Question 1

-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 2

A tradeoff is

Accepted Answer

A)  represented by a point inside a PPF. 
B)  represented by a point outside a PPF. 
C)  a constraint that requires giving up one thing to get another. 
D)  a transaction at a price either above or below the equilibrium price. 
A)  represented by a point inside a PPF. 
B)  represented by a point outside a PPF. 
C)  a constraint that requires giving up one thing to get another. 
D)  a transaction at a price either above or below the equilibrium price.

Question 3

-According to the figure above, the opportunity cost of producing another computer is

Accepted Answer

A)  higher at A. 
B)  higher at B. 
C)  the same at every point along the frontier. 
D)  different at most points along the frontier but equal at points A and B because they are equally distant from the axes. 
A)  higher at A. 
B)  higher at B. 
C)  the same at every point along the frontier. 
D)  different at most points along the frontier but equal at points A and B because they are equally distant from the axes.

Question 4

-As output moves from point a to point b to point c along the PPF in the above figure, the opportunity cost of one more unit of good X

Accepted Answer

A)  rises. The opportunity cost of one more unit of good Y also rises. 
B)  rises. The opportunity cost of one more unit of good Y falls. 
C)  falls. The opportunity cost of one more unit of good Y rises. 
D)  falls. The opportunity cost of one more unit of good Y also falls. 
A)  rises. The opportunity cost of one more unit of good Y also rises. 
B)  rises. The opportunity cost of one more unit of good Y falls. 
C)  falls. The opportunity cost of one more unit of good Y rises. 
D)  falls. The opportunity cost of one more unit of good Y also falls.

Question 5

A person has a comparative advantage in an activity whenever he or she

Accepted Answer

A)  has an absolute advantage in the activity. 
B)  can perform the activity at a lower opportunity cost than can anyone else. 
C)  can do the activity in less time than anyone else. 
D)  can do everything better than anyone else. 
A)  has an absolute advantage in the activity. 
B)  can perform the activity at a lower opportunity cost than can anyone else. 
C)  can do the activity in less time than anyone else. 
D)  can do everything better than anyone else.

Question 6

Ted can study for his economics exam or go to a concert. He decides to study for his economics exam instead of going to the concert. The concert he will miss is Ted's ________ of studying for the exam.

Accepted Answer

A)  opportunity cost 
B)  explicit cost 
C)  implicit cost 
D)  discretionary cost 
A)  opportunity cost 
B)  explicit cost 
C)  implicit cost 
D)  discretionary cost

Question 7

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.

Question 8

-Refer to the production possibilities frontier in the figure above. Which production point is unattainable?

Accepted Answer

A)  point a 
B)  point b 
C)  point c 
D)  point e 
A)  point a 
B)  point b 
C)  point c 
D)  point e

Question 9

-Employees at Bank of America are good at providing banking services and workers at Ben & Jerry's are good at making ice cream. The figure above shows the marginal cost and marginal benefit curves for ice cream. A movement from point a to point b reflects

Accepted Answer

A)  the economy must give up banking services to get extra gallons of ice cream. 
B)  the opportunity cost of banking services increases. 
C)  a decrease in the tradeoff between ice cream and banking services. 
D)  a leftward shift in the marginal benefit curve. 
A)  the economy must give up banking services to get extra gallons of ice cream. 
B)  the opportunity cost of banking services increases. 
C)  a decrease in the tradeoff between ice cream and banking services. 
D)  a leftward shift in the marginal benefit curve.

Question 10

-Victor currently produces nuts and bolts at point a in the figure. Victor's marginal cost of producing an additional nut is

Accepted Answer

A)  1 bolt per nut. 
B)  1/2 bolt per nut. 
C)  8/6 bolts per nut. 
D)  8 bolts per nut. 
A)  1 bolt per nut. 
B)  1/2 bolt per nut. 
C)  8/6 bolts per nut. 
D)  8 bolts per nut.

Question 11

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 12

Marginal benefit is the

Accepted Answer

A)  benefit that a person receives from consuming one more unit of a good or service. 
B)  amount of one good or service that a person gains when another good or service is consumed. 
C)  minimum amount a person is willing to pay for one more unit of a good or service. 
D)  dollars sacrificed to purchase a good or service. 
A)  benefit that a person receives from consuming one more unit of a good or service. 
B)  amount of one good or service that a person gains when another good or service is consumed. 
C)  minimum amount a person is willing to pay for one more unit of a good or service. 
D)  dollars sacrificed to purchase a good or service.

Question 13

-In the figure above, how can the economy represented by the production possibilities frontier move from point C to point F?

Accepted Answer

A)  Increase the available amount of resources. 
B)  Increase the level of technology. 
C)  Redistribute the existing resources to produce more apples and fewer oranges. 
D)  First move to point B and then move to point F. 
A)  Increase the available amount of resources. 
B)  Increase the level of technology. 
C)  Redistribute the existing resources to produce more apples and fewer oranges. 
D)  First move to point B and then move to point F.

Question 14

-In the figure above, point D is

Accepted Answer

A)  less production efficient than point C. 
B)  production efficient and point A is not production efficient. 
C)  not production efficient and point B is production efficient. 
D)  production efficient and point B is not production efficient. 
A)  less production efficient than point C. 
B)  production efficient and point A is not production efficient. 
C)  not production efficient and point B is production efficient. 
D)  production efficient and point B is not production efficient.

Question 15

-Employees at Bank of America are good at providing banking services and workers at Ben & Jerry's are good at making ice cream. The figure above shows the marginal cost and marginal benefit curves for ice cream. Point b represents ________ of banking services and ice cream.

Accepted Answer

A)  allocation efficiency and possibly production efficiency 
B)  neither allocative nor production efficiency 
C)  allocative and production efficiency in the production 
D)  production efficiency and possibly allocative efficiency in the production 
A)  allocation efficiency and possibly production efficiency 
B)  neither allocative nor production efficiency 
C)  allocative and production efficiency in the production 
D)  production efficiency and possibly allocative efficiency in the production

Question 16

-In the figure above, the marginal cost of the fifth computer is

Accepted Answer

A)  0 television sets per computer. 
B)  4 television sets per computer. 
C)  20 television sets per computer. 
D)  35 television sets per computer. 
A)  0 television sets per computer. 
B)  4 television sets per computer. 
C)  20 television sets per computer. 
D)  35 television sets per computer.

Question 17

Which of the following is TRUE regarding marginal benefit? I) The marginal benefit curve shows the benefit firms receive by producing another unit of a good.
II) Marginal benefit increases as more of a good is consumed.

Accepted Answer

A)  I and II 
B)  I only 
C)  II only 
D)  neither I nor II 
A)  I and II 
B)  I only 
C)  II only 
D)  neither I nor II

Question 18

Jane produces only corn and cloth. Taking account of her preferences for corn and cloth

Accepted Answer

A)  makes her production possibilities frontier straighter. 
B)  makes her production possibilities frontier steeper. 
C)  makes her production possibilities frontier flatter. 
D)  does not affect her production possibilities frontier. 
A)  makes her production possibilities frontier straighter. 
B)  makes her production possibilities frontier steeper. 
C)  makes her production possibilities frontier flatter. 
D)  does not affect her production possibilities frontier.

Question 19

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 20

Blue Violet's Orange Rose's
production possibilities production possibilities
  
-Two countries, Blue Violet and Orange Rose, produce only two goods: teapots and coffeepots. The table above gives their production possibilities. ________ has a comparative advantage in teapots and ________ has a comparative advantage in coffeepots.

Accepted Answer

A)  Orange Rose; Blue Violet 
B)  Blue Violet; Orange Rose 
C)  Blue Violet; Blue Violet 
D)  Orange Rose; Orange Rose 
A)  Orange Rose; Blue Violet 
B)  Blue Violet; Orange Rose 
C)  Blue Violet; Blue Violet 
D)  Orange Rose; Orange Rose

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

A tradeoff is

-According to the figure above, the opportunity cost of producing another computer is

-As output moves from point a to point b to point c along the PPF in the above figure, the opportunity cost of one more unit of good X

A person has a comparative advantage in an activity whenever he or she

Ted can study for his economics exam or go to a concert. He decides to study for his economics exam instead of going to the concert. The concert he will miss is Ted's ________ of studying for the exam.

A system of property rights

-Refer to the production possibilities frontier in the figure above. Which production point is unattainable?

-Employees at Bank of America are good at providing banking services and workers at Ben & Jerry's are good at making ice cream. The figure above shows the marginal cost and marginal benefit curves for ice cream. A movement from point a to point b reflects

-Victor currently produces nuts and bolts at point a in the figure. Victor's marginal cost of producing an additional nut is

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

Marginal benefit is the

-In the figure above, how can the economy represented by the production possibilities frontier move from point C to point F?

-In the figure above, point D is

-Employees at Bank of America are good at providing banking services and workers at Ben & Jerry's are good at making ice cream. The figure above shows the marginal cost and marginal benefit curves for ice cream. Point b represents ________ of banking services and ice cream.

-In the figure above, the marginal cost of the fifth computer is

Which of the following is TRUE regarding marginal benefit? I) The marginal benefit curve shows the benefit firms receive by producing another unit of a good. II) Marginal benefit increases as more of a good is consumed.

Jane produces only corn and cloth. Taking account of her preferences for corn and cloth

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

What Is Economics

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 2: The Economic Problem

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

A tradeoff is

-According to the figure above, the opportunity cost of producing another computer is

-As output moves from point a to point b to point c along the PPF in the above figure, the opportunity cost of one more unit of good X

A person has a comparative advantage in an activity whenever he or she

Ted can study for his economics exam or go to a concert. He decides to study for his economics exam instead of going to the concert. The concert he will miss is Ted's ________ of studying for the exam.

A system of property rights

-Refer to the production possibilities frontier in the figure above. Which production point is unattainable?

-Employees at Bank of America are good at providing banking services and workers at Ben & Jerry's are good at making ice cream. The figure above shows the marginal cost and marginal benefit curves for ice cream. A movement from point a to point b reflects

-Victor currently produces nuts and bolts at point a in the figure. Victor's marginal cost of producing an additional nut is

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

Marginal benefit is the

-In the figure above, how can the economy represented by the production possibilities frontier move from point C to point F?

-In the figure above, point D is

-Employees at Bank of America are good at providing banking services and workers at Ben & Jerry's are good at making ice cream. The figure above shows the marginal cost and marginal benefit curves for ice cream. Point b represents ________ of banking services and ice cream.

-In the figure above, the marginal cost of the fifth computer is

Which of the following is TRUE regarding marginal benefit? I) The marginal benefit curve shows the benefit firms receive by producing another unit of a good. II) Marginal benefit increases as more of a good is consumed.

Jane produces only corn and cloth. Taking account of her preferences for corn and cloth

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

What Is Economics

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

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