Question 1

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 2

A movement from one point on a production possibilities frontier to another represents

Accepted Answer

A)  a tradeoff. 
B)  a free lunch. 
C)  full employment of labor but not capital. 
D)  unemployment. 
E)  an advance in technology. 
A)  a tradeoff. 
B)  a free lunch. 
C)  full employment of labor but not capital. 
D)  unemployment. 
E)  an advance in technology.

Question 3

The figure above shows Liz's and Joe's production possibilities for Salads and Smoothies.
-Liz has a comparative advantage in ________ and an absolute advantage in ________.

Accepted Answer

A)  smoothies only; both goods 
B)  smoothies only; smoothies only 
C)  both goods; both goods 
D)  salads only; both goods 
E)  salads only; salads only 
A)  smoothies only; both goods 
B)  smoothies only; smoothies only 
C)  both goods; both goods 
D)  salads only; both goods 
E)  salads only; salads only

Question 4

-The above figure shows the production possibility frontier for a country. Suppose the country is producing at point D. What is the opportunity cost of increasing the production of rice to 15 tons?

Accepted Answer

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

Question 5

Given the information in the figure above, Joe can benefit from trade as far as the price at which he buys Liz's smoothies is

Accepted Answer

A)  below 5 salads per smoothie. 
B)  not higher than 2 salads per smoothie. 
C)  not lower than 2 salads per smoothie. 
D)  not lower than 1 salad per smoothie. 
E)  not higher than 4 salads per smoothie. 
A)  below 5 salads per smoothie. 
B)  not higher than 2 salads per smoothie. 
C)  not lower than 2 salads per smoothie. 
D)  not lower than 1 salad per smoothie. 
E)  not higher than 4 salads per smoothie.

Question 6

While moving on the production possibilities frontier, if the opportunity cost of producing one good is 1/2, the opportunity cost of producing the other good (in the same range) is

Accepted Answer

A)  1/2. 
B)  1/4. 
C)  2. 
D)  4. 
E)  an amount that cannot be calculated without more information. 
A)  1/2. 
B)  1/4. 
C)  2. 
D)  4. 
E)  an amount that cannot be calculated without more information.

Question 7

-The above figure shows the production possibility frontier for a country. Suppose the country is producing at point E. What would be the opportunity cost to increase the production of wine to 9 thousand bottles?

Accepted Answer

A)  Nothing, it is a free lunch 
B)  12 tons of rice 
C)  15 thousand bottles of wine 
D)  9 thousand bottles of wine 
E)  3 tons of rice 
A)  Nothing, it is a free lunch 
B)  12 tons of rice 
C)  15 thousand bottles of wine 
D)  9 thousand bottles of wine 
E)  3 tons of rice

Question 8

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 9

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 10

$\begin{array}{cccc}
\begin{array}{c}
\text { Production } \
\text { point }
\end{array} & \begin{array}{c}
\text { Beef } \
\text { (pounds) }
\end{array} && \begin{array}{c}
\text { Wheat } \
\text { (bushels) }
\end{array} \
\hline A & 0 & \text { and } & 9 \
B & 2 & \text { and } & 7 \
C & 4 & \text { and } & 4 \
D & 6 & \text { and } & 0
\end{array}$
-The table above presents the production possibilities of Farmer Brown.Use these data to calculate Farmer Brown's opportunity cost of additional beef as Farmer Brown moves from point A to B to C to D.Also use the data to calculate Farmer Brown's opportunity cost of additional wheat as Farmer Brown moves from point D to C to B to A.Based on these costs, does Farmer Brown use resources that are more productive in one activity than the other or are they equally productive in both uses?
 Explain your answer.

Accepted Answer

The opportunity cost of a pound of beef

Question 11

$$\begin{array} { c c c c c c c c } 
&{ \text { Anaconda } } & &{ \text { Bear } } \
\hline \begin{array} { c } 
\text { Production } \
\text { point }
\end{array} & \begin{array} { c } 
\text { Corn } \
\text { (tons) }
\end{array} & \begin{array} { c } 
\text { Shoes } \
\text { (number) }
\end{array} & \begin{array} { c } 
\text { Production Corn } \
\text { point }
\end{array} & \begin{array} { c } 
\text { Cons } \
\text { (tons) }
\end{array} & \begin{array} { c } 
\text { Shoes } \
\text { (number) }
\end{array} \
\hline \text { A } & 0 & \text { and } & 700 & \text { A } & 0 & \text { and } & 1000 \
\text { B } & 1 & \text { and } & 650 & \text { B } & 1 & \text { and } & 900 \
\text { C } & 2 & \text { and } & 550 & \text { C } & 2 & \text { and } & 700 \
\text { D } & 3 & \text { and } & 350 & \text { D } & 3 & \text { and } & 400 \
\text { E } & 4 & \text { and } & 0 & \text { E } & 4 & \text { and } & 0 \
\hline
\end{array}$$
-The table above gives the production possibilities frontier for two countries, Anaconda and Bear.This table shows that

Accepted Answer

A)  when Anaconda and Bear specialize and trade, Anaconda should specialize in the production of shoes . 
B)  when Anaconda and Bear specialize and trade, Anaconda should produce at its production point E. 
C)  Anaconda has an absolute advantage in the production of corn and shoes. 
D)  Bear can consume no more than 2 bushels of corn and 700 pairs of shoes. 
E)  Bear is unable to gain from trade with Anaconda. 
A)  when Anaconda and Bear specialize and trade, Anaconda should specialize in the production of shoes . 
B)  when Anaconda and Bear specialize and trade, Anaconda should produce at its production point E. 
C)  Anaconda has an absolute advantage in the production of corn and shoes. 
D)  Bear can consume no more than 2 bushels of corn and 700 pairs of shoes. 
E)  Bear is unable to gain from trade with Anaconda.

Question 12

-The figure above shows the production possibilities frontier for a country.If the country is producing at point D, then the

Accepted Answer

A)  resources are being used efficiently. 
B)  technology associated with producing SUVs and compact cars is advancing. 
C)  resources are not being used efficiently and/or are unemployed. 
D)  production of SUVs and compact cars is maximized. 
E)  None of the above answers are correct because it is not possible to produce at point D. 
A)  resources are being used efficiently. 
B)  technology associated with producing SUVs and compact cars is advancing. 
C)  resources are not being used efficiently and/or are unemployed. 
D)  production of SUVs and compact cars is maximized. 
E)  None of the above answers are correct because it is not possible to produce at point D.

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

-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 15

-The figure above represents the production possibilities frontier for a country.
a. The nation is currently producing at point B and wants to move to point C.What is the opportunity cost of the move?
b. The nation is currently producing at point B and wants to move to point A.What is the opportunity cost of the move?
c. The nation is currently producing at point D and wants to move to point B.What is the opportunity cost of the move?

Accepted Answer

a. By moving from point B to point C, th

Question 16

$\begin{array}{cccc}
\begin{array}{c}
\text { Production } \
\text { point }
\end{array} & \begin{array}{c}
\text { Milk } \
\text { (gallons) }
\end{array} & & \begin{array}{c}
\text { Shirts } \
\text { (numbers) }
\end{array} \
\hline \text { A } & 0 & \text { and } & 100 \
\text { B } & 2 & \text { and } & 90 \
\text { C } & 4 & \text { and } & 70 \
\text { D } & 6 & \text { and } & 40 \
\text { E } & 8 & \text { and } & 0
\end{array}$
-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 17

The opportunity cost of producing one more unit of a good is calculated by dividing the

Accepted Answer

A)  increase in the quantity of that good by the decrease in the quantity of other good. 
B)  total quantity of that good by the total quantity of other good. 
C)  decrease in the quantity of the other good by the increase in the quantity of the good whose opportunity cost we're calculating. 
D)  total quantity of the other good by the total quantity of the good whose opportunity cost we're calculating. 
E)  price of the good whose opportunity cost we are calculating by the number of units of the other good that are forgone. 
A)  increase in the quantity of that good by the decrease in the quantity of other good. 
B)  total quantity of that good by the total quantity of other good. 
C)  decrease in the quantity of the other good by the increase in the quantity of the good whose opportunity cost we're calculating. 
D)  total quantity of the other good by the total quantity of the good whose opportunity cost we're calculating. 
E)  price of the good whose opportunity cost we are calculating by the number of units of the other good that are forgone.

Question 18

Having a comparative advantage means a nation can

Accepted Answer

A)  benefit from trade. 
B)  produce at a higher opportunity cost. 
C)  produce more of the good. 
D)  produce without incurring an opportunity cost. 
E)  produce the good at a point beyond its PPF. 
A)  benefit from trade. 
B)  produce at a higher opportunity cost. 
C)  produce more of the good. 
D)  produce without incurring an opportunity cost. 
E)  produce the good at a point beyond its PPF.

Question 19

The opportunity cost of one more slice of pizza in terms of sodas is the

Accepted Answer

A)  number of pizza slices we have to give up in order to get one extra soda. 
B)  number of sodas we have to give up in order to get one extra pizza slice. 
C)  total number of sodas that we have divided by the total number of pizza slices that we have. 
D)  total number of pizza slices that we have divided by the total number of sodas that we have. 
E)  price of a pizza slice minus the price of a soda. 
A)  number of pizza slices we have to give up in order to get one extra soda. 
B)  number of sodas we have to give up in order to get one extra pizza slice. 
C)  total number of sodas that we have divided by the total number of pizza slices that we have. 
D)  total number of pizza slices that we have divided by the total number of sodas that we have. 
E)  price of a pizza slice minus the price of a soda.

Question 20

Which of the following statements is correct?

Accepted Answer

A)  If capital is idle, the economy is producing at its full potential. 
B)  The production possibilities frontier shows that there are no limits to production. 
C)  A tradeoff is a limit that forces an exchange or a substitution of one thing for something else. 
D)  Any point on or within the PPF is production efficient. 
E)  None of the above answers are correct. 
A)  If capital is idle, the economy is producing at its full potential. 
B)  The production possibilities frontier shows that there are no limits to production. 
C)  A tradeoff is a limit that forces an exchange or a substitution of one thing for something else. 
D)  Any point on or within the PPF is production efficient. 
E)  None of the above answers are correct.

If a country has

A movement from one point on a production possibilities frontier to another represents

The figure above shows Liz's and Joe's production possibilities for Salads and Smoothies. -Liz has a comparative advantage in and an absolute advantage in .

-The above figure shows the production possibility frontier for a country. Suppose the country is producing at point D. What is the opportunity cost of increasing the production of rice to 15 tons?

Given the information in the figure above, Joe can benefit from trade as far as the price at which he buys Liz's smoothies is

While moving on the production possibilities frontier, if the opportunity cost of producing one good is 1/2, the opportunity cost of producing the other good (in the same range) is

-The above figure shows the production possibility frontier for a country. Suppose the country is producing at point E. What would be the opportunity cost to increase the production of wine to 9 thousand bottles?

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?

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

-The figure above shows the production possibilities frontier for a country.If the country is producing at point D, then the

-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

-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 .

The opportunity cost of producing one more unit of a good is calculated by dividing the

Having a comparative advantage means a nation can

The opportunity cost of one more slice of pizza in terms of sodas is the

Which of the following statements is correct?

Getting Started

The Usand Global Economies

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

Exam 3: The Economic Problem

If a country has

A movement from one point on a production possibilities frontier to another represents

The figure above shows Liz's and Joe's production possibilities for Salads and Smoothies. -Liz has a comparative advantage in ________ and an absolute advantage in ________.

-The above figure shows the production possibility frontier for a country. Suppose the country is producing at point D. What is the opportunity cost of increasing the production of rice to 15 tons?

Given the information in the figure above, Joe can benefit from trade as far as the price at which he buys Liz's smoothies is

While moving on the production possibilities frontier, if the opportunity cost of producing one good is 1/2, the opportunity cost of producing the other good (in the same range) is

-The above figure shows the production possibility frontier for a country. Suppose the country is producing at point E. What would be the opportunity cost to increase the production of wine to 9 thousand bottles?

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?

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

-The figure above shows the production possibilities frontier for a country.If the country is producing at point D, then the

-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

-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 ________.

The opportunity cost of producing one more unit of a good is calculated by dividing the

Having a comparative advantage means a nation can

The opportunity cost of one more slice of pizza in terms of sodas is the

Which of the following statements is correct?

Getting Started

The Usand Global Economies

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

The figure above shows Liz's and Joe's production possibilities for Salads and Smoothies. -Liz has a comparative advantage in and an absolute advantage in .

-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 .