Question 1

-Refer to the production possibilities frontier in the figure above. Which production point is unattainable?

Accepted Answer

A)  Point a 
B)  Point b 
C)  Point c 
D)  Point e 
A)  Point a 
B)  Point b 
C)  Point c 
D)  Point e

Question 2

The state of Georgia offers free college tuition to high school students with a ʺBʺ 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. These changes

Accepted Answer

A)  will cause a shift out of the PPF. 
B)  will cause a shift in the of the PPF. 
C)  are example of a tradeoff. 
D)  are an example of incentives 
A)  will cause a shift out of the PPF. 
B)  will cause a shift in the of the PPF. 
C)  are example of a tradeoff. 
D)  are an example of incentives

Question 3

A marginal cost curve

Accepted Answer

A)  is upward sloping. 
B)  shows that as more of a good is produced, opportunity costs of producing another unit increase. 
C)  is bowed inward so that its slope can become negative. 
D)  Both answers A and B are correct. 
A)  is upward sloping. 
B)  shows that as more of a good is produced, opportunity costs of producing another unit increase. 
C)  is bowed inward so that its slope can become negative. 
D)  Both answers A and B are correct.

Question 4

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

Accepted Answer

A)  4 pounds of shrimp per gallon of gasoline 
B)  1 pound of shrimp per gallon of gasoline 
C)  3 pounds of shrimp per gallon of gasoline 
D)  5 pounds of shrimp per gallon of gasoline 
A)  4 pounds of shrimp per gallon of gasoline 
B)  1 pound of shrimp per gallon of gasoline 
C)  3 pounds of shrimp per gallon of gasoline 
D)  5 pounds of shrimp per gallon of gasoline

Question 5

-As output moves from point a to point b to point c along the PPF in the above figure, the opportunity cost of one more unit of good X

Accepted Answer

A)  falls. The opportunity cost of one more unit of good Y also falls. 
B)  rises. The opportunity cost of one more unit of good Y falls. 
C)  rises. The opportunity cost of one more unit of good Y also rises. 
D)  falls. The opportunity cost of one more unit of good Y rises. 
A)  falls. The opportunity cost of one more unit of good Y also falls. 
B)  rises. The opportunity cost of one more unit of good Y falls. 
C)  rises. The opportunity cost of one more unit of good Y also rises. 
D)  falls. The opportunity cost of one more unit of good Y rises.

Question 6

-In the figure above, the opportunity cost of moving from point C to point D is

Accepted Answer

A)  the loss in production in the education sector. 
B)  the loss in production in the health care sector. 
C)  zero. 
D)  the increase in production in the education sector. 
A)  the loss in production in the education sector. 
B)  the loss in production in the health care sector. 
C)  zero. 
D)  the increase in production in the education sector.

Question 7

The production possibilities frontier itself illustrates

Accepted Answer

A)  the combination of goods and services that can be produced efficiently 
B)  all possible production of capital goods 
C)  all goods and services that are desired but cannot be produced due to scarce resources. 
D)  all goods that can be produced by an economy 
A)  the combination of goods and services that can be produced efficiently 
B)  all possible production of capital goods 
C)  all goods and services that are desired but cannot be produced due to scarce resources. 
D)  all goods that can be produced by an economy

Question 8

The table above shows the amounts of cloth and cheese that China and Pakistan can produce in an hour. Which country has the comparative advantage in cloth and which country has the comparative advantage in cheese? $\begin{array}{|lr|lr|}
\hline\text { Omar's production in } 1&&\text { John's production in } 1\\text { day }&&\text { day }\
\hline \text { Computers fixed } & 12 & \text { Computers fixed } & 4 \
\text { Lines of code } & 800 & \text { Lines of code } & 200 \
\hline
\end{array}$

Accepted Answer

In China, to produce 8 cloths has an opp

Question 9

The marginal benefit of a good or service

Accepted Answer

A)  remains constant as more is consumed. 
B)  increases as more is consumed. 
C)  decreases as less is consumed 
D)  decreases as more is consumed 
A)  remains constant as more is consumed. 
B)  increases as more is consumed. 
C)  decreases as less is consumed 
D)  decreases as more is consumed

Question 10

One of the opportunity costs of economic growth is

Accepted Answer

A)  technological change. 
B)  the gain in future consumption. 
C)  reduced current consumption. 
D)  capital accumulation. 
A)  technological change. 
B)  the gain in future consumption. 
C)  reduced current consumption. 
D)  capital accumulation.

Question 11

If the United States can increase its production of automobiles without decreasing its production of any other good, the United States must have been producing at a point

Accepted Answer

A)  beyond its PPF. 
B)  on its PPF. 
C)  within its PPF. 
D)  None of the above is correct because increasing the production of one good without decreasing the production of another good is impossible. 
A)  beyond its PPF. 
B)  on its PPF. 
C)  within its PPF. 
D)  None of the above is correct because increasing the production of one good without decreasing the production of another good is impossible.

Question 12

Abe can catch 15 pounds of fish an hour or pick 30 pounds of fruit an hour. He works an 8 -hour day, spending 5 hours picking fruit and 3 hours catching fish. Calculate Abeʹs opportunity cost of a pound of fruit.

Accepted Answer

A)  3 hours a day 
B)  2 pounds of fish 
C)  6 minutes 
D)  0.5 pounds of fish 
A)  3 hours a day 
B)  2 pounds of fish 
C)  6 minutes 
D)  0.5 pounds of fish

Question 13

When we cannot produce more of any good without giving up some other good that we value more highly, we have achieved

Accepted Answer

A)  production. 
B)  equity. 
C)  the production point where the marginal benefit exceeds the marginal cost by as much as possible. 
D)  allocative efficiency. 
A)  production. 
B)  equity. 
C)  the production point where the marginal benefit exceeds the marginal cost by as much as possible. 
D)  allocative efficiency.

Question 14

A country that has a comparative advantage in producing capital goods will ___________a country that has a comparative advantage in consumption goods.

Accepted Answer

A)  specialize in producing capital goods and trade with 
B)  grow slower than 
C)  reap fewer of the gains from trade when it trades with 
D)  reap all of the gains from trade when it trades with 
A)  specialize in producing capital goods and trade with 
B)  grow slower than 
C)  reap fewer of the gains from trade when it trades with 
D)  reap all of the gains from trade when it trades with

Question 15

Some time ago the government of China required many highly skilled technicians and scientists to engage in unskilled agricultural labor in order to develop ʺproper social attitudes.ʺ This policy probably caused China to produce

Accepted Answer

A)  inside its production possibilities frontier with respect to food, but outside with respect to high-technology goods. 
B)  inside its production possibilities frontier. 
C)  at an inappropriate point along its production possibilities frontier. 
D)  outside its production possibilities frontier with respect to food, but inside with respect to high-technology goods. 
A)  inside its production possibilities frontier with respect to food, but outside with respect to high-technology goods. 
B)  inside its production possibilities frontier. 
C)  at an inappropriate point along its production possibilities frontier. 
D)  outside its production possibilities frontier with respect to food, but inside with respect to high-technology goods.

Question 16

The quantity of shoes produced is measured along the horizontal axis of a PPF and the quantity of shirts is measured along the vertical axis. As you move down toward the right along the PPF, the marginal cost of

Accepted Answer

A)  shoes and shirts is equal at the midpoint between the vertical and horizontal axis. 
B)  shoes decreases. 
C)  shirts increases. 
D)  shoes increases. 
A)  shoes and shirts is equal at the midpoint between the vertical and horizontal axis. 
B)  shoes decreases. 
C)  shirts increases. 
D)  shoes increases.

Question 17

A system of property rights

Accepted Answer

A)  reduces the efficiency of government, which reduces the growth rate of the economy over time. 
B)  discourages economic growth by discouraging the development of new ideas and ways of doing things. 
C)  encourages economic growth by creating incentives to invest in capital and to be innovative. 
D)  encourages investment but discourages entrepreneurial activity, so the effect on economic growth is uncertain. 
A)  reduces the efficiency of government, which reduces the growth rate of the economy over time. 
B)  discourages economic growth by discouraging the development of new ideas and ways of doing things. 
C)  encourages economic growth by creating incentives to invest in capital and to be innovative. 
D)  encourages investment but discourages entrepreneurial activity, so the effect on economic growth is uncertain.

Question 18

When an economy produces at its allocatively efficient production point,

Accepted Answer

A)  scarcity is not a problem. 
B)  a society can increase the production of all goods. 
C)  resources are not limited. 
D)  a society can increase the production of one good only by decreasing the production of some other good that is valued more highly. 
A)  scarcity is not a problem. 
B)  a society can increase the production of all goods. 
C)  resources are not limited. 
D)  a society can increase the production of one good only by decreasing the production of some other good that is valued more highly.

Question 19

Households are buyers in factor markets and sellers in goods markets.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

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

-Refer to the production possibilities frontier in the figure above. Which production point is unattainable?

A marginal cost curve

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

-As output moves from point a to point b to point c along the PPF in the above figure, the opportunity cost of one more unit of good X

-In the figure above, the opportunity cost of moving from point C to point D is

The production possibilities frontier itself illustrates

The marginal benefit of a good or service

One of the opportunity costs of economic growth is

If the United States can increase its production of automobiles without decreasing its production of any other good, the United States must have been producing at a point

Abe can catch 15 pounds of fish an hour or pick 30 pounds of fruit an hour. He works an 8 -hour day, spending 5 hours picking fruit and 3 hours catching fish. Calculate Abeʹs opportunity cost of a pound of fruit.

When we cannot produce more of any good without giving up some other good that we value more highly, we have achieved

A country that has a comparative advantage in producing capital goods will ___________a country that has a comparative advantage in consumption goods.

Some time ago the government of China required many highly skilled technicians and scientists to engage in unskilled agricultural labor in order to develop ʺproper social attitudes.ʺ This policy probably caused China to produce

The quantity of shoes produced is measured along the horizontal axis of a PPF and the quantity of shirts is measured along the vertical axis. As you move down toward the right along the PPF, the marginal cost of

A system of property rights

When an economy produces at its allocatively efficient production point,

Households are buyers in factor markets and sellers in goods markets.

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

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

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Exam 2: The Economic Problem

-Refer to the production possibilities frontier in the figure above. Which production point is unattainable?

A marginal cost curve

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

-As output moves from point a to point b to point c along the PPF in the above figure, the opportunity cost of one more unit of good X

-In the figure above, the opportunity cost of moving from point C to point D is

The production possibilities frontier itself illustrates

The marginal benefit of a good or service

One of the opportunity costs of economic growth is

If the United States can increase its production of automobiles without decreasing its production of any other good, the United States must have been producing at a point

Abe can catch 15 pounds of fish an hour or pick 30 pounds of fruit an hour. He works an 8 -hour day, spending 5 hours picking fruit and 3 hours catching fish. Calculate Abeʹs opportunity cost of a pound of fruit.

When we cannot produce more of any good without giving up some other good that we value more highly, we have achieved

A country that has a comparative advantage in producing capital goods will ___________a country that has a comparative advantage in consumption goods.

Some time ago the government of China required many highly skilled technicians and scientists to engage in unskilled agricultural labor in order to develop ʺproper social attitudes.ʺ This policy probably caused China to produce

The quantity of shoes produced is measured along the horizontal axis of a PPF and the quantity of shirts is measured along the vertical axis. As you move down toward the right along the PPF, the marginal cost of

A system of property rights

When an economy produces at its allocatively efficient production point,

Households are buyers in factor markets and sellers in goods markets.

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

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