Question 1

Which of the following is correct about comparative advantage?

Accepted Answer

A)  Some countries will have a comparative advantage in everything. 
B)  Having a comparative advantage without an absolute advantage is impossible. 
C)  A comparative advantage in a good means that the country can produce more of the good than any other country. 
D)  A country has a comparative advantage in the production of a good if it can produce the good at lower opportunity cost than any other country. 
E)  None of the above answers is correct. 
A)  Some countries will have a comparative advantage in everything. 
B)  Having a comparative advantage without an absolute advantage is impossible. 
C)  A comparative advantage in a good means that the country can produce more of the good than any other country. 
D)  A country has a comparative advantage in the production of a good if it can produce the good at lower opportunity cost than any other country. 
E)  None of the above answers is correct.

Question 2

Scott and Cindy both produce only pizza and tacos.In one hour,Scott can produce 20 pizzas or 40 tacos.In one hour,Cindy can produce 30 pizzas or 40 tacos.Scott's opportunity cost of producing 1 taco is

Accepted Answer

A)  1/2 of a pizza. 
B)  1 pizza. 
C)  2 pizzas. 
D)  20 pizzas. 
E)  2 tacos. 
A)  1/2 of a pizza. 
B)  1 pizza. 
C)  2 pizzas. 
D)  20 pizzas. 
E)  2 tacos.

Question 3

What economic concepts are represented in the production possibilities model?

Accepted Answer

There are a large number of economic con

Question 4

$$\begin{array} { c c c } 
\text { Possibility } & \begin{array} { c } 
\text { Fish } \
\text { (pounds) }
\end{array} & \begin{array} { c } 
\text { Fruit } \
\text { (pounds) }
\end{array} \
\hline \text { A } & 37 & 56 \
\text { B } & 31 & 78 \
\text { C } & 20 & 90 \
\text { D } & 9 & 99
\end{array}$$
-Robinson Crusoe divides his time between catching fish and gathering fruit.Part of his production possibilities frontier is given in the above table.If Mr.Crusoe is on his PPF and he increases the amount of fruit he gathers from 56 to 90 pounds,the opportunity cost is

Accepted Answer

A)  37 pounds of fish. 
B)  31 pounds of fish. 
C)  17 pounds of fish. 
D)  34 pounds of fruit. 
E)  90 pounds of fruit. 
A)  37 pounds of fish. 
B)  31 pounds of fish. 
C)  17 pounds of fish. 
D)  34 pounds of fruit. 
E)  90 pounds of fruit.

Question 5

Increasing opportunity cost exists

Accepted Answer

A)  in the real world. 
B)  as long as there is high unemployment. 
C)  only in theory but not in real life. 
D)  for a country but not for an individual. 
E)  inside the PPF but not on the PPF. 
A)  in the real world. 
B)  as long as there is high unemployment. 
C)  only in theory but not in real life. 
D)  for a country but not for an individual. 
E)  inside the PPF but not on the PPF.

Question 6

If there is unemployment in an economy,then the

Accepted Answer

A)  production possibilities frontier will shift inwards. 
B)  economy is operating at an unattainable point. 
C)  production possibilities frontier will shift outwards. 
D)  economy is producing at a point inside the production possibilities frontier. 
E)  production possibilities frontier must be bowed inward. 
A)  production possibilities frontier will shift inwards. 
B)  economy is operating at an unattainable point. 
C)  production possibilities frontier will shift outwards. 
D)  economy is producing at a point inside the production possibilities frontier. 
E)  production possibilities frontier must be bowed inward.

Question 7

Which of the following best describes comparative advantage?

Accepted Answer

A)  being able to produce more output than any other country 
B)  using the fewest number of resources to produce a given amount of output 
C)  having the largest number of resources compared to other countries 
D)  forgoing the fewest units of one product to produce a unit of another product 
E)  It is the same as absolute advantage. 
A)  being able to produce more output than any other country 
B)  using the fewest number of resources to produce a given amount of output 
C)  having the largest number of resources compared to other countries 
D)  forgoing the fewest units of one product to produce a unit of another product 
E)  It is the same as absolute advantage.

Question 8

-In the above figure,Jack'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)  6 gallons 
D)  1/4 of a gallon 
E)  1 gallon 
A)  2 gallons 
B)  1/2 of a gallon 
C)  6 gallons 
D)  1/4 of a gallon 
E)  1 gallon

Question 9

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point E.What would be the opportunity cost to increase the production of wine to 9 thousand bottles?

Accepted Answer

A)  12 tons of rice 
B)  15 thousand bottles of wine 
C)  9 thousand bottles of wine 
D)  3 tons of rice 
E)  Nothing, it is a free lunch. 
A)  12 tons of rice 
B)  15 thousand bottles of wine 
C)  9 thousand bottles of wine 
D)  3 tons of rice 
E)  Nothing, it is a free lunch.

Question 10

Moving along a country's PPF,a reason opportunity costs increase is that

Accepted Answer

A)  unemployment decreases as a country produces more and more of one good. 
B)  unemployment increases as a country produces more and more of one good. 
C)  technology declines as a country produces more and more of one good. 
D)  some resources are better suited for producing one good rather than the other. 
E)  technology must advance in order to produce more and more of one good. 
A)  unemployment decreases as a country produces more and more of one good. 
B)  unemployment increases as a country produces more and more of one good. 
C)  technology declines as a country produces more and more of one good. 
D)  some resources are better suited for producing one good rather than the other. 
E)  technology must advance in order to produce more and more of one good.

Question 11

-The figure above shows a production possibilities frontier.In the figure,when the economy moves from point C to point B,what is the opportunity cost of a DVD?

Accepted Answer

A)  0.5 cell phones 
B)  2 cell phones 
C)  0.5 million cell phones 
D)  2 million cell phones 
E)  zero 
A)  0.5 cell phones 
B)  2 cell phones 
C)  0.5 million cell phones 
D)  2 million cell phones 
E)  zero

Question 12

$$\begin{array} { c c c } 
\hline \text { Possibility } & \text { Capital goods } & \text { Consumption goods } \
\hline \text { A } & 0 & 60 \
\text { B } & 2 & 55 \
\text { C } & 4 & 45 \
\text { D } & 6 & 25 \
\text { E } & 8 & 0
\end{array}$$
-The table above presents the production possibilities frontier for a nation.Using the information in the table,when moving from possibility C to D,the cost of 1 unit of a capital good in terms of the consumption goods forgone is ________ consumption goods per capital good.

Accepted Answer

A)  25 
B)  15 
C)  20 
D)  10 
E)  an undefined amount of 
A)  25 
B)  15 
C)  20 
D)  10 
E)  an undefined amount of

Question 13

If Tom can wax a car in fewer hours than Jerry,then Tom definitely has

Accepted Answer

A)  a comparative advantage in car waxing. 
B)  an absolute advantage in car waxing. 
C)  both a comparative and an absolute advantage in car waxing. 
D)  neither a comparative nor an absolute advantage in car waxing. 
E)  an undetermined advantage because we do not know how long it takes Tom and Jerry to wash a car. 
A)  a comparative advantage in car waxing. 
B)  an absolute advantage in car waxing. 
C)  both a comparative and an absolute advantage in car waxing. 
D)  neither a comparative nor an absolute advantage in car waxing. 
E)  an undetermined advantage because we do not know how long it takes Tom and Jerry to wash a car.

Question 14

Consider a production possibility frontier with jeans on the vertical axis and shoes on the horizontal axis.As a country moves along the frontier closer to the vertical axis,

Accepted Answer

A)  the opportunity cost of producing jeans increases. 
B)  the opportunity cost of producing shoes increases. 
C)  there are fewer tradeoffs. 
D)  inefficient production occurs. 
E)  the opportunity cost of producing jeans decreases. 
A)  the opportunity cost of producing jeans increases. 
B)  the opportunity cost of producing shoes increases. 
C)  there are fewer tradeoffs. 
D)  inefficient production occurs. 
E)  the opportunity cost of producing jeans decreases.

Question 15

-The figure above shows a production possibilities frontier.In the figure,which of the following combinations of the two goods are efficient?

Accepted Answer

A)  2 million cell phones and 13 million DVDs 
B)  5 million cell phones and 15 million DVDs 
C)  No cell phones and 15 million DVDs 
D)  4 million cell phones and 4 million DVDs 
E)  None of these combinations is efficient. 
A)  2 million cell phones and 13 million DVDs 
B)  5 million cell phones and 15 million DVDs 
C)  No cell phones and 15 million DVDs 
D)  4 million cell phones and 4 million DVDs 
E)  None of these combinations is efficient.

Question 16

$$\begin{array} { c c c } 
\text { Possibility } & \begin{array} { c } 
\text { Bread } \
\text { (number) }
\end{array} & \begin{array} { c } 
\text { Books } \
\text { (number) }
\end{array} \
\hline \text { A } & 0 & 1,000 \
\text { B } & 100 & 900 \
\text { C } & 200 & 700 \
\text { D } & 300 & 400 \
\text { E } & 400 & 0 \
\hline
\end{array}$$
-The table above shows a production possibilities frontier for an economy.Which of the following combinations is unattainable?

Accepted Answer

A)  0 loaves of bread and 800 books 
B)  100 loaves of bread and 800 books 
C)  200 loaves of bread and 800 books 
D)  300 loaves of bread and 200 books 
E)  0 loaves of bread and 0 books 
A)  0 loaves of bread and 800 books 
B)  100 loaves of bread and 800 books 
C)  200 loaves of bread and 800 books 
D)  300 loaves of bread and 200 books 
E)  0 loaves of bread and 0 books

Question 17

$$\begin{array} { c c c } 
\text { Possibility } & \begin{array} { c } 
\text { Airplanes } \
\text { (number) }
\end{array} & \begin{array} { c } 
\text { Cruise ships } \
\text { (number) }
\end{array} \
\hline \text { A } & 100 & 0 \
\text { B } & 80 & 20 \
\text { C } & 50 & 40 \
\text { D } & 0 & 60 \
\hline
\end{array}$$
-The table above gives four production possibilities for airplanes and cruise ships.In possibility A,how many resources are devoted to the production of cruise ships?

Accepted Answer

A)  0 
B)  few 
C)  most 
D)  all 
E)  It is impossible to tell without more information about the prices of airplanes and cruise ships. 
A)  0 
B)  few 
C)  most 
D)  all 
E)  It is impossible to tell without more information about the prices of airplanes and cruise ships.

Question 18

To achieve gains from trade,a country

Accepted Answer

A)  needs to have an absolute advantage in the production of all goods. 
B)  specializes in the producing a good in which it has a lower opportunity cost. 
C)  must produce at a point beyond its PPF. 
D)  should produce at the midpoint of its PPF. 
E)  needs to have an absolute advantage in the production of at least one good. 
A)  needs to have an absolute advantage in the production of all goods. 
B)  specializes in the producing a good in which it has a lower opportunity cost. 
C)  must produce at a point beyond its PPF. 
D)  should produce at the midpoint of its PPF. 
E)  needs to have an absolute advantage in the production of at least one good.

Question 19

$\begin{array}{c}
\begin{array}{c}
\hline\
\text { Production } \
\text {point}\
\hline\text {A}\
\text {B}\
\text {C}\
\text {D}\
\end{array}
\begin{array}{c}
\hline 
\text { Food } \
\text { (pounds) }\
\hline 24 & \text { and } \
16 & \text { and } \
8 & \text { and } \
0 & \text { and } 
\end{array}
\begin{array}{c}
 \hline
\text { Clothing}\
\text { (pounds)}\
 \hline \text {0}\
 \text {4}\
 \text {8}\
 \text {12}\
\end{array}

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

\begin{array}{c}
\hline 
\text { Food}\
\text { (pounds)}\
\hline 45 & \text { and }\
30 & \text { and }\
 15 & \text { and } \ 
0 & \text { and }
\end{array}

\begin{array}{c}
 \hline
\text { Clothing}\
\text { (pounds)}\
 \hline \text {0}\
 \text {5}\
 \text {10}\
 \text {15}\
\end{array}
\end{array}$

-In the table above,Jack's comparative advantage is producing ________ and Jill's comparative advantage is producing ________.

Accepted Answer

A)  clothing; food 
B)  clothing and food; nothing 
C)  nothing; clothing and food 
D)  food; clothing 
E)  clothing; clothing 
A)  clothing; food 
B)  clothing and food; nothing 
C)  nothing; clothing and food 
D)  food; clothing 
E)  clothing; clothing

Question 20

Suppose that an economy is currently producing at a point that lies inside of its production possibilities set.Which of the following would best explain this circumstance?

Accepted Answer

A)  The economy does not have enough resources to produce at a point closer to the frontier of the production possibilities set. 
B)  The prevailing level of technology prevents the economy from producing at a point closer to the frontier of the production possibilities set. 
C)  The economy is experiencing a high level of unemployment. 
D)  Any of the above statements could explain this situation. 
E)  None of the above statements could explain this situation. 
A)  The economy does not have enough resources to produce at a point closer to the frontier of the production possibilities set. 
B)  The prevailing level of technology prevents the economy from producing at a point closer to the frontier of the production possibilities set. 
C)  The economy is experiencing a high level of unemployment. 
D)  Any of the above statements could explain this situation. 
E)  None of the above statements could explain this situation.

Which of the following is correct about comparative advantage?

Scott and Cindy both produce only pizza and tacos.In one hour,Scott can produce 20 pizzas or 40 tacos.In one hour,Cindy can produce 30 pizzas or 40 tacos.Scott's opportunity cost of producing 1 taco is

What economic concepts are represented in the production possibilities model?

Increasing opportunity cost exists

If there is unemployment in an economy,then the

Which of the following best describes comparative advantage?

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

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point E.What would be the opportunity cost to increase the production of wine to 9 thousand bottles?

Moving along a country's PPF,a reason opportunity costs increase is that

-The figure above shows a production possibilities frontier.In the figure,when the economy moves from point C to point B,what is the opportunity cost of a DVD?

If Tom can wax a car in fewer hours than Jerry,then Tom definitely has

Consider a production possibility frontier with jeans on the vertical axis and shoes on the horizontal axis.As a country moves along the frontier closer to the vertical axis,

-The figure above shows a production possibilities frontier.In the figure,which of the following combinations of the two goods are efficient?

Possibility Bread (number) Books (number) A 0 1,000 B 100 900 C 200 700 D 300 400 E 400 0 -The table above shows a production possibilities frontier for an economy.Which of the following combinations is unattainable?

Possibility Airplanes (number) Cruise ships (number) A 100 0 B 80 20 C 50 40 D 0 60 -The table above gives four production possibilities for airplanes and cruise ships.In possibility A,how many resources are devoted to the production of cruise ships?

To achieve gains from trade,a country

\ Production point A B C D Food (pounds) 24 and 16 and 8 and 0 and Clothing (pounds) 0 4 8 12 Production point A B C D Food (pounds) 45 and 30 and 15 and 0 and Clothing (pounds) 0 5 10 15 -In the table above,Jack's comparative advantage is producing and Jill's comparative advantage is producing .

Suppose that an economy is currently producing at a point that lies inside of its production possibilities set.Which of the following would best explain this circumstance?

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

Which of the following is correct about comparative advantage?

Scott and Cindy both produce only pizza and tacos.In one hour,Scott can produce 20 pizzas or 40 tacos.In one hour,Cindy can produce 30 pizzas or 40 tacos.Scott's opportunity cost of producing 1 taco is

What economic concepts are represented in the production possibilities model?

Increasing opportunity cost exists

If there is unemployment in an economy,then the

Which of the following best describes comparative advantage?

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

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point E.What would be the opportunity cost to increase the production of wine to 9 thousand bottles?

Moving along a country's PPF,a reason opportunity costs increase is that

-The figure above shows a production possibilities frontier.In the figure,when the economy moves from point C to point B,what is the opportunity cost of a DVD?

If Tom can wax a car in fewer hours than Jerry,then Tom definitely has

Consider a production possibility frontier with jeans on the vertical axis and shoes on the horizontal axis.As a country moves along the frontier closer to the vertical axis,

-The figure above shows a production possibilities frontier.In the figure,which of the following combinations of the two goods are efficient?

Possibility Bread (number) Books (number) A 0 1,000 B 100 900 C 200 700 D 300 400 E 400 0 -The table above shows a production possibilities frontier for an economy.Which of the following combinations is unattainable?

Possibility Airplanes (number) Cruise ships (number) A 100 0 B 80 20 C 50 40 D 0 60 -The table above gives four production possibilities for airplanes and cruise ships.In possibility A,how many resources are devoted to the production of cruise ships?

To achieve gains from trade,a country

Suppose that an economy is currently producing at a point that lies inside of its production possibilities set.Which of the following would best explain this circumstance?

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