Question 1

-The figure above shows the production possibilities frontier for a country.In order for it to produce at point E,the

Accepted Answer

A)  country would need to acquire more resources and/or more advanced technology. 
B)  production of compact cars would need to decrease. 
C)  production of SUVs would need to decrease. 
D)  country would need to use its resources more efficiently. 
E)  country would need to determine that compact cars and SUVs are equally important to it. 
A)  country would need to acquire more resources and/or more advanced technology. 
B)  production of compact cars would need to decrease. 
C)  production of SUVs would need to decrease. 
D)  country would need to use its resources more efficiently. 
E)  country would need to determine that compact cars and SUVs are equally important to it.

Question 2

The figure above shows Liz's and Joe's production possibilities for Salads and Smoothies.
-Liz has a comparative advantage in ________ because ________.

Accepted Answer

A)  smoothies; her opportunity cost of producing smoothies is lower than Joe's 
B)  salads; her opportunity cost of producing salads is lower than Joe's 
C)  smoothies; she can produce more smoothies per hour than Joe can 
D)  salads; she can produce more salads per hour than Joe can 
E)  both goods; she can produce more of both goods per hour than Joe can 
A)  smoothies; her opportunity cost of producing smoothies is lower than Joe's 
B)  salads; her opportunity cost of producing salads is lower than Joe's 
C)  smoothies; she can produce more smoothies per hour than Joe can 
D)  salads; she can produce more salads per hour than Joe can 
E)  both goods; she can produce more of both goods per hour than Joe can

Question 3

$\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.This table shows that

Accepted Answer

A)  when Anaconda and Bear specialize and trade, Anaconda should specialize in the production of shoes. 
B)  when Anaconda and Bear specialize and trade, Anaconda should produce at its production point E. 
C)  Anaconda has an absolute advantage in the production of corn and shoes. 
D)  Bear can consume no more than 2 bushels of corn and 700 pairs of shoes. 
E)  Bear is unable to gain from trade with Anaconda. 
A)  when Anaconda and Bear specialize and trade, Anaconda should specialize in the production of shoes. 
B)  when Anaconda and Bear specialize and trade, Anaconda should produce at its production point E. 
C)  Anaconda has an absolute advantage in the production of corn and shoes. 
D)  Bear can consume no more than 2 bushels of corn and 700 pairs of shoes. 
E)  Bear is unable to gain from trade with Anaconda.

Question 4

-In the above figure,Jill's opportunity cost of producing 1 gallon of bottled water is ________ of soda.

Accepted Answer

A)  2 gallons 
B)  1/2 of a gallon 
C)  4 gallons 
D)  1 gallon 
E)  1/4 of a gallon 
A)  2 gallons 
B)  1/2 of a gallon 
C)  4 gallons 
D)  1 gallon 
E)  1/4 of a gallon

Question 5

A major earthquake occurs in the central part of the United States.What impact would this have on the nation's production possibilities frontier and why?

Accepted Answer

A)  It would shift outward because unemployment would be reduced. 
B)  Nothing would happen because the nation would still have the same capabilities. 
C)  A tradeoff would occur to replace the resources and goods destroyed. 
D)  It would shift inward because some of the nation's resources, such as capital and labor, would be destroyed. 
E)  It would not shift because people would get to work to replace any capital that was destroyed. 
A)  It would shift outward because unemployment would be reduced. 
B)  Nothing would happen because the nation would still have the same capabilities. 
C)  A tradeoff would occur to replace the resources and goods destroyed. 
D)  It would shift inward because some of the nation's resources, such as capital and labor, would be destroyed. 
E)  It would not shift because people would get to work to replace any capital that was destroyed.

Question 6

Specialization and trade

Accepted Answer

A)  does not benefit anyone. 
B)  allows nations to produce inside their individual production possibilities frontier. 
C)  allows nations to consume combinations of products that are outside their individual production possibilities frontier. 
D)  shifts the production possibilities frontier inward. 
E)  shifts the production possibilities frontier outward. 
A)  does not benefit anyone. 
B)  allows nations to produce inside their individual production possibilities frontier. 
C)  allows nations to consume combinations of products that are outside their individual production possibilities frontier. 
D)  shifts the production possibilities frontier inward. 
E)  shifts the production possibilities frontier outward.

Question 7

If a society moves from a period of time with significant unemployment to a time with full employment,its production possibilities frontier will

Accepted Answer

A)  shift leftward. 
B)  shift rightward. 
C)  not shift because the society moves from one point on the frontier to a point inside the frontier. 
D)  not shift because the society moves from a point inside the frontier to a point on the frontier. 
E)  not shift because the society moves from one point on the frontier to a point outside the frontier. 
A)  shift leftward. 
B)  shift rightward. 
C)  not shift because the society moves from one point on the frontier to a point inside the frontier. 
D)  not shift because the society moves from a point inside the frontier to a point on the frontier. 
E)  not shift because the society moves from one point on the frontier to a point outside the frontier.

Question 8

-Suppose Puerto Rico and Hawaii currently have the same production possibilities so that the above figure is the PPF for hotels and consumption goods in the two areas.Hotels are a capital good that,once built,will help produce still more consumption goods..According to the figure,which island will have more rapid economic growth?

Accepted Answer

A)  Hawaii 
B)  Both Hawaii and Puerto Rico will grow at the same speed. 
C)  Puerto Rico 
D)  Neither Hawaii nor Puerto Rico will grow. 
E)  More than one of the above answers is correct. 
A)  Hawaii 
B)  Both Hawaii and Puerto Rico will grow at the same speed. 
C)  Puerto Rico 
D)  Neither Hawaii nor Puerto Rico will grow. 
E)  More than one of the above answers is correct.

Question 9

A production possibilities frontier shows

Accepted Answer

A)  the various combinations of output a nation can produce a certain time, given its available resources and technology. 
B)  the limits to future growth of a nation. 
C)  how money can be allocated among two kinds of goods. 
D)  that if price of one good decreases, the price of the other has to increase. 
E)  that it is impossible to produce inefficiently. 
A)  the various combinations of output a nation can produce a certain time, given its available resources and technology. 
B)  the limits to future growth of a nation. 
C)  how money can be allocated among two kinds of goods. 
D)  that if price of one good decreases, the price of the other has to increase. 
E)  that it is impossible to produce inefficiently.

Question 10

A free lunch (the absence of a tradeoff)when the production of a good is increased is possible for the entire economy only if

Accepted Answer

A)  less of some product is produced. 
B)  prices are decreased. 
C)  prices are increased. 
D)  resources are used inefficiently. 
E)  there is a movement along the PPF. 
A)  less of some product is produced. 
B)  prices are decreased. 
C)  prices are increased. 
D)  resources are used inefficiently. 
E)  there is a movement along the PPF.

Question 11

As an economy grows,

Accepted Answer

A)  its PPF shifts outward. 
B)  it can eliminate scarcity. 
C)  the opportunity cost of production will approach 0. 
D)  the opportunity cost of production will increase. 
E)  its PPF does not shift; instead, the production point moves from inside the PPF to be closer to the PPF. 
A)  its PPF shifts outward. 
B)  it can eliminate scarcity. 
C)  the opportunity cost of production will approach 0. 
D)  the opportunity cost of production will increase. 
E)  its PPF does not shift; instead, the production point moves from inside the PPF to be closer to the PPF.

Question 12

$$\begin{array} { c c c } 
\hline \text { Possibility } & \text { Robots } & \text { Pizza } \
\hline A & 0 & 40 \
B & 1 & 39 \
\text { C } & 2 & 37 \
D & 3 & 34 \
E & 4 & 30 \
F & 5 & 20 \
G & 6 & 0
\end{array}$$
-The table above shows a nation's production possibilities frontier.If the nation chooses to increase the production of robots from 2 to 3 and it is on its PPF,it will have to forgo ________ pizzas.

Accepted Answer

A)  37 
B)  34 
C)  3 
D)  35.5 
E)  None of the above answers is correct. 
A)  37 
B)  34 
C)  3 
D)  35.5 
E)  None of the above answers is correct.

Question 13

In a production possibilities frontier graph,the cost of producing more units of a good is measured by the

Accepted Answer

A)  dollar value of the resources used to produce the good. 
B)  amount of the other good or service that must be forgone. 
C)  dollar value of the additional output. 
D)  area in the arc between the PPF and a straight line drawn between the starting point and the ending point. 
E)  None of the above answers is correct. 
A)  dollar value of the resources used to produce the good. 
B)  amount of the other good or service that must be forgone. 
C)  dollar value of the additional output. 
D)  area in the arc between the PPF and a straight line drawn between the starting point and the ending point. 
E)  None of the above answers is correct.

Question 14

The opportunity cost of producing one more unit of a good is calculated by dividing the

Accepted Answer

A)  increase in the quantity of that good by the decrease in the quantity of other good. 
B)  total quantity of that good by the total quantity of other good. 
C)  decrease in the quantity of the other good by the increase in the quantity of the good whose opportunity cost we're calculating. 
D)  total quantity of the other good by the total quantity of the good whose opportunity cost we're calculating. 
E)  price of the good whose opportunity cost we are calculating by the number of units of the other good that are forgone. 
A)  increase in the quantity of that good by the decrease in the quantity of other good. 
B)  total quantity of that good by the total quantity of other good. 
C)  decrease in the quantity of the other good by the increase in the quantity of the good whose opportunity cost we're calculating. 
D)  total quantity of the other good by the total quantity of the good whose opportunity cost we're calculating. 
E)  price of the good whose opportunity cost we are calculating by the number of units of the other good that are forgone.

Question 15

"When countries specialize in producing the good in which they have a comparative advantage and then trade with each other,only the country with the absolute advantage gains." Is the previous statement correct or incorrect? Briefly explain your answer.

Accepted Answer

The statement is incorrect.Absolute adva

Question 16

Production efficiency is represented by ________ a production possibilities frontier.

Accepted Answer

A)  all points on 
B)  all points inside 
C)  all points outside 
D)  a movement along 
E)  only one point on 
A)  all points on 
B)  all points inside 
C)  all points outside 
D)  a movement along 
E)  only one point on

Question 17

-Suppose India and France have the same PPF,shown in the figure above.Based on their current production points,India's most likely future PPF is ________ and France's most likely future PPF is ________.

Accepted Answer

A)  PPF₁; PPF₁ 
B)  PPF₂; PPF₂ 
C)  PPF₀; PPF₀ 
D)  PPF₂; PPF₁ 
E)  PPF₁; PPF₂ 
A)  PPF₁; PPF₁ 
B)  PPF₂; PPF₂ 
C)  PPF₀; PPF₀ 
D)  PPF₂; PPF₁ 
E)  PPF₁; PPF₂

Question 18

-The figure above illustrates a small country's production possibilities frontier.Moving from point A to point B,the per unit opportunity cost of a tablet is ________ per tablet.

Accepted Answer

A)  2 computers 
B)  4/3 of a computer 
C)  100 computers 
D)  1/2 of a computer 
E)  1 tablet 
A)  2 computers 
B)  4/3 of a computer 
C)  100 computers 
D)  1/2 of a computer 
E)  1 tablet

Question 19

$$\begin{array} { c c c } 
\hline \text { Possibility } & \text { Robots } & \text { Pizza } \
\hline A & 0 & 40 \
B & 1 & 39 \
\text { C } & 2 & 37 \
D & 3 & 34 \
E & 4 & 30 \
F & 5 & 20 \
G & 6 & 0
\end{array}$$
-The table above shows a nation's production possibilities frontier.The opportunity cost of a robot between combination D and E is

Accepted Answer

A)  4 pizzas. 
B)  34 pizzas. 
C)  30 pizzas. 
D)  1/4 of a pizza. 
E)  undefined because neither point is production efficient. 
A)  4 pizzas. 
B)  34 pizzas. 
C)  30 pizzas. 
D)  1/4 of a pizza. 
E)  undefined because neither point is production efficient.

Question 20

-The above figure shows the PPF for a country that produces computers and computer factories.The nation's production possibilities frontier is PPF₀.At which of the following production points would the economy grow most rapidly?

Accepted Answer

A)  Point A 
B)  Point B 
C)  Point C 
D)  It makes no difference among the three points because they are all production efficient. 
E)  More information is needed to answer the question. 
A)  Point A 
B)  Point B 
C)  Point C 
D)  It makes no difference among the three points because they are all production efficient. 
E)  More information is needed to answer the question.

-The figure above shows the production possibilities frontier for a country.In order for it to produce at point E,the

The figure above shows Liz's and Joe's production possibilities for Salads and Smoothies. -Liz has a comparative advantage in because .

-In the above figure,Jill's opportunity cost of producing 1 gallon of bottled water is ________ of soda.

A major earthquake occurs in the central part of the United States.What impact would this have on the nation's production possibilities frontier and why?

Specialization and trade

If a society moves from a period of time with significant unemployment to a time with full employment,its production possibilities frontier will

A production possibilities frontier shows

A free lunch (the absence of a tradeoff)when the production of a good is increased is possible for the entire economy only if

As an economy grows,

Possibility Robots Pizza A 0 40 B 1 39 C 2 37 D 3 34 E 4 30 F 5 20 G 6 0 -The table above shows a nation's production possibilities frontier.If the nation chooses to increase the production of robots from 2 to 3 and it is on its PPF,it will have to forgo ________ pizzas.

In a production possibilities frontier graph,the cost of producing more units of a good is measured by the

The opportunity cost of producing one more unit of a good is calculated by dividing the

"When countries specialize in producing the good in which they have a comparative advantage and then trade with each other,only the country with the absolute advantage gains." Is the previous statement correct or incorrect? Briefly explain your answer.

Production efficiency is represented by ________ a production possibilities frontier.

-Suppose India and France have the same PPF,shown in the figure above.Based on their current production points,India's most likely future PPF is and France's most likely future PPF is .

-The figure above illustrates a small country's production possibilities frontier.Moving from point A to point B,the per unit opportunity cost of a tablet is ________ per tablet.

Possibility Robots Pizza A 0 40 B 1 39 C 2 37 D 3 34 E 4 30 F 5 20 G 6 0 -The table above shows a nation's production possibilities frontier.The opportunity cost of a robot between combination D and E is

-The above figure shows the PPF for a country that produces computers and computer factories.The nation's production possibilities frontier is PPF₀.At which of the following production points would the economy grow most rapidly?

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 the production possibilities frontier for a country.In order for it to produce at point E,the

The figure above shows Liz's and Joe's production possibilities for Salads and Smoothies. -Liz has a comparative advantage in ________ because ________.

-In the above figure,Jill's opportunity cost of producing 1 gallon of bottled water is ________ of soda.

A major earthquake occurs in the central part of the United States.What impact would this have on the nation's production possibilities frontier and why?

Specialization and trade

If a society moves from a period of time with significant unemployment to a time with full employment,its production possibilities frontier will

A production possibilities frontier shows

A free lunch (the absence of a tradeoff)when the production of a good is increased is possible for the entire economy only if

As an economy grows,

Possibility Robots Pizza A 0 40 B 1 39 C 2 37 D 3 34 E 4 30 F 5 20 G 6 0 -The table above shows a nation's production possibilities frontier.If the nation chooses to increase the production of robots from 2 to 3 and it is on its PPF,it will have to forgo ________ pizzas.

In a production possibilities frontier graph,the cost of producing more units of a good is measured by the

The opportunity cost of producing one more unit of a good is calculated by dividing the

"When countries specialize in producing the good in which they have a comparative advantage and then trade with each other,only the country with the absolute advantage gains." Is the previous statement correct or incorrect? Briefly explain your answer.

Production efficiency is represented by ________ a production possibilities frontier.

-Suppose India and France have the same PPF,shown in the figure above.Based on their current production points,India's most likely future PPF is ________ and France's most likely future PPF is ________.

-The figure above illustrates a small country's production possibilities frontier.Moving from point A to point B,the per unit opportunity cost of a tablet is ________ per tablet.

Possibility Robots Pizza A 0 40 B 1 39 C 2 37 D 3 34 E 4 30 F 5 20 G 6 0 -The table above shows a nation's production possibilities frontier.The opportunity cost of a robot between combination D and E is

-The above figure shows the PPF for a country that produces computers and computer factories.The nation's production possibilities frontier is PPF₀.At which of the following production points would the economy grow most rapidly?

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 Liz's and Joe's production possibilities for Salads and Smoothies. -Liz has a comparative advantage in because .

-Suppose India and France have the same PPF,shown in the figure above.Based on their current production points,India's most likely future PPF is and France's most likely future PPF is .