Exam 2: Production Possibilities, Opportunity Cost, and Economic Growth

Which of the following is not true about a production possibilities curve? The curve:

Exhibit 2-9 Production possibilities curve If the economy represented in Exhibit 2-9 is operating at Point W:

The opportunity cost of producing a good or service is the good or service that is foregone by choosing to produce another good with the same resources in a given period of time.

The ability of an economy to produce greater levels of output in the same period of time is called:

In the context of the production possibilities curve, opportunity cost is measured in:

Ralph wants to buy some milk and a box of cereal. If Ralph buys 2 quarts of milk at $1 per quart, the box of cereal costs 75 cents. If he buys 3 quarts of milk at $1 per quart, the box of cereal is free. For Ralph, the marginal cost of the third quart of milk is:

If more of one good can be produced without producing less of another output, the economy must have been operating efficiently.

Exhibit 2-10 Production possibilities curve data Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10. The second unit of capital goods production will cost ____ units of consumption goods, and the third unit of capital goods production will cost ____ units of consumption goods.

Which of the following sayings best reflects the concept of opportunity cost?

Exhibit 2-18 Production possibilities curves In Exhibit 2-18, a country is located at point A on its Year X production possibilities curve. In Year Y this same country is located at point B on its Year Y production possibilities curve. Which of the following could have brought about this outward shift in production possibilities curves?

Technological innovations will cause:

Just before class, Jim tells Stuart, "Stuart, you shouldn't skip class today because you have paid tuition to enroll in the class." Stuart ignores Jim's advice, and instead makes the decision of whether to attend based on the importance to his grade that he feels he'd be missing that day in class relative to his value of the extra time he could have to finish the video game he is playing. To an economist, Stuart is:

Exhibit 2-18 Production possibilities curves In Exhibit 2-18, the production possibilities curves for a country are shown for the years Year X and Year Y. Suppose this country was located at point A in Year X and point B in Year Y. This economy:

What to produce, how to produce, and for who to produce are the three fundamental economic questions.

The opportunity cost of a purchase is:

The production possibilities curve shows that:

The opportunity cost of an activity means the:

Using a production possibilities curve, a technological advance that increases the amount of output for the same amount of inputs would be illustrated as a(n):

What shape is the production possibilities curve usually expected to exhibit?

Exhibit 2-8 Production possibilities curve data As shown in Exhibit 2-8, the concept of increasing opportunity costs is reflected in the fact that: