Question 1

When one person's opportunity cost of producing a good is lower than another person's opportunity cost of producing the same good,it is called

Accepted Answer

A)  an absolute advantage. 
B)  a comparative advantage. 
C)  specialization. 
D)  production possibilities. 
E)  a trade off. 
A)  an absolute advantage. 
B)  a comparative advantage. 
C)  specialization. 
D)  production possibilities. 
E)  a trade off.

Question 2

-The figure above shows the production possibilities frontiers for the United Kingdom and France.What is the opportunity cost of one bushel of wheat in France?

Accepted Answer

A)  1/4 of a pound of fish 
B)  4 pounds of fish 
C)  1 pound of fish 
D)  100 pounds of fish 
E)  2 pounds of fish 
A)  1/4 of a pound of fish 
B)  4 pounds of fish 
C)  1 pound of fish 
D)  100 pounds of fish 
E)  2 pounds of fish

Question 3

Mac can bake more cookies than Monica per hour.It must be true that

Accepted Answer

A)  Monica has an absolute advantage in cookie baking. 
B)  Mac has an absolute advantage in baking cookies. 
C)  Mac has a comparative advantage in baking cookies. 
D)  Monica has a comparative advantage in baking cookies. 
E)  Mac cannot benefit by trade between the two of them. 
A)  Monica has an absolute advantage in cookie baking. 
B)  Mac has an absolute advantage in baking cookies. 
C)  Mac has a comparative advantage in baking cookies. 
D)  Monica has a comparative advantage in baking cookies. 
E)  Mac cannot benefit by trade between the two of them.

Question 4

What does the vertical intercept of a production possibilities frontier represent?

Accepted Answer

The vertical intercept is the

Question 5

"When a person has an absolute advantage in producing a good,the person necessarily has a lower opportunity cost of producing it." Is this assertion correct or incorrect?

Accepted Answer

The assertion is incorrect.An absolute a

Question 6

Moving between two points on a PPF,a country gains 6 automobiles and forgoes 3 trucks.The opportunity cost of 1 automobile is

Accepted Answer

A)  3 trucks. 
B)  6 automobiles - 3 trucks. 
C)  2 trucks. 
D)  1/2 of a truck. 
E)  1 automobile. 
A)  3 trucks. 
B)  6 automobiles - 3 trucks. 
C)  2 trucks. 
D)  1/2 of a truck. 
E)  1 automobile.

Question 7

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

Accepted Answer

A)  increases. 
B)  decreases. 
C)  remains the same. 
D)  decreases from possibility A to C, and then increases from possibility C to D. 
E)  cannot be calculated. 
A)  increases. 
B)  decreases. 
C)  remains the same. 
D)  decreases from possibility A to C, and then increases from possibility C to D. 
E)  cannot be calculated.

Question 8

The fact of increasing opportunity cost when moving on the PPF means that

Accepted Answer

A)  to increase the production of one product requires larger and larger sacrifices of the other good. 
B)  to decrease the production of one product requires smaller and smaller sacrifices of the other good. 
C)  to increase the production of one product requires smaller and smaller sacrifices of the other good. 
D)  when the government forces a movement from one point on the PPF to another point, no production is lost. 
E)  the PPF will be a negatively sloped straight line. 
A)  to increase the production of one product requires larger and larger sacrifices of the other good. 
B)  to decrease the production of one product requires smaller and smaller sacrifices of the other good. 
C)  to increase the production of one product requires smaller and smaller sacrifices of the other good. 
D)  when the government forces a movement from one point on the PPF to another point, no production is lost. 
E)  the PPF will be a negatively sloped straight line.

Question 9

To calculate the opportunity cost per unit,you divide the decrease in the quantity of the forgone item by the

Accepted Answer

A)  decrease in the quantity of the other item. 
B)  increase in the quantity of the other item obtained. 
C)  price of the item obtained. 
D)  price of the item forgone. 
E)  price of the item obtained and then multiply by the price of the item forgone. 
A)  decrease in the quantity of the other item. 
B)  increase in the quantity of the other item obtained. 
C)  price of the item obtained. 
D)  price of the item forgone. 
E)  price of the item obtained and then multiply by the price of the item forgone.

Question 10

Rika's opportunity cost of producing 100 t-shirts is 50 jackets.Jeff's opportunity cost of producing 75 t-shirts is 25 jackets.Who should specialize in jackets?

Accepted Answer

A)  Rika 
B)  Jeff 
C)  neither 
D)  both 
E)  More information is needed about their production possibilities frontiers to determine who should specialize in jackets. 
A)  Rika 
B)  Jeff 
C)  neither 
D)  both 
E)  More information is needed about their production possibilities frontiers to determine who should specialize in jackets.

Question 11

"Comparative advantage" is defined as a situation in which one person can produce

Accepted Answer

A)  more of all goods than another person. 
B)  more of a good than another person. 
C)  a good for a lower dollar cost than another person. 
D)  a good for a lower opportunity cost than another person. 
E)  all goods for lower opportunity costs than another person. 
A)  more of all goods than another person. 
B)  more of a good than another person. 
C)  a good for a lower dollar cost than another person. 
D)  a good for a lower opportunity cost than another person. 
E)  all goods for lower opportunity costs than another person.

Question 12

$\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 table shows that

Accepted Answer

A)  Bear achieves production efficiency only at its production point A. 
B)  Anaconda achieves production efficiency only at its production point A. 
C)  Anaconda has a comparative advantage in the production of corn. 
D)  Bear has an absolute advantage in the production of both goods. 
E)  Both answers A and B are correct. 
A)  Bear achieves production efficiency only at its production point A. 
B)  Anaconda achieves production efficiency only at its production point A. 
C)  Anaconda has a comparative advantage in the production of corn. 
D)  Bear has an absolute advantage in the production of both goods. 
E)  Both answers A and B are correct.

Question 13

Before the first Gulf War,Kuwait had the capacity to produce a certain amount of oil from its oil wells.After the war,it found that capacity greatly diminished because the oil wells were on fire.Draw Kuwait's PPF before and after the war,assuming that the only two goods produced are oil and food.Further assume that setting the oil wells on fire did not affect Kuwait's ability to produce food.Explain why the PPF before the war is different from the PPF after the war.

Accepted Answer

@#IMG-DLM& When a PPF is drawn,we draw it for a fi

Question 14

Why does the production possibilities frontier have a bowed out shape rather than being a straight line?

Accepted Answer

The fact that as the production of one g

Question 15

The opportunity cost of a good increases as more of it is produced because

Accepted Answer

A)  there is no such thing as a free lunch. 
B)  resources are not equally productive in all activities. 
C)  producing more of a good requires additional resources. 
D)  the number of forgone alternatives also increases. 
E)  people want the good less as more is produced. 
A)  there is no such thing as a free lunch. 
B)  resources are not equally productive in all activities. 
C)  producing more of a good requires additional resources. 
D)  the number of forgone alternatives also increases. 
E)  people want the good less as more is produced.

Question 16

By specializing and trading,a country is able to

Accepted Answer

A)  obtain the absolute advantage in the goods it produces. 
B)  consume but not to produce combinations of goods that lie beyond its production possibilities frontier. 
C)  produce but not to consume combinations of goods that lie beyond its production possibilities frontier. 
D)  both produce and consume combinations of goods that lie beyond its production possibilities frontier. 
E)  neither produce nor consume combinations of goods that lie beyond its production possibilities frontier. 
A)  obtain the absolute advantage in the goods it produces. 
B)  consume but not to produce combinations of goods that lie beyond its production possibilities frontier. 
C)  produce but not to consume combinations of goods that lie beyond its production possibilities frontier. 
D)  both produce and consume combinations of goods that lie beyond its production possibilities frontier. 
E)  neither produce nor consume combinations of goods that lie beyond its production possibilities frontier.

Question 17

-The figure above shows the production possibilities frontiers for the United Kingdom and France.If the United Kingdom and France specialize and engage in trade,the United Kingdom will export ________ and France will export ________.

Accepted Answer

A)  wheat; wheat 
B)  wheat; fish 
C)  fish; wheat 
D)  fish; fish 
E)  nothing; nothing 
A)  wheat; wheat 
B)  wheat; fish 
C)  fish; wheat 
D)  fish; fish 
E)  nothing; nothing

Question 18

What is the opportunity cost of economic growth?

Accepted Answer

A)  current period consumption goods 
B)  current period capital goods 
C)  land 
D)  both current period consumption and capital goods 
E)  both current period capital goods and land 
A)  current period consumption goods 
B)  current period capital goods 
C)  land 
D)  both current period consumption and capital goods 
E)  both current period capital goods and land

Question 19

Suppose a country operates on its production possibility frontier when it produces 1000 books and 1000 tables.The combination of ________ reflects ________.

Accepted Answer

A)  500 books and 1000 tables; an inefficient but attainable point. 
B)  1000 books and 500 tables; an efficient point. 
C)  1000 books and 1000 tables; a free lunch. 
D)  500 books and 500 tables; an attainable and efficient point. 
E)  1000 books and 1500 tables; a free lunch. 
A)  500 books and 1000 tables; an inefficient but attainable point. 
B)  1000 books and 500 tables; an efficient point. 
C)  1000 books and 1000 tables; a free lunch. 
D)  500 books and 500 tables; an attainable and efficient point. 
E)  1000 books and 1500 tables; a free lunch.

Question 20

Moving between two points on a PPF,a country gains 8 desktop computers and forgoes 4 laptop computers.The opportunity cost of 1 desktop computer is

Accepted Answer

A)  4 laptops. 
B)  8 desktops. 
C)  1 desktop. 
D)  2 laptops. 
E)  1/2 of a laptop. 
A)  4 laptops. 
B)  8 desktops. 
C)  1 desktop. 
D)  2 laptops. 
E)  1/2 of a laptop.

When one person's opportunity cost of producing a good is lower than another person's opportunity cost of producing the same good,it is called

-The figure above shows the production possibilities frontiers for the United Kingdom and France.What is the opportunity cost of one bushel of wheat in France?

Mac can bake more cookies than Monica per hour.It must be true that

What does the vertical intercept of a production possibilities frontier represent?

"When a person has an absolute advantage in producing a good,the person necessarily has a lower opportunity cost of producing it." Is this assertion correct or incorrect?

Moving between two points on a PPF,a country gains 6 automobiles and forgoes 3 trucks.The opportunity cost of 1 automobile is

The fact of increasing opportunity cost when moving on the PPF means that

To calculate the opportunity cost per unit,you divide the decrease in the quantity of the forgone item by the

Rika's opportunity cost of producing 100 t-shirts is 50 jackets.Jeff's opportunity cost of producing 75 t-shirts is 25 jackets.Who should specialize in jackets?

"Comparative advantage" is defined as a situation in which one person can produce

Why does the production possibilities frontier have a bowed out shape rather than being a straight line?

The opportunity cost of a good increases as more of it is produced because

By specializing and trading,a country is able to

-The figure above shows the production possibilities frontiers for the United Kingdom and France.If the United Kingdom and France specialize and engage in trade,the United Kingdom will export and France will export .

What is the opportunity cost of economic growth?

Suppose a country operates on its production possibility frontier when it produces 1000 books and 1000 tables.The combination of reflects .

Moving between two points on a PPF,a country gains 8 desktop computers and forgoes 4 laptop computers.The opportunity cost of 1 desktop computer 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

When one person's opportunity cost of producing a good is lower than another person's opportunity cost of producing the same good,it is called

-The figure above shows the production possibilities frontiers for the United Kingdom and France.What is the opportunity cost of one bushel of wheat in France?

Mac can bake more cookies than Monica per hour.It must be true that

What does the vertical intercept of a production possibilities frontier represent?

"When a person has an absolute advantage in producing a good,the person necessarily has a lower opportunity cost of producing it." Is this assertion correct or incorrect?

Moving between two points on a PPF,a country gains 6 automobiles and forgoes 3 trucks.The opportunity cost of 1 automobile is

The fact of increasing opportunity cost when moving on the PPF means that

To calculate the opportunity cost per unit,you divide the decrease in the quantity of the forgone item by the

Rika's opportunity cost of producing 100 t-shirts is 50 jackets.Jeff's opportunity cost of producing 75 t-shirts is 25 jackets.Who should specialize in jackets?

"Comparative advantage" is defined as a situation in which one person can produce

Why does the production possibilities frontier have a bowed out shape rather than being a straight line?

The opportunity cost of a good increases as more of it is produced because

By specializing and trading,a country is able to

-The figure above shows the production possibilities frontiers for the United Kingdom and France.If the United Kingdom and France specialize and engage in trade,the United Kingdom will export ________ and France will export ________.

What is the opportunity cost of economic growth?

Suppose a country operates on its production possibility frontier when it produces 1000 books and 1000 tables.The combination of ________ reflects ________.

Moving between two points on a PPF,a country gains 8 desktop computers and forgoes 4 laptop computers.The opportunity cost of 1 desktop computer 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

-The figure above shows the production possibilities frontiers for the United Kingdom and France.If the United Kingdom and France specialize and engage in trade,the United Kingdom will export and France will export .

Suppose a country operates on its production possibility frontier when it produces 1000 books and 1000 tables.The combination of reflects .