Question 1

A movement along the production possibilities frontier will result from

Accepted Answer

A) technological change. 
B) change in the stock of capital. 
C) change in the labour force. 
D) all of the above. 
E) none of the above. 
A) technological change. 
B) change in the stock of capital. 
C) change in the labour force. 
D) all of the above. 
E) none of the above.

Question 2

Use the figure below to answer the following questions.
Table 2.4.1
The planets of Vulcan and Romulus each produce goods X and Y.
The following table gives points on their production possibilities frontiers.
  
-Refer to Table 2.4.1.For Romulus,the opportunity cost of producing an additional unit of Y is

Accepted Answer

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

Question 3

Use the figure below to answer the following question.
   
Figure 2.1.6
-When producing at a point of production efficiency,________.

Accepted Answer

A) our choice of goods to produce can be either on or inside the production possibilities frontier 
B) we can satisfy all our wants 
C) the opportunity cost of producing goods other than those measured on the axes of the production possibilities frontier is zero 
D) we face a tradeoff and incur an opportunity cost 
E) resources are either unused or misallocated 
A) our choice of goods to produce can be either on or inside the production possibilities frontier 
B) we can satisfy all our wants 
C) the opportunity cost of producing goods other than those measured on the axes of the production possibilities frontier is zero 
D) we face a tradeoff and incur an opportunity cost 
E) resources are either unused or misallocated

Question 4

Which one of the following would likely shift a production possibilities frontier inward?

Accepted Answer

A) technological change. 
B) a drought. 
C) a decrease in the price of natural resources. 
D) all of the above 
E) None of the above, because production possibilities frontiers do not shift inward. 
A) technological change. 
B) a drought. 
C) a decrease in the price of natural resources. 
D) all of the above 
E) None of the above, because production possibilities frontiers do not shift inward.

Question 5

Use the table below to answer the following questions.
Table 2.1.2
Production Possibilities
  
-Refer to Table 2.1.2.In moving from combination B to combination C,the opportunity cost of producing one additional unit of guns is

Accepted Answer

A) 2 kilograms of butter. 
B) 1/2 kilogram of butter. 
C) 6 kilograms of butter. 
D) 1/6 kilogram of butter. 
E) 3 kilograms of butter. 
A) 2 kilograms of butter. 
B) 1/2 kilogram of butter. 
C) 6 kilograms of butter. 
D) 1/6 kilogram of butter. 
E) 3 kilograms of butter.

Question 6

It pays for people to specialize and trade with each other because

Accepted Answer

A) otherwise they would not survive. 
B) they can take advantage of the fact they have an absolute advantage in the production of something. 
C) this way they can consume outside their production possibilities frontier. 
D) this way the strong can exploit the weak. 
E) all of the above. 
A) otherwise they would not survive. 
B) they can take advantage of the fact they have an absolute advantage in the production of something. 
C) this way they can consume outside their production possibilities frontier. 
D) this way the strong can exploit the weak. 
E) all of the above.

Question 7

The flows in the market economy that go from firms to households are ________.
The flows in the market economy that go from households to firms are ________.

Accepted Answer

A) all flowing through goods markets;all flowing through factor markets 
B) the real flows of goods and services and the income flows of wages, rent, interest and profits;the real flows of labour, land, capital and entrepreneurship and the flow of expenditure on goods and services 
C) the income flows of wages, rent, interest, and profits and the flow of expenditure on goods and services;the real flows of goods and services and the real flows of labour, land, capital and entrepreneurship 
D) the real flows of goods and services and the real flows of labour, land, capital and entrepreneurship;the income flows of wages, rent, interest, and profits and the flow of expenditure on goods and services 
E) all flowing through factor markets;all flowing through goods markets 
A) all flowing through goods markets;all flowing through factor markets 
B) the real flows of goods and services and the income flows of wages, rent, interest and profits;the real flows of labour, land, capital and entrepreneurship and the flow of expenditure on goods and services 
C) the income flows of wages, rent, interest, and profits and the flow of expenditure on goods and services;the real flows of goods and services and the real flows of labour, land, capital and entrepreneurship 
D) the real flows of goods and services and the real flows of labour, land, capital and entrepreneurship;the income flows of wages, rent, interest, and profits and the flow of expenditure on goods and services 
E) all flowing through factor markets;all flowing through goods markets

Question 8

Use the figure below to answer the following questions.
   
Figure 2.1.1
-Complete the following sentence.In Figure 2.1.1,

Accepted Answer

A) movement from A to B would require a technological advance. 
B) point B is a point of production efficiency. 
C) some resources must be unused at point C. 
D) the concept of decreasing opportunity cost is illustrated. 
E) movement from C to B would require a technological improvement. 
A) movement from A to B would require a technological advance. 
B) point B is a point of production efficiency. 
C) some resources must be unused at point C. 
D) the concept of decreasing opportunity cost is illustrated. 
E) movement from C to B would require a technological improvement.

Question 9

If additional units of any good could be produced at a constant opportunity cost,the production possibilities frontier would be

Accepted Answer

A) bowed inward. 
B) bowed outward. 
C) positively sloped. 
D) negatively sloped. 
E) linear. 
A) bowed inward. 
B) bowed outward. 
C) positively sloped. 
D) negatively sloped. 
E) linear.

Question 10

If opportunity costs are increasing,then the production possibilities frontier

Accepted Answer

A) will be bowed out and have a positive slope. 
B) will be positively sloped. 
C) will be linear and have a negative slope. 
D) will be bowed out and have a negative slope. 
E) reflects the fact that available resources are equally useful in all production activities. 
A) will be bowed out and have a positive slope. 
B) will be positively sloped. 
C) will be linear and have a negative slope. 
D) will be bowed out and have a negative slope. 
E) reflects the fact that available resources are equally useful in all production activities.

Question 11

Which one of the following would cause a production possibilities frontier to shift outward?

Accepted Answer

A) an increase in the stock of capital 
B) an increase in the production of consumption goods 
C) bad weather 
D) a decision to fully utilize unemployed resources 
E) a decrease in the population 
A) an increase in the stock of capital 
B) an increase in the production of consumption goods 
C) bad weather 
D) a decision to fully utilize unemployed resources 
E) a decrease in the population

Question 12

A medical clinic has 10 workers.Each worker can produce a maximum of either 2 units of medical services or 5 units of secretarial services a day.One day,the firm decides it would like to produce 16 units of medical services and 5 units of secretarial services.This output level is

Accepted Answer

A)  efficient. 
B) unattainable. 
C) inefficient. 
D) costless. 
E) attainable and efficient. 
A)  efficient. 
B) unattainable. 
C) inefficient. 
D) costless. 
E) attainable and efficient.

Question 13

Suppose the production possibilities frontier for skirts and pants is a straight line.As the production of skirts increases,the marginal benefit from skirts

Accepted Answer

A) increases and marginal cost is constant. 
B) is constant and marginal cost decreases. 
C) decreases and marginal cost increases. 
D) decreases and marginal cost decreases. 
E) decreases and marginal cost is constant. 
A) increases and marginal cost is constant. 
B) is constant and marginal cost decreases. 
C) decreases and marginal cost increases. 
D) decreases and marginal cost decreases. 
E) decreases and marginal cost is constant.

Question 14

If Sam is producing at a point inside his production possibilities frontier,then he

Accepted Answer

A) can increase production of both goods with zero opportunity cost. 
B) is fully using all his resources and allocating his resources to their best use. 
C) must be doing the best he can with limited resources. 
D) is unaffected by costs and technology. 
E) has a high opportunity cost of moving from this point. 
A) can increase production of both goods with zero opportunity cost. 
B) is fully using all his resources and allocating his resources to their best use. 
C) must be doing the best he can with limited resources. 
D) is unaffected by costs and technology. 
E) has a high opportunity cost of moving from this point.

Question 15

The existence of increasing opportunity cost

Accepted Answer

A) explains why specialization is frequently useful. 
B) explains why resources are scarce. 
C) explains the bowed-out shape of the production possibilities frontier. 
D) follows from the existence of property rights. 
E) explains why some societies produce inside their production possibilities frontier. 
A) explains why specialization is frequently useful. 
B) explains why resources are scarce. 
C) explains the bowed-out shape of the production possibilities frontier. 
D) follows from the existence of property rights. 
E) explains why some societies produce inside their production possibilities frontier.

Question 16

Use the figure below to answer the following questions.
   
Figure 2.1.3
-Figure 2.1.3 illustrates Mary's production possibilities frontier.If Mary wants to move from point D to point C,

Accepted Answer

A) it will be necessary to improve technology. 
B) it will be necessary to increase the accumulation of capital. 
C) it will be necessary to give up some of good X to obtain more of good Y. 
D) it will be necessary to give up some of good Y to obtain more of good X. 
E) she can accomplish this without any opportunity cost. 
A) it will be necessary to improve technology. 
B) it will be necessary to increase the accumulation of capital. 
C) it will be necessary to give up some of good X to obtain more of good Y. 
D) it will be necessary to give up some of good Y to obtain more of good X. 
E) she can accomplish this without any opportunity cost.

Question 17

Use the figure below to answer the following questions.
   
Figure 2.1.4
-Refer to the production possibilities frontier in Figure 2.1.4.Which point is unattainable?

Accepted Answer

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

Question 18

Use the information below to answer the following questions.
Fact 2.4.1
In an eight-hour day, Andy can produce either 24 loaves of bread or 8 kilograms of butter.In an eight-hour day, Rolfe can produce either 8 loaves of bread or 8 kilograms of butter.
-Refer to Fact 2.4.1.Which one of the following statements is true?

Accepted Answer

A) Andy has an absolute advantage in butter production. 
B) Rolfe has an absolute advantage in butter production. 
C) Andy has a comparative advantage in bread production. 
D) Andy has a comparative advantage in butter production. 
E) Rolfe has a comparative advantage in bread production. 
A) Andy has an absolute advantage in butter production. 
B) Rolfe has an absolute advantage in butter production. 
C) Andy has a comparative advantage in bread production. 
D) Andy has a comparative advantage in butter production. 
E) Rolfe has a comparative advantage in bread production.

Question 19

Use the table below to answer the following questions.
Table 2.1.1
The following table gives points on the production possibilities frontier for goods X and Y.
  
-From the data in Table 2.1.1,the production of 7 units of X and 28 units of Y is

Accepted Answer

A) unattainable. 
B) attainable but leaves some resources unused or misallocated or both. 
C) on the PPF between points C and D. 
D) on the PPF between points B and C. 
E) outside the PPF. 
A) unattainable. 
B) attainable but leaves some resources unused or misallocated or both. 
C) on the PPF between points C and D. 
D) on the PPF between points B and C. 
E) outside the PPF.

Question 20

Use the information below to answer the following questions.
Fact 2.4.1
In an eight-hour day, Andy can produce either 24 loaves of bread or 8 kilograms of butter.In an eight-hour day, Rolfe can produce either 8 loaves of bread or 8 kilograms of butter.
-From Fact 2.4.1,we know that

Accepted Answer

A) Andy has the lower opportunity cost of producing bread, while Andy and Rolfe have equal opportunity costs of producing butter. 
B) Andy has the lower opportunity cost of producing both bread and butter. 
C) Andy has the lower opportunity cost of producing bread, while Rolfe has the lower opportunity cost of producing butter. 
D) Andy has the lower opportunity cost of producing butter, while Rolfe has the lower opportunity cost of producing bread. 
E) Andy has the higher opportunity cost of producing both bread and butter. 
A) Andy has the lower opportunity cost of producing bread, while Andy and Rolfe have equal opportunity costs of producing butter. 
B) Andy has the lower opportunity cost of producing both bread and butter. 
C) Andy has the lower opportunity cost of producing bread, while Rolfe has the lower opportunity cost of producing butter. 
D) Andy has the lower opportunity cost of producing butter, while Rolfe has the lower opportunity cost of producing bread. 
E) Andy has the higher opportunity cost of producing both bread and butter.

Exam 2: The Economic Problem

A movement along the production possibilities frontier will result from

Use the figure below to answer the following question. Figure 2.1.6 -When producing at a point of production efficiency,________.

Which one of the following would likely shift a production possibilities frontier inward?

Use the table below to answer the following questions. Table 2.1.2 Production Possibilities -Refer to Table 2.1.2.In moving from combination B to combination C,the opportunity cost of producing one additional unit of guns is

It pays for people to specialize and trade with each other because

The flows in the market economy that go from firms to households are ________. The flows in the market economy that go from households to firms are ________.

Use the figure below to answer the following questions. Figure 2.1.1 -Complete the following sentence.In Figure 2.1.1,

If additional units of any good could be produced at a constant opportunity cost,the production possibilities frontier would be

If opportunity costs are increasing,then the production possibilities frontier

Which one of the following would cause a production possibilities frontier to shift outward?

A medical clinic has 10 workers.Each worker can produce a maximum of either 2 units of medical services or 5 units of secretarial services a day.One day,the firm decides it would like to produce 16 units of medical services and 5 units of secretarial services.This output level is

Suppose the production possibilities frontier for skirts and pants is a straight line.As the production of skirts increases,the marginal benefit from skirts

If Sam is producing at a point inside his production possibilities frontier,then he

The existence of increasing opportunity cost

Use the figure below to answer the following questions. Figure 2.1.3 -Figure 2.1.3 illustrates Mary's production possibilities frontier.If Mary wants to move from point D to point C,

Use the figure below to answer the following questions. Figure 2.1.4 -Refer to the production possibilities frontier in Figure 2.1.4.Which point is unattainable?

Use the table below to answer the following questions. Table 2.1.1 The following table gives points on the production possibilities frontier for goods X and Y. -From the data in Table 2.1.1,the production of 7 units of X and 28 units of Y is

Use the information below to answer the following questions. Fact 2.4.1 In an eight-hour day, Andy can produce either 24 loaves of bread or 8 kilograms of butter.In an eight-hour day, Rolfe can produce either 8 loaves of bread or 8 kilograms of butter. -From Fact 2.4.1,we know that

What Is Economics?

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

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

Canadian Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

The flows in the market economy that go from firms to households are . The flows in the market economy that go from households to firms are .