Question 1

-Suppose India and France have the same PPF,shown in the figure above.Based on their current production points,which is France's most likely future PPF?

Accepted Answer

A)  PPF₂ 
B)  PPF₁ 
C)  PPF₀ 
D)  Either PPF₀ or PPF₁ 
E)  None of the above because economic growth will not happen in India. 
A)  PPF₂ 
B)  PPF₁ 
C)  PPF₀ 
D)  Either PPF₀ or PPF₁ 
E)  None of the above because economic growth will not happen in India.

Question 2

If the production possibilities frontier between two goods is a straight line,then the

Accepted Answer

A)  opportunity cost is not a ratio. 
B)  resources are equally productive in both goods. 
C)  line does not qualify as a production possibilities frontier because the unattainable production points are too close to the inefficient production points. 
D)  Both answers A and C are correct. 
E)  Both answers A and B are correct. 
A)  opportunity cost is not a ratio. 
B)  resources are equally productive in both goods. 
C)  line does not qualify as a production possibilities frontier because the unattainable production points are too close to the inefficient production points. 
D)  Both answers A and C are correct. 
E)  Both answers A and B are correct.

Question 3

In terms of a nation's production possibilities frontier,what impact does international trade have?

Accepted Answer

A)  International trade shifts the nation's production possibilities frontier outward. 
B)  International trade shifts the nation's production possibilities frontier inward. 
C)  International trade allows the nation to consume at a point outside its production possibilities frontier. 
D)  International trade shifts the production possibilities frontier outward for the goods that are exported and inward for the goods that are imported. 
E)  International trade shifts the production possibilities frontier outward for the goods that are imported and inward for the goods that are exported. 
A)  International trade shifts the nation's production possibilities frontier outward. 
B)  International trade shifts the nation's production possibilities frontier inward. 
C)  International trade allows the nation to consume at a point outside its production possibilities frontier. 
D)  International trade shifts the production possibilities frontier outward for the goods that are exported and inward for the goods that are imported. 
E)  International trade shifts the production possibilities frontier outward for the goods that are imported and inward for the goods that are exported.

Question 4

The opportunity cost of producing one more unit of a good is calculated by dividing the

Accepted Answer

A)  increase in the quantity of that good by the decrease in the quantity of other good. 
B)  total quantity of that good by the total quantity of other good. 
C)  decrease in the quantity of the other good by the increase in the quantity of the good whose opportunity cost we're calculating. 
D)  total quantity of the other good by the total quantity of the good whose opportunity cost we're calculating. 
E)  price of the good whose opportunity cost we are calculating by the number of units of the other good that are forgone. 
A)  increase in the quantity of that good by the decrease in the quantity of other good. 
B)  total quantity of that good by the total quantity of other good. 
C)  decrease in the quantity of the other good by the increase in the quantity of the good whose opportunity cost we're calculating. 
D)  total quantity of the other good by the total quantity of the good whose opportunity cost we're calculating. 
E)  price of the good whose opportunity cost we are calculating by the number of units of the other good that are forgone.

Question 5

On a production possibilities frontier,500 pounds of apples and 1,200 pounds of bananas can be produced while at another point on the same frontier,300 pounds of apples and 1,300 pounds of bananas can be produced.Between these points,what is the opportunity cost of producing a pound of bananas?

Accepted Answer

A)  2 pounds of bananas 
B)  200 pounds of apples 
C)  2 pounds of apples 
D)  0.5 a pound of apples 
E)  12/5 = 2.4 pounds of apples 
A)  2 pounds of bananas 
B)  200 pounds of apples 
C)  2 pounds of apples 
D)  0.5 a pound of apples 
E)  12/5 = 2.4 pounds of apples

Question 6

-Using the figure above,if Jack and Jill specialize and gain from trade,then

Accepted Answer

A)  Jack produces equal amounts of gallons of water and bottled water. 
B)  Jack specializes in the production of bottled water. 
C)  Jack and Jill produce beyond their PPF. 
D)  Jack specializes in the production of soda. 
E)  Jack specializes on the production of soda and water. 
A)  Jack produces equal amounts of gallons of water and bottled water. 
B)  Jack specializes in the production of bottled water. 
C)  Jack and Jill produce beyond their PPF. 
D)  Jack specializes in the production of soda. 
E)  Jack specializes on the production of soda and water.

Question 7

-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

Why do nations engage in international trade?

Accepted Answer

Nations engage in international trade be

Question 9

If the production possibilities frontier between bottled water and water in a jug is a straight line,which of the following statements would be correct?

Accepted Answer

A)  A large amount of unemployment must exist. 
B)  Resources are equally productive at producing either product. 
C)  There is no tradeoff between the two goods. 
D)  There is no decrease in the production of one good when the production of the other is increased. 
E)  Producing more of one good gives the economy a free lunch. 
A)  A large amount of unemployment must exist. 
B)  Resources are equally productive at producing either product. 
C)  There is no tradeoff between the two goods. 
D)  There is no decrease in the production of one good when the production of the other is increased. 
E)  Producing more of one good gives the economy a free lunch.

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

As an economy moves down along a straight line production possibilities frontier,what happens to the opportunity cost of producing the good on the horizontal axis?

Accepted Answer

A)  It remains constant. 
B)  It decreases. 
C)  It increases. 
D)  Above the midpoint it decreases until it equals 1 at the midpoint and then it increases. 
E)  None of these depict what happens to opportunity cost. 
A)  It remains constant. 
B)  It decreases. 
C)  It increases. 
D)  Above the midpoint it decreases until it equals 1 at the midpoint and then it increases. 
E)  None of these depict what happens to opportunity cost.

Question 12

When a production possibilities frontier is bowed outward,as more of one good is produced,its opportunity cost

Accepted Answer

A)  increases. 
B)  decreases. 
C)  remains constant. 
D)  might increase, decrease, or remain constant depending on how much people value the additional units of the good. 
E)  cannot be predicted. 
A)  increases. 
B)  decreases. 
C)  remains constant. 
D)  might increase, decrease, or remain constant depending on how much people value the additional units of the good. 
E)  cannot be predicted.

Question 13

Are all points inside the production possibilities frontier unattainable?

Accepted Answer

No,all points within the produ

Question 14

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

Question 15

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

Accepted Answer

A)  1 jacket 
B)  16 jackets 
C)  2/3 of a jacket 
D)  1 1/2 jackets 
E)  24 dresses 
A)  1 jacket 
B)  16 jackets 
C)  2/3 of a jacket 
D)  1 1/2 jackets 
E)  24 dresses

Question 16

In the production possibilities frontier model,an unattainable point lies

Accepted Answer

A)  only on the production possibilities frontier itself. 
B)  only inside the production possibilities frontier. 
C)  only outside the production possibilities frontier. 
D)  both on and outside the production possibilities frontier. 
E)  There are no unattainable points in the production possibilities model. 
A)  only on the production possibilities frontier itself. 
B)  only inside the production possibilities frontier. 
C)  only outside the production possibilities frontier. 
D)  both on and outside the production possibilities frontier. 
E)  There are no unattainable points in the production possibilities model.

Question 17

Which of the following is an assumption used when drawing a production possibilities frontier?
i.Human wants and desires are limited to what is available.
ii.Only two goods are considered.
iii.The level of technology is fixed and unchanging.

Accepted Answer

A)  i only 
B)  ii only 
C)  i and iii 
D)  ii and iii 
E)  i, ii, and iii 
A)  i only 
B)  ii only 
C)  i and iii 
D)  ii and iii 
E)  i, ii, and iii

Question 18

-The figure above shows the production possibilities frontier for a country.In order for it to move from producing at point A to producing at point B,the country would need to

Accepted Answer

A)  decrease SUV production by 1 million. 
B)  decrease SUV production by 3 million. 
C)  decrease SUV production by 4 million. 
D)  decrease compact car production by 3 million. 
E)  acquire more resources and/or more advanced technology. 
A)  decrease SUV production by 1 million. 
B)  decrease SUV production by 3 million. 
C)  decrease SUV production by 4 million. 
D)  decrease compact car production by 3 million. 
E)  acquire more resources and/or more advanced technology.

Question 19

If an economy cannot produce more of one good without producing less of another good,this implies that which of the following has been achieved?

Accepted Answer

A)  allocative efficiency 
B)  minimum marginal cost 
C)  PPF efficiency 
D)  production efficiency 
E)  maximum marginal benefit 
A)  allocative efficiency 
B)  minimum marginal cost 
C)  PPF efficiency 
D)  production efficiency 
E)  maximum marginal benefit

Question 20

-Which point in the figure above is an attainable combination that would have unemployed resources?

Accepted Answer

A)  point A 
B)  point B 
C)  point C 
D)  point D 
E)  point A and point B 
A)  point A 
B)  point B 
C)  point C 
D)  point D 
E)  point A and point B

-Suppose India and France have the same PPF,shown in the figure above.Based on their current production points,which is France's most likely future PPF?

If the production possibilities frontier between two goods is a straight line,then the

In terms of a nation's production possibilities frontier,what impact does international trade have?

The opportunity cost of producing one more unit of a good is calculated by dividing the

On a production possibilities frontier,500 pounds of apples and 1,200 pounds of bananas can be produced while at another point on the same frontier,300 pounds of apples and 1,300 pounds of bananas can be produced.Between these points,what is the opportunity cost of producing a pound of bananas?

-Using the figure above,if Jack and Jill specialize and gain from trade,then

-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

Why do nations engage in international trade?

If the production possibilities frontier between bottled water and water in a jug is a straight line,which of the following statements would be correct?

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

As an economy moves down along a straight line production possibilities frontier,what happens to the opportunity cost of producing the good on the horizontal axis?

When a production possibilities frontier is bowed outward,as more of one good is produced,its opportunity cost

Are all points inside the production possibilities frontier unattainable?

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

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

In the production possibilities frontier model,an unattainable point lies

Which of the following is an assumption used when drawing a production possibilities frontier? i.Human wants and desires are limited to what is available. ii.Only two goods are considered. iii.The level of technology is fixed and unchanging.

-The figure above shows the production possibilities frontier for a country.In order for it to move from producing at point A to producing at point B,the country would need to

If an economy cannot produce more of one good without producing less of another good,this implies that which of the following has been achieved?

-Which point in the figure above is an attainable combination that would have unemployed resources?

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

-Suppose India and France have the same PPF,shown in the figure above.Based on their current production points,which is France's most likely future PPF?

If the production possibilities frontier between two goods is a straight line,then the

In terms of a nation's production possibilities frontier,what impact does international trade have?

The opportunity cost of producing one more unit of a good is calculated by dividing the

On a production possibilities frontier,500 pounds of apples and 1,200 pounds of bananas can be produced while at another point on the same frontier,300 pounds of apples and 1,300 pounds of bananas can be produced.Between these points,what is the opportunity cost of producing a pound of bananas?

-Using the figure above,if Jack and Jill specialize and gain from trade,then

-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

Why do nations engage in international trade?

If the production possibilities frontier between bottled water and water in a jug is a straight line,which of the following statements would be correct?

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

As an economy moves down along a straight line production possibilities frontier,what happens to the opportunity cost of producing the good on the horizontal axis?

When a production possibilities frontier is bowed outward,as more of one good is produced,its opportunity cost

Are all points inside the production possibilities frontier unattainable?

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

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

In the production possibilities frontier model,an unattainable point lies

Which of the following is an assumption used when drawing a production possibilities frontier? i.Human wants and desires are limited to what is available. ii.Only two goods are considered. iii.The level of technology is fixed and unchanging.

-The figure above shows the production possibilities frontier for a country.In order for it to move from producing at point A to producing at point B,the country would need to

If an economy cannot produce more of one good without producing less of another good,this implies that which of the following has been achieved?

-Which point in the figure above is an attainable combination that would have unemployed resources?

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