Question 1

A bowed outward production possibilities frontier occurs when

Accepted Answer

A)  opportunity costs are constant. 
B)  as more of a good is produced, producing additional units of it require greater reductions in the other good. 
C)  resources are not scarce. 
D)  the society is operating on the production possibilities frontier. 
A)  opportunity costs are constant. 
B)  as more of a good is produced, producing additional units of it require greater reductions in the other good. 
C)  resources are not scarce. 
D)  the society is operating on the production possibilities frontier.

Question 2

Sarah and her boyfriend Mike want to save some money to pay for their wedding. So they decided to help people in the neighborhood by cleaning their garages and mowing lawns. Sarah takes 60 minutes to clean a garage and 80 minutes to mow a lawn. Mike takes 80 minutes to clean a garage and 80 minutes to mow a lawn. Sarah and Mike devote 10 hours per week each to these activities and get paid $25 for each garage they clean and $25 for each lawn they mow. Sarah says to Mike: ʺI have an absolute advantage in cleaning and we are equally productive in mowing. Therefore I should do both cleaning and mowing but you should only mow lawns.ʺ Mike disagrees. He thinks Sarah should specialize in cleaning garages and he should specialize in mowing lawns. Help Sarah and Mike to resolve their dispute.
a) Who has an absolute advantage in cleaning garages? In mowing lawns? Explain.
b) Draw Sarahʹs and Mikeʹs production possibilities frontiers. What are each individualʹs opportunity costs?
c) Who has a comparative advantage in cleaning garages? In mowing lawns? Explain.
d) Is Sarah right when she says that she should do both cleaning and mowing while Mike should only mow lawns? Or may be Mike is right when he suggests that Sarah specializes in cleaning and he specializes in mowing? Illustrate and substantiate your answer with a numerical example.

Accepted Answer

a) Sarah has an absolute advantage in cl

Question 3

-In the figure above, the point labeled C in the production possibilities frontier

Accepted Answer

A)  represents the maximum sustainable output level for this nation in the long run. 
B)  represents a highly desirable output level in the long run, because it conserves scarce resources. 
C)  represents either unemployed or inefficiently utilized resources. 
D)  is unattainable; it is beyond the productive capability of this country. 
A)  represents the maximum sustainable output level for this nation in the long run. 
B)  represents a highly desirable output level in the long run, because it conserves scarce resources. 
C)  represents either unemployed or inefficiently utilized resources. 
D)  is unattainable; it is beyond the productive capability of this country.

Question 4

-Based on the above, which figure shows the impact of a decrease in the population available to work?

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 5

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

Accepted Answer

A)  1 pound of shrimp per gallon of gasoline 
B)  3 pounds of shrimp per gallon of gasoline 
C)  5 pounds of shrimp per gallon of gasoline 
D)  2 pounds of shrimp per gallon of gasoline 
A)  1 pound of shrimp per gallon of gasoline 
B)  3 pounds of shrimp per gallon of gasoline 
C)  5 pounds of shrimp per gallon of gasoline 
D)  2 pounds of shrimp per gallon of gasoline

Question 6

$$\begin{array} { | l | l | l | } 
\hline \text { Point } & \begin{array} { l } 
\text { Production } \
\text { of } X
\end{array} & \begin{array} { l } 
\text { Production } \
\text { of } Y
\end{array} \
\hline a & 0 & 40 \
\hline b & 4 & 36 \
\hline c & 8 & 28 \
\hline & 12 & 16 \
\hline e & 16 & 0 \
\hline
\end{array}$$
-Refer to the table above, which gives five points on a nation?s PPF. As we increase the production of X,

Accepted Answer

A)  the opportunity cost of each new unit of X decreases. 
B)  the opportunity cost of each new unit of X increases. 
C)  the output of Y increases. 
D)  unemployment increases. 
A)  the opportunity cost of each new unit of X decreases. 
B)  the opportunity cost of each new unit of X increases. 
C)  the output of Y increases. 
D)  unemployment increases.

Question 7

Both Mergatroid and the Geebocks produce only gizmos and widgets. It is possible for Mergatroid to have

Accepted Answer

A)  an absolute and a comparative advantage in both products. 
B)  a comparative but not an absolute advantage in both products. 
C)  neither a comparative nor an absolute advantage in both products. 
D)  an absolute but not a comparative advantage in both products. 
A)  an absolute and a comparative advantage in both products. 
B)  a comparative but not an absolute advantage in both products. 
C)  neither a comparative nor an absolute advantage in both products. 
D)  an absolute but not a comparative advantage in both products.

Question 8

By specialization and trade, two individuals can

Accepted Answer

A)  shift their individual production possibilities frontiers outward. 
B)  consume at a point beyond their individual production possibilities frontiers. 
C)  increase their comparative advantage. 
D)  increase their absolute advantage. 
A)  shift their individual production possibilities frontiers outward. 
B)  consume at a point beyond their individual production possibilities frontiers. 
C)  increase their comparative advantage. 
D)  increase their absolute advantage.

Question 9

In a world lacking property rights, it would be_______ to realize the gains from trade and there would be __________specialization.

Accepted Answer

A)  harder; less 
B)  easier; more 
C)  harder; more 
D)  easier; less 
A)  harder; less 
B)  easier; more 
C)  harder; more 
D)  easier; less

Question 10

The production possibilities frontier shifts as

Accepted Answer

A)  the unemployment rate changes. 
B)  tastes and preferences change. 
C)  technology changes. 
D)  the money supply grows or shrinks. 
A)  the unemployment rate changes. 
B)  tastes and preferences change. 
C)  technology changes. 
D)  the money supply grows or shrinks.

Question 11

Jean can either type her term paper or create Web pages during the limited time she has available. The table above shows her PPF.
a) Can Jean type 90 pages and create 2 Web pages?
b) Use the above numbers to calculate the opportunity cost of a typed page as she increases her time typing and decreases time creating a Web page. $$\begin{array} { | l | l | l | l | } 
\hline \begin{array} { l } 
\text { Production } \
\text { point }
\end{array} & \begin{array} { l } 
\text { Wheat } \
\text { (bushels) }
\end{array} & & \begin{array} { l } 
\text { Soybeans } \
\text { (bushels) }
\end{array} \
\hline A & 1,500 & \text { and } & 0 \
\hline B & 1,000 & \text { and } & 2,250 \
\hline C & 500 & \text { and } & 3,500 \
\hline D & 0 & \text { and } & 4,000 \
\hline
\end{array}$$

Accepted Answer

a) Jean cannot type 90 pages and create

Question 12

If the marginal benefit of a good exceeds its marginal cost

Accepted Answer

A)  we should produce less to achieve the allocatively efficient use of resources. 
B)  weʹve achieved efficient resource use. 
C)  we should produce more to achieve the allocatively efficient use of resources. 
D)  we cannot tell if more or less should be produced to achieve the allocatively efficient use of resources. 
A)  we should produce less to achieve the allocatively efficient use of resources. 
B)  weʹve achieved efficient resource use. 
C)  we should produce more to achieve the allocatively efficient use of resources. 
D)  we cannot tell if more or less should be produced to achieve the allocatively efficient use of resources.

Question 13

Samʹs production possibilities frontier has good A on the horizontal axis and good B on the vertical axis. If Sam is producing at a point inside his frontier, then he

Accepted Answer

A)  is fully using all his resources. 
B)  values good A more than good B. 
C)  values good B more than good A. 
D)  can increase production of both goods with no increase in resources. 
A)  is fully using all his resources. 
B)  values good A more than good B. 
C)  values good B more than good A. 
D)  can increase production of both goods with no increase in resources.

Question 14

$$\begin{array} { | l | l | l | } 
\hline \text { Point } & \begin{array} { l } 
\text { Production } \
\text { chocolate } \
\text { bars }
\end{array} & \begin{array} { l } 
\text { Production } \
\text { cans of cola }
\end{array} \
\hline \text { A } & 0 & 100 \
\hline \text { B } & 10 & 90 \
\hline \text { C } & 20 & 70 \
\hline \text { D } & 30 & 40 \
\hline \text { E } & 40 & 0 \
\hline
\end{array}$$
-The above table shows production points on Sweet-Tooth Land?s production possibilities frontier. A movement from________ represents the greatest opportunity cost of increasing cola production.

Accepted Answer

A)  point B to point A 
B)  point C to point B 
C)  point D to point C 
D)  point E to point D 
A)  point B to point A 
B)  point C to point B 
C)  point D to point C 
D)  point E to point D

Question 15

$$\begin{array} { | l | c | c | } 
\hline & \begin{array} { c } 
\text { U.S. production } \
\text { possibilities }
\end{array} & \begin{array} { l } 
\text { France's production } \
\text { possibilities }
\end{array} \
\hline \text { Steel } & 100 & 25 \
\hline \text { Concrete } & 200 & 100 \
\hline
\end{array}$$
-The above table shows the tons of steel and concrete that can be produced by the United States and France in an hour. From the data in the table,

Accepted Answer

A)  the United States has a comparative advantage in the production of both goods. 
B)  France has an absolute advantage in the production of concrete. 
C)  France has a comparative advantage in the production of concrete. 
D)  the United States has a comparative advantage in the production of concrete. 
A)  the United States has a comparative advantage in the production of both goods. 
B)  France has an absolute advantage in the production of concrete. 
C)  France has a comparative advantage in the production of concrete. 
D)  the United States has a comparative advantage in the production of concrete.

Question 16

If a country operates on its PPF, it achieves production efficiency.)

Accepted Answer

A) True 
 B)False

Question 17

-In the above figure, point A is________, and point B is ________.

Accepted Answer

A)  unattainable, attainable 
B)  attainable, attainable 
C)  unattainable, unattainable 
D)  attainable, unattainable 
A)  unattainable, attainable 
B)  attainable, attainable 
C)  unattainable, unattainable 
D)  attainable, unattainable

Question 18

What factors generate economic growth?

Accepted Answer

Two key factors create economic growth:

Question 19

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

Accepted Answer

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

Question 20

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

A bowed outward production possibilities frontier occurs when

-In the figure above, the point labeled C in the production possibilities frontier

-Based on the above, which figure shows the impact of a decrease in the population available to work?

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

Point Production of X Production of Y a 0 40 b 4 36 c 8 28 12 16 e 16 0 -Refer to the table above, which gives five points on a nation?s PPF. As we increase the production of X,

Both Mergatroid and the Geebocks produce only gizmos and widgets. It is possible for Mergatroid to have

By specialization and trade, two individuals can

In a world lacking property rights, it would be_ to realize the gains from trade and there would be ____specialization.

The production possibilities frontier shifts as

If the marginal benefit of a good exceeds its marginal cost

Samʹs production possibilities frontier has good A on the horizontal axis and good B on the vertical axis. If Sam is producing at a point inside his frontier, then he

Point Production chocolate bars Production cans of cola A 0 100 B 10 90 C 20 70 D 30 40 E 40 0 -The above table shows production points on Sweet-Tooth Land?s production possibilities frontier. A movement from________ represents the greatest opportunity cost of increasing cola production.

U.S. production possibilities France's production possibilities Steel 100 25 Concrete 200 100 -The above table shows the tons of steel and concrete that can be produced by the United States and France in an hour. From the data in the table,

If a country operates on its PPF, it achieves production efficiency.)

-In the above figure, point A is, and point B is .

What factors generate economic growth?

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

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

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

A bowed outward production possibilities frontier occurs when

-In the figure above, the point labeled C in the production possibilities frontier

-Based on the above, which figure shows the impact of a decrease in the population available to work?

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

Point Production of X Production of Y a 0 40 b 4 36 c 8 28 12 16 e 16 0 -Refer to the table above, which gives five points on a nation?s PPF. As we increase the production of X,

Both Mergatroid and the Geebocks produce only gizmos and widgets. It is possible for Mergatroid to have

By specialization and trade, two individuals can

In a world lacking property rights, it would be_______ to realize the gains from trade and there would be __________specialization.

The production possibilities frontier shifts as

If the marginal benefit of a good exceeds its marginal cost

Samʹs production possibilities frontier has good A on the horizontal axis and good B on the vertical axis. If Sam is producing at a point inside his frontier, then he

Point Production chocolate bars Production cans of cola A 0 100 B 10 90 C 20 70 D 30 40 E 40 0 -The above table shows production points on Sweet-Tooth Land?s production possibilities frontier. A movement from________ represents the greatest opportunity cost of increasing cola production.

U.S. production possibilities France's production possibilities Steel 100 25 Concrete 200 100 -The above table shows the tons of steel and concrete that can be produced by the United States and France in an hour. From the data in the table,

If a country operates on its PPF, it achieves production efficiency.)

-In the above figure, point A is________, and point B is ________.

What factors generate economic growth?

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

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

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

In a world lacking property rights, it would be_ to realize the gains from trade and there would be ____specialization.

-In the above figure, point A is, and point B is .