Question 1

When the production possibilities frontier is bowed outwards, the opportunity cost of producing more of one good

Accepted Answer

A)  increases in terms of the amount foregone of the other good. 
B)  decreases in terms of the amount foregone of the other good. 
C)  cannot be determined. 
D)  remains constant. 
A)  increases in terms of the amount foregone of the other good. 
B)  decreases in terms of the amount foregone of the other good. 
C)  cannot be determined. 
D)  remains constant.

Question 2

Abe can catch 10 pounds of fish an hour or pick 10 pounds of fruit. Zeb can catch 30 pounds of fish an hour or pick 20 pounds of fruit. The opportunity cost of fish is ________for Abe than for Zeb, and the opportunity cost of fruit is ________for Abe than for Zeb.

Accepted Answer

A)  higher, higher 
B)  lower, higher 
C)  higher, lower 
D)  lower, lower 
A)  higher, higher 
B)  lower, higher 
C)  higher, lower 
D)  lower, lower

Question 3

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 about opportunity cost is correct?

Accepted Answer

A)  The opportunity cost of a ton of pecans is 2 tons of pears per ton of pecans for Missouri and 1/4 ton of pears per ton of pecans for Washington. 
B)  The opportunity cost of a ton of pecans is 1/2 ton of pears per ton of pecans for Missouri and 4 tons of pears per ton of pecans for Washington. 
C)  The opportunity cost of a ton of pears is 2 tons of pecans per ton of pears for Missouri and 1/4 ton of pecans per ton of pears for Washington. 
D)  Both answers B and C are correct. 
A)  The opportunity cost of a ton of pecans is 2 tons of pears per ton of pecans for Missouri and 1/4 ton of pears per ton of pecans for Washington. 
B)  The opportunity cost of a ton of pecans is 1/2 ton of pears per ton of pecans for Missouri and 4 tons of pears per ton of pecans for Washington. 
C)  The opportunity cost of a ton of pears is 2 tons of pecans per ton of pears for Missouri and 1/4 ton of pecans per ton of pears for Washington. 
D)  Both answers B and C are correct.

Question 4

The social arrangement that gives John Grisham, the writer of best -selling novels, the ownership of his novels is

Accepted Answer

A)  dynamic comparative advantage. 
B)  absolute advantage. 
C)  property rights. 
D)  a market. 
A)  dynamic comparative advantage. 
B)  absolute advantage. 
C)  property rights. 
D)  a market.

Question 5

Opportunity cost is best defined as

Accepted Answer

A)  a situation in which one individual cannot have an absolute advantage over another individual in the production of all goods. 
B)  the amount of money that an individual is willing to pay to purchase a good that means a great deal to that person. 
C)  the highest-valued alternative that is forgone when choosing among various alternatives. 
D)  the amount of money lost by one individual in an exchange process so that another individual might gain. 
A)  a situation in which one individual cannot have an absolute advantage over another individual in the production of all goods. 
B)  the amount of money that an individual is willing to pay to purchase a good that means a great deal to that person. 
C)  the highest-valued alternative that is forgone when choosing among various alternatives. 
D)  the amount of money lost by one individual in an exchange process so that another individual might gain.

Question 6

-In the figure above, the marginal cost of the fifth computer is

Accepted Answer

A)  4 television sets per computer. 
B)  0 television sets per computer. 
C)  35 television sets per computer. 
D)  20 television sets per computer. 
A)  4 television sets per computer. 
B)  0 television sets per computer. 
C)  35 television sets per computer. 
D)  20 television sets per computer.

Question 7

When a nation has a comparative advantage in the production of a particular good,

Accepted Answer

A)  the nation can gain from trade. 
B)  the comparative advantage encourages self-sufficiency. 
C)  the opportunity cost of producing that good is higher than that of other goods. 
D)  the nation tends to avoid specialization. 
A)  the nation can gain from trade. 
B)  the comparative advantage encourages self-sufficiency. 
C)  the opportunity cost of producing that good is higher than that of other goods. 
D)  the nation tends to avoid specialization.

Question 8

The table above presents the production possibilities of Farmer Brown. Use these data to calculate Farmer Brownʹs 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 Brownʹs 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. $$\begin{array} { | l | l | l | l | } 
\hline \begin{array} { l } 
\text { Production } \
\text { point }
\end{array} & \begin{array} { l } 
\text { Fish } \
\text { (pounds) }
\end{array} && \begin{array} { l } 
\text { Berries } \
\text { (pounds) }
\end{array} \
\hline A & 0 & \text { and } & 50 \
\hline B & 1 & \text { and } & 45 \
\hline C & 2 & \text { and } & 35 \
\hline D & 3 & \text { and } & 20 \
\hline E & 4 & \text { and } & 0 \
\hline
\end{array}$$

Accepted Answer

The opportunity cost of a pound of beef

Question 9

Jane produces only corn and cloth. Taking account of her preferences for corn and cloth

Accepted Answer

A)  makes her production possibilities frontier straighter. 
B)  does not affect her production possibilities frontier. 
C)  makes her production possibilities frontier flatter. 
D)  makes her production possibilities frontier steeper. 
A)  makes her production possibilities frontier straighter. 
B)  does not affect her production possibilities frontier. 
C)  makes her production possibilities frontier flatter. 
D)  makes her production possibilities frontier steeper.

Question 10

$$\begin{array} { | l | c | c | } 
\hline & \begin{array} { c } 
\text { U.S. production } \
\text { possibilities }
\end{array} & \begin{array} { l } 
\text { France's production } \
\text { possibilities }
\end{array} \
\hline \text { Steel } & 100 & 25 \
\hline \text { Concrete } & 200 & 100 \
\hline
\end{array}$$
-Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. There can be gains from exchange

Accepted Answer

A)  if Agnes specializes in the production of X and Brenda specializes in the production of Y. 
B)  only if Brenda becomes faster at producing X or Y. 
C)  if Agnes specializes in the production of Y and Brenda specializes in the production of X. 
D)  only if Agnes becomes faster at producing X. 
A)  if Agnes specializes in the production of X and Brenda specializes in the production of Y. 
B)  only if Brenda becomes faster at producing X or Y. 
C)  if Agnes specializes in the production of Y and Brenda specializes in the production of X. 
D)  only if Agnes becomes faster at producing X.

Question 11

-Refer to the production possibilities frontier in the figure above. If the country moves from point a
To point c, the opportunity cost of the move is

Accepted Answer

A)  10 million capital goods. 
B)  30 million capital goods. 
C)  20 million capital goods. 
D)  10 million consumption goods. 
A)  10 million capital goods. 
B)  30 million capital goods. 
C)  20 million capital goods. 
D)  10 million consumption goods.

Question 12

We have achieved production efficiency if we can produce more of one good without producing less of some other good.

Accepted Answer

A) True 
 B)False

Question 13

The idea of comparative advantage implies that people or countries

Accepted Answer

A)  should specialize in the production of goods. 
B)  can consume at a point outside their production possibilities frontier. 
C)  can gain from trading. 
D)  all of the above 
A)  should specialize in the production of goods. 
B)  can consume at a point outside their production possibilities frontier. 
C)  can gain from trading. 
D)  all of the above

Question 14

What is the relationship between the bowed out shape of the production possibilities frontier and the increasing opportunity cost of a good as more of it is produced?

Accepted Answer

The production possibilities frontier is

Question 15

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

Accepted Answer

A)  opportunity cost of ice cream decreases. 
B)  marginal cost curve shifts upward. 
C)  marginal cost curve shifts downward. 
D)  opportunity cost of ice cream increases to 2 banking services per gallon. 
A)  opportunity cost of ice cream decreases. 
B)  marginal cost curve shifts upward. 
C)  marginal cost curve shifts downward. 
D)  opportunity cost of ice cream increases to 2 banking services per gallon.

Question 16

Suppose that when NBC produces 1 new drama series in a season it gives up the chance to produce 3 new reality shows. This means that

Accepted Answer

A)  NBC has a comparative advantage in producing new reality shows. 
B)  the opportunity cost of a new drama series is 1/3 of a new reality show. 
C)  NBC has a comparative advantage in producing new drama series. 
D)  the opportunity cost of a 1 new reality show is 1/3 of a new drama series. 
A)  NBC has a comparative advantage in producing new reality shows. 
B)  the opportunity cost of a new drama series is 1/3 of a new reality show. 
C)  NBC has a comparative advantage in producing new drama series. 
D)  the opportunity cost of a 1 new reality show is 1/3 of a new drama series.

Question 17

The Hobbits of the Shire are trying to decide how much bread and how much wine to produce. They ask you to be their economic consultant and give you the information in the first table above about different combinations of wine and bread that they can produce if they are fully employed and doing their best. The Hobbits also give you the information in the second table above about their willingness to pay for wine depending on how much wine they already have. To help the Hobbits solve their problem:
a) Draw the Shireʹs production possibilities frontier. Put wine on the horizontal axis.
b) What is the opportunity cost of the first two thousand bottles of wine? What is the marginal cost of the 3000th bottle of wine? What is the marginal cost of the 3,000th loaf of bread?
c) Draw the marginal cost of wine curve. What happens to the marginal cost if production of wine increases? Why?
d) Draw the marginal benefit from wine curve on the same figure on which you put the marginal cost curve. Describe the relationship between the quantity of wine produced and the marginal benefit from wine.
e) What combination of bread and wine will you recommend the Hobbits to produce? Why? Explain to the Hobbits why they would be worse off by producing a different combination of bread and wine.

Accepted Answer

The figure above shows the Shireʹs produ

Question 18

ʺIf Mexico is currently operating at a point inside its production possibilities frontier, then there are unemployed resources in Mexico.ʺ Is this statement true or false? Briefly explain your answer.

Accepted Answer

The statement is true. Points within the

Question 19

$$\begin{array} { | l | l | l | } 
\hline \text { Point } & \begin{array} { l } 
\text { Production of } \
X
\end{array} & \begin{array} { l } 
\text { Production of } \
Y
\end{array} \
\hline \text { A } & 0 & 40 \
\hline B & 3 & 36 \
\hline \text { C } & 6 & 28 \
\hline \text { D } & 9 & 16 \
\hline \text { E } & 12 & 0 \
\hline
\end{array}$$
-The above table shows production combinations on a country?s production possibilities frontier. What is the opportunity cost of one unit of Y when the production of good Y increases from 16 to 28 units?

Accepted Answer

A)  3 units of good X per unit of good Y 
B)  1/4 unit of good X per unit of good Y 
C)  4 units of good X per unit of good Y 
D)  There is no opportunity cost when moving from one point to another along a production possibilities frontier. 
A)  3 units of good X per unit of good Y 
B)  1/4 unit of good X per unit of good Y 
C)  4 units of good X per unit of good Y 
D)  There is no opportunity cost when moving from one point to another along a production possibilities frontier.

Question 20

A tradeoff is illustrated by

Accepted Answer

A)  the negative slope of the PPF. 
B)  a change in the slope of the PPF. 
C)  a point inside the PPF. 
D)  a point outside the PPF. 
A)  the negative slope of the PPF. 
B)  a change in the slope of the PPF. 
C)  a point inside the PPF. 
D)  a point outside the PPF.

When the production possibilities frontier is bowed outwards, the opportunity cost of producing more of one good

Abe can catch 10 pounds of fish an hour or pick 10 pounds of fruit. Zeb can catch 30 pounds of fish an hour or pick 20 pounds of fruit. The opportunity cost of fish is for Abe than for Zeb, and the opportunity cost of fruit is for Abe than for Zeb.

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 about opportunity cost is correct?

The social arrangement that gives John Grisham, the writer of best -selling novels, the ownership of his novels is

Opportunity cost is best defined as

-In the figure above, the marginal cost of the fifth computer is

When a nation has a comparative advantage in the production of a particular good,

Jane produces only corn and cloth. Taking account of her preferences for corn and cloth

U.S. production possibilities France's production possibilities Steel 100 25 Concrete 200 100 -Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. There can be gains from exchange

-Refer to the production possibilities frontier in the figure above. If the country moves from point a To point c, the opportunity cost of the move is

We have achieved production efficiency if we can produce more of one good without producing less of some other good.

The idea of comparative advantage implies that people or countries

What is the relationship between the bowed out shape of the production possibilities frontier and the increasing opportunity cost of a good as more of it is produced?

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

Suppose that when NBC produces 1 new drama series in a season it gives up the chance to produce 3 new reality shows. This means that

ʺIf Mexico is currently operating at a point inside its production possibilities frontier, then there are unemployed resources in Mexico.ʺ Is this statement true or false? Briefly explain your answer.

Point Production of X Production of Y A 0 40 B 3 36 C 6 28 D 9 16 E 12 0 -The above table shows production combinations on a country?s production possibilities frontier. What is the opportunity cost of one unit of Y when the production of good Y increases from 16 to 28 units?

A tradeoff is illustrated by

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

When the production possibilities frontier is bowed outwards, the opportunity cost of producing more of one good

Abe can catch 10 pounds of fish an hour or pick 10 pounds of fruit. Zeb can catch 30 pounds of fish an hour or pick 20 pounds of fruit. The opportunity cost of fish is ________for Abe than for Zeb, and the opportunity cost of fruit is ________for Abe than for Zeb.

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 about opportunity cost is correct?

The social arrangement that gives John Grisham, the writer of best -selling novels, the ownership of his novels is

Opportunity cost is best defined as

-In the figure above, the marginal cost of the fifth computer is

When a nation has a comparative advantage in the production of a particular good,

Jane produces only corn and cloth. Taking account of her preferences for corn and cloth

U.S. production possibilities France's production possibilities Steel 100 25 Concrete 200 100 -Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. There can be gains from exchange

-Refer to the production possibilities frontier in the figure above. If the country moves from point a To point c, the opportunity cost of the move is

We have achieved production efficiency if we can produce more of one good without producing less of some other good.

The idea of comparative advantage implies that people or countries

What is the relationship between the bowed out shape of the production possibilities frontier and the increasing opportunity cost of a good as more of it is produced?

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

Suppose that when NBC produces 1 new drama series in a season it gives up the chance to produce 3 new reality shows. This means that

ʺIf Mexico is currently operating at a point inside its production possibilities frontier, then there are unemployed resources in Mexico.ʺ Is this statement true or false? Briefly explain your answer.

Point Production of X Production of Y A 0 40 B 3 36 C 6 28 D 9 16 E 12 0 -The above table shows production combinations on a country?s production possibilities frontier. What is the opportunity cost of one unit of Y when the production of good Y increases from 16 to 28 units?

A tradeoff is illustrated by

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

Abe can catch 10 pounds of fish an hour or pick 10 pounds of fruit. Zeb can catch 30 pounds of fish an hour or pick 20 pounds of fruit. The opportunity cost of fish is for Abe than for Zeb, and the opportunity cost of fruit is for Abe than for Zeb.