Question 1

Points on the PPF are all

Accepted Answer

A) unattainable and have fully employed resources. 
B) free lunches. 
C) inefficient. 
D) attainable and have some unemployed resources. 
E) production efficient. 
A) unattainable and have fully employed resources. 
B) free lunches. 
C) inefficient. 
D) attainable and have some unemployed resources. 
E) production efficient.

Question 2

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 3

-Huey and Steve can grow potatoes or tomatoes.The table above shows the pounds of potatoes and tomatoes Huey and Steve can grow in a week.Based on the table, which of the following statements is correct?

Accepted Answer

A) Steve has an absolute advantage in both potatoes and tomatoes. 
B) Steve has a comparative advantage in both potatoes and tomatoes. 
C) Steve has an absolute advantage in potatoes only. 
D) Huey has an absolute advantage in potatoes only. 
E) Huey has an absolute advantage in both potatoes and tomatoes. 
A) Steve has an absolute advantage in both potatoes and tomatoes. 
B) Steve has a comparative advantage in both potatoes and tomatoes. 
C) Steve has an absolute advantage in potatoes only. 
D) Huey has an absolute advantage in potatoes only. 
E) Huey has an absolute advantage in both potatoes and tomatoes.

Question 4

-The figure above shows the production possibilities frontier for a country.The opportunity cost of a gallon of milk between combination point A and B is

Accepted Answer

A) 4 gallons of ice cream for a gallon of milk. 
B) 3 gallons of ice cream for a gallon of milk. 
C) 1 gallon of ice cream for a gallon of milk. 
D) 1/3 of a gallon of ice cream for a gallon of milk. 
E) zero because at point A zero milk is being produced. 
A) 4 gallons of ice cream for a gallon of milk. 
B) 3 gallons of ice cream for a gallon of milk. 
C) 1 gallon of ice cream for a gallon of milk. 
D) 1/3 of a gallon of ice cream for a gallon of milk. 
E) zero because at point A zero milk is being produced.

Question 5

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 6

If a nation devotes a larger share of its current production to consumption goods, then

Accepted Answer

A) its economic growth will slow down. 
B) its PPF will shift outward. 
C) its PPF will shift inward. 
D) some productive factors will become unemployed. 
E) it must produce at a point within its PPF. 
A) its economic growth will slow down. 
B) its PPF will shift outward. 
C) its PPF will shift inward. 
D) some productive factors will become unemployed. 
E) it must produce at a point within its PPF.

Question 7

When a country's production possibilities frontier shifts outward over time, the country is experiencing

Accepted Answer

A) no opportunity cost. 
B) economic growth. 
C) higher unemployment of resources. 
D) a decrease in unemployment of resources. 
E) an end to opportunity cost. 
A) no opportunity cost. 
B) economic growth. 
C) higher unemployment of resources. 
D) a decrease in unemployment of resources. 
E) an end to opportunity cost.

Question 8

On a production possibilities frontier diagram, where are production points that have tradeoffs? Where are production points with a free lunch?

Accepted Answer

A tradeoff is a situation in which a lim

Question 9

-The table above shows the production possibilities for an economy.The opportunity cost of a loaf of bread is ________ when moving from possibility B to possibility C.

Accepted Answer

A) 1/2 of a book 
B) 2 books 
C) 200 books 
D) 100 loaves of bread 
E) 1 loaf of bread 
A) 1/2 of a book 
B) 2 books 
C) 200 books 
D) 100 loaves of bread 
E) 1 loaf of bread

Question 10

In one hour John can produce 20 loaves of bread or 8 cakes.In one hour Phyllis can produce 30 loaves of bread or 15 cakes.Which of the following statements is true?

Accepted Answer

A) Phyllis has a comparative advantage in producing bread. 
B) John has a comparative advantage in producing cakes. 
C) Phyllis has an absolute advantage in both goods. 
D) John has an absolute advantage in both goods. 
E) Phyllis has a comparative advantage in producing both cakes and bread. 
A) Phyllis has a comparative advantage in producing bread. 
B) John has a comparative advantage in producing cakes. 
C) Phyllis has an absolute advantage in both goods. 
D) John has an absolute advantage in both goods. 
E) Phyllis has a comparative advantage in producing both cakes and bread.

Question 11

To increase its economic growth, a nation should

Accepted Answer

A) limit the number of people in college because they produce nothing. 
B) encourage spending on goods and services. 
C) encourage education because that increases the quality of labor. 
D) increase current consumption. 
E) eliminate expenditure on capital goods. 
A) limit the number of people in college because they produce nothing. 
B) encourage spending on goods and services. 
C) encourage education because that increases the quality of labor. 
D) increase current consumption. 
E) eliminate expenditure on capital goods.

Question 12

In the production possibilities model, the vertical axis measures ________ and the horizontal axis measures ________.

Accepted Answer

A) the quantity of a good or service; the quantity of another good or service 
B) the price of a good or service; the quantity of the good or service 
C) the price of a good or service; the price of another good or service 
D) the quantity of a good or service; time 
E) people's wants; the quantity of a good or service 
A) the quantity of a good or service; the quantity of another good or service 
B) the price of a good or service; the quantity of the good or service 
C) the price of a good or service; the price of another good or service 
D) the quantity of a good or service; time 
E) people's wants; the quantity of a good or service

Question 13

In a production possibilities frontier diagram, the attainable production points are shown as

Accepted Answer

A) only the points on the production possibilities frontier. 
B) only the points beyond the production possibilities frontier. 
C) only the points inside the production possibilities frontier. 
D) the points inside and the points on the production possibilities frontier. 
E) any of the production points. 
A) only the points on the production possibilities frontier. 
B) only the points beyond the production possibilities frontier. 
C) only the points inside the production possibilities frontier. 
D) the points inside and the points on the production possibilities frontier. 
E) any of the production points.

Question 14

A reason the production possibilities frontier exists is

Accepted Answer

A) unlimited resources and technology. 
B) scarcity of resources. 
C) scarcity of resources and unlimited technology. 
D) unemployment. 
E) that people's wants are unlimited. 
A) unlimited resources and technology. 
B) scarcity of resources. 
C) scarcity of resources and unlimited technology. 
D) unemployment. 
E) that people's wants are unlimited.

Question 15

The United States is one of the richest nations in the world,

Accepted Answer

A) so it does not need to trade with poor nations in order to achieve any gains from trade. 
B) so it might not have a comparative advantage in producing any goods. 
C) but it can still benefit from specialization and trade. 
D) so it must have a comparative advantage in the production of all goods. 
E) so it must have an absolute advantage in the production of all goods. 
A) so it does not need to trade with poor nations in order to achieve any gains from trade. 
B) so it might not have a comparative advantage in producing any goods. 
C) but it can still benefit from specialization and trade. 
D) so it must have a comparative advantage in the production of all goods. 
E) so it must have an absolute advantage in the production of all goods.

Question 16

Why is a production possibilities frontier bowed out (concave)?

Accepted Answer

A) The bowed shape reflects constant opportunity cost. 
B) The bowed shape reflects decreasing opportunity cost. 
C) The bowed shape indicates that opportunity cost at first decreases at a decreasing rate, and then begins to decrease at an increasing rate. 
D) The bowed shape indicates that opportunity cost at first increases at a decreasing rate, and then begins to increase at an increasing rate. 
E) The bowed shape reflects increasing opportunity cost. 
A) The bowed shape reflects constant opportunity cost. 
B) The bowed shape reflects decreasing opportunity cost. 
C) The bowed shape indicates that opportunity cost at first decreases at a decreasing rate, and then begins to decrease at an increasing rate. 
D) The bowed shape indicates that opportunity cost at first increases at a decreasing rate, and then begins to increase at an increasing rate. 
E) The bowed shape reflects increasing opportunity cost.

Question 17

-Suppose India and France have the same PPF, shown in the figure above.Based on their current production points, which is India'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 18

-The figure above illustrates a small country's production possibilities frontier.Based on the figure, we can tell that the nation's resources are

Accepted Answer

A) equally productive in all tasks because the slope is negative. 
B) equally productive in all tasks because the production possibilities frontier is bowed out. 
C) not equally productive in all tasks because the slope is negative. 
D) not equally productive in all tasks because the production possibilities frontier is bowed out. 
E) unlimited because the slope is negative and the PPF is bowed out. 
A) equally productive in all tasks because the slope is negative. 
B) equally productive in all tasks because the production possibilities frontier is bowed out. 
C) not equally productive in all tasks because the slope is negative. 
D) not equally productive in all tasks because the production possibilities frontier is bowed out. 
E) unlimited because the slope is negative and the PPF is bowed out.

Question 19

-Gabriel operates a ranch in Idaho where he raises cattle and grows potatoes.The figure above illustrates his production possibilities frontier.What is Gabriel's opportunity cost of growing another ton of potatoes?

Accepted Answer

A) 400 cows 
B) 80 cows 
C) 100 cows 
D) 0 cows 
E) 1 ton of potatoes 
A) 400 cows 
B) 80 cows 
C) 100 cows 
D) 0 cows 
E) 1 ton of potatoes

Question 20

Moving along a country's PPF, a reason opportunity costs increase is that

Accepted Answer

A) unemployment decreases as a country produces more and more of one good. 
B) unemployment increases as a country produces more and more of one good. 
C) technology declines as a country produces more and more of one good. 
D) some resources are better suited for producing one good rather than the other. 
E) technology must advance in order to produce more and more of one good. 
A) unemployment decreases as a country produces more and more of one good. 
B) unemployment increases as a country produces more and more of one good. 
C) technology declines as a country produces more and more of one good. 
D) some resources are better suited for producing one good rather than the other. 
E) technology must advance in order to produce more and more of one good.

Points on the PPF are all

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?

-Huey and Steve can grow potatoes or tomatoes.The table above shows the pounds of potatoes and tomatoes Huey and Steve can grow in a week.Based on the table, which of the following statements is correct?

-The figure above shows the production possibilities frontier for a country.The opportunity cost of a gallon of milk between combination point A and B is

In the production possibilities frontier model, an unattainable point lies

If a nation devotes a larger share of its current production to consumption goods, then

When a country's production possibilities frontier shifts outward over time, the country is experiencing

On a production possibilities frontier diagram, where are production points that have tradeoffs? Where are production points with a free lunch?

-The table above shows the production possibilities for an economy.The opportunity cost of a loaf of bread is ________ when moving from possibility B to possibility C.

In one hour John can produce 20 loaves of bread or 8 cakes.In one hour Phyllis can produce 30 loaves of bread or 15 cakes.Which of the following statements is true?

To increase its economic growth, a nation should

In the production possibilities model, the vertical axis measures and the horizontal axis measures .

In a production possibilities frontier diagram, the attainable production points are shown as

A reason the production possibilities frontier exists is

The United States is one of the richest nations in the world,

Why is a production possibilities frontier bowed out (concave)?

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

-The figure above illustrates a small country's production possibilities frontier.Based on the figure, we can tell that the nation's resources are

-Gabriel operates a ranch in Idaho where he raises cattle and grows potatoes.The figure above illustrates his production possibilities frontier.What is Gabriel's opportunity cost of growing another ton of potatoes?

Moving along a country's PPF, a reason opportunity costs increase is that

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

Points on the PPF are all

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?

-Huey and Steve can grow potatoes or tomatoes.The table above shows the pounds of potatoes and tomatoes Huey and Steve can grow in a week.Based on the table, which of the following statements is correct?

-The figure above shows the production possibilities frontier for a country.The opportunity cost of a gallon of milk between combination point A and B is

In the production possibilities frontier model, an unattainable point lies

If a nation devotes a larger share of its current production to consumption goods, then

When a country's production possibilities frontier shifts outward over time, the country is experiencing

On a production possibilities frontier diagram, where are production points that have tradeoffs? Where are production points with a free lunch?

-The table above shows the production possibilities for an economy.The opportunity cost of a loaf of bread is ________ when moving from possibility B to possibility C.

In one hour John can produce 20 loaves of bread or 8 cakes.In one hour Phyllis can produce 30 loaves of bread or 15 cakes.Which of the following statements is true?

To increase its economic growth, a nation should

In the production possibilities model, the vertical axis measures ________ and the horizontal axis measures ________.

In a production possibilities frontier diagram, the attainable production points are shown as

A reason the production possibilities frontier exists is

The United States is one of the richest nations in the world,

Why is a production possibilities frontier bowed out (concave)?

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

-The figure above illustrates a small country's production possibilities frontier.Based on the figure, we can tell that the nation's resources are

-Gabriel operates a ranch in Idaho where he raises cattle and grows potatoes.The figure above illustrates his production possibilities frontier.What is Gabriel's opportunity cost of growing another ton of potatoes?

Moving along a country's PPF, a reason opportunity costs increase is that

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

In the production possibilities model, the vertical axis measures and the horizontal axis measures .