Question 1

Moving along a bowed-out PPF between milk and cotton, as more milk is produced the marginal cost of an additional gallon of milk

Accepted Answer

A)  rises. 
B)  does not change. 
C)  falls. 
D)  probably changes, but in an ambiguous direction. 
A)  rises. 
B)  does not change. 
C)  falls. 
D)  probably changes, but in an ambiguous direction.

Question 2

-In the production possibilities frontier depicted in the figure above, what is the opportunity cost of increasing the production of bananas from two million pounds to three million pounds?

Accepted Answer

A)  1/2 hat per pound of bananas 
B)  1 hat per pound of bananas 
C)  2 hats per pound of bananas 
D)  3 hats per pound of bananas 
A)  1/2 hat per pound of bananas 
B)  1 hat per pound of bananas 
C)  2 hats per pound of bananas 
D)  3 hats per pound of bananas

Question 3

When moving along the production possibilities frontier, opportunity cost is measured as the

Accepted Answer

A)  increase in the quantity produced of one good divided by the decrease in the quantity produced of another good. 
B)  decrease in the quantity produced of one good divided by the increase in the quantity produced of another good. 
C)  quantity produced of one good divided by the quantity produced of another good. 
D)  quantity produced of one good multiplied by the quantity produced of another good. 
A)  increase in the quantity produced of one good divided by the decrease in the quantity produced of another good. 
B)  decrease in the quantity produced of one good divided by the increase in the quantity produced of another good. 
C)  quantity produced of one good divided by the quantity produced of another good. 
D)  quantity produced of one good multiplied by the quantity produced of another good.

Question 4

Using the production possibilities frontier model, unemployment is described as producing at a point

Accepted Answer

A)  on the exact middle of the PPF curve. 
B)  on either end of the PPF curve. 
C)  inside the PPF curve. 
D)  outside the PPF curve. 
A)  on the exact middle of the PPF curve. 
B)  on either end of the PPF curve. 
C)  inside the PPF curve. 
D)  outside the PPF curve.

Question 5

-In the figure above

Accepted Answer

A)  moving from point a to point b would require new technology. 
B)  production at point b is efficient whereas production at point a is not efficient. 
C)  some resources must be unemployed at point c. 
D)  opportunity costs are decreasing. 
A)  moving from point a to point b would require new technology. 
B)  production at point b is efficient whereas production at point a is not efficient. 
C)  some resources must be unemployed at point c. 
D)  opportunity costs are decreasing.

Question 6

-The figure above shows Roger's production possibilities frontier. Point a is an ________ point and at that point production is ________.

Accepted Answer

A)  attainable; efficient 
B)  attainable; inefficient 
C)  unattainable; inefficient 
D)  unattainable; efficient 
A)  attainable; efficient 
B)  attainable; inefficient 
C)  unattainable; inefficient 
D)  unattainable; efficient

Question 7

Draw a production possibilities frontier between beans and peas. Label the unattainable points, the attainable points with fully employed resources, and the attainable points with unemployed resources.

Accepted Answer

@#IMG-DLM& The production possibilities frontier,

Question 8

Marginal cost is the ________ one more unit of a good and ________ of the good increases.

Accepted Answer

A)  opportunity cost of producing; increases as production 
B)  opportunity cost of producing; decreases as production 
C)  price that must be paid to consume; increases as consumption 
D)  price that must be paid to consume; decreases as consumption 
A)  opportunity cost of producing; increases as production 
B)  opportunity cost of producing; decreases as production 
C)  price that must be paid to consume; increases as consumption 
D)  price that must be paid to consume; decreases as consumption

Question 9

Suppose that the United States and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, ________ will gain from that trade because ________.

Accepted Answer

A)  both countries; consumption possibilities in both Cuba and the United States will lie outside their PPFs. 
B)  neither country; their consumption possibilities will not change. 
C)  only the United States; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change. 
D)  only Cuba; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change. 
A)  both countries; consumption possibilities in both Cuba and the United States will lie outside their PPFs. 
B)  neither country; their consumption possibilities will not change. 
C)  only the United States; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change. 
D)  only Cuba; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change.

Question 10

-Harry usually spends 10 hours a week playing Quidditch. However, his Defense Against the Dark Arts exam is coming and he needs more time to study for the exam. If he does not study at all, the lowest grade he will receive is 55. But Harry realizes that this grade is unacceptable and so he has to give up some of his Quidditch time. But how much? He asks his friend Hermione, who is very good at Magical Economics, to help him figure this out. Together, they come up with the schedules of Harry's possibilities and values in the tables above. Then Hermione quickly finds the solution. But Harry still looks puzzled. Help Hermione to explain her solution to Harry.
a) Draw Harry's production possibilities frontier with the Quidditch hours on the horizontal axis and Harry's grade, starting at 55, on the vertical axis.
b) What is the opportunity cost of the first two hours of Quidditch? What is the marginal cost of the 5th hour?
c) What is Harry's opportunity cost of raising his grade from 82 points to 87 points?
d) Draw Harry's marginal cost of playing Quidditch curve. What happens to the marginal cost if Harry spends more time playing Quidditch?
e) Draw Harry's marginal benefit from playing Quidditch curve. Describe the relationship between Harry's time spent playing Quidditch and the marginal benefit from playing Quidditch.
f) For how many extra hours did Hermione recommend Harry to study? Why? If Harry follows her advice, what grade will he expect? What do you think Hermione said when Harry asked why he should not spend more time playing Quidditch?

Accepted Answer

@#IMG-DLM& a) The figure above shows Harry's produ

Question 11

The marginal benefit of a good or service

Accepted Answer

A)  increases as more is consumed. 
B)  decreases as more is consumed 
C)  remains constant as more is consumed. 
D)  decreases as less is consumed. 
A)  increases as more is consumed. 
B)  decreases as more is consumed 
C)  remains constant as more is consumed. 
D)  decreases as less is consumed.

Question 12

-Refer to the production possibilities frontier figure above. Which of the following movements requires the largest opportunity cost, in terms of good X forgone, per extra unit of good Y?

Accepted Answer

A)  from point e to point d 
B)  from point d to point c 
C)  from point c to point b 
D)  from point b to point a 
A)  from point e to point d 
B)  from point d to point c 
C)  from point c to point b 
D)  from point b to point a

Question 13

In general, the more resources that are devoted to technological research, the

Accepted Answer

A)  greater is current consumption. 
B)  higher is the unemployment rate. 
C)  faster the PPF shifts outward. 
D)  more the PPF will bow outward. 
A)  greater is current consumption. 
B)  higher is the unemployment rate. 
C)  faster the PPF shifts outward. 
D)  more the PPF will bow outward.

Question 14

Scarcity is represented on a production possibilities frontier figure by

Accepted Answer

A)  the amount of the good on the horizontal axis forgone. 
B)  the fact that there are only two goods in the diagram. 
C)  technological progress. 
D)  the fact there are attainable and unattainable points. 
A)  the amount of the good on the horizontal axis forgone. 
B)  the fact that there are only two goods in the diagram. 
C)  technological progress. 
D)  the fact there are attainable and unattainable points.

Question 15

Homer and Teddy are stranded on a desert island. To feed themselves each day they can either catch fish or pick fruit. In a day, Teddy could pick 60 pieces of fruit or catch 20 fish. Homer could pick 100 pieces of fruit or catch 150 fish. Which of the following is CORRECT?

Accepted Answer

A)  Homer has a comparative advantage in catching fish and Teddy has a comparative advantage in picking fruit. 
B)  Homer has a comparative advantage in picking fruit and Teddy has a comparative advantage in catching fish. 
C)  Homer has a comparative advantage in both catching fish and picking fruit. 
D)  Teddy has a comparative advantage in both catching fish and picking fruit. 
A)  Homer has a comparative advantage in catching fish and Teddy has a comparative advantage in picking fruit. 
B)  Homer has a comparative advantage in picking fruit and Teddy has a comparative advantage in catching fish. 
C)  Homer has a comparative advantage in both catching fish and picking fruit. 
D)  Teddy has a comparative advantage in both catching fish and picking fruit.

Question 16

-The above table shows the number of pencils or pens that could be produced by Don and Bob in an hour. This schedule shows that

Accepted Answer

A)  Don has an absolute advantage in the production of pencils, and Bob has an absolute advantage in the production of pens. 
B)  Bob has an absolute advantage in the production of pencils, and Don has an absolute advantage in the production of pens. 
C)  Don has a comparative advantage in the production of both pencils and pens. 
D)  Bob has a comparative advantage in the production of pencils. 
A)  Don has an absolute advantage in the production of pencils, and Bob has an absolute advantage in the production of pens. 
B)  Bob has an absolute advantage in the production of pencils, and Don has an absolute advantage in the production of pens. 
C)  Don has a comparative advantage in the production of both pencils and pens. 
D)  Bob has a comparative advantage in the production of pencils.

Question 17

Jake takes 40 minutes to fry a chicken and 10 minutes to toast a slice of bread. His brother Elwood takes 60 minutes to fry a chicken and 4 minutes to toast a slice of bread. Calculate each brother's opportunity cost. Who has a comparative advantage in which activity? Explain. Will the brothers gain if they specialize?

Accepted Answer

Jake can spend an hour to fry 1.5 chicke

Question 18

-The table above lists six points on the production possibilities frontier for grain and cars. What is the opportunity cost of producing the 26th car?

Accepted Answer

A)  2 tons of grain per car 
B)  4 tons of grain per car 
C)  0.25 tons of grain per car 
D)  0.5 tons of grain per car 
A)  2 tons of grain per car 
B)  4 tons of grain per car 
C)  0.25 tons of grain per car 
D)  0.5 tons of grain per car

Question 19

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. If Germany produces one less computer and switches resources to cameras, and the United States produces one more computer and takes resources out of cameras, then the net change in camera production in both countries taken together is

Accepted Answer

A)  0. 
B)  minus 10 cameras. 
C)  plus 10 cameras. 
D)  plus 20 cameras. 
A)  0. 
B)  minus 10 cameras. 
C)  plus 10 cameras. 
D)  plus 20 cameras.

Question 20

When producing goods and services along a PPF, tradeoffs exist because

Accepted Answer

A)  not all production is efficient. 
B)  society has only a limited amount of productive resources. 
C)  buyers and sellers often must negotiate prices. 
D)  human wants and needs are limited at a particular point in time. 
A)  not all production is efficient. 
B)  society has only a limited amount of productive resources. 
C)  buyers and sellers often must negotiate prices. 
D)  human wants and needs are limited at a particular point in time.

Moving along a bowed-out PPF between milk and cotton, as more milk is produced the marginal cost of an additional gallon of milk

-In the production possibilities frontier depicted in the figure above, what is the opportunity cost of increasing the production of bananas from two million pounds to three million pounds?

When moving along the production possibilities frontier, opportunity cost is measured as the

Using the production possibilities frontier model, unemployment is described as producing at a point

-In the figure above

-The figure above shows Roger's production possibilities frontier. Point a is an point and at that point production is .

Draw a production possibilities frontier between beans and peas. Label the unattainable points, the attainable points with fully employed resources, and the attainable points with unemployed resources.

Marginal cost is the one more unit of a good and of the good increases.

Suppose that the United States and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, will gain from that trade because .

The marginal benefit of a good or service

-Refer to the production possibilities frontier figure above. Which of the following movements requires the largest opportunity cost, in terms of good X forgone, per extra unit of good Y?

In general, the more resources that are devoted to technological research, the

Scarcity is represented on a production possibilities frontier figure by

Homer and Teddy are stranded on a desert island. To feed themselves each day they can either catch fish or pick fruit. In a day, Teddy could pick 60 pieces of fruit or catch 20 fish. Homer could pick 100 pieces of fruit or catch 150 fish. Which of the following is CORRECT?

-The above table shows the number of pencils or pens that could be produced by Don and Bob in an hour. This schedule shows that

-The table above lists six points on the production possibilities frontier for grain and cars. What is the opportunity cost of producing the 26th car?

When producing goods and services along a PPF, tradeoffs exist because

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

Moving along a bowed-out PPF between milk and cotton, as more milk is produced the marginal cost of an additional gallon of milk

-In the production possibilities frontier depicted in the figure above, what is the opportunity cost of increasing the production of bananas from two million pounds to three million pounds?

When moving along the production possibilities frontier, opportunity cost is measured as the

Using the production possibilities frontier model, unemployment is described as producing at a point

-In the figure above

-The figure above shows Roger's production possibilities frontier. Point a is an ________ point and at that point production is ________.

Draw a production possibilities frontier between beans and peas. Label the unattainable points, the attainable points with fully employed resources, and the attainable points with unemployed resources.

Marginal cost is the ________ one more unit of a good and ________ of the good increases.

Suppose that the United States and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, ________ will gain from that trade because ________.

The marginal benefit of a good or service

-Refer to the production possibilities frontier figure above. Which of the following movements requires the largest opportunity cost, in terms of good X forgone, per extra unit of good Y?

In general, the more resources that are devoted to technological research, the

Scarcity is represented on a production possibilities frontier figure by

Homer and Teddy are stranded on a desert island. To feed themselves each day they can either catch fish or pick fruit. In a day, Teddy could pick 60 pieces of fruit or catch 20 fish. Homer could pick 100 pieces of fruit or catch 150 fish. Which of the following is CORRECT?

-The above table shows the number of pencils or pens that could be produced by Don and Bob in an hour. This schedule shows that

-The table above lists six points on the production possibilities frontier for grain and cars. What is the opportunity cost of producing the 26th car?

When producing goods and services along a PPF, tradeoffs exist because

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

-The figure above shows Roger's production possibilities frontier. Point a is an point and at that point production is .

Marginal cost is the one more unit of a good and of the good increases.

Suppose that the United States and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, will gain from that trade because .