Question 1

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 2

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 3

Relative to Al,Joe has ________ if Joe can produce a good at a lower opportunity cost than Al.

Accepted Answer

A)  a comparative advantage 
B)  more production efficiency 
C)  a comparative benefit 
D)  a marginal benefit 
E)  a free lunch 
A)  a comparative advantage 
B)  more production efficiency 
C)  a comparative benefit 
D)  a marginal benefit 
E)  a free lunch

Question 4

-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 5

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 6

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point A.What is the opportunity cost of increasing the production of rice to 12 tons?

Accepted Answer

A)  15 thousand bottles of wine 
B)  6 thousand bottles of wine 
C)  9 thousand bottles of wine 
D)  12 tons of rice 
E)  Nothing, it is a free lunch. 
A)  15 thousand bottles of wine 
B)  6 thousand bottles of wine 
C)  9 thousand bottles of wine 
D)  12 tons of rice 
E)  Nothing, it is a free lunch.

Question 7

-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 8

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 9

During a time of high unemployment,a country can increase the production of one good or service

Accepted Answer

A)  without decreasing the production of something else. 
B)  but must decrease the production of something else. 
C)  and must increase the production of something else. 
D)  by using resources in the production process twice. 
E)  but the opportunity cost is infinite. 
A)  without decreasing the production of something else. 
B)  but must decrease the production of something else. 
C)  and must increase the production of something else. 
D)  by using resources in the production process twice. 
E)  but the opportunity cost is infinite.

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

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 12

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 13

-In the table above,how many jackets must Mary forgo for every dress she makes?

Accepted Answer

A)  12 jackets 
B)  3/4 of a jacket 
C)  2/3 of a jacket 
D)  1 1/2 jackets 
E)  8 jackets 
A)  12 jackets 
B)  3/4 of a jacket 
C)  2/3 of a jacket 
D)  1 1/2 jackets 
E)  8 jackets

Question 14

-Suppose that Germany,France,Estonia,and India all have the same production possibilities,illustrated in the figure above.Based on the production points in the figure,India is most likely to expand its PPF to

Accepted Answer

A)  PPF₃ or PPF₂. 
B)  PPF₃. 
C)  PPF₁. 
D)  PPF₁. or PPF₂. 
E)  PPF₂. 
A)  PPF₃ or PPF₂. 
B)  PPF₃. 
C)  PPF₁. 
D)  PPF₁. or PPF₂. 
E)  PPF₂.

Question 15

The United States produced approximately ________ worth of goods and services in 2011.

Accepted Answer

A)  $15 trillion 
B)  $15 billion 
C)  $150 trillion 
D)  $150 billion 
E)  $1,500 trillion 
A)  $15 trillion 
B)  $15 billion 
C)  $150 trillion 
D)  $150 billion 
E)  $1,500 trillion

Question 16

What does it mean when a "free lunch" is available? Relate your answer to the production possibilities frontier.

Accepted Answer

A free lunch means that there is no trad

Question 17

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.

Question 18

A country produces only apples and bananas.Moving from point A to point B along its production possibilities frontier,5 apples are gained and 4 bananas are forgone.What is the opportunity cost of an apple?

Accepted Answer

A)  4 bananas 
B)  5/4 of a bananas 
C)  4/5 of a banana 
D)  1 apple 
E)  None of the above answers is correct. 
A)  4 bananas 
B)  5/4 of a bananas 
C)  4/5 of a banana 
D)  1 apple 
E)  None of the above answers is correct.

Question 19

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 20

Why is it likely that the United States has an absolute advantage in goods and yet it still ends up importing them from other countries?

Accepted Answer

The United States might have an absolute

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

Relative to Al,Joe has ________ if Joe can produce a good at a lower opportunity cost than Al.

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

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point A.What is the opportunity cost of increasing the production of rice to 12 tons?

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

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

During a time of high unemployment,a country can increase the production of one good or service

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?

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

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?

-In the table above,how many jackets must Mary forgo for every dress she makes?

-Suppose that Germany,France,Estonia,and India all have the same production possibilities,illustrated in the figure above.Based on the production points in the figure,India is most likely to expand its PPF to

The United States produced approximately ________ worth of goods and services in 2011.

What does it mean when a "free lunch" is available? Relate your answer to the production possibilities frontier.

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

A country produces only apples and bananas.Moving from point A to point B along its production possibilities frontier,5 apples are gained and 4 bananas are forgone.What is the opportunity cost of an apple?

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,

Why is it likely that the United States has an absolute advantage in goods and yet it still ends up importing them from other countries?

Getting Started

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

Relative to Al,Joe has ________ if Joe can produce a good at a lower opportunity cost than Al.

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

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point A.What is the opportunity cost of increasing the production of rice to 12 tons?

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

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

During a time of high unemployment,a country can increase the production of one good or service

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?

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

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?

-In the table above,how many jackets must Mary forgo for every dress she makes?

-Suppose that Germany,France,Estonia,and India all have the same production possibilities,illustrated in the figure above.Based on the production points in the figure,India is most likely to expand its PPF to

The United States produced approximately ________ worth of goods and services in 2011.

What does it mean when a "free lunch" is available? Relate your answer to the production possibilities frontier.

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

A country produces only apples and bananas.Moving from point A to point B along its production possibilities frontier,5 apples are gained and 4 bananas are forgone.What is the opportunity cost of an apple?

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,

Why is it likely that the United States has an absolute advantage in goods and yet it still ends up importing them from other countries?

Getting Started

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

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