has an absolute advantage. 
A)  country A has an absolute advantage. 
B)  country B has a comparative advantage. 
C)  country A has a comparative advantage. 
D)  country B has an absolute advantage.

Question 5

Japan can use all of its resources to produce 100 videos or 400 shoes. China can use all of its resources to produce 25 videos or 200 shoes. Which nation has the comparative advantage in shoes and which nation has the comparative advantage in videos?

Accepted Answer

In Japan, the opportunity cost of produc

Question 6

$\quad\quad\quad\quad\text { Country A }$$\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Country B }$
$\begin{array}{|l|l|l|l|}
\hline \begin{array}{l}
\text { Good } X \
(\text { units of } X)
\end{array} & \begin{array}{l}
\text { Good } Y \
(\text { units of } Y)
\end{array} & \begin{array}{l}
\text { Good } X \
\text { (units of } X)
\end{array} & \begin{array}{l}
\text { Good } Y \
(\text { units of } Y)
\end{array} \\hline 0 & 16 & 0 & 12 \
\hline 2 & 12 & 2 & 9 \
\hline 4 & 8 & 4 & 6 \
\hline 6 & 4 & 6 & 3 \
\hline 8 & 0 & 8 & 0 \
\hline
\end{array}$
-In the table above, country B is producing 4 units of X and 6 units of Y. For country B, the opportunity cost of producing an additional unit of Y is

Accepted Answer

A)  2/3 unit of X per unit of Y. 
B)  3 units of X per unit of Y. 
C)  1/2 unit of X per unit of Y. 
D)  2 units of X per unit of Y. 
A)  2/3 unit of X per unit of Y. 
B)  3 units of X per unit of Y. 
C)  1/2 unit of X per unit of Y. 
D)  2 units of X per unit of Y.

Question 7

At one point along a PPF, 50 tons of coffee and 100 tons of bananas are produced. At another point along the same PPF, 30 tons of coffee and 140 tons of bananas are produced. The opportunity cost of a ton of coffee between these points is

Accepted Answer

A)  7/5 of a ton of bananas per ton of coffee. 
B)  5/7 of a ton of bananas per ton of coffee. 
C)  2 tons of bananas per ton of coffee. 
D)  1/2 of a ton of bananas per ton of coffee. 
A)  7/5 of a ton of bananas per ton of coffee. 
B)  5/7 of a ton of bananas per ton of coffee. 
C)  2 tons of bananas per ton of coffee. 
D)  1/2 of a ton of bananas per ton of coffee.

Question 8

Compare and contrast production efficiency and allocative efficiency.

Accepted Answer

Production efficiency means that we are

Question 9

Any production point outside the production possibilities frontier is

Accepted Answer

A)  attainable only if prices rise. 
B)  unattainable. 
C)  associated with unused resources. 
D)  attainable only if prices fall. 
A)  attainable only if prices rise. 
B)  unattainable. 
C)  associated with unused resources. 
D)  attainable only if prices fall.

Question 10

-In the above figure, at point a what is the opportunity cost of producing one more audio tape?

Accepted Answer

A)  2 video tapes per audio tape 
B)  1 video tape per audio tape 
C)  14 video tapes per audio tape 
D)  There is no opportunity cost. 
A)  2 video tapes per audio tape 
B)  1 video tape per audio tape 
C)  14 video tapes per audio tape 
D)  There is no opportunity cost.

Question 11

In the United States, the government coordinates most of the economic activity.)

Accepted Answer

A) True 
 B)False

Question 12

$$\begin{array} { | l | l | l | } 
\hline \begin{array} { l } 
\text { Quantity } \
\text { (pizzas per } \
\text { day) }
\end{array} & \begin{array} { l } 
\text { Marginal } \
\text { benefit } \
\text { (cans per } \
\text { day) }
\end{array} & \begin{array} { l } 
\text { Marginal } \
\text { cost (cans } \
\text { per day) }
\end{array} \
\hline 10 & 26 & 14 \
\hline 20 & 24 & 16 \
\hline 30 & 22 & 18 \
\hline 40 & 20 & 20 \
\hline 50 & 18 & 22 \
\hline 60 & 16 & 24 \
\hline 70 & 14 & 26 \
\hline
\end{array}$$
-The table above shows the marginal benefit from pizza and the marginal cost of pizza in cans of soda forgone. The allocatively efficient quantity of pizza is pizzas per day.

Accepted Answer

A)  40 
B)  more than 70 
C)  70 
D)  10 
A)  40 
B)  more than 70 
C)  70 
D)  10

Question 13

In general, the more resources that are devoted to technological research, the

Accepted Answer

A)  faster the PPF shifts outward. 
B)  greater is current consumption. 
C)  more the PPF will bow outward. 
D)  higher is the unemployment rate. 
A)  faster the PPF shifts outward. 
B)  greater is current consumption. 
C)  more the PPF will bow outward. 
D)  higher is the unemployment rate.

Question 14

Moving along a PPF, marginal cost is

Accepted Answer

A)  the total cost, less the production of the other good or service. 
B)  equal to the opportunity cost of producing one more unit of a good or service. 
C)  greater than the opportunity cost. 
D)  the cost of producing the first unit of a good or service. 
A)  the total cost, less the production of the other good or service. 
B)  equal to the opportunity cost of producing one more unit of a good or service. 
C)  greater than the opportunity cost. 
D)  the cost of producing the first unit of a good or service.

Question 15

The fact of increasing opportunity costs means that a production possibilities frontier will

Accepted Answer

A)  bow outward. 
B)  reach a maximum and then gradually decrease. 
C)  be a straight line. 
D)  shift outward over time. 
A)  bow outward. 
B)  reach a maximum and then gradually decrease. 
C)  be a straight line. 
D)  shift outward over time.

Question 16

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

Accepted Answer

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

Question 17

$$\begin{array} { | l | l | l | } 
\hline \text { Point } & \begin{array} { l } 
\text { Production of grain } \
\text { (tons) }
\end{array} & \begin{array} { l } 
\text { Production of cars } \
\text { (cars) }
\end{array} \
\hline \text { A } & 0 & 30 \
\hline \text { B } & 2 & 28 \
\hline \text { C } & 4 & 24 \
\hline \text { D } & 6 & 18 \
\hline \text { E } & 8 & 10 \
\hline \text { F } & 10 & 0 \
\hline
\end{array}$$
-The table above lists six points on the production possibilities frontier for grain and cars. What is the opportunity cost of producing the 5th ton of grain?

Accepted Answer

A)  3 cars per ton of grain 
B)  6 cars per ton of grain 
C)  16 cars per ton of grain 
D)  2 cars per ton of grain 
A)  3 cars per ton of grain 
B)  6 cars per ton of grain 
C)  16 cars per ton of grain 
D)  2 cars per ton of grain

Question 18

A point inside a production possibilities frontier

Accepted Answer

A)  is more efficient than points on the production possibilities frontier. 
B)  could indicate that some resources are unemployed. 
C)  is unattainable. 
D)  implies that too much capital and not enough labor are being used. 
A)  is more efficient than points on the production possibilities frontier. 
B)  could indicate that some resources are unemployed. 
C)  is unattainable. 
D)  implies that too much capital and not enough labor are being used.

Question 19

The principle of increasing opportunity cost leads to

Accepted Answer

A)  a production possibilities frontier PPF) that is bowed outward from the origin. 
B)  an outward shift of the production possibilities frontier PPF). 
C)  an inward shift of the production possibilities frontier PPF). 
D)  a production possibilities frontier PPF) that is bowed inward from the origin. 
A)  a production possibilities frontier PPF) that is bowed outward from the origin. 
B)  an outward shift of the production possibilities frontier PPF). 
C)  an inward shift of the production possibilities frontier PPF). 
D)  a production possibilities frontier PPF) that is bowed inward from the origin.

Question 20

A person has a comparative advantage in an activity if that person can

Accepted Answer

A)  produce more goods in a given amount of time than another person. 
B)  perform the activity at a lower opportunity cost than anyone else. 
C)  perform that activity at a higher opportunity cost than anyone else. 
D)  produce fewer goods in a given amount of time than another person. 
A)  produce more goods in a given amount of time than another person. 
B)  perform the activity at a lower opportunity cost than anyone else. 
C)  perform that activity at a higher opportunity cost than anyone else. 
D)  produce fewer goods in a given amount of time than another person.

The production possibilities frontier

As long as technology increases, economic growth is free.

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

Japan can use all of its resources to produce 100 videos or 400 shoes. China can use all of its resources to produce 25 videos or 200 shoes. Which nation has the comparative advantage in shoes and which nation has the comparative advantage in videos?

At one point along a PPF, 50 tons of coffee and 100 tons of bananas are produced. At another point along the same PPF, 30 tons of coffee and 140 tons of bananas are produced. The opportunity cost of a ton of coffee between these points is

Compare and contrast production efficiency and allocative efficiency.

Any production point outside the production possibilities frontier is

-In the above figure, at point a what is the opportunity cost of producing one more audio tape?

In the United States, the government coordinates most of the economic activity.)

In general, the more resources that are devoted to technological research, the

Moving along a PPF, marginal cost is

The fact of increasing opportunity costs means that a production possibilities frontier will

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

Point Production of grain (tons) Production of cars (cars) A 0 30 B 2 28 C 4 24 D 6 18 E 8 10 F 10 0 -The table above lists six points on the production possibilities frontier for grain and cars. What is the opportunity cost of producing the 5th ton of grain?

A point inside a production possibilities frontier

The principle of increasing opportunity cost leads to

A person has a comparative advantage in an activity if that person can

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: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters

Exam 2: The Economic Problem

The production possibilities frontier

As long as technology increases, economic growth is free.

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

Japan can use all of its resources to produce 100 videos or 400 shoes. China can use all of its resources to produce 25 videos or 200 shoes. Which nation has the comparative advantage in shoes and which nation has the comparative advantage in videos?

At one point along a PPF, 50 tons of coffee and 100 tons of bananas are produced. At another point along the same PPF, 30 tons of coffee and 140 tons of bananas are produced. The opportunity cost of a ton of coffee between these points is

Compare and contrast production efficiency and allocative efficiency.

Any production point outside the production possibilities frontier is

-In the above figure, at point a what is the opportunity cost of producing one more audio tape?

In the United States, the government coordinates most of the economic activity.)

In general, the more resources that are devoted to technological research, the

Moving along a PPF, marginal cost is

The fact of increasing opportunity costs means that a production possibilities frontier will

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

Point Production of grain (tons) Production of cars (cars) A 0 30 B 2 28 C 4 24 D 6 18 E 8 10 F 10 0 -The table above lists six points on the production possibilities frontier for grain and cars. What is the opportunity cost of producing the 5th ton of grain?

A point inside a production possibilities frontier

The principle of increasing opportunity cost leads to

A person has a comparative advantage in an activity if that person can

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: the Keynesian Model

U.S Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Review

Filters