Question 1

-In the figure above, if Mac and Izzie both completely specialized and traded with one another, their joint output would be

Accepted Answer

A)  3 computers and 3 TV sets per month. 
B)  6 computers and 6 TV sets per month. 
C)  12 computers and 12 TV sets per month. 
D)  24 computers and 24 TV sets per month. 
A)  3 computers and 3 TV sets per month. 
B)  6 computers and 6 TV sets per month. 
C)  12 computers and 12 TV sets per month. 
D)  24 computers and 24 TV sets per month.

Question 2

-Leisure Land produces only sunscreen and camel rides. The table shows the marginal benefit and marginal cost schedules for sunscreen and camel rides. The allocatively efficient number of camel rides is ________.

Accepted Answer

A)  1 ride per day because the marginal benefit exceeds the marginal cost by as much as possible 
B)  2 rides per day 
C)  4 rides per day 
D)  6 rides per day because that is the maximum number of rides 
A)  1 ride per day because the marginal benefit exceeds the marginal cost by as much as possible 
B)  2 rides per day 
C)  4 rides per day 
D)  6 rides per day because that is the maximum number of rides

Question 3

"Allocative efficiency requires that the maximum number of people have access to all of the goods and services that our economy produces." Is this statement true or false? Explain your answer.

Accepted Answer

The statement is false. Allocative effic

Question 4

"If Mexico is currently operating at a point beyond its production possibilities frontier, then there are unemployed resources in Mexico." Is this statement true or false? Briefly explain your answer.

Accepted Answer

The statement is false. It is false on t

Question 5

-Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. The opportunity cost of producing a unit of Y is

Accepted Answer

A)  1 unit of X per unit of Y for Agnes and 2 units of X per unit of Y for Brenda. 
B)  1 unit of X per unit of Y for Agnes and 1/2 unit of X per unit of Y for Brenda. 
C)  1 hour for Agnes and 1/2 hour for Brenda. 
D)  1 hour for Agnes and 2 hours for Brenda. 
A)  1 unit of X per unit of Y for Agnes and 2 units of X per unit of Y for Brenda. 
B)  1 unit of X per unit of Y for Agnes and 1/2 unit of X per unit of Y for Brenda. 
C)  1 hour for Agnes and 1/2 hour for Brenda. 
D)  1 hour for Agnes and 2 hours for Brenda.

Question 6

-Using the values for the marginal benefit and the marginal cost of a bushel of apples given in the table above, what is the allocatively efficient quantity of apples? Suppose 10 million bushels of apples are produced. Should the quantity be increased or decreased? What if 20 million bushels are produced; should the quantity be increased or decreased?

Accepted Answer

The allocatively efficient quantity of a

Question 7

-In the figure above, suppose that Mac and Izzie specialize and trade to reach point c. Mac sends Izzie

Accepted Answer

A)  12 computers in exchange for 12 TVs. 
B)  12 computers in exchange for 6 TVs. 
C)  6 computers in exchange for 12 TVs. 
D)  6 computers in exchange for 6 TVs. 
A)  12 computers in exchange for 12 TVs. 
B)  12 computers in exchange for 6 TVs. 
C)  6 computers in exchange for 12 TVs. 
D)  6 computers in exchange for 6 TVs.

Question 8

Marginal cost curves slope

Accepted Answer

A)  upward because of increasing opportunity cost. 
B)  upward because of decreasing opportunity cost. 
C)  downward because of increasing opportunity cost. 
D)  downward because of decreasing opportunity cost. 
A)  upward because of increasing opportunity cost. 
B)  upward because of decreasing opportunity cost. 
C)  downward because of increasing opportunity cost. 
D)  downward because of decreasing opportunity cost.

Question 9

Individual economic decisions are coordinated by

Accepted Answer

A)  markets through adjustments in sales levels. 
B)  markets through adjustments in prices. 
C)  government through adjustments in sales taxes. 
D)  government through adjustments in income taxes. 
A)  markets through adjustments in sales levels. 
B)  markets through adjustments in prices. 
C)  government through adjustments in sales taxes. 
D)  government through adjustments in income taxes.

Question 10

-In the production possibilities frontier depicted in the figure above, which of the following combinations of hats and bananas is unattainable?

Accepted Answer

A)  4 million pounds of bananas and 4 million hats 
B)  2 million pounds of bananas and 5 million hats 
C)  0 pounds of bananas and 6 million hats 
D)  1 million pounds of bananas and 3 million hats 
A)  4 million pounds of bananas and 4 million hats 
B)  2 million pounds of bananas and 5 million hats 
C)  0 pounds of bananas and 6 million hats 
D)  1 million pounds of bananas and 3 million hats

Question 11

One of the opportunity costs of economic growth is

Accepted Answer

A)  capital accumulation. 
B)  technological change. 
C)  reduced current consumption. 
D)  the gain in future consumption. 
A)  capital accumulation. 
B)  technological change. 
C)  reduced current consumption. 
D)  the gain in future consumption.

Question 12

-In the above figure, the curve labeled a is the ________ curve and the curve labeled b is the ________ curve.

Accepted Answer

A)  marginal cost; marginal benefit 
B)  marginal cost; trade line 
C)  marginal benefit; trade line 
D)  production possibilities frontier; trade line 
A)  marginal cost; marginal benefit 
B)  marginal cost; trade line 
C)  marginal benefit; trade line 
D)  production possibilities frontier; trade line

Question 13

Suppose the country of Popcorn produces only jets and corn. If Popcorn cannot produce any more jets without giving up corn, we say that Popcorn has achieved

Accepted Answer

A)  the highest marginal benefit. 
B)  production efficiency. 
C)  the lowest marginal cost. 
D)  the highest opportunity cost. 
A)  the highest marginal benefit. 
B)  production efficiency. 
C)  the lowest marginal cost. 
D)  the highest opportunity cost.

Question 14

When we choose a particular option, we must give up alternative options. The highest-valued alternative forgone is the ________ of the option chosen.

Accepted Answer

A)  opportunity cost 
B)  comparative advantage 
C)  nonmonetary cost 
D)  absolute advantage 
A)  opportunity cost 
B)  comparative advantage 
C)  nonmonetary cost 
D)  absolute advantage

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 about opportunity cost is CORRECT?

Accepted Answer

A)  The opportunity cost of a ton of pecans is 2 tons of pears per ton of pecans for Missouri and 1/4 ton of pears per ton of pecans for Washington. 
B)  The opportunity cost of a ton of pears is 2 tons of pecans per ton of pears for Missouri and 1/4 ton of pecans per ton of pears for Washington. 
C)  The opportunity cost of a ton of pecans is 1/2 ton of pears per ton of pecans for Missouri and 4 tons of pears per ton of pecans for Washington. 
D)  Both answers B and C are correct. 
A)  The opportunity cost of a ton of pecans is 2 tons of pears per ton of pecans for Missouri and 1/4 ton of pears per ton of pecans for Washington. 
B)  The opportunity cost of a ton of pears is 2 tons of pecans per ton of pears for Missouri and 1/4 ton of pecans per ton of pears for Washington. 
C)  The opportunity cost of a ton of pecans is 1/2 ton of pears per ton of pecans for Missouri and 4 tons of pears per ton of pecans for Washington. 
D)  Both answers B and C are correct.

Question 16

-The table above represents different points along a production possibilities curve. What is the marginal cost of moving from 2 bushels to 3 bushels of beans?

Accepted Answer

A)  9 bushels of carrots per bushel of beans 
B)  12 bushels of carrots per bushel of beans 
C)  3 bushels of carrots per bushel of beans 
D)  21 bushels of carrots per bushel of beans 
A)  9 bushels of carrots per bushel of beans 
B)  12 bushels of carrots per bushel of beans 
C)  3 bushels of carrots per bushel of beans 
D)  21 bushels of carrots per bushel of beans

Question 17

The slope of a production possibilities frontier that displays increasing opportunity cost is

Accepted Answer

A)  positive and constant. 
B)  negative and constant. 
C)  steeper near the horizontal intercept than near the vertical intercept. 
D)  steeper near the vertical intercept than near the horizontal intercept. 
A)  positive and constant. 
B)  negative and constant. 
C)  steeper near the horizontal intercept than near the vertical intercept. 
D)  steeper near the vertical intercept than near the horizontal intercept.

Question 18

-In the above figure, if 4,000 bicycles are produced per month,

Accepted Answer

A)  marginal benefit is greater than marginal cost. 
B)  fewer bicycles should be produced to reach the allocatively efficient level of output. 
C)  the marginal cost of production is 2 bottles of soda per bicycle. 
D)  Both answers A and B are correct. 
A)  marginal benefit is greater than marginal cost. 
B)  fewer bicycles should be produced to reach the allocatively efficient level of output. 
C)  the marginal cost of production is 2 bottles of soda per bicycle. 
D)  Both answers A and B are correct.

Question 19

A production possibilities frontier figure does NOT illustrate

Accepted Answer

A)  the limits on production imposed by our limited resources and technology. 
B)  the exchange of one good or service for another. 
C)  opportunity cost. 
D)  attainable and unattainable points. 
A)  the limits on production imposed by our limited resources and technology. 
B)  the exchange of one good or service for another. 
C)  opportunity cost. 
D)  attainable and unattainable points.

Question 20

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. Both individuals will be better off if

Accepted Answer

A)  Tom trades sandwiches in exchange for eggs. 
B)  Jerry trades sandwiches in exchange for eggs. 
C)  they trade, no matter who trades sandwiches and who eggs. 
D)  they don't trade. 
A)  Tom trades sandwiches in exchange for eggs. 
B)  Jerry trades sandwiches in exchange for eggs. 
C)  they trade, no matter who trades sandwiches and who eggs. 
D)  they don't trade.

-In the figure above, if Mac and Izzie both completely specialized and traded with one another, their joint output would be

-Leisure Land produces only sunscreen and camel rides. The table shows the marginal benefit and marginal cost schedules for sunscreen and camel rides. The allocatively efficient number of camel rides is ________.

"Allocative efficiency requires that the maximum number of people have access to all of the goods and services that our economy produces." Is this statement true or false? Explain your answer.

"If Mexico is currently operating at a point beyond its production possibilities frontier, then there are unemployed resources in Mexico." Is this statement true or false? Briefly explain your answer.

-Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. The opportunity cost of producing a unit of Y is

-In the figure above, suppose that Mac and Izzie specialize and trade to reach point c. Mac sends Izzie

Marginal cost curves slope

Individual economic decisions are coordinated by

-In the production possibilities frontier depicted in the figure above, which of the following combinations of hats and bananas is unattainable?

One of the opportunity costs of economic growth is

-In the above figure, the curve labeled a is the curve and the curve labeled b is the curve.

Suppose the country of Popcorn produces only jets and corn. If Popcorn cannot produce any more jets without giving up corn, we say that Popcorn has achieved

When we choose a particular option, we must give up alternative options. The highest-valued alternative forgone is the ________ of the option chosen.

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 about opportunity cost is CORRECT?

-The table above represents different points along a production possibilities curve. What is the marginal cost of moving from 2 bushels to 3 bushels of beans?

The slope of a production possibilities frontier that displays increasing opportunity cost is

-In the above figure, if 4,000 bicycles are produced per month,

A production possibilities frontier figure does NOT illustrate

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. Both individuals will be better off if

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

-In the figure above, if Mac and Izzie both completely specialized and traded with one another, their joint output would be

-Leisure Land produces only sunscreen and camel rides. The table shows the marginal benefit and marginal cost schedules for sunscreen and camel rides. The allocatively efficient number of camel rides is ________.

"Allocative efficiency requires that the maximum number of people have access to all of the goods and services that our economy produces." Is this statement true or false? Explain your answer.

"If Mexico is currently operating at a point beyond its production possibilities frontier, then there are unemployed resources in Mexico." Is this statement true or false? Briefly explain your answer.

-Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. The opportunity cost of producing a unit of Y is

-In the figure above, suppose that Mac and Izzie specialize and trade to reach point c. Mac sends Izzie

Marginal cost curves slope

Individual economic decisions are coordinated by

-In the production possibilities frontier depicted in the figure above, which of the following combinations of hats and bananas is unattainable?

One of the opportunity costs of economic growth is

-In the above figure, the curve labeled a is the ________ curve and the curve labeled b is the ________ curve.

Suppose the country of Popcorn produces only jets and corn. If Popcorn cannot produce any more jets without giving up corn, we say that Popcorn has achieved

When we choose a particular option, we must give up alternative options. The highest-valued alternative forgone is the ________ of the option chosen.

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 about opportunity cost is CORRECT?

-The table above represents different points along a production possibilities curve. What is the marginal cost of moving from 2 bushels to 3 bushels of beans?

The slope of a production possibilities frontier that displays increasing opportunity cost is

-In the above figure, if 4,000 bicycles are produced per month,

A production possibilities frontier figure does NOT illustrate

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. Both individuals will be better off if

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

-In the above figure, the curve labeled a is the curve and the curve labeled b is the curve.