Question 1

As an economy produces more of one of the goods on a bowed out production possibilities frontier, what happens to the opportunity cost of producing the good?

Accepted Answer

A) It remains constant. 
B) It decreases. 
C) It increases. 
D) It might increase, decrease, or remain constant depending on how much people value the additional units of the good. 
E) None of these depict what happens to opportunity cost. 
A) It remains constant. 
B) It decreases. 
C) It increases. 
D) It might increase, decrease, or remain constant depending on how much people value the additional units of the good. 
E) None of these depict what happens to opportunity cost.

Question 2

John can make pizza at a lower opportunity cost than Allen, but Allen can make more pizzas per day than John.Therefore,

Accepted Answer

A) John cannot benefit from trade with Allen. 
B) Allen cannot benefit from trade with John. 
C) John has a comparative advantage in pizza. 
D) John has an absolute advantage in pizza. 
E) Allen has a comparative advantage in pizza. 
A) John cannot benefit from trade with Allen. 
B) Allen cannot benefit from trade with John. 
C) John has a comparative advantage in pizza. 
D) John has an absolute advantage in pizza. 
E) Allen has a comparative advantage in pizza.

Question 3

A country produces only apples and bananas.Moving from point A to point B along its production possibilities frontier, 5 apples are gained and 4 bananas are forgone.What is the opportunity cost of an apple?

Accepted Answer

A) 4 bananas 
B) 5/4 of a bananas 
C) 4/5 of a banana 
D) 1 apple 
E) None of the above answers is correct. 
A) 4 bananas 
B) 5/4 of a bananas 
C) 4/5 of a banana 
D) 1 apple 
E) None of the above answers is correct.

Question 4

-The table above gives four production possibilities for airplanes and cruise ships.In possibility A, how many resources are devoted to the production of cruise ships?

Accepted Answer

A) 0 
B) few 
C) most 
D) all 
E) It is impossible to tell without more information about the prices of airplanes and cruise ships. 
A) 0 
B) few 
C) most 
D) all 
E) It is impossible to tell without more information about the prices of airplanes and cruise ships.

Question 5

-In the table above, Jack's comparative advantage is producing ________ and Jill's comparative advantage is producing ________.

Accepted Answer

A) clothing; food 
B) clothing and food; nothing 
C) nothing; clothing and food 
D) food; clothing 
E) clothing; clothing 
A) clothing; food 
B) clothing and food; nothing 
C) nothing; clothing and food 
D) food; clothing 
E) clothing; clothing

Question 6

The negative slope of the production possibilities frontier represents the idea

Accepted Answer

A) that free lunches are possible. 
B) of tradeoffs, that in order to produce more of one good, the nation must produce less of another. 
C) of unemployment. 
D) of inefficient production. 
E) that prices rise as less is produced. 
A) that free lunches are possible. 
B) of tradeoffs, that in order to produce more of one good, the nation must produce less of another. 
C) of unemployment. 
D) of inefficient production. 
E) that prices rise as less is produced.

Question 7

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

Accepted Answer

A) PPF₁; PPF₁ 
B) PPF₂; PPF₂ 
C) PPF₀; PPF₀ 
D) PPF₂; PPF₁ 
E) PPF₁; PPF₂ 
A) PPF₁; PPF₁ 
B) PPF₂; PPF₂ 
C) PPF₀; PPF₀ 
D) PPF₂; PPF₁ 
E) PPF₁; PPF₂

Question 8

-Deb and Pete have volunteered to help their favorite charity mail out fundraiser information.The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes.What is Deb's opportunity cost of assembling 1 packet?

Accepted Answer

A) 160 envelopes 
B) 40 envelopes 
C) 4 envelopes 
D) 1/4 of an envelope 
E) 4 packets 
A) 160 envelopes 
B) 40 envelopes 
C) 4 envelopes 
D) 1/4 of an envelope 
E) 4 packets

Question 9

Rika's opportunity cost of producing 100 t-shirts is 50 jackets.Jeff's opportunity cost of producing 75 t-shirts is 25 jackets.Who should specialize in jackets?

Accepted Answer

A) Rika 
B) Jeff 
C) neither 
D) both 
E) More information is needed about their production possibilities frontiers to determine who should specialize in jackets. 
A) Rika 
B) Jeff 
C) neither 
D) both 
E) More information is needed about their production possibilities frontiers to determine who should specialize in jackets.

Question 10

When economists state that the opportunity cost of a product increases as more of it is produced, what do they mean? For instance, what is the opportunity cost? And, where in a PPF diagram does this statement apply and where does it not apply?

Accepted Answer

In general, the opportunity cost of incr

Question 11

-The above figure shows the production possibility frontier for a country.What is the opportunity cost per ton of rice to move from point D to E?

Accepted Answer

A) 3000 bottles of wine 
B) 333 bottles of wine 
C) 3 bottles of wine 
D) 1/3 of a bottle of wine 
E) None of the above answers is correct. 
A) 3000 bottles of wine 
B) 333 bottles of wine 
C) 3 bottles of wine 
D) 1/3 of a bottle of wine 
E) None of the above answers is correct.

Question 12

When a person has a comparative advantage in producing a good or service, the person has

Accepted Answer

A) a higher opportunity cost in producing that product than someone else. 
B) a constant opportunity cost in producing that product. 
C) a decreasing opportunity cost in producing that product. 
D) a lower opportunity cost in producing that product than someone else. 
E) an increasing marginal benefit in producing the good. 
A) a higher opportunity cost in producing that product than someone else. 
B) a constant opportunity cost in producing that product. 
C) a decreasing opportunity cost in producing that product. 
D) a lower opportunity cost in producing that product than someone else. 
E) an increasing marginal benefit in producing the good.

Question 13

-In the table above, how many jackets must Mary forgo for every dress she makes?

Accepted Answer

A) 12 jackets 
B) 3/4 of a jacket 
C) 2/3 of a jacket 
D) 1 1/2 jackets 
E) 8 jackets 
A) 12 jackets 
B) 3/4 of a jacket 
C) 2/3 of a jacket 
D) 1 1/2 jackets 
E) 8 jackets

Question 14

-Jean can either type her term paper or create Web pages during the limited time she has available.The table above shows her PPF.
a∙Can Jean type 90 pages and create 2 Web pages?
b∙Use the above numbers to calculate the opportunity cost of a typed page as she increases her time typing and decreases time creating a Web page.

Accepted Answer

a∙Jean cannot type 90 pages and create 2

Question 15

-The table above presents the production possibilities frontier for a nation.Using the information in the table, when moving from possibility A to B to C to ultimately E, the cost of a unit of capital goods in terms of consumption goods

Accepted Answer

A) increases. 
B) decreases. 
C) remains the same. 
D) decreases from possibility A to C, and then increases from possibility C to D. 
E) cannot be calculated. 
A) increases. 
B) decreases. 
C) remains the same. 
D) decreases from possibility A to C, and then increases from possibility C to D. 
E) cannot be calculated.

Question 16

"Comparative advantage" is defined as a situation in which one person can produce

Accepted Answer

A) more of all goods than another person. 
B) more of a good than another person. 
C) a good for a lower dollar cost than another person. 
D) a good for a lower opportunity cost than another person. 
E) all goods for lower opportunity costs than another person. 
A) more of all goods than another person. 
B) more of a good than another person. 
C) a good for a lower dollar cost than another person. 
D) a good for a lower opportunity cost than another person. 
E) all goods for lower opportunity costs than another person.

Question 17

Assume that an association of young workers has lobbied Congress to require that all workers retire once they reach the age of fifty.What impact would this law have on the nation's production possibilities frontier?

Accepted Answer

A) no impact at all 
B) The level of unemployment would decrease so the production possibilities frontier would shift outward. 
C) The nation would move to a new position on its production possibilities frontier but the frontier itself would not shift. 
D) The production possibilities frontier would shift inward. 
E) The number of young workers would increase so the production possibilities frontier would shift outward. 
A) no impact at all 
B) The level of unemployment would decrease so the production possibilities frontier would shift outward. 
C) The nation would move to a new position on its production possibilities frontier but the frontier itself would not shift. 
D) The production possibilities frontier would shift inward. 
E) The number of young workers would increase so the production possibilities frontier would shift outward.

Question 18

-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, Steve has a comparative advantage in

Accepted Answer

A) both potatoes and tomatoes. 
B) neither potatoes nor tomatoes. 
C) potatoes. 
D) tomatoes. 
E) More information is needed about Huey's comparative advantage in order to determine Steve's comparative advantage. 
A) both potatoes and tomatoes. 
B) neither potatoes nor tomatoes. 
C) potatoes. 
D) tomatoes. 
E) More information is needed about Huey's comparative advantage in order to determine Steve's comparative advantage.

Question 19

-In the table above, Jack's opportunity cost for 1 pound of food is ________ and his opportunity cost for 1 pound of clothing is ________.

Accepted Answer

A) 1 pound of clothing; 4 pounds of food 
B) 1/2 of a pound of clothing; 2 pounds of food 
C) 1/3 of a pound of clothing; 3 pounds of food 
D) 2 pounds of clothing; 2 pounds of food 
E) 1 pound of food; 1 pound of clothing 
A) 1 pound of clothing; 4 pounds of food 
B) 1/2 of a pound of clothing; 2 pounds of food 
C) 1/3 of a pound of clothing; 3 pounds of food 
D) 2 pounds of clothing; 2 pounds of food 
E) 1 pound of food; 1 pound of clothing

Question 20

-In the above table, for Mary the opportunity cost of producing a dress is ________ and the opportunity cost for Mark of producing a dress is ________.

Accepted Answer

A) 1 1/2 jackets; 2/3 of a jacket 
B) 1 1/2 jackets; 2 1/2 jackets 
C) 1 1/4 jackets; 1/2 of a jacket 
D) 1 jacket; 1 jacket 
E) 1 dress; 1 dress 
A) 1 1/2 jackets; 2/3 of a jacket 
B) 1 1/2 jackets; 2 1/2 jackets 
C) 1 1/4 jackets; 1/2 of a jacket 
D) 1 jacket; 1 jacket 
E) 1 dress; 1 dress

As an economy produces more of one of the goods on a bowed out production possibilities frontier, what happens to the opportunity cost of producing the good?

John can make pizza at a lower opportunity cost than Allen, but Allen can make more pizzas per day than John.Therefore,

A country produces only apples and bananas.Moving from point A to point B along its production possibilities frontier, 5 apples are gained and 4 bananas are forgone.What is the opportunity cost of an apple?

-The table above gives four production possibilities for airplanes and cruise ships.In possibility A, how many resources are devoted to the production of cruise ships?

-In the table above, Jack's comparative advantage is producing and Jill's comparative advantage is producing .

The negative slope of the production possibilities frontier represents the idea

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

-Deb and Pete have volunteered to help their favorite charity mail out fundraiser information.The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes.What is Deb's opportunity cost of assembling 1 packet?

Rika's opportunity cost of producing 100 t-shirts is 50 jackets.Jeff's opportunity cost of producing 75 t-shirts is 25 jackets.Who should specialize in jackets?

When economists state that the opportunity cost of a product increases as more of it is produced, what do they mean? For instance, what is the opportunity cost? And, where in a PPF diagram does this statement apply and where does it not apply?

-The above figure shows the production possibility frontier for a country.What is the opportunity cost per ton of rice to move from point D to E?

When a person has a comparative advantage in producing a good or service, the person has

-In the table above, how many jackets must Mary forgo for every dress she makes?

-The table above presents the production possibilities frontier for a nation.Using the information in the table, when moving from possibility A to B to C to ultimately E, the cost of a unit of capital goods in terms of consumption goods

"Comparative advantage" is defined as a situation in which one person can produce

Assume that an association of young workers has lobbied Congress to require that all workers retire once they reach the age of fifty.What impact would this law have on the nation's production possibilities frontier?

-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, Steve has a comparative advantage in

-In the table above, Jack's opportunity cost for 1 pound of food is and his opportunity cost for 1 pound of clothing is .

-In the above table, for Mary the opportunity cost of producing a dress is and the opportunity cost for Mark of producing a dress is .

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

As an economy produces more of one of the goods on a bowed out production possibilities frontier, what happens to the opportunity cost of producing the good?

John can make pizza at a lower opportunity cost than Allen, but Allen can make more pizzas per day than John.Therefore,

A country produces only apples and bananas.Moving from point A to point B along its production possibilities frontier, 5 apples are gained and 4 bananas are forgone.What is the opportunity cost of an apple?

-The table above gives four production possibilities for airplanes and cruise ships.In possibility A, how many resources are devoted to the production of cruise ships?

-In the table above, Jack's comparative advantage is producing ________ and Jill's comparative advantage is producing ________.

The negative slope of the production possibilities frontier represents the idea

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

-Deb and Pete have volunteered to help their favorite charity mail out fundraiser information.The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes.What is Deb's opportunity cost of assembling 1 packet?

Rika's opportunity cost of producing 100 t-shirts is 50 jackets.Jeff's opportunity cost of producing 75 t-shirts is 25 jackets.Who should specialize in jackets?

When economists state that the opportunity cost of a product increases as more of it is produced, what do they mean? For instance, what is the opportunity cost? And, where in a PPF diagram does this statement apply and where does it not apply?

-The above figure shows the production possibility frontier for a country.What is the opportunity cost per ton of rice to move from point D to E?

When a person has a comparative advantage in producing a good or service, the person has

-In the table above, how many jackets must Mary forgo for every dress she makes?

-The table above presents the production possibilities frontier for a nation.Using the information in the table, when moving from possibility A to B to C to ultimately E, the cost of a unit of capital goods in terms of consumption goods

"Comparative advantage" is defined as a situation in which one person can produce

Assume that an association of young workers has lobbied Congress to require that all workers retire once they reach the age of fifty.What impact would this law have on the nation's production possibilities frontier?

-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, Steve has a comparative advantage in

-In the table above, Jack's opportunity cost for 1 pound of food is ________ and his opportunity cost for 1 pound of clothing is ________.

-In the above table, for Mary the opportunity cost of producing a dress is ________ and the opportunity cost for Mark of producing a dress is ________.

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 table above, Jack's comparative advantage is producing and Jill's comparative advantage is producing .

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

-In the table above, Jack's opportunity cost for 1 pound of food is and his opportunity cost for 1 pound of clothing is .

-In the above table, for Mary the opportunity cost of producing a dress is and the opportunity cost for Mark of producing a dress is .