Question 1

Microsoft's marginal cost of the 100th copy of Microsoft Windows 8 is

Accepted Answer

A) the maximum amount that someone is willing to pay for the 100th copy of Windows 8. 
B) equal to the marginal benefit of the 100th copy of Windows 8. 
C) the opportunity cost of producing the 100th copy of Windows 8. 
D) the maximum amount that someone is willing to pay Microsoft to obtain the code that supports Windows 8. 
E) greater than the marginal benefit from the 100th copy of Windows 8. 
A) the maximum amount that someone is willing to pay for the 100th copy of Windows 8. 
B) equal to the marginal benefit of the 100th copy of Windows 8. 
C) the opportunity cost of producing the 100th copy of Windows 8. 
D) the maximum amount that someone is willing to pay Microsoft to obtain the code that supports Windows 8. 
E) greater than the marginal benefit from the 100th copy of Windows 8.

Question 2

Property rights

Accepted Answer

A) discourage economic growth by discouraging the development of new ideas and ways of doing things. 
B) encourage investment but discourage entrepreneurial activity, so the effect on economic growth is uncertain. 
C) encourage economic growth by creating incentives to invest in capital. 
D) reduce the efficiency of government, which reduces economic growth over time. 
E) encourage entrepreneurial activity but discourage investment, so the effect on economic growth is uncertain. 
A) discourage economic growth by discouraging the development of new ideas and ways of doing things. 
B) encourage investment but discourage entrepreneurial activity, so the effect on economic growth is uncertain. 
C) encourage economic growth by creating incentives to invest in capital. 
D) reduce the efficiency of government, which reduces economic growth over time. 
E) encourage entrepreneurial activity but discourage investment, so the effect on economic growth is uncertain.

Question 3

Table 2.1.1
The following table gives points on the production possibilities frontier for goods X and Y.
 
-From the data in Table 2.1.1 we can infer that

Accepted Answer

A) the economy illustrated has a comparative advantage in the production of Y. 
B) the economy illustrated has a comparative advantage in the production of X. 
C) the opportunity cost of producing an additional unit of Y increases as the production of Y increases. 
D) the opportunity cost of producing an additional unit of Y decreases as the production of Y increases. 
E) none of the above. 
A) the economy illustrated has a comparative advantage in the production of Y. 
B) the economy illustrated has a comparative advantage in the production of X. 
C) the opportunity cost of producing an additional unit of Y increases as the production of Y increases. 
D) the opportunity cost of producing an additional unit of Y decreases as the production of Y increases. 
E) none of the above.

Question 4

To gain from comparative advantage, countries must not only trade, they must also

Accepted Answer

A) save. 
B) invest. 
C) engage in research and development. 
D) engage in capital accumulation. 
E) specialize. 
A) save. 
B) invest. 
C) engage in research and development. 
D) engage in capital accumulation. 
E) specialize.

Question 5

Complete the following sentence. Marginal cost

Accepted Answer

A) is the opportunity cost of producing one more unit of a good or service. 
B) is unrelated to the production possibilities frontier. 
C) always equals marginal benefit. 
D) remains constant. 
E) is always greater then marginal benefit. 
A) is the opportunity cost of producing one more unit of a good or service. 
B) is unrelated to the production possibilities frontier. 
C) always equals marginal benefit. 
D) remains constant. 
E) is always greater then marginal benefit.

Question 6

The opportunity cost of pushing the production possibilities frontier outward is

Accepted Answer

A) capital accumulation. 
B) technological change. 
C) reduced current consumption. 
D) the gain in future consumption. 
E) all of the above 
A) capital accumulation. 
B) technological change. 
C) reduced current consumption. 
D) the gain in future consumption. 
E) all of the above

Question 7

In Portugal, the opportunity cost of a bale of wool is 3 bottles of wine. In England, the opportunity cost of 1 bottle of wine is 3 bales of wool. Given this information,

Accepted Answer

A) England has an absolute advantage in wine production. 
B) Portugal has an absolute advantage in wool production. 
C) Portugal has a comparative advantage in wine production. 
D) Portugal has a comparative advantage in wool production. 
E) no trade will occur. 
A) England has an absolute advantage in wine production. 
B) Portugal has an absolute advantage in wool production. 
C) Portugal has a comparative advantage in wine production. 
D) Portugal has a comparative advantage in wool production. 
E) no trade will occur.

Question 8

Debra has an absolute advantage in producing a good when she

Accepted Answer

A) has a comparative advantage in producing that good. 
B) can produce the good at lower opportunity cost than anyone else. 
C) can produce more of that good than anyone else, using the same quantity of inputs. 
D) has exclusive rights to sell that good. 
E) has better technology than anyone else. 
A) has a comparative advantage in producing that good. 
B) can produce the good at lower opportunity cost than anyone else. 
C) can produce more of that good than anyone else, using the same quantity of inputs. 
D) has exclusive rights to sell that good. 
E) has better technology than anyone else.

Question 9

The development of new goods and better ways of producing goods and services is

Accepted Answer

A) capital accumulation. 
B) technological change. 
C) the big tradeoff. 
D) allocative efficiency. 
E) production efficiency. 
A) capital accumulation. 
B) technological change. 
C) the big tradeoff. 
D) allocative efficiency. 
E) production efficiency.

Question 10

Table 2.1.1
The following table gives points on the production possibilities frontier for goods X and Y.
 
-The diagram of the production possibilities frontier corresponding to the data in Table 2.1.1 would be

Accepted Answer

A) negatively sloped and linear. 
B) negatively sloped and bowed inward. 
C) negatively sloped and bowed outward. 
D) positively sloped for X and negatively sloped for Y. 
E) a horizontal line. 
A) negatively sloped and linear. 
B) negatively sloped and bowed inward. 
C) negatively sloped and bowed outward. 
D) positively sloped for X and negatively sloped for Y. 
E) a horizontal line.

Question 11

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. If Tom and Jerry specialize and trade eggs and sandwiches with each other,

Accepted Answer

A) Tom benefits but Jerry does not. 
B) Jerry benefits but Tom does not. 
C) neither Tom nor Jerry benefit. 
D) either Tom or Jerry benefit but we don't have enough information to know which one benefits. 
E) both of them benefit. 
A) Tom benefits but Jerry does not. 
B) Jerry benefits but Tom does not. 
C) neither Tom nor Jerry benefit. 
D) either Tom or Jerry benefit but we don't have enough information to know which one benefits. 
E) both of them benefit.

Question 12

Use the figure below to answer the following questions.
   
Figure 2.1.3
-Refer to the production possibilities frontier in Figure 2.1.3. The fact that less of X must be given up when moving from D to C than when moving from B to A indicates

Accepted Answer

A) decreasing opportunity cost. 
B) increasing opportunity cost. 
C) comparative advantage in the production of X. 
D) the consequences of technological improvement. 
E) unemployed resources at D. 
A) decreasing opportunity cost. 
B) increasing opportunity cost. 
C) comparative advantage in the production of X. 
D) the consequences of technological improvement. 
E) unemployed resources at D.

Question 13

The principle of decreasing marginal benefit implies that the

Accepted Answer

A) additional benefit from obtaining one more unit of a good or service decreases as more of that good or service is consumed. 
B) additional benefit from obtaining one more unit of a good or service increases as more of that good or service is consumed. 
C) total benefit from obtaining more of a good or service decreases as more is consumed. 
D) total benefit from obtaining more of a good or service remains the same as more is consumed. 
E) additional benefit from producing one more unit of a good or service decreases as more of that good or service is produced. 
A) additional benefit from obtaining one more unit of a good or service decreases as more of that good or service is consumed. 
B) additional benefit from obtaining one more unit of a good or service increases as more of that good or service is consumed. 
C) total benefit from obtaining more of a good or service decreases as more is consumed. 
D) total benefit from obtaining more of a good or service remains the same as more is consumed. 
E) additional benefit from producing one more unit of a good or service decreases as more of that good or service is produced.

Question 14

A tradeoff exists when

Accepted Answer

A) we move from a point within the production possibilities frontier (PPF)to a point on the PPF. 
B) we move from a point on the PPF to a point within the PPF. 
C) the PPF shifts outward. 
D) we move along the PPF. 
E) the PPF shifts towards the origin. 
A) we move from a point within the production possibilities frontier (PPF)to a point on the PPF. 
B) we move from a point on the PPF to a point within the PPF. 
C) the PPF shifts outward. 
D) we move along the PPF. 
E) the PPF shifts towards the origin.

Question 15

The production possibilities frontier

Accepted Answer

A) is the boundary between attainable and unattainable levels of production. 
B) is the boundary between what we want to consume and what we want to produce. 
C) shows how production increases as prices rise. 
D) shows prices at which production is possible and impossible. 
E) illustrates why there need not be any scarcity in the world. 
A) is the boundary between attainable and unattainable levels of production. 
B) is the boundary between what we want to consume and what we want to produce. 
C) shows how production increases as prices rise. 
D) shows prices at which production is possible and impossible. 
E) illustrates why there need not be any scarcity in the world.

Question 16

Jane produces only corn and cloth. If her preferences for corn and cloth change, then

Accepted Answer

A) her PPF becomes steeper. 
B) her PPF becomes flatter. 
C) her PPF becomes straighter. 
D) the world PPF shifts outward. 
E) her PPF does not change. 
A) her PPF becomes steeper. 
B) her PPF becomes flatter. 
C) her PPF becomes straighter. 
D) the world PPF shifts outward. 
E) her PPF does not change.

Question 17

Which one of the following concepts is illustrated by a production possibilities frontier?

Accepted Answer

A) profit 
B) consumption 
C) investment 
D) monetary exchange 
E) the tradeoff between producing one good versus another 
A) profit 
B) consumption 
C) investment 
D) monetary exchange 
E) the tradeoff between producing one good versus another

Question 18

Choose the correct statement.

Accepted Answer

A) A marginal cost curve that is a horizontal line is derived from a PPF that has a bowed-out shape. 
B) A marginal cost curve that is upward sloping is derived from a PPF that has a constant slope. 
C) A marginal cost curve that is vertical is derived from a PPF that has a bowed-out shape. 
D) A marginal benefit curve that is downward sloping is derived from a PPF that has a bowed-out shape. 
E) A marginal cost curve that is a horizontal line is derived from a PPF that has a constant slope. 
A) A marginal cost curve that is a horizontal line is derived from a PPF that has a bowed-out shape. 
B) A marginal cost curve that is upward sloping is derived from a PPF that has a constant slope. 
C) A marginal cost curve that is vertical is derived from a PPF that has a bowed-out shape. 
D) A marginal benefit curve that is downward sloping is derived from a PPF that has a bowed-out shape. 
E) A marginal cost curve that is a horizontal line is derived from a PPF that has a constant slope.

Question 19

Use the figure below to answer the following question.
   
Figure 2.3.1
-Refer to the production possibilities frontier in Figure 2.3.1. The production possibilities frontier will shift rightward most rapidly if current production is at

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D. 
E) E. 
A) A. 
B) B. 
C) C. 
D) D. 
E) E.

Question 20

If Sam is producing at a point inside his production possibilities frontier, then he

Accepted Answer

A) can increase production of both goods with zero opportunity cost. 
B) is fully using all his resources and allocating his resources to their best use. 
C) must be doing the best he can with limited resources. 
D) is unaffected by costs and technology. 
E) has a high opportunity cost of moving from this point. 
A) can increase production of both goods with zero opportunity cost. 
B) is fully using all his resources and allocating his resources to their best use. 
C) must be doing the best he can with limited resources. 
D) is unaffected by costs and technology. 
E) has a high opportunity cost of moving from this point.

Exam 2: The Economic Problem

Microsoft's marginal cost of the 100th copy of Microsoft Windows 8 is

Property rights

Table 2.1.1 The following table gives points on the production possibilities frontier for goods X and Y. -From the data in Table 2.1.1 we can infer that

To gain from comparative advantage, countries must not only trade, they must also

Complete the following sentence. Marginal cost

The opportunity cost of pushing the production possibilities frontier outward is

In Portugal, the opportunity cost of a bale of wool is 3 bottles of wine. In England, the opportunity cost of 1 bottle of wine is 3 bales of wool. Given this information,

Debra has an absolute advantage in producing a good when she

The development of new goods and better ways of producing goods and services is

Table 2.1.1 The following table gives points on the production possibilities frontier for goods X and Y. -The diagram of the production possibilities frontier corresponding to the data in Table 2.1.1 would be

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. If Tom and Jerry specialize and trade eggs and sandwiches with each other,

Use the figure below to answer the following questions. Figure 2.1.3 -Refer to the production possibilities frontier in Figure 2.1.3. The fact that less of X must be given up when moving from D to C than when moving from B to A indicates

The principle of decreasing marginal benefit implies that the

A tradeoff exists when

The production possibilities frontier

Jane produces only corn and cloth. If her preferences for corn and cloth change, then

Which one of the following concepts is illustrated by a production possibilities frontier?

Choose the correct statement.

Use the figure below to answer the following question. Figure 2.3.1 -Refer to the production possibilities frontier in Figure 2.3.1. The production possibilities frontier will shift rightward most rapidly if current production is at

If Sam is producing at a point inside his production possibilities frontier, then he

What Is Economics

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Governments Actions in Markets

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Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

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Economic Inequality

Measuring Gdp and Economic Growth

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Money, the Price Level, and Inflation

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