Question 1

-The figure above shows the production possibilities frontier for a country.A combination of 3 million gallons of milk and 3 million gallons of ice cream is

Accepted Answer

A) unattainable. 
B) attainable and production efficient. 
C) attainable and production inefficient. 
D) unattainable and production efficient. 
E) More information is needed to determine if the point is attainable or not. 
A) unattainable. 
B) attainable and production efficient. 
C) attainable and production inefficient. 
D) unattainable and production efficient. 
E) More information is needed to determine if the point is attainable or not.

Question 2

Explain why a movement from a point inside a production possibilities frontier to the production possibilities frontier is described as a free lunch and a movement along a production possibilities frontier is described as a tradeoff.

Accepted Answer

The key point to answer this question is

Question 3

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 4

-The table above presents the production possibilities frontier for a nation.Using the information in the table, moving from possibility C to B means that

Accepted Answer

A) 4 units of capital goods are given up to get 55 units of consumption goods. 
B) 2 units of capital goods are given up to get 55 additional units of consumption goods. 
C) 4 units of capital goods are given up to get 10 additional units of consumption goods. 
D) 4 units of capital goods are given up to get 45 units of consumption goods. 
E) 2 units of capital goods are given up to get 10 additional units of consumption goods. 
A) 4 units of capital goods are given up to get 55 units of consumption goods. 
B) 2 units of capital goods are given up to get 55 additional units of consumption goods. 
C) 4 units of capital goods are given up to get 10 additional units of consumption goods. 
D) 4 units of capital goods are given up to get 45 units of consumption goods. 
E) 2 units of capital goods are given up to get 10 additional units of consumption goods.

Question 5

-The figure above shows a production possibilities frontier.In the figure, when the economy moves from point D to point C, the opportunity cost of producing one more DVD ________, and when it moves from point C to D, the opportunity cost of producing one more cell phone ________.

Accepted Answer

A) increases; increases 
B) increases; decreases 
C) decreases; decreases 
D) decreases; increases 
E) increases; remains the same 
A) increases; increases 
B) increases; decreases 
C) decreases; decreases 
D) decreases; increases 
E) increases; remains the same

Question 6

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 7

Suppose a country operates on its production possibility frontier when it produces 1000 books and 1000 tables.The combination of _________ reflects ____________

Accepted Answer

A) 500 books and 1000 tables; an inefficient but attainable point. 
B) 1000 books and 500 tables; an efficient point. 
C) 1000 books and 1000 tables; a free lunch. 
D) 500 books and 500 tables; an attainable and efficient point. 
E) 1000 books and 1500 tables; a free lunch. 
A) 500 books and 1000 tables; an inefficient but attainable point. 
B) 1000 books and 500 tables; an efficient point. 
C) 1000 books and 1000 tables; a free lunch. 
D) 500 books and 500 tables; an attainable and efficient point. 
E) 1000 books and 1500 tables; a free lunch.

Question 8

For country North, the opportunity cost incurred when 3 tractors are produced is 21 watches.For country South, the opportunity cost incurred when 5 tractors are produced is 100 watches.Which country has the comparative advantage in the production of tractors?

Accepted Answer

A) North 
B) South 
C) Both have the comparative advantage in the production of tractors. 
D) Neither country has the comparative advantage in the production of tractors. 
E) More information is needed about which country has the comparative advantage in the production of watches. 
A) North 
B) South 
C) Both have the comparative advantage in the production of tractors. 
D) Neither country has the comparative advantage in the production of tractors. 
E) More information is needed about which country has the comparative advantage in the production of watches.

Question 9

-The above figure shows the production possibility frontier for a country.What is the opportunity cost to move from point D to point B?

Accepted Answer

A) 12 tons of rice 
B) 15 thousand bottles of wine 
C) 6 thousand bottles of wine 
D) 9 thousand bottles of wine 
E) Nothing, it is a free lunch. 
A) 12 tons of rice 
B) 15 thousand bottles of wine 
C) 6 thousand bottles of wine 
D) 9 thousand bottles of wine 
E) Nothing, it is a free lunch.

Question 10

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point D.What would be the opportunity cost to move to point C?

Accepted Answer

A) 6 thousand bottles of wine 
B) 15 thousand bottles of wine 
C) 12 tons of rice 
D) Nothing, it is a free lunch 
E) This movement is not possible without economic growth. 
A) 6 thousand bottles of wine 
B) 15 thousand bottles of wine 
C) 12 tons of rice 
D) Nothing, it is a free lunch 
E) This movement is not possible without economic growth.

Question 11

-Suppose Puerto Rico and Hawaii currently have the same production possibilities so that the above figure is the PPF for hotels and consumption goods in the two areas.Hotels are a capital good that,once built, will help produce still more consumption goods.If Puerto Rico produces more hotels than Hawaii,

Accepted Answer

A) Hawaii's PPF will shift outward further than Puerto Rico's PPF. 
B) Hawaii's PPF will shift inward. 
C) Puerto Rico's PPF will not shift. 
D) Puerto Rico's and Hawaii's PPF will shift outward by the same amount. 
E) Puerto Rico's PPF will shift outward further than Hawaii's PPF. 
A) Hawaii's PPF will shift outward further than Puerto Rico's PPF. 
B) Hawaii's PPF will shift inward. 
C) Puerto Rico's PPF will not shift. 
D) Puerto Rico's and Hawaii's PPF will shift outward by the same amount. 
E) Puerto Rico's PPF will shift outward further than Hawaii's PPF.

Question 12

By specializing and trading, a country is able to

Accepted Answer

A) obtain the absolute advantage in the goods it produces. 
B) consume but not to produce combinations of goods that lie beyond its production possibilities frontier. 
C) produce but not to consume combinations of goods that lie beyond its production possibilities frontier. 
D) both produce and consume combinations of goods that lie beyond its production possibilities frontier. 
E) neither produce nor consume combinations of goods that lie beyond its production possibilities frontier. 
A) obtain the absolute advantage in the goods it produces. 
B) consume but not to produce combinations of goods that lie beyond its production possibilities frontier. 
C) produce but not to consume combinations of goods that lie beyond its production possibilities frontier. 
D) both produce and consume combinations of goods that lie beyond its production possibilities frontier. 
E) neither produce nor consume combinations of goods that lie beyond its production possibilities frontier.

Question 13

-The figure above shows the production possibilities frontier for a country.A combination of 4 million gallons of milk and 4 million gallons of ice cream is

Accepted Answer

A) unattainable. 
B) attainable and production efficient. 
C) attainable and production inefficient. 
D) unattainable and production efficient. 
E) More information is needed to determine if the point is attainable or not. 
A) unattainable. 
B) attainable and production efficient. 
C) attainable and production inefficient. 
D) unattainable and production efficient. 
E) More information is needed to determine if the point is attainable or not.

Question 14

Scott and Cindy both produce only pizza and tacos.In one hour, Scott can produce 20 pizzas or 40 tacos.In one hour, Cindy can produce 30 pizzas or 40 tacos.Scott's opportunity cost of producing 1 taco is

Accepted Answer

A) 1/2 of a pizza. 
B) 1 pizza. 
C) 2 pizzas. 
D) 20 pizzas. 
E) 2 tacos. 
A) 1/2 of a pizza. 
B) 1 pizza. 
C) 2 pizzas. 
D) 20 pizzas. 
E) 2 tacos.

Question 15

Which of the following is the best definition of economic growth?

Accepted Answer

A) The investment in capital and consumption goods by an economy. 
B) The opportunity cost of capital. 
C) The opportunity cost of consumption. 
D) Increased development of land and entrepreneurship. 
E) The sustained expansion of production possibilities. 
A) The investment in capital and consumption goods by an economy. 
B) The opportunity cost of capital. 
C) The opportunity cost of consumption. 
D) Increased development of land and entrepreneurship. 
E) The sustained expansion of production possibilities.

Question 16

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 apples?

Accepted Answer

A) 2 pounds of bananas 
B) 100 pounds of bananas 
C) 2 pounds of apples 
D) 0.5 of a pound of bananas 
E) 5/12 of a pound of bananas 
A) 2 pounds of bananas 
B) 100 pounds of bananas 
C) 2 pounds of apples 
D) 0.5 of a pound of bananas 
E) 5/12 of a pound of bananas

Question 17

Increasing opportunity cost exists

Accepted Answer

A) in the real world. 
B) as long as there is high unemployment. 
C) only in theory but not in real life. 
D) for a country but not for an individual. 
E) inside the PPF but not on the PPF. 
A) in the real world. 
B) as long as there is high unemployment. 
C) only in theory but not in real life. 
D) for a country but not for an individual. 
E) inside the PPF but not on the PPF.

Question 18

If a country has

Accepted Answer

A) an absolute advantage in producing a good, it definitely also has a comparative advantage in producing that good. 
B) an absolute advantage in producing a good, it might or might not have a comparative advantage in producing that good. 
C) a comparative advantage in production of a good, it must also have an absolute advantage in producing that good. 
D) an absolute advantage in producing a good, it definitely will not have a comparative advantage in producing that good. 
E) None of the above answers is correct. 
A) an absolute advantage in producing a good, it definitely also has a comparative advantage in producing that good. 
B) an absolute advantage in producing a good, it might or might not have a comparative advantage in producing that good. 
C) a comparative advantage in production of a good, it must also have an absolute advantage in producing that good. 
D) an absolute advantage in producing a good, it definitely will not have a comparative advantage in producing that good. 
E) None of the above answers is correct.

Question 19

The figure above show Liz's and Joe's production possibilities for Salads and Smoothies.
-Using the figure above, suppose with no trade Liz and Joe each produce at point A on their respective PPFs.Then, Joe suggests that they specialize and trade.He would produces only salads and Liz would produce only smoothies.Then, Joe says, he would buy 16 smoothies from Liz at a price of 1.5 salads per smoothie.Liz should

Accepted Answer

A) accept Joe's offer since she will gain 4 smoothies and 4 salads. 
B) accept Joe's offer as she will be as well off as with no trade. 
C) not accept Joe's offer as the price he offers is too low for her to gain from trade. 
D) not accept Joe's offer since she would lose 2 smoothies and 2 salads. 
E) accept Joe's offer since she will gain 4 salads. 
A) accept Joe's offer since she will gain 4 smoothies and 4 salads. 
B) accept Joe's offer as she will be as well off as with no trade. 
C) not accept Joe's offer as the price he offers is too low for her to gain from trade. 
D) not accept Joe's offer since she would lose 2 smoothies and 2 salads. 
E) accept Joe's offer since she will gain 4 salads.

Question 20

-The above figure shows the PPF for a country that produces computers and computer factories.The nation's production possibilities frontier is PPF₀ .At which of the following production points would the economy grow most rapidly?

Accepted Answer

A) Point A 
B) Point B 
C) Point C 
D) It makes no difference among the three points because they are all production efficient. 
E) More information is needed to answer the question. 
A) Point A 
B) Point B 
C) Point C 
D) It makes no difference among the three points because they are all production efficient. 
E) More information is needed to answer the question.

-The figure above shows the production possibilities frontier for a country.A combination of 3 million gallons of milk and 3 million gallons of ice cream is

Explain why a movement from a point inside a production possibilities frontier to the production possibilities frontier is described as a free lunch and a movement along a production possibilities frontier is described as a tradeoff.

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?

-The table above presents the production possibilities frontier for a nation.Using the information in the table, moving from possibility C to B means that

-The figure above shows a production possibilities frontier.In the figure, when the economy moves from point D to point C, the opportunity cost of producing one more DVD , and when it moves from point C to D, the opportunity cost of producing one more cell phone .

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

Suppose a country operates on its production possibility frontier when it produces 1000 books and 1000 tables.The combination of _ reflects ____

For country North, the opportunity cost incurred when 3 tractors are produced is 21 watches.For country South, the opportunity cost incurred when 5 tractors are produced is 100 watches.Which country has the comparative advantage in the production of tractors?

-The above figure shows the production possibility frontier for a country.What is the opportunity cost to move from point D to point B?

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point D.What would be the opportunity cost to move to point C?

By specializing and trading, a country is able to

-The figure above shows the production possibilities frontier for a country.A combination of 4 million gallons of milk and 4 million gallons of ice cream is

Scott and Cindy both produce only pizza and tacos.In one hour, Scott can produce 20 pizzas or 40 tacos.In one hour, Cindy can produce 30 pizzas or 40 tacos.Scott's opportunity cost of producing 1 taco is

Which of the following is the best definition of economic growth?

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 apples?

Increasing opportunity cost exists

If a country has

-The above figure shows the PPF for a country that produces computers and computer factories.The nation's production possibilities frontier is PPF₀ .At which of the following production points would the economy grow most rapidly?

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

-The figure above shows the production possibilities frontier for a country.A combination of 3 million gallons of milk and 3 million gallons of ice cream is

Explain why a movement from a point inside a production possibilities frontier to the production possibilities frontier is described as a free lunch and a movement along a production possibilities frontier is described as a tradeoff.

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?

-The table above presents the production possibilities frontier for a nation.Using the information in the table, moving from possibility C to B means that

-The figure above shows a production possibilities frontier.In the figure, when the economy moves from point D to point C, the opportunity cost of producing one more DVD ________, and when it moves from point C to D, the opportunity cost of producing one more cell phone ________.

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

Suppose a country operates on its production possibility frontier when it produces 1000 books and 1000 tables.The combination of _________ reflects ____________

For country North, the opportunity cost incurred when 3 tractors are produced is 21 watches.For country South, the opportunity cost incurred when 5 tractors are produced is 100 watches.Which country has the comparative advantage in the production of tractors?

-The above figure shows the production possibility frontier for a country.What is the opportunity cost to move from point D to point B?

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point D.What would be the opportunity cost to move to point C?

By specializing and trading, a country is able to

-The figure above shows the production possibilities frontier for a country.A combination of 4 million gallons of milk and 4 million gallons of ice cream is

Scott and Cindy both produce only pizza and tacos.In one hour, Scott can produce 20 pizzas or 40 tacos.In one hour, Cindy can produce 30 pizzas or 40 tacos.Scott's opportunity cost of producing 1 taco is

Which of the following is the best definition of economic growth?

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 apples?

Increasing opportunity cost exists

If a country has

-The above figure shows the PPF for a country that produces computers and computer factories.The nation's production possibilities frontier is PPF₀ .At which of the following production points would the economy grow most rapidly?

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

-The figure above shows a production possibilities frontier.In the figure, when the economy moves from point D to point C, the opportunity cost of producing one more DVD , and when it moves from point C to D, the opportunity cost of producing one more cell phone .

Suppose a country operates on its production possibility frontier when it produces 1000 books and 1000 tables.The combination of _ reflects ____