Question 1

-The figure above shows a production possibilities frontier.In the figure,the economy faces a tradeoff when ________ cell phones and ________ DVDs.are produced.

Accepted Answer

A)  3 million; 9 million 
B)  2 million; 9 million 
C)  3 million; 8 million 
D)  4.5 million; no 
E)  5 million; 15 million 
A)  3 million; 9 million 
B)  2 million; 9 million 
C)  3 million; 8 million 
D)  4.5 million; no 
E)  5 million; 15 million

Question 2

-Using the figure above,if Jack and Jill specialize and gain from trade,then

Accepted Answer

A)  Jack produces equal amounts of gallons of water and bottled water. 
B)  Jack specializes in the production of bottled water. 
C)  Jack and Jill produce beyond their PPF. 
D)  Jack specializes in the production of soda. 
E)  Jack specializes on the production of soda and water. 
A)  Jack produces equal amounts of gallons of water and bottled water. 
B)  Jack specializes in the production of bottled water. 
C)  Jack and Jill produce beyond their PPF. 
D)  Jack specializes in the production of soda. 
E)  Jack specializes on the production of soda and water.

Question 3

Why does a nation experience increasing opportunity cost?

Accepted Answer

A)  As the nation moves from a production point within the PPF to one on the PPF, opportunity costs increase. 
B)  As the nation moves from a production point within the PPF to another point also within the PPF, opportunity costs increase. 
C)  When the amount of resources increases, the opportunity cost of all goods and services increases. 
D)  Resources are not equally productive in producing different kinds of goods and services. 
E)  Because the nation cannot produce at the unattainable production points that lie beyond the PPF. 
A)  As the nation moves from a production point within the PPF to one on the PPF, opportunity costs increase. 
B)  As the nation moves from a production point within the PPF to another point also within the PPF, opportunity costs increase. 
C)  When the amount of resources increases, the opportunity cost of all goods and services increases. 
D)  Resources are not equally productive in producing different kinds of goods and services. 
E)  Because the nation cannot produce at the unattainable production points that lie beyond the PPF.

Question 4

To find the opportunity cost of producing one more unit of any product while on the production possibilities frontier requires

Accepted Answer

A)  setting the amounts of the two products equal to each other. 
B)  setting the change in one product equal to the change in the other product. 
C)  dividing the amount of the product forgone by the amount of the product gained. 
D)  subtracting the change in the product whose production increased from the change in the product whose production decreased. 
E)  None of these describe how to find opportunity cost. 
A)  setting the amounts of the two products equal to each other. 
B)  setting the change in one product equal to the change in the other product. 
C)  dividing the amount of the product forgone by the amount of the product gained. 
D)  subtracting the change in the product whose production increased from the change in the product whose production decreased. 
E)  None of these describe how to find opportunity cost.

Question 5

If John can produce 10 chairs or 20 lamps during a week while Mary can produce 12 chairs or 22 lamps in the same time,who has the absolute advantage in producing each good?

Accepted Answer

A)  Mary in producing both goods 
B)  John in producing both goods 
C)  Mary in producing chairs, John in producing lamps 
D)  John in producing chairs, Mary in producing lamps 
E)  Both Mary and John in both goods 
A)  Mary in producing both goods 
B)  John in producing both goods 
C)  Mary in producing chairs, John in producing lamps 
D)  John in producing chairs, Mary in producing lamps 
E)  Both Mary and John in both goods

Question 6

Which of the following would most likely cause a country's production possibilities set to shift outward at every point along the frontier?

Accepted Answer

A)  a decrease in idle capital 
B)  a decrease in unemployment 
C)  a technological advance in only one sector of the economy 
D)  a general technological advance that affects all sectors of the economy 
E)  none of the above 
A)  a decrease in idle capital 
B)  a decrease in unemployment 
C)  a technological advance in only one sector of the economy 
D)  a general technological advance that affects all sectors of the economy 
E)  none of the above

Question 7

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point A.What would be the opportunity cost to increase the production of rice to 12 tons?

Accepted Answer

A)  6 thousand bottles of wine 
B)  15 thousand bottles of wine 
C)  9 thousand bottles of wine 
D)  6 tons of rice 
E)  Nothing, it is a free lunch. 
A)  6 thousand bottles of wine 
B)  15 thousand bottles of wine 
C)  9 thousand bottles of wine 
D)  6 tons of rice 
E)  Nothing, it is a free lunch.

Question 8

-The above figure shows the production possibility frontier for a country.What is the opportunity cost per ton of rice to move from point D to E?

Accepted Answer

A)  3000 bottles of wine 
B)  333 bottles of wine 
C)  3 bottles of wine 
D)  1/3 of a bottle of wine 
E)  None of the above answers is correct. 
A)  3000 bottles of wine 
B)  333 bottles of wine 
C)  3 bottles of wine 
D)  1/3 of a bottle of wine 
E)  None of the above answers is correct.

Question 9

In a production possibilities frontier diagram,the attainable production points are shown as

Accepted Answer

A)  only the points on the production possibilities frontier. 
B)  only the points beyond the production possibilities frontier. 
C)  only the points inside the production possibilities frontier. 
D)  the points inside and the points on the production possibilities frontier. 
E)  any of the production points. 
A)  only the points on the production possibilities frontier. 
B)  only the points beyond the production possibilities frontier. 
C)  only the points inside the production possibilities frontier. 
D)  the points inside and the points on the production possibilities frontier. 
E)  any of the production points.

Question 10

As an economy moves down along a straight line production possibilities frontier,what happens to the opportunity cost of producing the good on the horizontal axis?

Accepted Answer

A)  It remains constant. 
B)  It decreases. 
C)  It increases. 
D)  Above the midpoint it decreases until it equals 1 at the midpoint and then it increases. 
E)  None of these depicts what happens to opportunity cost. 
A)  It remains constant. 
B)  It decreases. 
C)  It increases. 
D)  Above the midpoint it decreases until it equals 1 at the midpoint and then it increases. 
E)  None of these depicts what happens to opportunity cost.

Question 11

While moving along a production possibilities frontier,the amount of labor ________,the amount of capital ________,and the level of technology ________.

Accepted Answer

A)  is fixed; is fixed; varies 
B)  varies; is fixed; varies 
C)  varies; is fixed; is fixed 
D)  is fixed; is fixed; is fixed 
E)  varies; varies; varies 
A)  is fixed; is fixed; varies 
B)  varies; is fixed; varies 
C)  varies; is fixed; is fixed 
D)  is fixed; is fixed; is fixed 
E)  varies; varies; varies

Question 12

David takes 10 minutes to process a customer,and 20 minutes to stock the shelves.Danny takes 15 minutes to process a customer,and 15 minutes to stock the shelves.Which of the following statements is true?

Accepted Answer

A)  David has an absolute advantage in performing both tasks. 
B)  Danny has an absolute advantage in performing both tasks. 
C)  David has a comparative advantage in processing customers but not in stocking shelves. 
D)  Danny has a comparative advantage in processing customers but not in stocking shelves. 
E)  Danny has a comparative advantage in processing customers and in stocking shelves. 
A)  David has an absolute advantage in performing both tasks. 
B)  Danny has an absolute advantage in performing both tasks. 
C)  David has a comparative advantage in processing customers but not in stocking shelves. 
D)  Danny has a comparative advantage in processing customers but not in stocking shelves. 
E)  Danny has a comparative advantage in processing customers and in stocking shelves.

Question 13

What is comparative advantage? Give an example.

Accepted Answer

Comparative advantage is the ability of

Question 14

Why is the production possibilities frontier bowed out?

Accepted Answer

The production possibilities frontier is

Question 15

If the production possibilities frontier between two goods were a straight line,then the opportunity cost of one good in terms of another would be

Accepted Answer

A)  constant. 
B)  increasing. 
C)  decreasing. 
D)  zero. 
E)  either constant, increasing, or decreasing but more information is needed to determine which. 
A)  constant. 
B)  increasing. 
C)  decreasing. 
D)  zero. 
E)  either constant, increasing, or decreasing but more information is needed to determine which.

Question 16

How can a nation that is at an absolute disadvantage gain from trade?

Accepted Answer

Being at an absolute disadvantage means

Question 17

Comparative advantage is directly related to which of the following concepts?

Accepted Answer

A)  productivity 
B)  efficiency 
C)  opportunity cost 
D)  competition 
E)  fairness 
A)  productivity 
B)  efficiency 
C)  opportunity cost 
D)  competition 
E)  fairness

Question 18

Are all points inside the production possibilities frontier unattainable?

Accepted Answer

No,all points within the produ

Question 19

$\begin{array}{c}
\begin{array}{c}
\hline\
\text { Production } \
\text {point}\
\hline\text {A}\
\text {B}\
\text {C}\
\text {D}\
\text {E}
\end{array}
\begin{array}{c}
\hline 
\text { Corn } \
\text { (tons) }\
\hline 0 & \text { and } \
1 & \text { and } \
2 & \text { and } \
3 & \text { and } \
4&\text { and }
\end{array}
\begin{array}{c}
 \hline
\text { Shoes}\
\text { (number) }\
 \hline \text {700}\
 \text {650}\
 \text {550}\
 \text {350}\
 \text {0}
\end{array}

\begin{array}{c}
\hline
\text { Production }\
\text { point } \
\hline A \
B \
C \
D\
E
\end{array}

\begin{array}{c}
\hline 
\text { Corn } \
\text { (tons) }\
\hline 0& \text { and }\
1& \text { and }\
2 & \text { and } \ 
3 & \text { and }\
4&\text { and }
\end{array}

\begin{array}{c}
 \hline
\text { Shoes}\
\text { (number) }\
 \hline \text {1000}\
 \text {900}\
 \text {700}\
 \text {400}\
0
\end{array}
\end{array}$

-The table above gives the production possibilities frontier for two countries,Anaconda and Bear.The opportunity cost of moving from ________ is greater for ________.

Accepted Answer

A)  point A to point B; Anaconda 
B)  point B to point A; Bear 
C)  point D to point E; Bear 
D)  point E to point D; Bear 
E)  any point to any other point; Bear 
A)  point A to point B; Anaconda 
B)  point B to point A; Bear 
C)  point D to point E; Bear 
D)  point E to point D; Bear 
E)  any point to any other point; Bear

Question 20

A country produces only apples and bananas.Moving from point A to point B along its production possibilities frontier,5 apples are gained and 4 bananas are forgone.What is the opportunity cost of an apple?

Accepted Answer

A)  4 bananas 
B)  5/4 of a banana 
C)  4/5 of a banana 
D)  1 apple 
E)  None of the above answers is correct. 
A)  4 bananas 
B)  5/4 of a banana 
C)  4/5 of a banana 
D)  1 apple 
E)  None of the above answers is correct.

-The figure above shows a production possibilities frontier.In the figure,the economy faces a tradeoff when cell phones and DVDs.are produced.

-Using the figure above,if Jack and Jill specialize and gain from trade,then

Why does a nation experience increasing opportunity cost?

To find the opportunity cost of producing one more unit of any product while on the production possibilities frontier requires

If John can produce 10 chairs or 20 lamps during a week while Mary can produce 12 chairs or 22 lamps in the same time,who has the absolute advantage in producing each good?

Which of the following would most likely cause a country's production possibilities set to shift outward at every point along the frontier?

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point A.What would be the opportunity cost to increase the production of rice to 12 tons?

-The above figure shows the production possibility frontier for a country.What is the opportunity cost per ton of rice to move from point D to E?

In a production possibilities frontier diagram,the attainable production points are shown as

As an economy moves down along a straight line production possibilities frontier,what happens to the opportunity cost of producing the good on the horizontal axis?

While moving along a production possibilities frontier,the amount of labor ,the amount of capital ,and the level of technology .

David takes 10 minutes to process a customer,and 20 minutes to stock the shelves.Danny takes 15 minutes to process a customer,and 15 minutes to stock the shelves.Which of the following statements is true?

What is comparative advantage? Give an example.

Why is the production possibilities frontier bowed out?

If the production possibilities frontier between two goods were a straight line,then the opportunity cost of one good in terms of another would be

How can a nation that is at an absolute disadvantage gain from trade?

Comparative advantage is directly related to which of the following concepts?

Are all points inside the production possibilities frontier unattainable?

A country produces only apples and bananas.Moving from point A to point B along its production possibilities frontier,5 apples are gained and 4 bananas are forgone.What is the opportunity cost of an apple?

Getting Started

The U.S.and Global Economies

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 3: The Economic Problem

-The figure above shows a production possibilities frontier.In the figure,the economy faces a tradeoff when ________ cell phones and ________ DVDs.are produced.

-Using the figure above,if Jack and Jill specialize and gain from trade,then

Why does a nation experience increasing opportunity cost?

To find the opportunity cost of producing one more unit of any product while on the production possibilities frontier requires

If John can produce 10 chairs or 20 lamps during a week while Mary can produce 12 chairs or 22 lamps in the same time,who has the absolute advantage in producing each good?

Which of the following would most likely cause a country's production possibilities set to shift outward at every point along the frontier?

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point A.What would be the opportunity cost to increase the production of rice to 12 tons?

-The above figure shows the production possibility frontier for a country.What is the opportunity cost per ton of rice to move from point D to E?

In a production possibilities frontier diagram,the attainable production points are shown as

As an economy moves down along a straight line production possibilities frontier,what happens to the opportunity cost of producing the good on the horizontal axis?

While moving along a production possibilities frontier,the amount of labor ________,the amount of capital ________,and the level of technology ________.

David takes 10 minutes to process a customer,and 20 minutes to stock the shelves.Danny takes 15 minutes to process a customer,and 15 minutes to stock the shelves.Which of the following statements is true?

What is comparative advantage? Give an example.

Why is the production possibilities frontier bowed out?

If the production possibilities frontier between two goods were a straight line,then the opportunity cost of one good in terms of another would be

How can a nation that is at an absolute disadvantage gain from trade?

Comparative advantage is directly related to which of the following concepts?

Are all points inside the production possibilities frontier unattainable?

A country produces only apples and bananas.Moving from point A to point B along its production possibilities frontier,5 apples are gained and 4 bananas are forgone.What is the opportunity cost of an apple?

Getting Started

The U.S.and Global Economies

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

-The figure above shows a production possibilities frontier.In the figure,the economy faces a tradeoff when cell phones and DVDs.are produced.

While moving along a production possibilities frontier,the amount of labor ,the amount of capital ,and the level of technology .