Question 1

Production efficiency is achieved when

Accepted Answer

A) the production possibilities frontier shifts outward at an even pace. 
B) there are no more tradeoffs. 
C) all resources are equally productive in all activities. 
D) resources are not equally productive in all activities. 
E) we produce goods and services at the lowest possible cost. 
A) the production possibilities frontier shifts outward at an even pace. 
B) there are no more tradeoffs. 
C) all resources are equally productive in all activities. 
D) resources are not equally productive in all activities. 
E) we produce goods and services at the lowest possible cost.

Question 2

A marginal benefit curve measures

Accepted Answer

A) comparative advantage. 
B) willingness to pay. 
C) absolute advantage. 
D) opportunity cost. 
E) expenditure. 
A) comparative advantage. 
B) willingness to pay. 
C) absolute advantage. 
D) opportunity cost. 
E) expenditure.

Question 3

In 1963, the production possibilities per person in Canada were ________ than those in Hong Kong. Between 1963 and 2013, Hong Kong's production possibilities have ________ Canada's production possibilities.

Accepted Answer

A) smaller; expanded more quickly than 
B) smaller; not expanded as quickly as 
C) greater; not expanded as quickly as 
D) greater; expanded more quickly than 
E) greater; expanded at the same rate as 
A) smaller; expanded more quickly than 
B) smaller; not expanded as quickly as 
C) greater; not expanded as quickly as 
D) greater; expanded more quickly than 
E) greater; expanded at the same rate as

Question 4

The production possibilities frontier shows

Accepted Answer

A) the maximum possible rate of growth of output in an economy. 
B) the maximum quantity of resources available at any given time. 
C) the maximum level of production that can be attained. 
D) combinations of goods and services that do not fully use available resources. 
E) the effect of advancing technology on production possibilities. 
A) the maximum possible rate of growth of output in an economy. 
B) the maximum quantity of resources available at any given time. 
C) the maximum level of production that can be attained. 
D) combinations of goods and services that do not fully use available resources. 
E) the effect of advancing technology on production possibilities.

Question 5

Intellectual property ________.

Accepted Answer

A) includes land and buildings 
B) includes stocks and bonds and money in the bank 
C) is the intangible product of creative effort 
D) is protected by copyrights and patents 
E) Both C and D are correct. 
A) includes land and buildings 
B) includes stocks and bonds and money in the bank 
C) is the intangible product of creative effort 
D) is protected by copyrights and patents 
E) Both C and D are correct.

Question 6

The depletion of fish stocks in Eastern Canada, with its accompanying unemployment, will lead to a

Accepted Answer

A) movement from the existing production possibilities frontier to a point inside the production possibilities frontier. 
B) shift inward of the existing production possibilities frontier and production at a point on the new PPF. 
C) shift outward of the existing production possibilities frontier. 
D) movement along the existing production possibilities frontier to a point of less fish production. 
E) shift inward of the existing production possibilities frontier plus a movement to a point inside the new production possibilities frontier. 
A) movement from the existing production possibilities frontier to a point inside the production possibilities frontier. 
B) shift inward of the existing production possibilities frontier and production at a point on the new PPF. 
C) shift outward of the existing production possibilities frontier. 
D) movement along the existing production possibilities frontier to a point of less fish production. 
E) shift inward of the existing production possibilities frontier plus a movement to a point inside the new production possibilities frontier.

Question 7

Which of the following describes comparative advantage?

Accepted Answer

A) Firm A can produce a good at a cost of $3 a unit, and Firm B can produce the same good at a cost of $4 a unit. 
B) Jane can type 50 words per minute, and Joe can type 60 words per minute. 
C) Firm A can produce 4 boxes of cereal in a day, and Firm B can produce 5 boxes of cereal in a day. 
D) To produce a basket of wheat, Farmer John must give up growing 2 baskets of corn, whereas Farmer Ben must give up 3 baskets of corn to produce a basket of wheat. 
E) Bill can read one book in a week, but it takes Jeannie 10 days to read the same book. 
A) Firm A can produce a good at a cost of $3 a unit, and Firm B can produce the same good at a cost of $4 a unit. 
B) Jane can type 50 words per minute, and Joe can type 60 words per minute. 
C) Firm A can produce 4 boxes of cereal in a day, and Firm B can produce 5 boxes of cereal in a day. 
D) To produce a basket of wheat, Farmer John must give up growing 2 baskets of corn, whereas Farmer Ben must give up 3 baskets of corn to produce a basket of wheat. 
E) Bill can read one book in a week, but it takes Jeannie 10 days to read the same book.

Question 8

A person who has an absolute advantage in the production of all goods will

Accepted Answer

A) also have a comparative advantage in the production of all goods. 
B) not be able to gain from specialization and trade. 
C) produce all goods at the lowest opportunity cost. 
D) not have a comparative advantage in the production of any goods. 
E) have a comparative advantage in the production of only some goods and not others. 
A) also have a comparative advantage in the production of all goods. 
B) not be able to gain from specialization and trade. 
C) produce all goods at the lowest opportunity cost. 
D) not have a comparative advantage in the production of any goods. 
E) have a comparative advantage in the production of only some goods and not others.

Question 9

The production possibilities frontier shifts outward when

Accepted Answer

A) tastes and preferences change. 
B) the quantity of money in the economy grows. 
C) prices rise. 
D) human capital accumulates. 
E) the political party in power changes. 
A) tastes and preferences change. 
B) the quantity of money in the economy grows. 
C) prices rise. 
D) human capital accumulates. 
E) the political party in power changes.

Question 10

Suppose the production possibilities frontier for skirts and pants is a straight line. As the production of skirts increases, the marginal benefit from skirts

Accepted Answer

A) increases and marginal cost is constant. 
B) is constant and marginal cost decreases. 
C) decreases and marginal cost increases. 
D) decreases and marginal cost decreases. 
E) decreases and marginal cost is constant. 
A) increases and marginal cost is constant. 
B) is constant and marginal cost decreases. 
C) decreases and marginal cost increases. 
D) decreases and marginal cost decreases. 
E) decreases and marginal cost is constant.

Question 11

Use the information below to answer the following questions.
Fact 2.4.1
In one hour, Sue can produce 50 caps or 10 jackets, and Tessa can produce 70 caps or 7 jackets.
-Refer to Fact 2.4.1. Sue's opportunity cost of producing a cap is ________ jackets and Tessa's opportunity cost of producing a cap is ________ jackets.

Accepted Answer

A) 10; 7 
B) 5; 10 
C) 0.1; 0.2 
D) 0.2; 0.1 
E) 10; 5 
A) 10; 7 
B) 5; 10 
C) 0.1; 0.2 
D) 0.2; 0.1 
E) 10; 5

Question 12

Consider the following household. In 5 hours, Bob can cook 5 meals or clean 6 rooms. In 5 hours, Mary can cook 30 meals or clean 10 rooms. Select the best statement.

Accepted Answer

A) Bob has an absolute advantage in the production of both goods. 
B) Since Mary is better at producing both goods, she should produce both. 
C) Bob has a comparative advantage in cooking. 
D) Mary has a comparative advantage in cooking. 
E) Mary has a comparative advantage in cooking and cleaning. 
A) Bob has an absolute advantage in the production of both goods. 
B) Since Mary is better at producing both goods, she should produce both. 
C) Bob has a comparative advantage in cooking. 
D) Mary has a comparative advantage in cooking. 
E) Mary has a comparative advantage in cooking and cleaning.

Question 13

Use the figure below to answer the following questions.
   
Figure 2.1.1
-Refer to the production possibilities frontier in Figure 2.1.1. Which one of the following is true about point C?

Accepted Answer

A) It is attainable only if we consume more of good X. 
B) It is unattainable. 
C) It is attainable only if we consume less of good Y. 
D) It is attainable only if we consume less of good X. 
E) It is attainable only if we consume more of good Y. 
A) It is attainable only if we consume more of good X. 
B) It is unattainable. 
C) It is attainable only if we consume less of good Y. 
D) It is attainable only if we consume less of good X. 
E) It is attainable only if we consume more of good Y.

Question 14

Use the table below to answer the following questions.
Table 2.1.1
The following table gives points on the production possibilities frontier for goods X and Y.
  
-Refer to Table 2.1.1. What does point C mean?

Accepted Answer

A) If 8 units of X are produced, then at least 28 units of Y can be produced. 
B) If 8 units of X are produced, then at most 28 units of Y can be produced. 
C) If 28 units of Y are produced, then more than 8 units of X can be produced. 
D) If 8 units of X are produced, then only 36 units of Y can be produced. 
E) There is unemployment at this point. 
A) If 8 units of X are produced, then at least 28 units of Y can be produced. 
B) If 8 units of X are produced, then at most 28 units of Y can be produced. 
C) If 28 units of Y are produced, then more than 8 units of X can be produced. 
D) If 8 units of X are produced, then only 36 units of Y can be produced. 
E) There is unemployment at this point.

Question 15

Use the table below to answer the following question.
Table 2.1.3
Production possibilities for a society that produces only two
goods - hockey sticks and maple leaves
  
-Refer to Table 2.1.3. In moving from combination C to combination B, the opportunity cost of producing one additional hockey stick is

Accepted Answer

A) 2 maple leaves. 
B) 1/2 maple leaves. 
C) 6 maple leaves. 
D) 1/6 maple leaves. 
E) 3 maple leaves. 
A) 2 maple leaves. 
B) 1/2 maple leaves. 
C) 6 maple leaves. 
D) 1/6 maple leaves. 
E) 3 maple leaves.

Question 16

Use the table below to answer the following question.
Table 2.2.1
  
-Refer to Table 2.2.1. Marginal benefit from food crops

Accepted Answer

A) equals the marginal cost of food crops. 
B) remains constant as the quantity of food crops increases from 1 tonne a day to 2 tonnes a day. 
C) cannot be calculated from the table. 
D) increases as the quantity of food crops increases from 1 tonne a day to 2 tonnes a day. 
E) equals 70 barrels of ethanol. 
A) equals the marginal cost of food crops. 
B) remains constant as the quantity of food crops increases from 1 tonne a day to 2 tonnes a day. 
C) cannot be calculated from the table. 
D) increases as the quantity of food crops increases from 1 tonne a day to 2 tonnes a day. 
E) equals 70 barrels of ethanol.

Question 17

Use the information below to answer the following questions.
Fact 2.4.1
In one hour, Sue can produce 50 caps or 10 jackets, and Tessa can produce 70 caps or 7 jackets.
-Refer to Fact 2.4.1. ________ has a comparative advantage in producing caps. If Sue and Tessa each specialize in producing the good in which they have a comparative advantage and trade 1 jacket for 7 caps, ________.

Accepted Answer

A) Sue; Tessa gains but Sue loses 
B) Tessa; Sue loses but Tessa gains 
C) Sue; both Sue and Tessa gain 
D) Tessa; both Sue and Tessa gain 
E) Tessa; Tessa loses but Sue gains 
A) Sue; Tessa gains but Sue loses 
B) Tessa; Sue loses but Tessa gains 
C) Sue; both Sue and Tessa gain 
D) Tessa; both Sue and Tessa gain 
E) Tessa; Tessa loses but Sue gains

Question 18

A property right is

Accepted Answer

A) any commodity or token that is generally acceptable as a means of payment. 
B) an economic unit that hires factors of production and organizes those factors to produce and sell goods and services. 
C) any arrangement that enables buyers and sellers to get information and to do business with each other. 
D) a social arrangement that governs the ownership, use, and disposable of anything that people value. 
E) a medium of exchange. 
A) any commodity or token that is generally acceptable as a means of payment. 
B) an economic unit that hires factors of production and organizes those factors to produce and sell goods and services. 
C) any arrangement that enables buyers and sellers to get information and to do business with each other. 
D) a social arrangement that governs the ownership, use, and disposable of anything that people value. 
E) a medium of exchange.

Question 19

Individuals A and B can both produce goods X and Y. Individual A has a comparative advantage in the production of X if

Accepted Answer

A) A is faster than B at producing X. 
B) the amount by which A must reduce production of Y is less than the amount by which B must reduce production of Y to produce an additional unit of X. 
C) B has superior knowledge about how to produce X. 
D) A has a preference to consume X. 
E) the amount by which A must reduce production of Y is more than the amount by which B must reduce production of Y to produce an additional unit of X. 
A) A is faster than B at producing X. 
B) the amount by which A must reduce production of Y is less than the amount by which B must reduce production of Y to produce an additional unit of X. 
C) B has superior knowledge about how to produce X. 
D) A has a preference to consume X. 
E) the amount by which A must reduce production of Y is more than the amount by which B must reduce production of Y to produce an additional unit of X.

Question 20

Consider a country that has two industries. In the north, they grow wild rice, which requires a lot of rainfall. In the south, they grow wheat, which requires just a moderate amount of rainfall (too much rainfall is bad for wheat production). One year, there is a record rainfall. This will result in

Accepted Answer

A) a parallel shift inward of the production possibilities frontier. 
B) a parallel shift outward of the production possibilities frontier. 
C) the production possibilities frontier rotating, with the wild rice intercept increasing, and the wheat intercept decreasing. 
D) the production possibilities frontier rotating, with the wild rice intercept decreasing, and the wheat intercept increasing. 
E) the production possibilities frontier becoming linear. 
A) a parallel shift inward of the production possibilities frontier. 
B) a parallel shift outward of the production possibilities frontier. 
C) the production possibilities frontier rotating, with the wild rice intercept increasing, and the wheat intercept decreasing. 
D) the production possibilities frontier rotating, with the wild rice intercept decreasing, and the wheat intercept increasing. 
E) the production possibilities frontier becoming linear.

Exam 2: The Economic Problem

Production efficiency is achieved when

A marginal benefit curve measures

In 1963, the production possibilities per person in Canada were ________ than those in Hong Kong. Between 1963 and 2013, Hong Kong's production possibilities have ________ Canada's production possibilities.

The production possibilities frontier shows

Intellectual property ________.

The depletion of fish stocks in Eastern Canada, with its accompanying unemployment, will lead to a

Which of the following describes comparative advantage?

A person who has an absolute advantage in the production of all goods will

The production possibilities frontier shifts outward when

Suppose the production possibilities frontier for skirts and pants is a straight line. As the production of skirts increases, the marginal benefit from skirts

Consider the following household. In 5 hours, Bob can cook 5 meals or clean 6 rooms. In 5 hours, Mary can cook 30 meals or clean 10 rooms. Select the best statement.

Use the figure below to answer the following questions. Figure 2.1.1 -Refer to the production possibilities frontier in Figure 2.1.1. Which one of the following is true about point C?

Use the table below to answer the following questions. Table 2.1.1 The following table gives points on the production possibilities frontier for goods X and Y. -Refer to Table 2.1.1. What does point C mean?

Use the table below to answer the following question. Table 2.2.1 -Refer to Table 2.2.1. Marginal benefit from food crops

A property right is

Individuals A and B can both produce goods X and Y. Individual A has a comparative advantage in the production of X if

What Is Economics

Demand and Supply

Elasticity

Efficiency and Equity

Governments Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

Macro Only: International Trade Policy

Filters

In 1963, the production possibilities per person in Canada were than those in Hong Kong. Between 1963 and 2013, Hong Kong's production possibilities have Canada's production possibilities.