Question 1

In the production possibilities model,the vertical axis measures ________ and the horizontal axis measures ________.

Accepted Answer

A)  the quantity of a good or service; the quantity of another good or service 
B)  the price of a good or service; the quantity of the good or service 
C)  the price of a good or service; the price of another good or service 
D)  the quantity of a good or service; time 
E)  people's wants; the quantity of a good or service 
A)  the quantity of a good or service; the quantity of another good or service 
B)  the price of a good or service; the quantity of the good or service 
C)  the price of a good or service; the price of another good or service 
D)  the quantity of a good or service; time 
E)  people's wants; the quantity of a good or service

Question 2

-Deb and Pete have volunteered to help their favorite charity mail out fundraiser information.The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes.Which of the following statements is correct?

Accepted Answer

A)  Deb has a comparative advantage in assembling packets. 
B)  Pete has an absolute advantage in both assembling packets and stuffing envelopes. 
C)  Deb has a comparative advantage in stuffing envelopes. 
D)  Deb has an absolute advantage in both assembling packets and stuffing envelopes. 
E)  Deb has a comparative advantage in both assembling packets and stuffing envelopes. 
A)  Deb has a comparative advantage in assembling packets. 
B)  Pete has an absolute advantage in both assembling packets and stuffing envelopes. 
C)  Deb has a comparative advantage in stuffing envelopes. 
D)  Deb has an absolute advantage in both assembling packets and stuffing envelopes. 
E)  Deb has a comparative advantage in both assembling packets and stuffing envelopes.

Question 3

Explain why a movement from a point inside a production possibilities frontier to the production possibilities frontier is described as a free lunch and a movement along a production possibilities frontier is described as a tradeoff.

Accepted Answer

The key point to answer this question is

Question 4

$\begin{array}{c}
\begin{array}{c}
\text { Production } \
\text { point }\
\hline A \
B \
C \
D
\end{array}
\begin{array}{c}
\text { Beef}\
\text { (pounds)}\
\hline0 &\text { and}\
2 &\text { and}\
4& \text { and}\
6 &\text { and}\ 
\end{array}
\begin{array}{c}
\text { Wheat } \
\text { (bushels)}\
\hline 9 \
7 \
4 \
0
\end{array}
\end{array}$
-The table above presents the production possibilities of Farmer Brown.Use these data to calculate Farmer Brown's opportunity cost of additional beef as Farmer Brown moves from point A to B to C to D.Also use the data to calculate Farmer Brown's opportunity cost of additional wheat as Farmer Brown moves from point D to C to B to A.Based on these costs,does Farmer Brown use resources that are more productive in one activity than the other or are they equally productive in both uses? Explain your answer.

Accepted Answer

The opportunity cost of a pound of beef

Question 5

$$\begin{array} { c c c } 
\text { Possibility } & \begin{array} { c } 
\text { Bread } \
\text { (number) }
\end{array} & \begin{array} { c } 
\text { Books } \
\text { (number) }
\end{array} \
\hline \text { A } & 0 & 1,000 \
\text { B } & 100 & 900 \
\text { C } & 200 & 700 \
\text { D } & 300 & 400 \
\text { E } & 400 & 0 \
\hline
\end{array}$$
-The table above shows a production possibilities frontier for an economy.If the economy tried to produce a combination of 250 loaves of bread and 800 books,

Accepted Answer

A)  there is some unemployment. 
B)  there is full employment. 
C)  the tradeoff between bread and books is inefficient. 
D)  it cannot produce this combination because it lacks enough resources or technology. 
E)  it is enjoying a free lunch. 
A)  there is some unemployment. 
B)  there is full employment. 
C)  the tradeoff between bread and books is inefficient. 
D)  it cannot produce this combination because it lacks enough resources or technology. 
E)  it is enjoying a free lunch.

Question 6

-The figure above represents the production possibilities frontier for a country.
a.The nation is currently producing at point B and wants to move to point C.What is the opportunity cost of the move?
b.The nation is currently producing at point B and wants to move to point A.What is the opportunity cost of the move?
c.The nation is currently producing at point D and wants to move to point B.What is the opportunity cost of the move?

Accepted Answer

a.By moving from point B to point C,the

Question 7

-Deb and Pete have volunteered to help their favorite charity mail out fundraiser information.The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes.If Deb spends all her time assembling packets,how many can she assemble?

Accepted Answer

A)  32 
B)  40 
C)  64 
D)  160 
E)  22 
A)  32 
B)  40 
C)  64 
D)  160 
E)  22

Question 8

If Wendy can produce more of all goods than Tommy in an hour,then

Accepted Answer

A)  Wendy has an absolute advantage in all goods. 
B)  Wendy does not need to trade with Tommy in order to achieve the gains from trade. 
C)  Wendy has a comparative advantage in all goods. 
D)  Tommy has an absolute advantage in all goods. 
E)  Only Tommy but not Wendy can benefit from trade between the two of them. 
A)  Wendy has an absolute advantage in all goods. 
B)  Wendy does not need to trade with Tommy in order to achieve the gains from trade. 
C)  Wendy has a comparative advantage in all goods. 
D)  Tommy has an absolute advantage in all goods. 
E)  Only Tommy but not Wendy can benefit from trade between the two of them.

Question 9

The bowed out (concave)shape of the production possibilities curve implies that as production of one good

Accepted Answer

A)  increases, society must forgo increasing amounts of another good. 
B)  increases, society must forgo decreasing amounts of another good. 
C)  decreases, production of other goods decreases as well. 
D)  increases, production of other goods increases as well. 
E)  increases, society can obtain a free lunch. 
A)  increases, society must forgo increasing amounts of another good. 
B)  increases, society must forgo decreasing amounts of another good. 
C)  decreases, production of other goods decreases as well. 
D)  increases, production of other goods increases as well. 
E)  increases, society can obtain a free lunch.

Question 10

For country North,the opportunity cost incurred when 3 tractors are produced is 21 watches.For country South,the opportunity cost incurred when 5 tractors are produced is 100 watches.Which country has the comparative advantage in the production of tractors?

Accepted Answer

A)  North 
B)  South 
C)  Both have the comparative advantage in the production of tractors. 
D)  Neither country has the comparative advantage in the production of tractors. 
E)  More information is needed about which country has the comparative advantage in the production of watches. 
A)  North 
B)  South 
C)  Both have the comparative advantage in the production of tractors. 
D)  Neither country has the comparative advantage in the production of tractors. 
E)  More information is needed about which country has the comparative advantage in the production of watches.

Question 11

A movement from one point on a production possibilities frontier to another represents

Accepted Answer

A)  a tradeoff. 
B)  a free lunch. 
C)  full employment of labor but not capital. 
D)  unemployment. 
E)  an advance in technology. 
A)  a tradeoff. 
B)  a free lunch. 
C)  full employment of labor but not capital. 
D)  unemployment. 
E)  an advance in technology.

Question 12

-The figure above shows a production possibilities frontier.In the figure,when the economy moves from point D to point C,the opportunity cost of producing one more DVD ________,and when it moves from point C to D,the opportunity cost of producing one more cell phone ________.

Accepted Answer

A)  increases; increases 
B)  increases; decreases 
C)  decreases; decreases 
D)  decreases; increases 
E)  increases; remains the same 
A)  increases; increases 
B)  increases; decreases 
C)  decreases; decreases 
D)  decreases; increases 
E)  increases; remains the same

Question 13

In order for Ireland to grow more potatoes,wool production must decrease.This situation is an example of

Accepted Answer

A)  producing at a point that lies beyond the PPF. 
B)  zero opportunity cost. 
C)  opportunity benefit. 
D)  a free lunch. 
E)  a tradeoff. 
A)  producing at a point that lies beyond the PPF. 
B)  zero opportunity cost. 
C)  opportunity benefit. 
D)  a free lunch. 
E)  a tradeoff.

Question 14

-The above figure shows the production possibility frontier for an economy.The point or points that are not attainable 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 15

When a country's production possibilities frontier shifts outward over time,the country is experiencing

Accepted Answer

A)  no opportunity cost. 
B)  economic growth. 
C)  higher unemployment of resources. 
D)  a decrease in unemployment of resources. 
E)  an end to opportunity cost. 
A)  no opportunity cost. 
B)  economic growth. 
C)  higher unemployment of resources. 
D)  a decrease in unemployment of resources. 
E)  an end to opportunity cost.

Question 16

$\begin{array}{c}
\begin{array}{c}
\text { Production } \
\text { point } \
\hline \text { A } \
\text { B } \
\text { C } \
\text { D } \
\text { E } 
\end{array}
\begin{array}{c}
\text { Pages}\
\text { typed}\
\hline 0 &\text { and}\
40 &\text { and}\
70 &\text { and}\
90&\text {  and}\
100 &\text { and}
\end{array}
\begin{array}{|c}
\text {Web pages }\
\text {created}\
\hline4\
3\
2\
1 \
0
\end{array}
\end{array}$
-Jean can either type her term paper or create Web pages during the limited time she has available.The table above shows her PPF.
a.Can Jean type 90 pages and create 2 Web pages?
b.Use the above numbers to calculate the opportunity cost of a typed page as she increases her time typing and decreases time creating a Web page.

Accepted Answer

a.Jean cannot type 90 pages and create 2

Question 17

$$\begin{array} { c c c } 
\text { Possibility } & \begin{array} { c } 
\text { Bread } \
\text { (number) }
\end{array} & \begin{array} { c } 
\text { Books } \
\text { (number) }
\end{array} \
\hline \text { A } & 0 & 1,000 \
\text { B } & 100 & 900 \
\text { C } & 200 & 700 \
\text { D } & 300 & 400 \
\text { E } & 400 & 0 \
\hline
\end{array}$$
-The table above shows the production possibilities for an economy.Drawing a PPF with books on the vertical axis and bread on the horizontal axis,a movement from possibility B to possibility C to possibility D shows the opportunity cost of ________ moving down along the PPF.

Accepted Answer

A)  books decreasing 
B)  bread decreasing 
C)  bread increases 
D)  books is constant 
E)  books and bread are both increasing 
A)  books decreasing 
B)  bread decreasing 
C)  bread increases 
D)  books is constant 
E)  books and bread are both increasing

Question 18

What is the relationship between the bowed out shape of the production possibilities frontier and the increasing opportunity cost of a good as more of it is produced?

Accepted Answer

The production possibilities frontier is

Question 19

The opportunity cost of economic growth is ________ and the benefit of economic growth is ________.

Accepted Answer

A)  increased current consumption; increased future consumption 
B)  increased current consumption; decreased future consumption 
C)  decreased current consumption; increased future consumption 
D)  decreased current consumption; decreased future consumption 
E)  nothing; increased future consumption 
A)  increased current consumption; increased future consumption 
B)  increased current consumption; decreased future consumption 
C)  decreased current consumption; increased future consumption 
D)  decreased current consumption; decreased future consumption 
E)  nothing; increased future consumption

Question 20

The figure above shows Liz's and Joe's production possibilities for Salads and Smoothies.
-Using the figure above,suppose with no trade Liz and Joe each produce at point A on their respective PPFs.Then,Joe suggests that they specialize and trade.He would produces only salads and Liz would produce only smoothies.Then,Joe says,he would buy 16 smoothies from Liz at a price of 1.5 salads per smoothie.Liz should

Accepted Answer

A)  accept Joe's offer since she will gain 4 smoothies and 4 salads. 
B)  accept Joe's offer as she will be as well off as with no trade. 
C)  not accept Joe's offer as the price he offers is too low for her to gain from trade. 
D)  not accept Joe's offer since she would lose 2 smoothies and 2 salads. 
E)  accept Joe's offer since she will gain 4 salads. 
A)  accept Joe's offer since she will gain 4 smoothies and 4 salads. 
B)  accept Joe's offer as she will be as well off as with no trade. 
C)  not accept Joe's offer as the price he offers is too low for her to gain from trade. 
D)  not accept Joe's offer since she would lose 2 smoothies and 2 salads. 
E)  accept Joe's offer since she will gain 4 salads.

In the production possibilities model,the vertical axis measures and the horizontal axis measures .

-Deb and Pete have volunteered to help their favorite charity mail out fundraiser information.The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes.Which of the following statements is correct?

Explain why a movement from a point inside a production possibilities frontier to the production possibilities frontier is described as a free lunch and a movement along a production possibilities frontier is described as a tradeoff.

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.If the economy tried to produce a combination of 250 loaves of bread and 800 books,

-Deb and Pete have volunteered to help their favorite charity mail out fundraiser information.The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes.If Deb spends all her time assembling packets,how many can she assemble?

If Wendy can produce more of all goods than Tommy in an hour,then

The bowed out (concave)shape of the production possibilities curve implies that as production of one good

For country North,the opportunity cost incurred when 3 tractors are produced is 21 watches.For country South,the opportunity cost incurred when 5 tractors are produced is 100 watches.Which country has the comparative advantage in the production of tractors?

A movement from one point on a production possibilities frontier to another represents

-The figure above shows a production possibilities frontier.In the figure,when the economy moves from point D to point C,the opportunity cost of producing one more DVD ,and when it moves from point C to D,the opportunity cost of producing one more cell phone .

In order for Ireland to grow more potatoes,wool production must decrease.This situation is an example of

-The above figure shows the production possibility frontier for an economy.The point or points that are not attainable are

When a country's production possibilities frontier shifts outward over time,the country is experiencing

What is the relationship between the bowed out shape of the production possibilities frontier and the increasing opportunity cost of a good as more of it is produced?

The opportunity cost of economic growth is and the benefit of economic growth is .

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

In the production possibilities model,the vertical axis measures ________ and the horizontal axis measures ________.

-Deb and Pete have volunteered to help their favorite charity mail out fundraiser information.The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes.Which of the following statements is correct?

Explain why a movement from a point inside a production possibilities frontier to the production possibilities frontier is described as a free lunch and a movement along a production possibilities frontier is described as a tradeoff.

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.If the economy tried to produce a combination of 250 loaves of bread and 800 books,

-Deb and Pete have volunteered to help their favorite charity mail out fundraiser information.The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes.If Deb spends all her time assembling packets,how many can she assemble?

If Wendy can produce more of all goods than Tommy in an hour,then

The bowed out (concave)shape of the production possibilities curve implies that as production of one good

For country North,the opportunity cost incurred when 3 tractors are produced is 21 watches.For country South,the opportunity cost incurred when 5 tractors are produced is 100 watches.Which country has the comparative advantage in the production of tractors?

A movement from one point on a production possibilities frontier to another represents

-The figure above shows a production possibilities frontier.In the figure,when the economy moves from point D to point C,the opportunity cost of producing one more DVD ________,and when it moves from point C to D,the opportunity cost of producing one more cell phone ________.

In order for Ireland to grow more potatoes,wool production must decrease.This situation is an example of

-The above figure shows the production possibility frontier for an economy.The point or points that are not attainable are

When a country's production possibilities frontier shifts outward over time,the country is experiencing

What is the relationship between the bowed out shape of the production possibilities frontier and the increasing opportunity cost of a good as more of it is produced?

The opportunity cost of economic growth is ________ and the benefit of economic growth is ________.

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

In the production possibilities model,the vertical axis measures and the horizontal axis measures .

-The figure above shows a production possibilities frontier.In the figure,when the economy moves from point D to point C,the opportunity cost of producing one more DVD ,and when it moves from point C to D,the opportunity cost of producing one more cell phone .

The opportunity cost of economic growth is and the benefit of economic growth is .