Question 1

Does the production possibilities curve tell us if goods are distributed efficiently in a society? Explain.

Accepted Answer

No.The production possibilities curve on

Question 2

Can a country gain comparative advantage in some product? Can a country lose that advantage?

Accepted Answer

The answer is yes,in both cases.The avai

Question 3

The production possibility table below is for growing broccoli and asparagus in a 320-square-foot garden in one season. $$\begin{array}{l}
\text { Praductinn Passibility }\
\begin{array} { | c | c | } 
\hline \text { Braccoli } & \text { Asparapus } \
\hline 30 & 0 \
\hline 20 & 18 \
\hline 10 & 26 \
\hline 0 & 30 \
\hline
\end{array}
\end{array}$$   Which curve on the graph on the right corresponds to this table?

Accepted Answer

A) I 
B) II 
C) III 
D) IV 
A) I 
B) II 
C) III 
D) IV

Question 4

The slope of a line is the:

Accepted Answer

A) value on the vertical axis divided by the value on the horizontal axis. 
B) value on the horizontal axis divided by the value on the vertical axis. 
C) change in the value on the vertical axis divided by the change in the value on the horizontal axis. 
D) change in the value on the horizontal axis divided by the change in the value on the vertical axis. 
A) value on the vertical axis divided by the value on the horizontal axis. 
B) value on the horizontal axis divided by the value on the vertical axis. 
C) change in the value on the vertical axis divided by the change in the value on the horizontal axis. 
D) change in the value on the horizontal axis divided by the change in the value on the vertical axis.

Question 5

According to Adam Smith, individuals are directed to do those things for which they have a comparative advantage by:

Accepted Answer

A) their self-interest. 
B) corporate management. 
C) government policy. 
D) the educational system. 
A) their self-interest. 
B) corporate management. 
C) government policy. 
D) the educational system.

Question 6

What kind of relationship exists between the price of gas and the quantity demanded for gas if the quantity demanded for gas falls when the price of gas increases?

Accepted Answer

A) Direct 
B) Inverse 
C) Normal 
D) Perverse 
A) Direct 
B) Inverse 
C) Normal 
D) Perverse

Question 7

In the linear equation y = mx + b, m is the:

Accepted Answer

A) variable on the horizontal axis. 
B) variable on the vertical axis. 
C) slope. 
D) vertical intercept. 
A) variable on the horizontal axis. 
B) variable on the vertical axis. 
C) slope. 
D) vertical intercept.

Question 8

Refer to the graph below.   The graph indicates that as more eggs are produced, the marginal opportunity cost of:

Accepted Answer

A) both eggs and rye increases. 
B) eggs increases while the marginal opportunity cost of rye remains constant. 
C) eggs increases while the marginal opportunity cost of rye decreases. 
D) eggs decreases while the marginal opportunity cost of rye remains constant. 
A) both eggs and rye increases. 
B) eggs increases while the marginal opportunity cost of rye remains constant. 
C) eggs increases while the marginal opportunity cost of rye decreases. 
D) eggs decreases while the marginal opportunity cost of rye remains constant.

Question 9

If no resources had a comparative advantage in the production of any good, the production possibility curve would be:

Accepted Answer

A) bowed outward. 
B) bowed inward. 
C) a horizontal line. 
D) a downward-sloping straight line. 
A) bowed outward. 
B) bowed inward. 
C) a horizontal line. 
D) a downward-sloping straight line.

Question 10

Laissez-faire is an economic:

Accepted Answer

A) theorem because it is based on deductive analysis of a model that is based on assumptions. 
B) theorem because it is the logical conclusion of a model with carefully stated relationships among variables. 
C) precept because it is based on a model and normative judgments about the relevance of the model to the real world. 
D) precept because it is the logical conclusion of a model with widely held assumptions. 
A) theorem because it is based on deductive analysis of a model that is based on assumptions. 
B) theorem because it is the logical conclusion of a model with carefully stated relationships among variables. 
C) precept because it is based on a model and normative judgments about the relevance of the model to the real world. 
D) precept because it is the logical conclusion of a model with widely held assumptions.

Question 11

Refer to the graph below.   Productive inefficiency occurs at what point?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 12

Evan can grow both roses and carnations in his garden. His production possibility table is shown below. If he is currently producing 110 roses, his opportunity cost of producing 40 more roses is: $$\begin{array} { | c | c | } 
\hline \text { Number d roses } & \text { Number of carnatims } \
\hline 0 & 155 \
\hline 60 & 135 \
\hline 110 & 109 \
\hline 150 & 78 \
\hline 180 & 0 \
\hline
\end{array}$$

Accepted Answer

A) 20 carnations 
B) 26 carnations 
C) 31 carnations 
D) 78 carnations 
A) 20 carnations 
B) 26 carnations 
C) 31 carnations 
D) 78 carnations

Question 13

Suppose that in Colombia one unit of labor can produce 8 tons of papayas or 2 tons of bananas. In Brazil, one unit of labor can produce either 4 tons of papayas or 1 ton of bananas. Given this information, which of the following statements is true?

Accepted Answer

A) Columbia has a comparative advantage in producing papayas but not bananas. 
B) Columbia has a comparative advantage in producing papayas and bananas. 
C) These countries would increase combined consumption if they specialized and traded. 
D) These countries cannot gain from trading. 
A) Columbia has a comparative advantage in producing papayas but not bananas. 
B) Columbia has a comparative advantage in producing papayas and bananas. 
C) These countries would increase combined consumption if they specialized and traded. 
D) These countries cannot gain from trading.

Question 14

Refer to the graph below.   Which of the shifts explains what will happen to the production possibility curve if political unrest and strikes disrupt all sectors of an economy equally?

Accepted Answer

A) I 
B) II 
C) III 
D) IV 
A) I 
B) II 
C) III 
D) IV

Question 15

A resource is said to have a comparative advantage if:

Accepted Answer

A) it is better suited to the production of one good than to the production of an alternative good. 
B) it is equally suited to the production of all goods. 
C) its suitability to the production of one good changes as it produces more of that good. 
D) its suitability to the production of one good does not change as it produces more of that good. 
A) it is better suited to the production of one good than to the production of an alternative good. 
B) it is equally suited to the production of all goods. 
C) its suitability to the production of one good changes as it produces more of that good. 
D) its suitability to the production of one good does not change as it produces more of that good.

Question 16

Refer to the graph below.   Productive efficiency is achieved at what points?

Accepted Answer

A) A, B, and M 
B) C, D, and N 
C) A, C, and F 
D) M, D, and E 
A) A, B, and M 
B) C, D, and N 
C) A, C, and F 
D) M, D, and E

Question 17

The production possibility frontiers of Northland and Southland are given. Without trade, Northland produces and consumes 20 apples and 5 bananas and Southland produces and consumes 10 apples and 40 bananas. Could they increase their consumption bundle by optimizing production and trading? $$\begin{array} { c   } 
 { \text { Narthland } } \quad\quad\quad\quad{ \text { Sauthland } } \
\begin{array} { | c | c | c | c | } 
\hline \text { Agples } & \text { Bananas } & \text { Agples } & \text { Bananas } \
\hline 30 & 0 & 30 & 0 \
\hline 20 & 5 & 20 & 20 \
\hline 15 & 10 & 10 & 40 \
\hline 0 & 15 & 0 & 60 \
\hline
\end{array}\end{array}$$

Accepted Answer

A) No, Southland does at least as well at producing both, so it would have no incentive to trade. 
B) Yes, they could gain 75 bananas and 60 apples. 
C) Yes, they could gain up to 60 apples without losing bananas. 
D) Yes, they could gain up to 15 bananas without losing apples. 
A) No, Southland does at least as well at producing both, so it would have no incentive to trade. 
B) Yes, they could gain 75 bananas and 60 apples. 
C) Yes, they could gain up to 60 apples without losing bananas. 
D) Yes, they could gain up to 15 bananas without losing apples.

Question 18

If the hourly wage of German workers is $6, the hourly wage of Canadian workers is $10, and German workers produce half as much output per hour as Canadian workers, all else equal, it would be efficient to locate production facilities in:

Accepted Answer

A) Germany since the cost per unit of output will be higher. 
B) Germany since the cost per unit of output will be lower. 
C) Canada since the cost per unit of output will be higher. 
D) Canada since the cost per unit of output will be lower. 
A) Germany since the cost per unit of output will be higher. 
B) Germany since the cost per unit of output will be lower. 
C) Canada since the cost per unit of output will be higher. 
D) Canada since the cost per unit of output will be lower.

Question 19

Productive efficiency is not achieved at any point inside the production possibility curve.

Accepted Answer

A) True 
 B)False

Question 20

An inverse relationship occurs between two variables when as one goes:

Accepted Answer

A) up the other goes up. 
B) up the other goes down. 
C) up the other does not change. 
D) down the other goes down. 
A) up the other goes up. 
B) up the other goes down. 
C) up the other does not change. 
D) down the other goes down.

Exam 2: The Production Possibility Model, Trade, and Globalization

Does the production possibilities curve tell us if goods are distributed efficiently in a society? Explain.

Can a country gain comparative advantage in some product? Can a country lose that advantage?

The production possibility table below is for growing broccoli and asparagus in a 320-square-foot garden in one season. Praductinn Passibility Braccoli Asparapus 30 0 20 18 10 26 0 30 Which curve on the graph on the right corresponds to this table?

The slope of a line is the:

According to Adam Smith, individuals are directed to do those things for which they have a comparative advantage by:

What kind of relationship exists between the price of gas and the quantity demanded for gas if the quantity demanded for gas falls when the price of gas increases?

In the linear equation y = mx + b, m is the:

Refer to the graph below. The graph indicates that as more eggs are produced, the marginal opportunity cost of:

If no resources had a comparative advantage in the production of any good, the production possibility curve would be:

Laissez-faire is an economic:

Refer to the graph below. Productive inefficiency occurs at what point?

Evan can grow both roses and carnations in his garden. His production possibility table is shown below. If he is currently producing 110 roses, his opportunity cost of producing 40 more roses is: Number d roses Number of carnatims 0 155 60 135 110 109 150 78 180 0

Suppose that in Colombia one unit of labor can produce 8 tons of papayas or 2 tons of bananas. In Brazil, one unit of labor can produce either 4 tons of papayas or 1 ton of bananas. Given this information, which of the following statements is true?

Refer to the graph below. Which of the shifts explains what will happen to the production possibility curve if political unrest and strikes disrupt all sectors of an economy equally?

A resource is said to have a comparative advantage if:

Refer to the graph below. Productive efficiency is achieved at what points?

If the hourly wage of German workers is $6, the hourly wage of Canadian workers is $10, and German workers produce half as much output per hour as Canadian workers, all else equal, it would be efficient to locate production facilities in:

Productive efficiency is not achieved at any point inside the production possibility curve.

An inverse relationship occurs between two variables when as one goes:

Economics and Economic Reasoning

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

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