Question 1

The marginal benefit curve from a good

Accepted Answer

A) shows the benefit a firm receives from producing one more unit of that good. 
B) shows the most a consumer is willing to pay for one more unit of that good. 
C) is upward-sloping. 
D) is bowed outward. 
E) is vertical. 
A) shows the benefit a firm receives from producing one more unit of that good. 
B) shows the most a consumer is willing to pay for one more unit of that good. 
C) is upward-sloping. 
D) is bowed outward. 
E) is vertical.

Question 2

Which of the following quotations illustrates economic growth?

Accepted Answer

A) "The firm should lower the price it charges for widgets and gadgets." 
B) "The firm should sell more gadgets, even if it means less widget sales." 
C) "The more and more gadgets the firm produces, the bigger the fall in widget production." 
D) "If the firm invests more in capital equipment, it can expand production next year." 
E) "The firm has been able to lower costs due to its extensive experience in building widgets." 
A) "The firm should lower the price it charges for widgets and gadgets." 
B) "The firm should sell more gadgets, even if it means less widget sales." 
C) "The more and more gadgets the firm produces, the bigger the fall in widget production." 
D) "If the firm invests more in capital equipment, it can expand production next year." 
E) "The firm has been able to lower costs due to its extensive experience in building widgets."

Question 3

Consider a PPF that measures the production of quilts on the y-axis and the production of pillows on the x-axis. As the firm moves along this PPF, the quantities of

Accepted Answer

A) all goods other than pillows and quilts are decreasing. 
B) all goods other than pillows and quilts remain constant. 
C) all goods other than pillows and quilts are increasing. 
D) pillows and quilts produced increase together. 
E) pillows and quilts produced decrease together. 
A) all goods other than pillows and quilts are decreasing. 
B) all goods other than pillows and quilts remain constant. 
C) all goods other than pillows and quilts are increasing. 
D) pillows and quilts produced increase together. 
E) pillows and quilts produced decrease together.

Question 4

Trade is organized using the social institutions of all of the following except

Accepted Answer

A) firms. 
B) property rights. 
C) money. 
D) markets. 
E) labour unions 
A) firms. 
B) property rights. 
C) money. 
D) markets. 
E) labour unions

Question 5

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. As we increase the production of X,

Accepted Answer

A) the amount of Y that is given up for each additional unit of X decreases. 
B) the output of Y increases. 
C) the opportunity cost of each additional unit of X increases. 
D) unemployment increases. 
E) the amount of X increases at an increasing rate. 
A) the amount of Y that is given up for each additional unit of X decreases. 
B) the output of Y increases. 
C) the opportunity cost of each additional unit of X increases. 
D) unemployment increases. 
E) the amount of X increases at an increasing rate.

Question 6

As production of food increases, marginal benefit from food

Accepted Answer

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

Question 7

Use the figure below to answer the following questions.
   
Figure 2.1.2
-Consider the production possibilities frontier in Figure 2.1.2. Which of the following statements is false?

Accepted Answer

A) Resources are not equally useful in all activities. 
B) Points inside the production possibilities frontier indicate unused or misallocated resources. 
C) Starting at point A, an increase in the production of Y will shift the production possibilities frontier outward. 
D) The opportunity cost of producing Y increases as production of Y increases. 
E) The opportunity cost of producing X increases as production of X increases. 
A) Resources are not equally useful in all activities. 
B) Points inside the production possibilities frontier indicate unused or misallocated resources. 
C) Starting at point A, an increase in the production of Y will shift the production possibilities frontier outward. 
D) The opportunity cost of producing Y increases as production of Y increases. 
E) The opportunity cost of producing X increases as production of X increases.

Question 8

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 opportunity cost of moving from C to B will be

Accepted Answer

A) greater than moving from D to C but less than moving from B to A. 
B) less than moving from D to C but greater than moving from B to A. 
C) the same as moving from D to C or moving from B to A. 
D) greater than moving either from D to C or from B to A. 
E) less than moving from E to D. 
A) greater than moving from D to C but less than moving from B to A. 
B) less than moving from D to C but greater than moving from B to A. 
C) the same as moving from D to C or moving from B to A. 
D) greater than moving either from D to C or from B to A. 
E) less than moving from E to D.

Question 9

Which one of the following concepts is not illustrated by a production possibilities frontier?

Accepted Answer

A) scarcity 
B) monetary exchange 
C) opportunity cost 
D) attainable and unattainable points 
E) the tradeoff between producing one good versus another 
A) scarcity 
B) monetary exchange 
C) opportunity cost 
D) attainable and unattainable points 
E) the tradeoff between producing one good versus another

Question 10

Use the information below to answer the following questions.
Fact 2.4.2
Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour.
-Complete the following sentence. Given Fact 2.4.2,

Accepted Answer

A) there will be gains from trade, no matter what Brenda and Agnes specialize in, as long as they specialize. 
B) there will be gains from trade only if Agnes specializes in the production of Y and Brenda in X. 
C) there will be gains from trade only if Agnes becomes faster at producing X. 
D) there will be no gains from trade because Agnes has an absolute advantage. 
E) there will be gains from trade if Agnes specializes in the production of X and Brenda in Y. 
A) there will be gains from trade, no matter what Brenda and Agnes specialize in, as long as they specialize. 
B) there will be gains from trade only if Agnes specializes in the production of Y and Brenda in X. 
C) there will be gains from trade only if Agnes becomes faster at producing X. 
D) there will be no gains from trade because Agnes has an absolute advantage. 
E) there will be gains from trade if Agnes specializes in the production of X and Brenda in Y.

Question 11

Use the figure below to answer the following questions.
   
Figure 2.2.1
-In Figure 2.2.1, when 4,000 bicycles are produced each month,

Accepted Answer

A) the marginal benefit from another bicycle is greater than the marginal cost of another bicycle. 
B) more bicycles must be produced to reach the efficient level of output. 
C) fewer bicycles must be produced to reach the efficient level of output. 
D) the economy is efficient at this level of production of bicycles. 
E) both A and B. 
A) the marginal benefit from another bicycle is greater than the marginal cost of another bicycle. 
B) more bicycles must be produced to reach the efficient level of output. 
C) fewer bicycles must be produced to reach the efficient level of output. 
D) the economy is efficient at this level of production of bicycles. 
E) both A and B.

Question 12

Use the table below to answer the following questions.
Table 2.4.2
Production for one week by Sheila and Bruce
  
-Given the information in Table 2.4.2, can Sheila and Bruce gain by specialization?

Accepted Answer

A) Yes, but only if Bruce gets paid more than Sheila. 
B) No, not under the given circumstances. 
C) It depends on the wages each earns. 
D) Only if they are married to each other. 
E) Yes, if each specializes in the good in which he has a comparative advantage. 
A) Yes, but only if Bruce gets paid more than Sheila. 
B) No, not under the given circumstances. 
C) It depends on the wages each earns. 
D) Only if they are married to each other. 
E) Yes, if each specializes in the good in which he has a comparative advantage.

Question 13

A production possibilities frontier will shift outward FOR ALL OF THE FOLLOWING REASONS EXCEPT

Accepted Answer

A) a technological improvement. 
B) an increase in the stock of capital. 
C) an increase in the labour force. 
D) an increase in opportunity cost. 
E) an increase in human capital. 
A) a technological improvement. 
B) an increase in the stock of capital. 
C) an increase in the labour force. 
D) an increase in opportunity cost. 
E) an increase in human capital.

Question 14

Use the table below to answer the following question.
Table 2.1.4
Consider the following production possibilities for a student for the typical week:
  
-Refer to Table 2.1.4. Complete the following sentence. The production possibilities frontier in the table shows

Accepted Answer

A) increasing opportunity cost. 
B) learning-by-doing. 
C) constant opportunity cost. 
D) under-utilization of resources. 
E) decreasing opportunity cost. 
A) increasing opportunity cost. 
B) learning-by-doing. 
C) constant opportunity cost. 
D) under-utilization of resources. 
E) decreasing opportunity cost.

Question 15

Use the table below to answer the following questions.
Table 2.1.2
Production Possibilities
  
-Refer to Table 2.1.2. In moving from combination B to combination C, the opportunity cost of producing one additional unit of guns is

Accepted Answer

A) 2 kilograms of butter. 
B) 1/2 kilogram of butter. 
C) 6 kilograms of butter. 
D) 1/6 kilogram of butter. 
E) 3 kilograms of butter. 
A) 2 kilograms of butter. 
B) 1/2 kilogram of butter. 
C) 6 kilograms of butter. 
D) 1/6 kilogram of butter. 
E) 3 kilograms of butter.

Question 16

Use the figure below to answer the following questions.
   
Figure 2.1.3
-Figure 2.1.3 illustrates Mary's production possibilities frontier. If Mary wants to move from point B to point C,

Accepted Answer

A) it will be necessary to improve technology. 
B) it will be necessary to increase the accumulation of capital. 
C) it will be necessary to give up some of good X to obtain more of good Y. 
D) it will be necessary to give up some of good Y to obtain more of good X. 
E) she can accomplish this without any opportunity cost. 
A) it will be necessary to improve technology. 
B) it will be necessary to increase the accumulation of capital. 
C) it will be necessary to give up some of good X to obtain more of good Y. 
D) it will be necessary to give up some of good Y to obtain more of good X. 
E) she can accomplish this without any opportunity cost.

Question 17

Use the figure below to answer the following questions.
   
Figure 2.2.1
-In Figure 2.2.1, when 2,000 bicycles are produced each month,

Accepted Answer

A) the marginal benefit from another bicycle is greater than the marginal cost of another bicycle. 
B) more bicycles must be produced to reach the efficient level of output. 
C) fewer bicycles must be produced to reach the efficient level of output. 
D) the economy is efficient at this level of production of bicycles. 
E) both A and B. 
A) the marginal benefit from another bicycle is greater than the marginal cost of another bicycle. 
B) more bicycles must be produced to reach the efficient level of output. 
C) fewer bicycles must be produced to reach the efficient level of output. 
D) the economy is efficient at this level of production of bicycles. 
E) both A and B.

Question 18

On a graph of a production possibilities frontier, opportunity cost is represented by

Accepted Answer

A) a point on the horizontal axis. 
B) a point on the vertical axis. 
C) a ray through the origin. 
D) the slope of the production possibilities frontier. 
E) the x-axis intercept. 
A) a point on the horizontal axis. 
B) a point on the vertical axis. 
C) a ray through the origin. 
D) the slope of the production possibilities frontier. 
E) the x-axis intercept.

Question 19

A situation in which resources are either unused or misallocated or both is represented in a production possibilities frontier diagram by

Accepted Answer

A) any point on either the horizontal or the vertical axis. 
B) a point above or to the right of the production possibilities frontier. 
C) a point outside the production possibilities frontier. 
D) a point inside the production possibilities frontier. 
E) a point on or inside the production possibilities frontier. 
A) any point on either the horizontal or the vertical axis. 
B) a point above or to the right of the production possibilities frontier. 
C) a point outside the production possibilities frontier. 
D) a point inside the production possibilities frontier. 
E) a point on or inside the production possibilities frontier.

Exam 2: The Economic Problem

The marginal benefit curve from a good

Which of the following quotations illustrates economic growth?

Consider a PPF that measures the production of quilts on the y-axis and the production of pillows on the x-axis. As the firm moves along this PPF, the quantities of

Trade is organized using the social institutions of all of the following except

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. As we increase the production of X,

As production of food increases, marginal benefit from food

Use the figure below to answer the following questions. Figure 2.1.2 -Consider the production possibilities frontier in Figure 2.1.2. Which of the following statements is false?

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 opportunity cost of moving from C to B will be

Which one of the following concepts is not illustrated by a production possibilities frontier?

Use the information below to answer the following questions. Fact 2.4.2 Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. -Complete the following sentence. Given Fact 2.4.2,

Use the figure below to answer the following questions. Figure 2.2.1 -In Figure 2.2.1, when 4,000 bicycles are produced each month,

Use the table below to answer the following questions. Table 2.4.2 Production for one week by Sheila and Bruce -Given the information in Table 2.4.2, can Sheila and Bruce gain by specialization?

A production possibilities frontier will shift outward FOR ALL OF THE FOLLOWING REASONS EXCEPT

Use the table below to answer the following question. Table 2.1.4 Consider the following production possibilities for a student for the typical week: -Refer to Table 2.1.4. Complete the following sentence. The production possibilities frontier in the table shows

Use the table below to answer the following questions. Table 2.1.2 Production Possibilities -Refer to Table 2.1.2. In moving from combination B to combination C, the opportunity cost of producing one additional unit of guns is

Use the figure below to answer the following questions. Figure 2.1.3 -Figure 2.1.3 illustrates Mary's production possibilities frontier. If Mary wants to move from point B to point C,

Use the figure below to answer the following questions. Figure 2.2.1 -In Figure 2.2.1, when 2,000 bicycles are produced each month,

On a graph of a production possibilities frontier, opportunity cost is represented by

A situation in which resources are either unused or misallocated or both is represented in a production possibilities frontier diagram by

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

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Monetary Policy

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