Question 1

A country has a comparative advantage in the production of a good if its opportunity cost is lower compared to another country.

Accepted Answer

A) True 
 B)False

Question 2

When economic growth occurs, the

Accepted Answer

A)  economy moves along its production possibilities frontier. 
B)  production possibilities frontier shifts outward. 
C)  production possibilities frontier becomes steeper. 
D)  production possibilities frontier shifts outward but no longer limits the amount that can be produced. 
A)  economy moves along its production possibilities frontier. 
B)  production possibilities frontier shifts outward. 
C)  production possibilities frontier becomes steeper. 
D)  production possibilities frontier shifts outward but no longer limits the amount that can be produced.

Question 3

-Refer to the table above, which gives five points on a nation's PPF. As we increase the production of X,

Accepted Answer

A)  the output of Y increases. 
B)  unemployment increases. 
C)  the opportunity cost of each new unit of X increases. 
D)  the opportunity cost of each new unit of X decreases. 
A)  the output of Y increases. 
B)  unemployment increases. 
C)  the opportunity cost of each new unit of X increases. 
D)  the opportunity cost of each new unit of X decreases.

Question 4

An increase in the nation's capital stock will

Accepted Answer

A)  shift the PPF outward. 
B)  cause a movement along the PPF upward and leftward. 
C)  cause a movement along the PPF downward and rightward. 
D)  move the nation from producing within the PPF to producing at a point closer to the PPF. 
A)  shift the PPF outward. 
B)  cause a movement along the PPF upward and leftward. 
C)  cause a movement along the PPF downward and rightward. 
D)  move the nation from producing within the PPF to producing at a point closer to the PPF.

Question 5

An increase in the nation's capital stock will

Accepted Answer

A)  shift the PPF outward. 
B)  cause a movement along the PPF up and to the left. 
C)  cause a movement along the PPF down and to the right. 
D)  move the nation from producing within the PPF to producing at a point closer to the PPF. 
A)  shift the PPF outward. 
B)  cause a movement along the PPF up and to the left. 
C)  cause a movement along the PPF down and to the right. 
D)  move the nation from producing within the PPF to producing at a point closer to the PPF.

Question 6

A country that has a comparative advantage in producing capital goods will ________ a country that has a comparative advantage in consumption goods.

Accepted Answer

A)  reap all of the gains from trade when it trades with 
B)  grow slower than 
C)  reap fewer of the gains from trade when it trades with 
D)  specialize in producing capital goods and trade with 
A)  reap all of the gains from trade when it trades with 
B)  grow slower than 
C)  reap fewer of the gains from trade when it trades with 
D)  specialize in producing capital goods and trade with

Question 7

-In the above figure, curve b shows the

Accepted Answer

A)  bottles of soda that people are willing to forgo to get another bicycle. 
B)  bottles of soda that people must forgo to get another bicycle. 
C)  benefits of producing more bicycles is greater than the benefits of producing more soda. 
D)  benefits of producing more soda is greater than the benefits of producing more bicycles. 
A)  bottles of soda that people are willing to forgo to get another bicycle. 
B)  bottles of soda that people must forgo to get another bicycle. 
C)  benefits of producing more bicycles is greater than the benefits of producing more soda. 
D)  benefits of producing more soda is greater than the benefits of producing more bicycles.

Question 8

As long as technology increases, economic growth is free.

Accepted Answer

A) True 
 B)False

Question 9

The state of Georgia offers free college tuition to high school students with a "B" average. In 2007, the state raised the requirement so that fewer students qualified for the scholarship. At the same time, Georgia increased state spending on health care. Suppose that college education is on the vertical axis and health care is on the horizontal axis of a PPF. Georgia's change in spending would be shown as

Accepted Answer

A)  a movement up along the PPF. 
B)  a movement down along the PPF. 
C)  a shift out of the PPF. 
D)  a shift in of the PPF. 
A)  a movement up along the PPF. 
B)  a movement down along the PPF. 
C)  a shift out of the PPF. 
D)  a shift in of the PPF.

Question 10

A person who has an absolute advantage in the production of all goods will

Accepted Answer

A)  also have a comparative advantage in the production of all goods. 
B)  not be able to gain from specialization and exchange. 
C)  have a production possibilities frontier with a constant slope. 
D)  have a comparative advantage in the production of some goods but not in the production of others. 
A)  also have a comparative advantage in the production of all goods. 
B)  not be able to gain from specialization and exchange. 
C)  have a production possibilities frontier with a constant slope. 
D)  have a comparative advantage in the production of some goods but not in the production of others.

Question 11

In the U.S., the changing shares of production from industry to services

Accepted Answer

A)  requires workers to engage in job training and/or relocation in order to gain employment. 
B)  imposes little hardship, as displaced industry workers can easily obtain employment in services. 
C)  allows the economy to constantly produce on the PPF. 
D)  shifts the PPF inward. 
A)  requires workers to engage in job training and/or relocation in order to gain employment. 
B)  imposes little hardship, as displaced industry workers can easily obtain employment in services. 
C)  allows the economy to constantly produce on the PPF. 
D)  shifts the PPF inward.

Question 12

An economy produces only food and shelter. There are two individuals in the economy: Bill and Mary. Mary's opportunity cost of producing 1 unit of shelter is 2 units of food. Bill's opportunity cost of producing 1 unit of shelter is 4 units of food.

Accepted Answer

A)  Bill has a comparative advantage over Mary in the production of shelter. 
B)  Mary has a comparative advantage over Bill in the production of food. 
C)  Mary has a comparative advantage over Bill in the production of shelter. 
D)  Bill has an absolute advantage over Mary in the production of shelter. 
A)  Bill has a comparative advantage over Mary in the production of shelter. 
B)  Mary has a comparative advantage over Bill in the production of food. 
C)  Mary has a comparative advantage over Bill in the production of shelter. 
D)  Bill has an absolute advantage over Mary in the production of shelter.

Question 13

We have achieved production efficiency if we can produce more of one good without producing less of some other good.

Accepted Answer

A) True 
 B)False

Question 14

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. The opportunity cost of 20 cameras in terms of computers in the United States is

Accepted Answer

A)  10 computers per camera. 
B)  2 computers per camera. 
C)  1 computer per camera. 
D)  1/20 of a computer per camera. 
A)  10 computers per camera. 
B)  2 computers per camera. 
C)  1 computer per camera. 
D)  1/20 of a computer per camera.

Question 15

The production possibilities frontier

Accepted Answer

A)  depicts the boundary between those combinations of goods and services that can be produced and those that cannot, given resources and the current state of technology. 
B)  shows how many goods and services are consumed by each person in a country. 
C)  is a model that assumes there is no scarcity and no opportunity cost. 
D)  is a graph with price on the vertical axis and income on the horizontal axis. 
A)  depicts the boundary between those combinations of goods and services that can be produced and those that cannot, given resources and the current state of technology. 
B)  shows how many goods and services are consumed by each person in a country. 
C)  is a model that assumes there is no scarcity and no opportunity cost. 
D)  is a graph with price on the vertical axis and income on the horizontal axis.

Question 16

Suppose a scientific breakthrough made free solar power available in unlimited quantities in the United States. The effect of this invention would be to move the

Accepted Answer

A)  United States beyond its production possibilities frontier. 
B)  United States inside its production possibilities frontier. 
C)  U.S. production possibilities frontier outward. 
D)  U.S. production possibilities frontier inward. 
A)  United States beyond its production possibilities frontier. 
B)  United States inside its production possibilities frontier. 
C)  U.S. production possibilities frontier outward. 
D)  U.S. production possibilities frontier inward.

Question 17

If marginal benefit is greater than marginal cost for the production of cars, to reach the allocative efficient quantity of cars, the production of cars must be increased.

Accepted Answer

A) True 
 B)False

Question 18

Production possibilities
  
-In the above table, the opportunity cost of the 2nd pizza is

Accepted Answer

A)  0 cases of soda per pizza. 
B)  15 cases of soda per pizza. 
C)  95 cases of soda per pizza. 
D)  80 cases of soda per pizza. 
A)  0 cases of soda per pizza. 
B)  15 cases of soda per pizza. 
C)  95 cases of soda per pizza. 
D)  80 cases of soda per pizza.

Question 19

-The table above shows the marginal benefit from pizza and the marginal cost of pizza in cans of soda forgone. If ________ pizzas are produced, the quantity of soda that people are willing to give up to get an additional pizza is more than the quantity of soda that they must give up to get that additional pizza.

Accepted Answer

A)  any quantity other than 40 
B)  40 
C)  more than 40 
D)  fewer than 40 
A)  any quantity other than 40 
B)  40 
C)  more than 40 
D)  fewer than 40

Question 20

Production possibilities
  
-In the above table, the production of 3 pizzas and 80 cases of soda is

Accepted Answer

A)  impossible unless more resources become available or technology improves. 
B)  feasible but would involve unemployed or misallocated resources. 
C)  possible only if the economy produces with maximum efficiency. 
D)  possible only if there is inflation. 
A)  impossible unless more resources become available or technology improves. 
B)  feasible but would involve unemployed or misallocated resources. 
C)  possible only if the economy produces with maximum efficiency. 
D)  possible only if there is inflation.

A country has a comparative advantage in the production of a good if its opportunity cost is lower compared to another country.

When economic growth occurs, the

-Refer to the table above, which gives five points on a nation's PPF. As we increase the production of X,

An increase in the nation's capital stock will

An increase in the nation's capital stock will

A country that has a comparative advantage in producing capital goods will ________ a country that has a comparative advantage in consumption goods.

-In the above figure, curve b shows the

As long as technology increases, economic growth is free.

A person who has an absolute advantage in the production of all goods will

In the U.S., the changing shares of production from industry to services

An economy produces only food and shelter. There are two individuals in the economy: Bill and Mary. Mary's opportunity cost of producing 1 unit of shelter is 2 units of food. Bill's opportunity cost of producing 1 unit of shelter is 4 units of food.

We have achieved production efficiency if we can produce more of one good without producing less of some other good.

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. The opportunity cost of 20 cameras in terms of computers in the United States is

The production possibilities frontier

Suppose a scientific breakthrough made free solar power available in unlimited quantities in the United States. The effect of this invention would be to move the

If marginal benefit is greater than marginal cost for the production of cars, to reach the allocative efficient quantity of cars, the production of cars must be increased.

Production possibilities -In the above table, the opportunity cost of the 2nd pizza is

Production possibilities -In the above table, the production of 3 pizzas and 80 cases of soda is

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 country has a comparative advantage in the production of a good if its opportunity cost is lower compared to another country.

When economic growth occurs, the

-Refer to the table above, which gives five points on a nation's PPF. As we increase the production of X,

An increase in the nation's capital stock will

An increase in the nation's capital stock will

A country that has a comparative advantage in producing capital goods will ________ a country that has a comparative advantage in consumption goods.

-In the above figure, curve b shows the

As long as technology increases, economic growth is free.

A person who has an absolute advantage in the production of all goods will

In the U.S., the changing shares of production from industry to services

An economy produces only food and shelter. There are two individuals in the economy: Bill and Mary. Mary's opportunity cost of producing 1 unit of shelter is 2 units of food. Bill's opportunity cost of producing 1 unit of shelter is 4 units of food.

We have achieved production efficiency if we can produce more of one good without producing less of some other good.

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. The opportunity cost of 20 cameras in terms of computers in the United States is

The production possibilities frontier

Suppose a scientific breakthrough made free solar power available in unlimited quantities in the United States. The effect of this invention would be to move the

If marginal benefit is greater than marginal cost for the production of cars, to reach the allocative efficient quantity of cars, the production of cars must be increased.

Production possibilities -In the above table, the opportunity cost of the 2nd pizza is

Production possibilities -In the above table, the production of 3 pizzas and 80 cases of soda is

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