Question 1

If the economy is currently producing at a point on its production possibilities frontier (PPF), the economy is

Accepted Answer

A) productive inefficient. 
B) operating with no unemployed resources. 
C) productive efficient. 
D) b and c 
E) none of the above 
A) productive inefficient. 
B) operating with no unemployed resources. 
C) productive efficient. 
D) b and c 
E) none of the above

Question 2

An advance in technology commonly refers to the ability to produce

Accepted Answer

A) the same output with a smaller quantity of resources. 
B) more output with a fixed quantity of resources. 
C) more output with a greater quantity of resources. 
D) both a and b 
E) both b and c 
A) the same output with a smaller quantity of resources. 
B) more output with a fixed quantity of resources. 
C) more output with a greater quantity of resources. 
D) both a and b 
E) both b and c

Question 3

Points that lie inside (or below) the PPF are

Accepted Answer

A) unattainable. 
B) attainable and productive efficient. 
C) attainable and productive inefficient. 
D) attainable and neither productive efficient nor productive inefficient. 
A) unattainable. 
B) attainable and productive efficient. 
C) attainable and productive inefficient. 
D) attainable and neither productive efficient nor productive inefficient.

Question 4

When opportunity costs are constant, the PPF will be a straight line.

Accepted Answer

A) True 
 B)False

Question 5

Exhibit 2-1
  
-Refer to Exhibit 2-1. Scarcity exists

Accepted Answer

A) at point C but not at point A. 
B) neither at point C nor at point A. 
C) at both point C and at point A. 
D) at point A but not at point C. 
A) at point C but not at point A. 
B) neither at point C nor at point A. 
C) at both point C and at point A. 
D) at point A but not at point C.

Question 6

Productive inefficiency implies that

Accepted Answer

A) it is possible to obtain gains in one area without losses in another. 
B) it is impossible to obtain gains in one area without losses in another. 
C) there are too many resources. 
D) there are too few resources. 
E) none of the above 
A) it is possible to obtain gains in one area without losses in another. 
B) it is impossible to obtain gains in one area without losses in another. 
C) there are too many resources. 
D) there are too few resources. 
E) none of the above

Question 7

Keisha can produce the following combinations of X and Y: 100X and 20Y, 50X and 30Y, or 0X and 40Y. The opportunity cost of one unit of Y for Keisha is

Accepted Answer

A) 5 units of X. 
B) 0.2 units of X. 
C) 3 units of X. 
D) 1/2 unit of X. 
E) none of the above 
A) 5 units of X. 
B) 0.2 units of X. 
C) 3 units of X. 
D) 1/2 unit of X. 
E) none of the above

Question 8

Exhibit 2-4
  
-Refer to Exhibit 2-4. As more fax machines are produced, the opportunity cost of producing them

Accepted Answer

A) increases. 
B) decreases. 
C) remains constant. 
D) first decreases and then increases. 
A) increases. 
B) decreases. 
C) remains constant. 
D) first decreases and then increases.

Question 9

Suppose an economy can produce a maximum of 10 units of good X and the opportunity cost of 1X is always 2Y. What is the maximum number of units of good Y the economy can produce?

Accepted Answer

A) 10 
B) 200 
C) 20 
D) 500 
E) none of the above 
A) 10 
B) 200 
C) 20 
D) 500 
E) none of the above

Question 10

Within the production possibilities frontier (PPF) framework, choice is depicted by the

Accepted Answer

A) PPF itself. 
B) PPF being bowed outward. 
C) need to select among the points making up the PPF. 
D) straight-line PPF. 
A) PPF itself. 
B) PPF being bowed outward. 
C) need to select among the points making up the PPF. 
D) straight-line PPF.

Question 11

The law of increasing opportunity cost results from the varying ability of resources to adapt to the production of different goods and it helps to explain why production possibilities curves are typically bowed outward.

Accepted Answer

A) True 
 B)False

Question 12

Exhibit 2-8
  
-Refer to Exhibit 2-8. For Maya, the opportunity cost of producing one unit of good X is ___________ unit(s) of good Y.

Accepted Answer

A) 2.00 
B) 1.00 
C) 10.00 
D) 0.50 
A) 2.00 
B) 1.00 
C) 10.00 
D) 0.50

Question 13

Exhibit 2-4
  
-Refer to Exhibit 2-4. This economy is productive

Accepted Answer

A) efficient, if it operates at point B or C. 
B) efficient, if it operates at point A or D. 
C) inefficient, if it operates at point A or D. 
D) inefficient regardless of the particular point. 
E) both a and b 
A) efficient, if it operates at point B or C. 
B) efficient, if it operates at point A or D. 
C) inefficient, if it operates at point A or D. 
D) inefficient regardless of the particular point. 
E) both a and b

Question 14

Productive efficiency implies that

Accepted Answer

A) it is impossible to obtain gains in one area without losses in another. 
B) it is possible to obtain gains in one area without losses in another. 
C) there are too many resources available. 
D) there are too few resources available. 
A) it is impossible to obtain gains in one area without losses in another. 
B) it is possible to obtain gains in one area without losses in another. 
C) there are too many resources available. 
D) there are too few resources available.

Question 15

Which of the following statements is true?

Accepted Answer

A) In a world of efficiently used scarce resources, more of one good necessarily means less of some other good. 
B) The law of increasing opportunity costs assumes that all people have the same ability to produce goods. 
C) Efficiency implies that it is impossible to get more of one good without getting less of another. 
D) Even if a country has unemployed resources, it can still be operating on its production possibilities frontier (PPF). 
E) a and c 
A) In a world of efficiently used scarce resources, more of one good necessarily means less of some other good. 
B) The law of increasing opportunity costs assumes that all people have the same ability to produce goods. 
C) Efficiency implies that it is impossible to get more of one good without getting less of another. 
D) Even if a country has unemployed resources, it can still be operating on its production possibilities frontier (PPF). 
E) a and c

Question 16

Exhibit 2-2
  
-Refer to Exhibit 2-2. If PPF2 is the relevant production possibilities frontier, a significant loss of the quantity of resources available could

Accepted Answer

A) move this society from point D to point G on PPF   . 
B) shift this society to PPF   . 
C) shift this society to PPF   . 
D) not affect this society. 
A) move this society from point D to point G on PPF   . 
B) shift this society to PPF   . 
C) shift this society to PPF   . 
D) not affect this society.

Question 17

If there is always a 4-for-1 tradeoff between producing good X and good Y, it follows that the opportunity cost of X (in terms of Y) ____________________ and the PPF for these two goods is ______________________.

Accepted Answer

A) decreases at low levels of X; a straight line 
B) rises at high levels of Y; bowed-outward 
C) decreases at high levels of X; bowed-outward 
D) is always the same; a straight line 
A) decreases at low levels of X; a straight line 
B) rises at high levels of Y; bowed-outward 
C) decreases at high levels of X; bowed-outward 
D) is always the same; a straight line

Question 18

Michael can produce the following combinations of X and Y: 10X and 10Y, 5X and 15Y, and 0X and 20Y. Vernon can produce the following combinations of X and Y: 100X and 20Y, 50X and 30Y, or 0X and 40Y. It follows that

Accepted Answer

A) Michael has the comparative advantage in producing X and Vernon has the comparative advantage in producing Y. 
B) Michael has the comparative advantage in producing Y and Vernon has the comparative advantage in producing X. 
C) Neither Michael nor Vernon has a comparative advantage in producing X. 
D) Neither Michael nor Vernon has a comparative advantage in producing Y. 
E) There is not enough information to answer the question. 
A) Michael has the comparative advantage in producing X and Vernon has the comparative advantage in producing Y. 
B) Michael has the comparative advantage in producing Y and Vernon has the comparative advantage in producing X. 
C) Neither Michael nor Vernon has a comparative advantage in producing X. 
D) Neither Michael nor Vernon has a comparative advantage in producing Y. 
E) There is not enough information to answer the question.

Question 19

Suppose the economy goes from a point on its production possibilities frontier (PPF) to a point directly to the left of it. Assuming that the PPF has not shifted, this could be due to

Accepted Answer

A) a gain of resources. 
B) a loss of resources. 
C) technological improvement in the production of both goods. 
D) the implementation of a new law that interferes with productive efficiency. 
A) a gain of resources. 
B) a loss of resources. 
C) technological improvement in the production of both goods. 
D) the implementation of a new law that interferes with productive efficiency.

Question 20

Which of the following statements is true?

Accepted Answer

A) The concept of opportunity costs cannot be illustrated within a PPF framework. 
B) If scarcity did not exist, neither would a PPF. 
C) All PPFs are downward-sloping straight lines. 
D) There are more attainable points than unattainable points in every PPF diagram. 
A) The concept of opportunity costs cannot be illustrated within a PPF framework. 
B) If scarcity did not exist, neither would a PPF. 
C) All PPFs are downward-sloping straight lines. 
D) There are more attainable points than unattainable points in every PPF diagram.

Exam 2: Production Possibilities Frontier Framework

If the economy is currently producing at a point on its production possibilities frontier (PPF), the economy is

An advance in technology commonly refers to the ability to produce

Points that lie inside (or below) the PPF are

When opportunity costs are constant, the PPF will be a straight line.

Exhibit 2-1 -Refer to Exhibit 2-1. Scarcity exists

Productive inefficiency implies that

Keisha can produce the following combinations of X and Y: 100X and 20Y, 50X and 30Y, or 0X and 40Y. The opportunity cost of one unit of Y for Keisha is

Exhibit 2-4 -Refer to Exhibit 2-4. As more fax machines are produced, the opportunity cost of producing them

Suppose an economy can produce a maximum of 10 units of good X and the opportunity cost of 1X is always 2Y. What is the maximum number of units of good Y the economy can produce?

Within the production possibilities frontier (PPF) framework, choice is depicted by the

The law of increasing opportunity cost results from the varying ability of resources to adapt to the production of different goods and it helps to explain why production possibilities curves are typically bowed outward.

Exhibit 2-8 -Refer to Exhibit 2-8. For Maya, the opportunity cost of producing one unit of good X is ___________ unit(s) of good Y.

Exhibit 2-4 -Refer to Exhibit 2-4. This economy is productive

Productive efficiency implies that

Which of the following statements is true?

Exhibit 2-2 -Refer to Exhibit 2-2. If PPF2 is the relevant production possibilities frontier, a significant loss of the quantity of resources available could

If there is always a 4-for-1 tradeoff between producing good X and good Y, it follows that the opportunity cost of X (in terms of Y) ____________________ and the PPF for these two goods is ______________________.

Michael can produce the following combinations of X and Y: 10X and 10Y, 5X and 15Y, and 0X and 20Y. Vernon can produce the following combinations of X and Y: 100X and 20Y, 50X and 30Y, or 0X and 40Y. It follows that

Suppose the economy goes from a point on its production possibilities frontier (PPF) to a point directly to the left of it. Assuming that the PPF has not shifted, this could be due to

Which of the following statements is true?

What Economics Is About

Supply and Demand Theory

Prices Free Controlled and Relative

Supply Demand and Price Applications

Macroeconomic Measurements Part I Prices and Unemployment

Macroeconomic Measurements Part II Gdp and Real Gdp

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability a Critique of the Self Regulating Economy

Fiscal Policy and the Federal Budget

Money Banking and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth Resources Technology Ideas and Institutions

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition Oligopoly and Game Theory

Government and Product Markets Antitrust and Regulation

Factor Markets With Emphasis on the Labor Market

Wages Unions and Labor

The Distribution of Income and Poverty

Interest Rent and Profit

Market Failure Externalities Public Goods and Asymmetric Information

Public Choice and Special Interest Group Politics

Building Theories to Explain Everyday Life From Observations to Questions to Theories to Predictions

International Trade

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The Economic Case for and Against Government Five Topics Considered

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Exhibit 2-2 -Refer to Exhibit 2-2. If PPF₂ is the relevant production possibilities frontier, a significant loss of the quantity of resources available could

If there is always a 4-for-1 tradeoff between producing good X and good Y, it follows that the opportunity cost of X (in terms of Y) and the PPF for these two goods is __.