Question 1

Exhibit 2-2 Production possibilities curve  
-In Exhibit 2-2, the opportunity cost of coffee when moving from A to B is:

Accepted Answer

A)  the same as moving from A to C. 
B)  the same as moving from A to D. 
C)  the same as moving from B to D. 
D)  the same as moving from B to C. 
E)  it is not possible to determine. 
A)  the same as moving from A to C. 
B)  the same as moving from A to D. 
C)  the same as moving from B to D. 
D)  the same as moving from B to C. 
E)  it is not possible to determine.

Question 2

Which of the following is true?

Accepted Answer

A)  The production possibilities curve indicates that it will be impossible to expand total output with the passage of time. 
B)  As long as resources are scarce, output cannot be increased. 
C)  The size of the economic pie is fixed, and therefore, if one individual has more income, others must have less. 
D)  Over time, the output of goods and services can be increased through human ingenuity and discovery of better ways of doing things. 
A)  The production possibilities curve indicates that it will be impossible to expand total output with the passage of time. 
B)  As long as resources are scarce, output cannot be increased. 
C)  The size of the economic pie is fixed, and therefore, if one individual has more income, others must have less. 
D)  Over time, the output of goods and services can be increased through human ingenuity and discovery of better ways of doing things.

Question 3

The opportunity cost of a purchase is:

Accepted Answer

A)  the selling price of the good or service. 
B)  zero if the good or service satisfies a need. 
C)  greater for persons who are rich. 
D)  the good or service given up for the good or service purchased. 
A)  the selling price of the good or service. 
B)  zero if the good or service satisfies a need. 
C)  greater for persons who are rich. 
D)  the good or service given up for the good or service purchased.

Question 4

One of the assumptions underlying the production possibilities curve for any given economy is that:

Accepted Answer

A)  the state of technology changes. 
B)  there is an unlimited supply of resources. 
C)  there is full employment of resources when the economy is on the curve. 
D)  goods can be produced outside the curve. 
A)  the state of technology changes. 
B)  there is an unlimited supply of resources. 
C)  there is full employment of resources when the economy is on the curve. 
D)  goods can be produced outside the curve.

Question 5

Exhibit 2-1 Production possibilities curve data $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Consumption } \
\text { Goods }
\end{array} & \begin{array} { c } 
\text { Capital } \
\text { Goods }
\end{array} \
\hline 10 & 0 \
9 & 1 \
7 & 2 \
4 & 3 \
0 & 4 \
\hline
\end{array}$$
-In Exhibit 2-1, the opportunity cost of producing the fourth unit of capital is:

Accepted Answer

A)  0. 
B)  1 unit of consumption goods. 
C)  2 units of consumption goods. 
D)  4 units of consumption goods. 
E)  there is not enough information to estimate the opportunity cost. 
A)  0. 
B)  1 unit of consumption goods. 
C)  2 units of consumption goods. 
D)  4 units of consumption goods. 
E)  there is not enough information to estimate the opportunity cost.

Question 6

The opportunity cost to a city for using local tax revenues to construct a new park is the:

Accepted Answer

A)  best alternative foregone by building the park. 
B)  dollar cost of constructing the new park. 
C)  dollar cost of the old park. 
D)  increased taxes necessary to pay for maintenance of the new park. 
A)  best alternative foregone by building the park. 
B)  dollar cost of constructing the new park. 
C)  dollar cost of the old park. 
D)  increased taxes necessary to pay for maintenance of the new park.

Question 7

Exhibit 2-16 Production possibilities curve  
-In Exhibit 2-16, to move from U to B, the opportunity cost:

Accepted Answer

A)  would be 4 units of consumption goods. 
B)  would be 2 units of capital goods. 
C)  would be zero. 
D)  would be 5 units of capital goods. 
E)  cannot be estimated. 
A)  would be 4 units of consumption goods. 
B)  would be 2 units of capital goods. 
C)  would be zero. 
D)  would be 5 units of capital goods. 
E)  cannot be estimated.

Question 8

Which of the following would be most likely to cause the production possibilities curve for computers and education to shift outward?

Accepted Answer

A)  A choice of more computers and less education. 
B)  A choice of more education and less computers. 
C)  A reduction in the labor force. 
D)  An increase in the quantity of resources. 
A)  A choice of more computers and less education. 
B)  A choice of more education and less computers. 
C)  A reduction in the labor force. 
D)  An increase in the quantity of resources.

Question 9

Other things being equal, a decreased supply of natural resources would be represented on a production possibilities curve by a(n):

Accepted Answer

A)  movement off the curve to a point inside the curve. 
B)  movement down along the curve. 
C)  movement up along the curve. 
D)  inward shift of the entire curve. 
A)  movement off the curve to a point inside the curve. 
B)  movement down along the curve. 
C)  movement up along the curve. 
D)  inward shift of the entire curve.

Question 10

Exhibit 2-18 Production possibilities curves  
-In Exhibit 2-18, the production possibilities curves for a country are shown for the years Year X and Year Y. Suppose this country was located at point A in Year X and point B in Year Y. This country:

Accepted Answer

A)  is producing the same number of capital goods in both years. 
B)  is producing the same number of consumption goods in both years. 
C)  has shown no growth between Year X and Year Y. 
D)  has higher unemployment in Year X than in Year Y. 
E)  has higher unemployment in Year Y than in Year X. 
A)  is producing the same number of capital goods in both years. 
B)  is producing the same number of consumption goods in both years. 
C)  has shown no growth between Year X and Year Y. 
D)  has higher unemployment in Year X than in Year Y. 
E)  has higher unemployment in Year Y than in Year X.

Question 11

Exhibit 2-13 Production possibilities curve  
-In Exhibit 2-13, the combination of goods given by point H could:

Accepted Answer

A)  never be achieved by this economy. 
B)  be achieved today if the economy achieved full employment. 
C)  be achieved today if the economy achieved maximum efficiency. 
D)  not be achieved today. 
E)  be achieved today with the proper allocation of resources. 
A)  never be achieved by this economy. 
B)  be achieved today if the economy achieved full employment. 
C)  be achieved today if the economy achieved maximum efficiency. 
D)  not be achieved today. 
E)  be achieved today with the proper allocation of resources.

Question 12

Exhibit 2-19 Production possibilities curves  
-In Exhibit 2-19, the production possibilities curves for a country are shown for the years Year X and Year Y. Suppose this country was located at point A in Year X and point B in Year Y. This economy:

Accepted Answer

A)  has lower unemployment in Year Y than in Year X. 
B)  was more efficient in Year X than in Year Y. 
C)  achieved full employment in Year X and in Year Y. 
D)  showed no growth between Year X and Year Y. 
E)  is worse off in Year Y than in Year X. 
A)  has lower unemployment in Year Y than in Year X. 
B)  was more efficient in Year X than in Year Y. 
C)  achieved full employment in Year X and in Year Y. 
D)  showed no growth between Year X and Year Y. 
E)  is worse off in Year Y than in Year X.

Question 13

Which of the following does not illustrate opportunity cost?

Accepted Answer

A)  If I study, I must give up going to the football game. 
B)  If I buy a computer, I must do without a 35" television. 
C)  If I spend more on clothes, I must spend less on food. 
D)  All of these illustrate opportunity cost. 
A)  If I study, I must give up going to the football game. 
B)  If I buy a computer, I must do without a 35" television. 
C)  If I spend more on clothes, I must spend less on food. 
D)  All of these illustrate opportunity cost.

Question 14

Suppose that an economy can produce various combinations of fish and bread. If more people with strong fishing skills became employed in this economy, how would the production possibilities curve (PPC) change?

Accepted Answer

A)  The PPC would shift outward on the fish axis, but would not change on the bread axis. 
B)  The PPC would shift outward equally along both the fish and the bread axes. 
C)  The PPC would shift inward on the bread axis, but would not change on the fish axis. 
D)  The PPC would shift inward equally along both the fish and the bread axes. 
A)  The PPC would shift outward on the fish axis, but would not change on the bread axis. 
B)  The PPC would shift outward equally along both the fish and the bread axes. 
C)  The PPC would shift inward on the bread axis, but would not change on the fish axis. 
D)  The PPC would shift inward equally along both the fish and the bread axes.

Question 15

Which of the following sayings best reflects the concept of opportunity cost?

Accepted Answer

A)  "You can't teach an old dog new tricks." 
B)  "There is no such thing as a free lunch." 
C)  "I have a baker's dozen." 
D)  "There's no business like show business." 
A)  "You can't teach an old dog new tricks." 
B)  "There is no such thing as a free lunch." 
C)  "I have a baker's dozen." 
D)  "There's no business like show business."

Question 16

The law of increasing opportunity costs causes the production possibilities curve to:

Accepted Answer

A)  be a straight line. 
B)  slope upwards. 
C)  have a bowed-out shape. 
D)  shift inward. 
A)  be a straight line. 
B)  slope upwards. 
C)  have a bowed-out shape. 
D)  shift inward.

Question 17

Exhibit 2-11 Production possibilities curves  
-In Exhibit 2-11, which of the following could have caused the production possibilities curve of an economy to shift from the one labeled A to the one labeled B?

Accepted Answer

A)  A major natural disaster 
B)  An increase in consumption goods production this year 
C)  An advance in technology 
D)  An increase in unemployment 
E)  A decrease in consumption goods production this year 
A)  A major natural disaster 
B)  An increase in consumption goods production this year 
C)  An advance in technology 
D)  An increase in unemployment 
E)  A decrease in consumption goods production this year

Question 18

Reductions in available resources will cause the production possibilities curve to:

Accepted Answer

A)  expand. 
B)  disappear. 
C)  become vertical. 
D)  shift inward. 
A)  expand. 
B)  disappear. 
C)  become vertical. 
D)  shift inward.

Question 19

Exhibit 2-15 Production possibilities curve  
-In Exhibit 2-15, if the economy moves from point L to point M, the opportunity cost of producing 10 more capital goods is:

Accepted Answer

A)  40 less consumer goods. 
B)  25 less consumer goods. 
C)  15 less consumer goods. 
D)  15 more consumer goods. 
E)  25 more consumer goods. 
A)  40 less consumer goods. 
B)  25 less consumer goods. 
C)  15 less consumer goods. 
D)  15 more consumer goods. 
E)  25 more consumer goods.

Question 20

Exhibit 2-15 Production possibilities curve  
-In Exhibit 2-15, inefficient resource use is shown by which of the following points?

Accepted Answer

A)  N. 
B)  J. 
C)  Q. 
D)  L. 
E)  P. 
A)  N. 
B)  J. 
C)  Q. 
D)  L. 
E)  P.

Exhibit 2-2 Production possibilities curve -In Exhibit 2-2, the opportunity cost of coffee when moving from A to B is:

Which of the following is true?

The opportunity cost of a purchase is:

One of the assumptions underlying the production possibilities curve for any given economy is that:

Exhibit 2-1 Production possibilities curve data Consumption Goods Capital Goods 10 0 9 1 7 2 4 3 0 4 -In Exhibit 2-1, the opportunity cost of producing the fourth unit of capital is:

The opportunity cost to a city for using local tax revenues to construct a new park is the:

Exhibit 2-16 Production possibilities curve -In Exhibit 2-16, to move from U to B, the opportunity cost:

Which of the following would be most likely to cause the production possibilities curve for computers and education to shift outward?

Other things being equal, a decreased supply of natural resources would be represented on a production possibilities curve by a(n):

Exhibit 2-18 Production possibilities curves -In Exhibit 2-18, the production possibilities curves for a country are shown for the years Year X and Year Y. Suppose this country was located at point A in Year X and point B in Year Y. This country:

Exhibit 2-13 Production possibilities curve -In Exhibit 2-13, the combination of goods given by point H could:

Exhibit 2-19 Production possibilities curves -In Exhibit 2-19, the production possibilities curves for a country are shown for the years Year X and Year Y. Suppose this country was located at point A in Year X and point B in Year Y. This economy:

Which of the following does not illustrate opportunity cost?

Suppose that an economy can produce various combinations of fish and bread. If more people with strong fishing skills became employed in this economy, how would the production possibilities curve (PPC) change?

Which of the following sayings best reflects the concept of opportunity cost?

The law of increasing opportunity costs causes the production possibilities curve to:

Exhibit 2-11 Production possibilities curves -In Exhibit 2-11, which of the following could have caused the production possibilities curve of an economy to shift from the one labeled A to the one labeled B?

Reductions in available resources will cause the production possibilities curve to:

Exhibit 2-15 Production possibilities curve -In Exhibit 2-15, if the economy moves from point L to point M, the opportunity cost of producing 10 more capital goods is:

Exhibit 2-15 Production possibilities curve -In Exhibit 2-15, inefficient resource use is shown by which of the following points?

Introducing the Economic Way of Thinking

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

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Exam 2: Production Possibilities, Opportunity Cost, and Economic Growth

Exhibit 2-2 Production possibilities curve -In Exhibit 2-2, the opportunity cost of coffee when moving from A to B is:

Which of the following is true?

The opportunity cost of a purchase is:

One of the assumptions underlying the production possibilities curve for any given economy is that:

Exhibit 2-1 Production possibilities curve data Consumption Goods Capital Goods 10 0 9 1 7 2 4 3 0 4 -In Exhibit 2-1, the opportunity cost of producing the fourth unit of capital is:

The opportunity cost to a city for using local tax revenues to construct a new park is the:

Exhibit 2-16 Production possibilities curve -In Exhibit 2-16, to move from U to B, the opportunity cost:

Which of the following would be most likely to cause the production possibilities curve for computers and education to shift outward?

Other things being equal, a decreased supply of natural resources would be represented on a production possibilities curve by a(n):

Exhibit 2-18 Production possibilities curves -In Exhibit 2-18, the production possibilities curves for a country are shown for the years Year X and Year Y. Suppose this country was located at point A in Year X and point B in Year Y. This country:

Exhibit 2-13 Production possibilities curve -In Exhibit 2-13, the combination of goods given by point H could:

Exhibit 2-19 Production possibilities curves -In Exhibit 2-19, the production possibilities curves for a country are shown for the years Year X and Year Y. Suppose this country was located at point A in Year X and point B in Year Y. This economy:

Which of the following does not illustrate opportunity cost?

Suppose that an economy can produce various combinations of fish and bread. If more people with strong fishing skills became employed in this economy, how would the production possibilities curve (PPC) change?

Which of the following sayings best reflects the concept of opportunity cost?

The law of increasing opportunity costs causes the production possibilities curve to:

Exhibit 2-11 Production possibilities curves -In Exhibit 2-11, which of the following could have caused the production possibilities curve of an economy to shift from the one labeled A to the one labeled B?

Reductions in available resources will cause the production possibilities curve to:

Exhibit 2-15 Production possibilities curve -In Exhibit 2-15, if the economy moves from point L to point M, the opportunity cost of producing 10 more capital goods is:

Exhibit 2-15 Production possibilities curve -In Exhibit 2-15, inefficient resource use is shown by which of the following points?

Introducing the Economic Way of Thinking

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

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