Question 1

A computer software program is most strongly an example of

Accepted Answer

A)  real property. 
B)  fiat property. 
C)  intellectual property. 
D)  vicarious property. 
A)  real property. 
B)  fiat property. 
C)  intellectual property. 
D)  vicarious property.

Question 2

Generally, opportunity costs increase and the production possibilities frontier bows outward. Why?

Accepted Answer

A)  Unemployment is inevitable. 
B)  Resources are not equally useful in all activities. 
C)  Technology is slow to change. 
D)  Labor is scarcer than capital. 
A)  Unemployment is inevitable. 
B)  Resources are not equally useful in all activities. 
C)  Technology is slow to change. 
D)  Labor is scarcer than capital.

Question 3

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

Accepted Answer

A)  of producing; increases as production 
B)  of producing; decreases as production 
C)  from consuming; increases as consumption 
D)  from consuming; decreases as consumption 
A)  of producing; increases as production 
B)  of producing; decreases as production 
C)  from consuming; increases as consumption 
D)  from consuming; decreases as consumption

Question 4

One point on a PPF shows production levels at 50 tons of coffee and 100 tons of bananas. Remaining on the PPF, an increase of banana production to 140 tons shows coffee production at 30 tons. Still remaining on the PPF, coffee production at 10 tons allows banana production at 160 tons. The opportunity cost of a ton of bananas is

Accepted Answer

A)  constant because coffee production decreased by the same amount each time. 
B)  decreasing, since the increase in banana production is less at each point considered. 
C)  16 to 1, that is every 1 ton of coffee given up will result in 16 more tons of bananas. 
D)  increasing from 1/2 ton of coffee per ton of bananas to 1 ton of coffee per ton of bananas. 
A)  constant because coffee production decreased by the same amount each time. 
B)  decreasing, since the increase in banana production is less at each point considered. 
C)  16 to 1, that is every 1 ton of coffee given up will result in 16 more tons of bananas. 
D)  increasing from 1/2 ton of coffee per ton of bananas to 1 ton of coffee per ton of bananas.

Question 5

The term "market" refers to

Accepted Answer

A)  physical structures only. 
B)  locations where buyers and sellers physically meet. 
C)  any arrangement that enables buyers and sellers to get information and trade with one another. 
D)  trading arrangements that have been approved by the government. 
A)  physical structures only. 
B)  locations where buyers and sellers physically meet. 
C)  any arrangement that enables buyers and sellers to get information and trade with one another. 
D)  trading arrangements that have been approved by the government.

Question 6

-In the above figure, once on PPF2, a country would grow slowest by producing at point

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 7

China's State Council has encouraged more spending to "improve transportation links and other infrastructure...." It will also "step up its spending on vocational training and other educational programs for adults." www.nytimes.com, Keith Bradsher, October 19, 2008
Suppose that capital goods are on the vertical axis while consumption goods are on the horizontal axis of China's PPF. As a result of enacting the policies, we would expect
I. an expansion of China's production possibilities.
II. capital accumulation.
III. an increase in human capital.

Accepted Answer

A)  i and II only. 
B)  i, II and III. 
C)  i and III only. 
D)  II and III only. 
A)  i and II only. 
B)  i, II and III. 
C)  i and III only. 
D)  II and III only.

Question 8

Capital accumulation definitely

Accepted Answer

A)  has no impact on the production possibilities frontier. 
B)  shifts the production possibilities frontier inward. 
C)  makes the production possibilities frontier steeper. 
D)  shifts the production possibilities frontier outward. 
A)  has no impact on the production possibilities frontier. 
B)  shifts the production possibilities frontier inward. 
C)  makes the production possibilities frontier steeper. 
D)  shifts the production possibilities frontier outward.

Question 9

-Point C on the production possibilities frontier in the above diagram illustrates

Accepted Answer

A)  a point that achieves production efficiency. 
B)  a combination of goods and services that cannot be produced efficiently. 
C)  all goods and services that are desired but cannot be produced due to scarce resources. 
D)  a production point that has underutilization of resources. 
A)  a point that achieves production efficiency. 
B)  a combination of goods and services that cannot be produced efficiently. 
C)  all goods and services that are desired but cannot be produced due to scarce resources. 
D)  a production point that has underutilization of resources.

Question 10

Explain how the production possibilities frontier illustrates scarcity.

Accepted Answer

The PPF illustrates

Question 11

At one point along a PPF, 10 pizzas and 7 sandwiches can be produced. At another point along the same PPF, 9 pizzas and 10 sandwiches can be produced. The opportunity cost of a pizza between these points is ________ per pizza.

Accepted Answer

A)  7/10 of a sandwich 
B)  10/7 of a sandwich 
C)  1/3 of a sandwich 
D)  3 sandwiches 
A)  7/10 of a sandwich 
B)  10/7 of a sandwich 
C)  1/3 of a sandwich 
D)  3 sandwiches

Question 12

Allocative efficiency occurs when

Accepted Answer

A)  we cannot produce more of any good without giving up some other good that we value more highly. 
B)  we cannot produce more of any one good without giving up some other good. 
C)  marginal benefit exceeds marginal cost. 
D)  opportunity costs are decreasing. 
A)  we cannot produce more of any good without giving up some other good that we value more highly. 
B)  we cannot produce more of any one good without giving up some other good. 
C)  marginal benefit exceeds marginal cost. 
D)  opportunity costs are decreasing.

Question 13

What is the relationship between the bowed out shape of the production possibilities frontier and the increasing opportunity cost of a good as more of it is produced?

Accepted Answer

The production possibilities frontier is

Question 14

-Suppose a factory can be designed to produce either trucks or cars. The figure above shows the marginal cost and marginal benefit of producing trucks in terms of the forgone cars.
a) What is the marginal benefit of the 25th truck?
b) What is the marginal cost of the 25th truck?
c) Should the 25th truck be produced? Why or why not.
d) What is the marginal benefit of the 75th truck?
e) What is the marginal cost of the 75th truck?
f) Should the 75th truck be produced? Why or why not?
g) What is the allocatively efficient quantity of trucks?

Accepted Answer

a) 3 cars per truck
b) 1 car per truck
c

Question 15

To obtain the gains available from comparative advantage, individuals or countries must do more than specialize; they must also

Accepted Answer

A)  save. 
B)  invest. 
C)  engage in research and development. 
D)  trade. 
A)  save. 
B)  invest. 
C)  engage in research and development. 
D)  trade.

Question 16

-Two countries, Blue Violet and Sweet Pansy, produce only two goods: teapots and coffeepots. The table above gives their production possibilities.

Accepted Answer

A)  Blue Violet has a comparative advantage in teapots. 
B)  Sweet Pansy has a comparative advantage in teapots. 
C)  Both have a comparative advantage in teapots. 
D)  Sweet Pansy has an absolute advantage in teapots. 
A)  Blue Violet has a comparative advantage in teapots. 
B)  Sweet Pansy has a comparative advantage in teapots. 
C)  Both have a comparative advantage in teapots. 
D)  Sweet Pansy has an absolute advantage in teapots.

Question 17

-In the figure above, Joe is producing at point A. Joe's opportunity cost of producing one shirt is

Accepted Answer

A)  5/3 of a pair of pants per shirt. 
B)  3/5 of a pair of pants per shirt. 
C)  5 pairs of pants per shirt. 
D)  2 pairs of pants per shirt. 
A)  5/3 of a pair of pants per shirt. 
B)  3/5 of a pair of pants per shirt. 
C)  5 pairs of pants per shirt. 
D)  2 pairs of pants per shirt.

Question 18

At one point along a PPF 40 tons of wheat are produced while 80 tons of rice are produced. At another point along the same PPF, 41 tons of wheat are produced while 70 tons of rice are produced. The opportunity cost of producing a ton of wheat between these points is ________ per ton of wheat.

Accepted Answer

A)  1/2 ton of rice 
B)  10 tons of rice 
C)  1/10 ton of rice 
D)  4/7 ton of rice 
A)  1/2 ton of rice 
B)  10 tons of rice 
C)  1/10 ton of rice 
D)  4/7 ton of rice

Question 19

-Two nations can produce computers and software in the amounts given in the table above. Does either nation have an absolute advantage in producing the products? Which nation has a comparative advantage in computers? Which nation has a comparative advantage in software? Explain your answers.

Accepted Answer

Nation B has an absolute advantage in pr

Question 20

A system of property rights

Accepted Answer

A)  encourages economic growth by creating incentives to invest in capital and to be innovative. 
B)  discourages economic growth by discouraging the development of new ideas and ways of doing things. 
C)  reduces the efficiency of government, which reduces the growth rate of the economy over time. 
D)  encourages investment but discourages entrepreneurial activity, so the effect on economic growth is uncertain. 
A)  encourages economic growth by creating incentives to invest in capital and to be innovative. 
B)  discourages economic growth by discouraging the development of new ideas and ways of doing things. 
C)  reduces the efficiency of government, which reduces the growth rate of the economy over time. 
D)  encourages investment but discourages entrepreneurial activity, so the effect on economic growth is uncertain.

A computer software program is most strongly an example of

Generally, opportunity costs increase and the production possibilities frontier bows outward. Why?

Marginal benefit is the benefit one more unit of the good and of the good increases.

The term "market" refers to

-In the above figure, once on PPF₂, a country would grow slowest by producing at point

Capital accumulation definitely

-Point C on the production possibilities frontier in the above diagram illustrates

Explain how the production possibilities frontier illustrates scarcity.

At one point along a PPF, 10 pizzas and 7 sandwiches can be produced. At another point along the same PPF, 9 pizzas and 10 sandwiches can be produced. The opportunity cost of a pizza between these points is ________ per pizza.

Allocative efficiency occurs when

What is the relationship between the bowed out shape of the production possibilities frontier and the increasing opportunity cost of a good as more of it is produced?

To obtain the gains available from comparative advantage, individuals or countries must do more than specialize; they must also

-Two countries, Blue Violet and Sweet Pansy, produce only two goods: teapots and coffeepots. The table above gives their production possibilities.

-In the figure above, Joe is producing at point A. Joe's opportunity cost of producing one shirt is

At one point along a PPF 40 tons of wheat are produced while 80 tons of rice are produced. At another point along the same PPF, 41 tons of wheat are produced while 70 tons of rice are produced. The opportunity cost of producing a ton of wheat between these points is ________ per ton of wheat.

-Two nations can produce computers and software in the amounts given in the table above. Does either nation have an absolute advantage in producing the products? Which nation has a comparative advantage in computers? Which nation has a comparative advantage in software? Explain your answers.

A system of property rights

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

A computer software program is most strongly an example of

Generally, opportunity costs increase and the production possibilities frontier bows outward. Why?

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

The term "market" refers to

-In the above figure, once on PPF2, a country would grow slowest by producing at point

Capital accumulation definitely

-Point C on the production possibilities frontier in the above diagram illustrates

Explain how the production possibilities frontier illustrates scarcity.

At one point along a PPF, 10 pizzas and 7 sandwiches can be produced. At another point along the same PPF, 9 pizzas and 10 sandwiches can be produced. The opportunity cost of a pizza between these points is ________ per pizza.

Allocative efficiency occurs when

What is the relationship between the bowed out shape of the production possibilities frontier and the increasing opportunity cost of a good as more of it is produced?

To obtain the gains available from comparative advantage, individuals or countries must do more than specialize; they must also

-Two countries, Blue Violet and Sweet Pansy, produce only two goods: teapots and coffeepots. The table above gives their production possibilities.

-In the figure above, Joe is producing at point A. Joe's opportunity cost of producing one shirt is

At one point along a PPF 40 tons of wheat are produced while 80 tons of rice are produced. At another point along the same PPF, 41 tons of wheat are produced while 70 tons of rice are produced. The opportunity cost of producing a ton of wheat between these points is ________ per ton of wheat.

-Two nations can produce computers and software in the amounts given in the table above. Does either nation have an absolute advantage in producing the products? Which nation has a comparative advantage in computers? Which nation has a comparative advantage in software? Explain your answers.

A system of property rights

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

Marginal benefit is the benefit one more unit of the good and of the good increases.

-In the above figure, once on PPF₂, a country would grow slowest by producing at point