Question 1

-The figure above shows a production possibilities frontier.In the figure, which of the following combinations of the two goods are efficient?

Accepted Answer

A) 2 million cell phones and 13 million DVDs 
B) 5 million cell phones and 15 million DVDs 
C) No cell phones and 15 million DVDs 
D) 4 million cell phones and 4 million DVDs 
E) None of these combinations is efficient. 
A) 2 million cell phones and 13 million DVDs 
B) 5 million cell phones and 15 million DVDs 
C) No cell phones and 15 million DVDs 
D) 4 million cell phones and 4 million DVDs 
E) None of these combinations is efficient.

Question 2

Specialization and trade make a country better off because with trade the country can consume at a point

Accepted Answer

A) outside its production possibilities frontier. 
B) inside its production possibilities frontier. 
C) on its production possibilities frontier. 
D) on its trading partner's production possibilities frontier. 
E) inside its trading partner's production possibilities frontier. 
A) outside its production possibilities frontier. 
B) inside its production possibilities frontier. 
C) on its production possibilities frontier. 
D) on its trading partner's production possibilities frontier. 
E) inside its trading partner's production possibilities frontier.

Question 3

-In the above figure, Jack's opportunity cost of producing 1 gallon of soda is ________ of bottled water.

Accepted Answer

A) 1 gallon 
B) 1/2 of a gallon 
C) 6 gallons 
D) 1/4 of a gallon 
E) 2 gallons 
A) 1 gallon 
B) 1/2 of a gallon 
C) 6 gallons 
D) 1/4 of a gallon 
E) 2 gallons

Question 4

-The table above shows the amounts of cloth and cheese that China and Pakistan can produce in an hour.Which country has the comparative advantage in cloth and which country has the comparative advantage in cheese?

Accepted Answer

In China, to produce 8 cloths has an opp

Question 5

-Suppose that Germany, France, Estonia, and India all have the same production possibilities, illustrated in the figure above.Based on the production points in the figure, India is most likely to expand its PPF to

Accepted Answer

A) PPF₃ or PPF₂. 
B) PPF₃. 
C) PPF₁. 
D) PPF₁. or PPF₂. 
E) PPF₂. 
A) PPF₃ or PPF₂. 
B) PPF₃. 
C) PPF₁. 
D) PPF₁. or PPF₂. 
E) PPF₂.

Question 6

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point A.What would be the opportunity cost to increase the production of rice to 12 tons?

Accepted Answer

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

Question 7

A free lunch (the absence of a tradeoff)when the production of a good is increased is possible for the entire economy only if

Accepted Answer

A) less of some product is produced. 
B) prices are decreased. 
C) prices are increased. 
D) resources are used inefficiently. 
E) there is a movement along the PPF. 
A) less of some product is produced. 
B) prices are decreased. 
C) prices are increased. 
D) resources are used inefficiently. 
E) there is a movement along the PPF.

Question 8

In terms of a nation's production possibilities frontier, what impact does international trade have?

Accepted Answer

A) International trade shifts the nation's production possibilities frontier outward. 
B) International trade shifts the nation's production possibilities frontier inward. 
C) International trade allows the nation to consume at a point outside its production possibilities frontier. 
D) International trade shifts the production possibilities frontier outward for the goods that are exported and inward for the goods that are imported. 
E) International trade shifts the production possibilities frontier outward for the goods that are imported and inward for the goods that are exported. 
A) International trade shifts the nation's production possibilities frontier outward. 
B) International trade shifts the nation's production possibilities frontier inward. 
C) International trade allows the nation to consume at a point outside its production possibilities frontier. 
D) International trade shifts the production possibilities frontier outward for the goods that are exported and inward for the goods that are imported. 
E) International trade shifts the production possibilities frontier outward for the goods that are imported and inward for the goods that are exported.

Question 9

In the movie Cast Away, Tom Hanks plays a FedEx efficiency expert stranded on a deserted island.While on the island, he divides his time between catching fish, gathering coconuts, painting, and building a raft.Suppose that these were Mr.Hanks' only activities.Did he face an opportunity cost from pursuing any of these activities? Why or why not?

Accepted Answer

Yes, Mr.Hanks faces an opportunity cost

Question 10

To achieve gains from trade, a country

Accepted Answer

A) needs to have an absolute advantage in the production of all goods. 
B) specializes in the producing a good in which it has a lower opportunity cost. 
C) must produce at a point beyond its PPF. 
D) should produce at the midpoint of its PPF. 
E) needs to have an absolute advantage in the production of at least one good. 
A) needs to have an absolute advantage in the production of all goods. 
B) specializes in the producing a good in which it has a lower opportunity cost. 
C) must produce at a point beyond its PPF. 
D) should produce at the midpoint of its PPF. 
E) needs to have an absolute advantage in the production of at least one good.

Question 11

Moving on a bowed out PPF, what happens to the opportunity cost of its production as a nation specializes more in one product?

Accepted Answer

The bowed out PPF indicates th

Question 12

"Because the United States is the largest economy in the world and can produce anything it needs domestically, there are no gains from trade for the United States." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect.The

Question 13

Which of the following is correct about comparative advantage?

Accepted Answer

A) Some countries will have a comparative advantage in everything. 
B) Having a comparative advantage without an absolute advantage is impossible. 
C) A comparative advantage in a good means that the country can produce more of the good than any other country. 
D) A country has a comparative advantage in the production of a good if it can produce the good at lower opportunity cost than any other country. 
E) None of the above answers is correct. 
A) Some countries will have a comparative advantage in everything. 
B) Having a comparative advantage without an absolute advantage is impossible. 
C) A comparative advantage in a good means that the country can produce more of the good than any other country. 
D) A country has a comparative advantage in the production of a good if it can produce the good at lower opportunity cost than any other country. 
E) None of the above answers is correct.

Question 14

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

Accepted Answer

A) 1000 bottles of wine 
B) 500 bottles of wine 
C) 2 bottles of wine 
D) 1/2 of a bottle of wine 
E) None of the above answers is correct. 
A) 1000 bottles of wine 
B) 500 bottles of wine 
C) 2 bottles of wine 
D) 1/2 of a bottle of wine 
E) None of the above answers is correct.

Question 15

-The above figure shows the production possibility frontier for an economy.The point or points that are attainable and production efficient are

Accepted Answer

A) points B and C. 
B) points A, B, and C. 
C) point E. 
D) points A, B, C, and D. 
E) points A and D. 
A) points B and C. 
B) points A, B, and C. 
C) point E. 
D) points A, B, C, and D. 
E) points A and D.

Question 16

If the production possibilities frontier between bottled water and water in a jug is a straight line, which of the following statements would be correct?

Accepted Answer

A) A large amount of unemployment must exist. 
B) Resources are equally productive at producing either product. 
C) There is no tradeoff between the two goods. 
D) There is no decrease in the production of one good when the production of the other is increased. 
E) Producing more of one good gives the economy a free lunch. 
A) A large amount of unemployment must exist. 
B) Resources are equally productive at producing either product. 
C) There is no tradeoff between the two goods. 
D) There is no decrease in the production of one good when the production of the other is increased. 
E) Producing more of one good gives the economy a free lunch.

Question 17

-A (very, very small)country produces milk and shirts and its production possibilities frontier is in the table above.
a∙The nation is currently producing at point B.What is the opportunity cost of two additional gallons of milk? At point C? At point D? What do your results show?
b∙Suppose the nation is initially producing 4 gallons of milk and 40 shirts.What is the opportunity cost of 2 additional gallons of milk? Explain your answer.

Accepted Answer

a∙At point B, the opportunity cost of 2

Question 18

-The figure above shows a nation's production possibilities frontier.In the figure, point B shows

Accepted Answer

A) an unattainable point. 
B) an attainable point. 
C) a point with a free lunch. 
D) a point with no trade off. 
E) a point at which there are unemployed resources. 
A) an unattainable point. 
B) an attainable point. 
C) a point with a free lunch. 
D) a point with no trade off. 
E) a point at which there are unemployed resources.

Question 19

"When countries specialize in producing the good in which they have a comparative advantage and then trade with each other, only the country with the absolute advantage gains." Is the previous statement correct or incorrect? Briefly explain your answer.

Accepted Answer

The statement is incorrect.Absolute adva

Question 20

-The figure above shows a production possibilities frontier.In the figure, which of the following combinations of the two goods cannot be produced with the current resources and technology?

Accepted Answer

A) 2 million cell phones and 13 million DVDs 
B) 4 million cell phones and 4 million DVDs 
C) 1 million cell phones and 14 million DVDs 
D) 3 million cell phones and 5 million DVDs 
E) 5 million cell phones and no DVDs 
A) 2 million cell phones and 13 million DVDs 
B) 4 million cell phones and 4 million DVDs 
C) 1 million cell phones and 14 million DVDs 
D) 3 million cell phones and 5 million DVDs 
E) 5 million cell phones and no DVDs

-The figure above shows a production possibilities frontier.In the figure, which of the following combinations of the two goods are efficient?

Specialization and trade make a country better off because with trade the country can consume at a point

-In the above figure, Jack's opportunity cost of producing 1 gallon of soda is ________ of bottled water.

-The table above shows the amounts of cloth and cheese that China and Pakistan can produce in an hour.Which country has the comparative advantage in cloth and which country has the comparative advantage in cheese?

-Suppose that Germany, France, Estonia, and India all have the same production possibilities, illustrated in the figure above.Based on the production points in the figure, India is most likely to expand its PPF to

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point A.What would be the opportunity cost to increase the production of rice to 12 tons?

A free lunch (the absence of a tradeoff)when the production of a good is increased is possible for the entire economy only if

In terms of a nation's production possibilities frontier, what impact does international trade have?

To achieve gains from trade, a country

Moving on a bowed out PPF, what happens to the opportunity cost of its production as a nation specializes more in one product?

"Because the United States is the largest economy in the world and can produce anything it needs domestically, there are no gains from trade for the United States." Is the previous statement correct or incorrect?

Which of the following is correct about comparative advantage?

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

-The above figure shows the production possibility frontier for an economy.The point or points that are attainable and production efficient are

If the production possibilities frontier between bottled water and water in a jug is a straight line, which of the following statements would be correct?

-The figure above shows a nation's production possibilities frontier.In the figure, point B shows

"When countries specialize in producing the good in which they have a comparative advantage and then trade with each other, only the country with the absolute advantage gains." Is the previous statement correct or incorrect? Briefly explain your answer.

-The figure above shows a production possibilities frontier.In the figure, which of the following combinations of the two goods cannot be produced with the current resources and technology?

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 a production possibilities frontier.In the figure, which of the following combinations of the two goods are efficient?

Specialization and trade make a country better off because with trade the country can consume at a point

-In the above figure, Jack's opportunity cost of producing 1 gallon of soda is ________ of bottled water.

-The table above shows the amounts of cloth and cheese that China and Pakistan can produce in an hour.Which country has the comparative advantage in cloth and which country has the comparative advantage in cheese?

-Suppose that Germany, France, Estonia, and India all have the same production possibilities, illustrated in the figure above.Based on the production points in the figure, India is most likely to expand its PPF to

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point A.What would be the opportunity cost to increase the production of rice to 12 tons?

A free lunch (the absence of a tradeoff)when the production of a good is increased is possible for the entire economy only if

In terms of a nation's production possibilities frontier, what impact does international trade have?

To achieve gains from trade, a country

Moving on a bowed out PPF, what happens to the opportunity cost of its production as a nation specializes more in one product?

"Because the United States is the largest economy in the world and can produce anything it needs domestically, there are no gains from trade for the United States." Is the previous statement correct or incorrect?

Which of the following is correct about comparative advantage?

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

-The above figure shows the production possibility frontier for an economy.The point or points that are attainable and production efficient are

If the production possibilities frontier between bottled water and water in a jug is a straight line, which of the following statements would be correct?

-The figure above shows a nation's production possibilities frontier.In the figure, point B shows

"When countries specialize in producing the good in which they have a comparative advantage and then trade with each other, only the country with the absolute advantage gains." Is the previous statement correct or incorrect? Briefly explain your answer.

-The figure above shows a production possibilities frontier.In the figure, which of the following combinations of the two goods cannot be produced with the current resources and technology?

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