Question 1

Increasing opportunity cost occurs along a production possibilities frontier because

Accepted Answer

A)  resources are not equally productive in all activities. 
B)  increasing wants need to be satisfied. 
C)  in order to produce more of one good decreasing amounts of another good must be sacrificed. 
D)  production takes time. 
A)  resources are not equally productive in all activities. 
B)  increasing wants need to be satisfied. 
C)  in order to produce more of one good decreasing amounts of another good must be sacrificed. 
D)  production takes time.

Question 2

Suppose that a typical German factory can produce 20 cameras or 1 computer in an hour, and that a typical American factory can produce 10 cameras or one computer in an hour. Germany wishes to purchase computers from the United States in exchange for cameras. What is the maximum number of cameras per computer that Germany would be willing to pay the United States?

Accepted Answer

A)  10 cameras per computer 
B)  20 cameras per computer 
C)  1 camera per computer 
D)  2 cameras per computer 
A)  10 cameras per computer 
B)  20 cameras per computer 
C)  1 camera per computer 
D)  2 cameras per computer

Question 3

A society that is producing on its production possibilities frontier is

Accepted Answer

A)  not utilizing all of its resources. 
B)  not being technologically efficient. 
C)  producing too much output. 
D)  fully utilizing all of its productive resources. 
A)  not utilizing all of its resources. 
B)  not being technologically efficient. 
C)  producing too much output. 
D)  fully utilizing all of its productive resources.

Question 4

The opportunity cost of producing one ton of wheat for Country Gamma is 4 tons of corn. The opportunity cost of producing one ton of wheat for Country Beta is 8 tons of corn. Which country has the comparative advantage in the production of wheat?

Accepted Answer

A)  Gamma 
B)  Beta 
C)  Neither country has a comparative advantage. 
D)  Both countries have the comparative advantage. 
A)  Gamma 
B)  Beta 
C)  Neither country has a comparative advantage. 
D)  Both countries have the comparative advantage.

Question 5

Mary takes 4 minutes to make a sandwich and 6 minutes to mix a cocktail. Her sister Ash takes 4 minutes to make a sandwich and 4 minutes to mix a cocktail. Calculate each sister's opportunity cost. Which of the two sisters has an absolute advantage in making sandwiches? In mixing cocktails? Which of the two has a comparative advantage in making sandwiches? In mixing cocktails?

Accepted Answer

Mary can spend an hour to make 15 sandwi

Question 6

George and Michael can gain from exchange

Accepted Answer

A)  unless one has an absolute advantage in all goods. 
B)  if each specializes in the production of the good for which he has the higher opportunity cost. 
C)  if each specializes in the production of the good for which he has the lower opportunity cost. 
D)  unless they have different opportunity costs. 
A)  unless one has an absolute advantage in all goods. 
B)  if each specializes in the production of the good for which he has the higher opportunity cost. 
C)  if each specializes in the production of the good for which he has the lower opportunity cost. 
D)  unless they have different opportunity costs.

Question 7

Households are buyers in factor markets and sellers in goods markets.

Accepted Answer

A) True 
 B)False

Question 8

The rights of an owner to use and exchange property are

Accepted Answer

A)  capitalist rights. 
B)  socialist rights. 
C)  property rights. 
D)  money rights. 
A)  capitalist rights. 
B)  socialist rights. 
C)  property rights. 
D)  money rights.

Question 9

-In the above figure, at point b what is the opportunity cost of producing 2 more audio tapes?

Accepted Answer

A)  1/2 video tape per audio tape 
B)  1 video tape per audio tape 
C)  6 video tapes per audio tape 
D)  There is no opportunity cost. 
A)  1/2 video tape per audio tape 
B)  1 video tape per audio tape 
C)  6 video tapes per audio tape 
D)  There is no opportunity cost.

Question 10

The principle of decreasing marginal benefit means that as the quantity of a good consumed

Accepted Answer

A)  decreases, its marginal benefit decreases. 
B)  increases, its marginal benefit decreases. 
C)  increases, its total benefit decreases. 
D)  None of the above answers is correct. 
A)  decreases, its marginal benefit decreases. 
B)  increases, its marginal benefit decreases. 
C)  increases, its total benefit decreases. 
D)  None of the above answers is correct.

Question 11

Which of the following does NOT help organize trade?

Accepted Answer

A)  property rights 
B)  markets 
C)  the production possibilities frontier 
D)  None of the above because all these answers given help organize trade. 
A)  property rights 
B)  markets 
C)  the production possibilities frontier 
D)  None of the above because all these answers given help organize trade.

Question 12

Consider a PPF for tapes and soda. If the opportunity cost of a tape increases as the quantity of tapes produced increases and also the opportunity cost of a soda increases as the quantity of soda produced increases, then the PPF between the two goods will be

Accepted Answer

A)  a straight, downward-sloping line. 
B)  a straight, upward-sloping line. 
C)  bowed outward. 
D)  All of the above are possible and more information is needed to determine which answer is correct. 
A)  a straight, downward-sloping line. 
B)  a straight, upward-sloping line. 
C)  bowed outward. 
D)  All of the above are possible and more information is needed to determine which answer is correct.

Question 13

-The table above lists six points on the production possibilities frontier for grain and cars. From this information you can conclude that production is inefficient if this economy produces

Accepted Answer

A)  6 tons of grain and 18 cars. 
B)  4 tons of grain and 26 cars. 
C)  2 tons of grain and 27 cars. 
D)  8 tons of grain and 10 cars. 
A)  6 tons of grain and 18 cars. 
B)  4 tons of grain and 26 cars. 
C)  2 tons of grain and 27 cars. 
D)  8 tons of grain and 10 cars.

Question 14

-Jane produces only corn, measured in tons, and cloth, measured in bolts. For her, the opportunity cost of one more ton of corn is

Accepted Answer

A)  the same as the opportunity cost of one more bolt of cloth. 
B)  the inverse of the opportunity cost of one more bolt of cloth. 
C)  the ratio of all the bolts of cloth she produces to all the tons of corn she produces. 
D)  the ratio of all the tons of corn she produces to all the bolts of cloth she produces. 
A)  the same as the opportunity cost of one more bolt of cloth. 
B)  the inverse of the opportunity cost of one more bolt of cloth. 
C)  the ratio of all the bolts of cloth she produces to all the tons of corn she produces. 
D)  the ratio of all the tons of corn she produces to all the bolts of cloth she produces.

Question 15

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 is TRUE?

Accepted Answer

A)  Washington has an absolute advantage in the production of both pecans and pears. 
B)  Washington has a comparative advantage in the production of both pecans and pears. 
C)  Washington has a comparative advantage in producing pecans and Missouri has a comparative advantage in producing pears. 
D)  Both answers A and C are correct. 
A)  Washington has an absolute advantage in the production of both pecans and pears. 
B)  Washington has a comparative advantage in the production of both pecans and pears. 
C)  Washington has a comparative advantage in producing pecans and Missouri has a comparative advantage in producing pears. 
D)  Both answers A and C are correct.

Question 16

Considering a PPF with health care services on the vertical axis and other goods and services on the horizontal axis, the increasing production of health care services in the United States as a result of the aging population represents

Accepted Answer

A)  a movement upward along the PPF. 
B)  an outward shift of the PPF from the vertical axis. 
C)  an outward shift of the PPF from the horizontal axis. 
D)  a movement downward along the PPF. 
A)  a movement upward along the PPF. 
B)  an outward shift of the PPF from the vertical axis. 
C)  an outward shift of the PPF from the horizontal axis. 
D)  a movement downward along the PPF.

Question 17

-The above figure illustrates Mary's production possibilities frontier. If Mary wants to move from point d to point c, she must

Accepted Answer

A)  improve technology. 
B)  increase her accumulation of capital. 
C)  give up some of good X in order to obtain more of good Y. 
D)  give up some of good Y in order to obtain more of good X. 
A)  improve technology. 
B)  increase her accumulation of capital. 
C)  give up some of good X in order to obtain more of good Y. 
D)  give up some of good Y in order to obtain more of good X.

Question 18

In order to achieve the maximum gains from trade, people should specialize according to

Accepted Answer

A)  property rights. 
B)  PPF. 
C)  absolute advantage. 
D)  comparative advantage. 
A)  property rights. 
B)  PPF. 
C)  absolute advantage. 
D)  comparative advantage.

Question 19

-Refer to the production possibilities frontier in the figure above. More of good X must be given up per unit of good Y gained when moving from point b to point a than when moving from point c to point b. This fact

Accepted Answer

A)  illustrates decreasing opportunity cost. 
B)  illustrates increasing opportunity cost. 
C)  indicates that good X is more capital intensive than good Y. 
D)  indicates that good Y is more capital intensive than good X. 
A)  illustrates decreasing opportunity cost. 
B)  illustrates increasing opportunity cost. 
C)  indicates that good X is more capital intensive than good Y. 
D)  indicates that good Y is more capital intensive than good X.

Question 20

-The opportunity cost of producing a unit of consumption at point b in the figure ________ point a.

Accepted Answer

A)  is greater than at 
B)  is less than at 
C)  cannot be compared with 
D)  is the same as 
A)  is greater than at 
B)  is less than at 
C)  cannot be compared with 
D)  is the same as

Increasing opportunity cost occurs along a production possibilities frontier because

A society that is producing on its production possibilities frontier is

The opportunity cost of producing one ton of wheat for Country Gamma is 4 tons of corn. The opportunity cost of producing one ton of wheat for Country Beta is 8 tons of corn. Which country has the comparative advantage in the production of wheat?

George and Michael can gain from exchange

Households are buyers in factor markets and sellers in goods markets.

The rights of an owner to use and exchange property are

-In the above figure, at point b what is the opportunity cost of producing 2 more audio tapes?

The principle of decreasing marginal benefit means that as the quantity of a good consumed

Which of the following does NOT help organize trade?

Consider a PPF for tapes and soda. If the opportunity cost of a tape increases as the quantity of tapes produced increases and also the opportunity cost of a soda increases as the quantity of soda produced increases, then the PPF between the two goods will be

-The table above lists six points on the production possibilities frontier for grain and cars. From this information you can conclude that production is inefficient if this economy produces

-Jane produces only corn, measured in tons, and cloth, measured in bolts. For her, the opportunity cost of one more ton of corn is

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 is TRUE?

Considering a PPF with health care services on the vertical axis and other goods and services on the horizontal axis, the increasing production of health care services in the United States as a result of the aging population represents

-The above figure illustrates Mary's production possibilities frontier. If Mary wants to move from point d to point c, she must

In order to achieve the maximum gains from trade, people should specialize according to

-Refer to the production possibilities frontier in the figure above. More of good X must be given up per unit of good Y gained when moving from point b to point a than when moving from point c to point b. This fact

-The opportunity cost of producing a unit of consumption at point b in the figure ________ point a.

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 Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 2: The Economic Problem

Increasing opportunity cost occurs along a production possibilities frontier because

A society that is producing on its production possibilities frontier is

The opportunity cost of producing one ton of wheat for Country Gamma is 4 tons of corn. The opportunity cost of producing one ton of wheat for Country Beta is 8 tons of corn. Which country has the comparative advantage in the production of wheat?

George and Michael can gain from exchange

Households are buyers in factor markets and sellers in goods markets.

The rights of an owner to use and exchange property are

-In the above figure, at point b what is the opportunity cost of producing 2 more audio tapes?

The principle of decreasing marginal benefit means that as the quantity of a good consumed

Which of the following does NOT help organize trade?

Consider a PPF for tapes and soda. If the opportunity cost of a tape increases as the quantity of tapes produced increases and also the opportunity cost of a soda increases as the quantity of soda produced increases, then the PPF between the two goods will be

-The table above lists six points on the production possibilities frontier for grain and cars. From this information you can conclude that production is inefficient if this economy produces

-Jane produces only corn, measured in tons, and cloth, measured in bolts. For her, the opportunity cost of one more ton of corn is

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 is TRUE?

Considering a PPF with health care services on the vertical axis and other goods and services on the horizontal axis, the increasing production of health care services in the United States as a result of the aging population represents

-The above figure illustrates Mary's production possibilities frontier. If Mary wants to move from point d to point c, she must

In order to achieve the maximum gains from trade, people should specialize according to

-Refer to the production possibilities frontier in the figure above. More of good X must be given up per unit of good Y gained when moving from point b to point a than when moving from point c to point b. This fact

-The opportunity cost of producing a unit of consumption at point b in the figure ________ point a.

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 Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters