Question 1

A movement from a point inside the production possibilities frontier to a point on the production possibilities frontier represents

Accepted Answer

A)  a tradeoff. 
B)  a free lunch. 
C)  full employment of labor but not capital. 
D)  unemployment of labor but not capital. 
E)  an infinite opportunity cost. 
A)  a tradeoff. 
B)  a free lunch. 
C)  full employment of labor but not capital. 
D)  unemployment of labor but not capital. 
E)  an infinite opportunity cost.

Question 2

A reason the production possibilities frontier exists is

Accepted Answer

A)  unlimited resources and technology. 
B)  scarcity of resources. 
C)  scarcity of resources and unlimited technology. 
D)  unemployment. 
E)  that people's wants are unlimited. 
A)  unlimited resources and technology. 
B)  scarcity of resources. 
C)  scarcity of resources and unlimited technology. 
D)  unemployment. 
E)  that people's wants are unlimited.

Question 3

How is economic growth shown in a production possibilities frontier graph?

Accepted Answer

Economic growth is i

Question 4

Consider the United States' production of soy beans and running shoes.If the United States has an absolute advantage in the production of both goods compared to China,

Accepted Answer

A)  both countries can gain from trade. 
B)  only the United States can gain from trade. 
C)  only China can gain from trade. 
D)  each country will be able to produce at a point beyond its PPF. 
E)  only the United States will be able to operate beyond its PPF. 
A)  both countries can gain from trade. 
B)  only the United States can gain from trade. 
C)  only China can gain from trade. 
D)  each country will be able to produce at a point beyond its PPF. 
E)  only the United States will be able to operate beyond its PPF.

Question 5

The production possibilities frontier illustrates the

Accepted Answer

A)  maximum combinations of goods and services that can be produced. 
B)  resources the economy possess, but not its level of technology. 
C)  goods and services that people want. 
D)  limits to people's wants. 
E)  amount of each good that people want to buy. 
A)  maximum combinations of goods and services that can be produced. 
B)  resources the economy possess, but not its level of technology. 
C)  goods and services that people want. 
D)  limits to people's wants. 
E)  amount of each good that people want to buy.

Question 6

$\begin{array}{c}
\begin{array}{c}
\text { Production } \
\text { point }\
\hline A \
B \
C \
D
\end{array}
\begin{array}{c}
\text { Wheat}\
\text { (bushels)}\
\hline1,500 &\text { and}\
1,000 &\text { and}\
500& \text { and}\
0 &\text { and}\ 
\end{array}
\begin{array}{c}
\text { Soybeans } \
\text { (bushels) }\
\hline 0 \
2,250 \
3,500 \
4,000 
\end{array}
\end{array}$
-The table above gives the production possibilities frontier for a nation that produces wheat and soybeans.Use the information in that table to complete the table below,which has in it the opportunity costs of moving from one production point to another.Do not forget to note the units of the opportunity costs.
 $\begin{array}{c}
\begin{array}{c}
\text { Movement }\
\text { from } \
\hline A \text { to } B \
B \text { to } C \
C \text { to } D 
\end{array}
\begin{array}{c}
\text { Opportunity}\
\text { cost}\
\hline
\
\
\
\end{array}
\begin{array}{c}
\text { Movement }\
\text { from } \
\hline D \text { to } C \
C \text { to } B \
B \text { to } A
\end{array}
\begin{array}{c}
\text { Opportunity}\
\text { cost}\
\hline
\
\
\
\end{array}
\end{array}$

Accepted Answer

The table above gives the oppo

Question 7

$\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 production point B to production point C for Anaconda equals ________ and for Bear equals ________.

Accepted Answer

A)  1 ton of corn; 1 ton of corn 
B)  650 pairs of shoes; 900 pairs of shoes 
C)  550 pairs of shoes; 700 pairs of shoes 
D)  100 pairs of shoes; 200 pairs of shoes 
E)  50 pairs of shoes; 100 pairs of shoes 
A)  1 ton of corn; 1 ton of corn 
B)  650 pairs of shoes; 900 pairs of shoes 
C)  550 pairs of shoes; 700 pairs of shoes 
D)  100 pairs of shoes; 200 pairs of shoes 
E)  50 pairs of shoes; 100 pairs of shoes

Question 8

Having a comparative advantage means a nation can

Accepted Answer

A)  benefit from trade. 
B)  produce at a higher opportunity cost. 
C)  produce more of the good. 
D)  produce without incurring an opportunity cost. 
E)  produce the good at a point beyond its PPF. 
A)  benefit from trade. 
B)  produce at a higher opportunity cost. 
C)  produce more of the good. 
D)  produce without incurring an opportunity cost. 
E)  produce the good at a point beyond its PPF.

Question 9

As an economy increasingly specializes in producing one good,the opportunity cost of that good increases.The opportunity cost increases because

Accepted Answer

A)  resources are not equally productive in all activities. 
B)  what must be paid to resources increases. 
C)  human wants are virtually unlimited. 
D)  not all goods are equally valuable. 
E)  as more of a good is produced, the profit from its production must rise. 
A)  resources are not equally productive in all activities. 
B)  what must be paid to resources increases. 
C)  human wants are virtually unlimited. 
D)  not all goods are equally valuable. 
E)  as more of a good is produced, the profit from its production must rise.

Question 10

-The above figure shows the production possibility frontier for an economy.The point or points that are attainable and production efficient are

Accepted Answer

A)  points B and C. 
B)  points A, B, and C. 
C)  point E. 
D)  points A, B, C, and D. 
E)  points A and D. 
A)  points B and C. 
B)  points A, B, and C. 
C)  point E. 
D)  points A, B, C, and D. 
E)  points A and D.

Question 11

$\begin{array}{c}
\begin{array}{lc}
\text { Omar's production in 1 day } \
\hline \text { Computers fixed } & 12 \
\text { Lines of code } & 800 
\end{array}
\begin{array}{lc}
{\text { John's production in } 1 \text { day }} \
\hline \text { Computers fixed } & 4 \
\text { Lines of code } & 200 
\end{array}
\end{array}$
-Omar and John can fix computers or write computer programs.The table above shows the number of computers they can fix and the lines of code they can write in a day.
a.Who,if anyone,has the absolute advantage?
b.Who has the comparative advantage in fixing computers? Why?
c.Who has the comparative advantage in writing programs? Why?

Accepted Answer

a.Omar has an absolute advantage in fixi

Question 12

-The figure above shows how the PPF for cell phones and new cell-phone factories can expand.In the figure,if the economy chose the point on this year's PPF that is below point K,the next year's PPF would

Accepted Answer

A)  shift outward along the horizontal axis farther than the new PPF shown in the figure. 
B)  shift outward along the horizontal axis, but not as far as the new PPF shown in the figure. 
C)  shift outward along the vertical axis, not along the horizontal axis. 
D)  shift inward along the horizontal axis. 
E)  shift inward along the vertical axis. 
A)  shift outward along the horizontal axis farther than the new PPF shown in the figure. 
B)  shift outward along the horizontal axis, but not as far as the new PPF shown in the figure. 
C)  shift outward along the vertical axis, not along the horizontal axis. 
D)  shift inward along the horizontal axis. 
E)  shift inward along the vertical axis.

Question 13

$$\begin{array} { c c c c } 
\begin{array} { c } 
\text { Production } \
\text { point }\
\hline \text { A }\
\text { B } \
\text { C }\
\text { D } \
\text { E } 
\end{array} & \begin{array} { c } 
\end{array} 
\begin{array} { c }
\text { Milk } \
\text { (gallons) }\ 
 \hline0 & \text { and } \
 2 & \text { and }  \
 4 & \text { and }  \
 6 & \text { and }  \
 8 & \text { and }\end{array} 
&\begin{array} { c } 
\text { Shirts } \
\text { (numbers) }\
\hline100\
90\
70\
40\
0
\end{array} \end{array}$$

-A (very,very small)country produces milk and shirts and its production possibilities frontier is in the table above.
a.The nation is currently producing at point B.What is the opportunity cost of two additional gallons of milk? At point C? At point D? What do your results show?
b.Suppose the nation is initially producing 4 gallons of milk and 40 shirts.What is the opportunity cost of 2 additional gallons of milk? Explain your answer.

Accepted Answer

a.At point B,the opportunity cost of 2 a

Question 14

When all of the available factors of production are being efficiently employed,the

Accepted Answer

A)  economy is producing at a point within its PPF. 
B)  economy is producing at a point on its PPF. 
C)  economy is producing at a point beyond its PPF. 
D)  PPF disappears. 
E)  opportunity cost of changing production is infinite. 
A)  economy is producing at a point within its PPF. 
B)  economy is producing at a point on its PPF. 
C)  economy is producing at a point beyond its PPF. 
D)  PPF disappears. 
E)  opportunity cost of changing production is infinite.

Question 15

The opportunity cost of producing more of one good on a production possibilities frontier is

Accepted Answer

A)  a dollar amount. 
B)  a ratio of quantities. 
C)  a ratio of prices. 
D)  equal to the area inside the production possibilities frontier. 
E)  a theoretical concept which cannot be measured. 
A)  a dollar amount. 
B)  a ratio of quantities. 
C)  a ratio of prices. 
D)  equal to the area inside the production possibilities frontier. 
E)  a theoretical concept which cannot be measured.

Question 16

"If Mexico is currently operating at a point inside its production possibilities frontier,then there are unemployed or misallocated resources in Mexico." Is this statement true or false? Briefly explain your answer.

Accepted Answer

The statement is true.Points within the

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 airplanes?

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

-The above figure shows the PPF for a country that produces computers and computer factories.Which of the following would most likely shift the PPF from PPF₀ in one year to PPF₁ in the next?

Accepted Answer

A)  Nothing, because the PPF does not shift. 
B)  Increase the production of computers from 9 million (at point 
C)  to 11 million (at point 
B) . 
C)  Decrease the production of computers from 11 million (at point 
B)  to 9 million (at point 
C)  and build 9 new computer factories. 
D)  Increase consumption of both computers and computer factories. 
E)  Decrease production of both computers and computer factories by moving into the interior of the PPF. 
A)  Nothing, because the PPF does not shift. 
B)  Increase the production of computers from 9 million (at point 
C)  to 11 million (at point 
B) . 
C)  Decrease the production of computers from 11 million (at point 
B)  to 9 million (at point 
C)  and build 9 new computer factories. 
D)  Increase consumption of both computers and computer factories. 
E)  Decrease production of both computers and computer factories by moving into the interior of the PPF.

Question 19

While moving on the production possibilities frontier,if the opportunity cost of producing one good is 1/2,the opportunity cost of producing the other good (in the same range)is

Accepted Answer

A)  1/2. 
B)  1/4. 
C)  2. 
D)  4. 
E)  An amount that cannot be calculated without more information. 
A)  1/2. 
B)  1/4. 
C)  2. 
D)  4. 
E)  An amount that cannot be calculated without more information.

Question 20

Moving on a bowed out PPF,what happens to the opportunity cost of its production as a nation specializes more in one product?

Accepted Answer

The bowed out PPF indicates th

A movement from a point inside the production possibilities frontier to a point on the production possibilities frontier represents

A reason the production possibilities frontier exists is

How is economic growth shown in a production possibilities frontier graph?

Consider the United States' production of soy beans and running shoes.If the United States has an absolute advantage in the production of both goods compared to China,

The production possibilities frontier illustrates the

Having a comparative advantage means a nation can

As an economy increasingly specializes in producing one good,the opportunity cost of that good increases.The opportunity cost increases because

-The above figure shows the production possibility frontier for an economy.The point or points that are attainable and production efficient are

-The figure above shows how the PPF for cell phones and new cell-phone factories can expand.In the figure,if the economy chose the point on this year's PPF that is below point K,the next year's PPF would

When all of the available factors of production are being efficiently employed,the

The opportunity cost of producing more of one good on a production possibilities frontier is

"If Mexico is currently operating at a point inside its production possibilities frontier,then there are unemployed or misallocated resources in Mexico." Is this statement true or false? Briefly explain your answer.

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 airplanes?

-The above figure shows the PPF for a country that produces computers and computer factories.Which of the following would most likely shift the PPF from PPF₀ in one year to PPF₁ in the next?

While moving on the production possibilities frontier,if the opportunity cost of producing one good is 1/2,the opportunity cost of producing the other good (in the same range)is

Moving on a bowed out PPF,what happens to the opportunity cost of its production as a nation specializes more in one product?

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

A movement from a point inside the production possibilities frontier to a point on the production possibilities frontier represents

A reason the production possibilities frontier exists is

How is economic growth shown in a production possibilities frontier graph?

Consider the United States' production of soy beans and running shoes.If the United States has an absolute advantage in the production of both goods compared to China,

The production possibilities frontier illustrates the

Having a comparative advantage means a nation can

As an economy increasingly specializes in producing one good,the opportunity cost of that good increases.The opportunity cost increases because

-The above figure shows the production possibility frontier for an economy.The point or points that are attainable and production efficient are

-The figure above shows how the PPF for cell phones and new cell-phone factories can expand.In the figure,if the economy chose the point on this year's PPF that is below point K,the next year's PPF would

When all of the available factors of production are being efficiently employed,the

The opportunity cost of producing more of one good on a production possibilities frontier is

"If Mexico is currently operating at a point inside its production possibilities frontier,then there are unemployed or misallocated resources in Mexico." Is this statement true or false? Briefly explain your answer.

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 airplanes?

-The above figure shows the PPF for a country that produces computers and computer factories.Which of the following would most likely shift the PPF from PPF₀ in one year to PPF₁ in the next?

While moving on the production possibilities frontier,if the opportunity cost of producing one good is 1/2,the opportunity cost of producing the other good (in the same range)is

Moving on a bowed out PPF,what happens to the opportunity cost of its production as a nation specializes more in one product?

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