Question 1

When one person's opportunity cost of producing a good is lower than another person's opportunity cost of producing the same good, it is called

Accepted Answer

A)  an absolute advantage. 
B)  a comparative advantage. 
C)  specialization. 
D)  production possibilities. 
E)  a trade off. 
A)  an absolute advantage. 
B)  a comparative advantage. 
C)  specialization. 
D)  production possibilities. 
E)  a trade off.

Question 2

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

Question 3

$\begin{array}{ccc}
\text { Possibility } & \text { Robots } & \text { Pizza } \
\hline A & 0 & 40 \
B & 1 & 39 \
C & 2 & 37 \
D & 3 & 34 \
E & 4 & 30 \
F & 5 & 20 \
G & 6 & 0
\end{array}$
-The table above shows a nation's production possibilities frontier.The opportunity cost of a robot between combination D and E is

Accepted Answer

A)  4 pizzas. 
B)  34 pizzas. 
C)  30 pizzas. 
D)  1/4 of a pizza. 
E)  undefined because neither point is production efficient. 
A)  4 pizzas. 
B)  34 pizzas. 
C)  30 pizzas. 
D)  1/4 of a pizza. 
E)  undefined because neither point is production efficient.

Question 4

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

Accepted Answer

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

Question 5

A production point beyond the production possibilities frontier represents what?

Accepted Answer

A production point beyond the

Question 6

-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.Which of the following statements is correct?

Accepted Answer

A)  Deb has a comparative advantage in assembling packets. 
B)  Pete has an absolute advantage in both assembling packets and stuffing envelopes. 
C)  Deb has a comparative advantage in stuffing envelopes. 
D)  Deb has an absolute advantage in both assembling packets and stuffing envelopes. 
E)  Deb has a comparative advantage in both assembling packets and stuffing envelopes. 
A)  Deb has a comparative advantage in assembling packets. 
B)  Pete has an absolute advantage in both assembling packets and stuffing envelopes. 
C)  Deb has a comparative advantage in stuffing envelopes. 
D)  Deb has an absolute advantage in both assembling packets and stuffing envelopes. 
E)  Deb has a comparative advantage in both assembling packets and stuffing envelopes.

Question 7

Economic growth depends upon which of the following?
I.Improving the quality of labor
Ii. Technological advancement
Iii. Increasing the amount of capital

Accepted Answer

A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  i, ii, and iii 
A)  i only 
B)  ii only 
C)  iii only 
D)  i and iii 
E)  i, ii, and iii

Question 8

-The figure above shows a production possibilities frontier.In the figure, the economy faces a tradeoff when ________ cell phones and ________ DVDs.are produced.

Accepted Answer

A)  3 million; 9 million 
B)  2 million; 9 million 
C)  3 million; 8 million 
D)  4.5 million; no 
E)  5 million; 15 million 
A)  3 million; 9 million 
B)  2 million; 9 million 
C)  3 million; 8 million 
D)  4.5 million; no 
E)  5 million; 15 million

Question 9

If Country A can produce an extra plane by giving up two boats, and Country B can produce an extra plane by giving up three boats, then

Accepted Answer

A)  Country A has a comparative advantage over Country B in the production of planes. 
B)  Country B has a comparative advantage over Country A in the production of planes. 
C)  the two countries have no incentive to trade with one another. 
D)  Country A would like to trade with B, but B cannot gain by trading with A. 
E)  Country A has an absolute advantage in producing planes and a comparative advantage in producing boats. 
A)  Country A has a comparative advantage over Country B in the production of planes. 
B)  Country B has a comparative advantage over Country A in the production of planes. 
C)  the two countries have no incentive to trade with one another. 
D)  Country A would like to trade with B, but B cannot gain by trading with A. 
E)  Country A has an absolute advantage in producing planes and a comparative advantage in producing boats.

Question 10

-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

Question 11

"When a person has an absolute advantage in producing a good, the person necessarily has a lower opportunity cost of producing it." Is this assertion true or false?

Accepted Answer

The assertion is incorrect.An absolute a

Question 12

In a production possibilities frontier graph, the cost of producing more units of a good is measured by the

Accepted Answer

A)  dollar value of the resources used to produce the good. 
B)  amount of the other good or service that must be forgone. 
C)  dollar value of the additional output. 
D)  area in the arc between the PPF and a straight line drawn between the starting point and the ending point. 
E)  None of the above answers is correct. 
A)  dollar value of the resources used to produce the good. 
B)  amount of the other good or service that must be forgone. 
C)  dollar value of the additional output. 
D)  area in the arc between the PPF and a straight line drawn between the starting point and the ending point. 
E)  None of the above answers is correct.

Question 13

Moving along the production possibilities frontier itself illustrates

Accepted Answer

A)  the existence of tradeoffs. 
B)  the existence of unemployment of some factors of production. 
C)  the benefits of free lunches. 
D)  how free lunches can be exploited through trade. 
E)  how tradeoffs need not occur if the economy is efficient. 
A)  the existence of tradeoffs. 
B)  the existence of unemployment of some factors of production. 
C)  the benefits of free lunches. 
D)  how free lunches can be exploited through trade. 
E)  how tradeoffs need not occur if the economy is efficient.

Question 14

What is the opportunity cost of economic growth?

Accepted Answer

A)  Consumption goods. 
B)  Capital goods. 
C)  Land. 
D)  Both consumption and capital goods. 
E)  Both capital goods and land. 
A)  Consumption goods. 
B)  Capital goods. 
C)  Land. 
D)  Both consumption and capital goods. 
E)  Both capital goods and land.

Question 15

-The figure above shows the production possibilities frontier for a country.In order for it to move from producing at point A to producing at point B, the country would need to

Accepted Answer

A)  decrease SUV production by 1 million. 
B)  decrease SUV production by 3 million. 
C)  decrease SUV production by 4 million. 
D)  decrease compact car production by 3 million. 
E)  acquire more resources and/or more advanced technology. 
A)  decrease SUV production by 1 million. 
B)  decrease SUV production by 3 million. 
C)  decrease SUV production by 4 million. 
D)  decrease compact car production by 3 million. 
E)  acquire more resources and/or more advanced technology.

Question 16

The fact of increasing opportunity cost when moving on the PPF means that

Accepted Answer

A)  to increase the production of one product requires larger and larger sacrifices of the other good. 
B)  to decrease the production of one product requires smaller and smaller sacrifices of the other good. 
C)  to increase the production of one product requires smaller and smaller sacrifices of the other good. 
D)  when the government forces a movement from one point on the PPF to another point, no production is lost. 
E)  the PPF will be a negatively sloped straight line. 
A)  to increase the production of one product requires larger and larger sacrifices of the other good. 
B)  to decrease the production of one product requires smaller and smaller sacrifices of the other good. 
C)  to increase the production of one product requires smaller and smaller sacrifices of the other good. 
D)  when the government forces a movement from one point on the PPF to another point, no production is lost. 
E)  the PPF will be a negatively sloped straight line.

Question 17

-The figure above shows how the PPF for cell phones and new cell-phone factories can expand.In the figure, if the economy chose the point on this year's PPF that is above point K, the next year's PPF would

Accepted Answer

A)  shift outward along the horizontal axis farther than the new PPF shown in the figure. 
B)  shift outward along the horizontal axis, but not as far as the new PPF shown in the figure. 
C)  shift outward along the vertical axis, not along the horizontal axis. 
D)  shift inward along the horizontal axis. 
E)  shift inward along the vertical axis. 
A)  shift outward along the horizontal axis farther than the new PPF shown in the figure. 
B)  shift outward along the horizontal axis, but not as far as the new PPF shown in the figure. 
C)  shift outward along the vertical axis, not along the horizontal axis. 
D)  shift inward along the horizontal axis. 
E)  shift inward along the vertical axis.

Question 18

If a country is operating at a point of production efficiency,

Accepted Answer

A)  it enjoys a free lunch when increasing production. 
B)  it produces on its production possibilities frontier. 
C)  it must specialize in the production of a good. 
D)  it operates on its trade line. 
E)  it cannot be producing at its point of comparative advantage. 
A)  it enjoys a free lunch when increasing production. 
B)  it produces on its production possibilities frontier. 
C)  it must specialize in the production of a good. 
D)  it operates on its trade line. 
E)  it cannot be producing at its point of comparative advantage.

Question 19

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 20

When drawing a production possibilities frontier, which of the following is held constant?

Accepted Answer

A)  the amount of money in the economy 
B)  the available factors of production and the state of technology 
C)  the prices of goods and services 
D)  the quantity of the goods and services that are produced 
E)  None of the above because nothing is held constant when drawing the production possibilities frontier. 
A)  the amount of money in the economy 
B)  the available factors of production and the state of technology 
C)  the prices of goods and services 
D)  the quantity of the goods and services that are produced 
E)  None of the above because nothing is held constant when drawing the production possibilities frontier.

When one person's opportunity cost of producing a good is lower than another person's opportunity cost of producing the same good, it is called

-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?

Possibility Robots Pizza A 0 40 B 1 39 C 2 37 D 3 34 E 4 30 F 5 20 G 6 0 -The table above shows a nation's production possibilities frontier.The opportunity cost of a robot between combination D and E is

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

A production point beyond the production possibilities frontier represents what?

-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.Which of the following statements is correct?

Economic growth depends upon which of the following? I.Improving the quality of labor Ii. Technological advancement Iii. Increasing the amount of capital

-The figure above shows a production possibilities frontier.In the figure, the economy faces a tradeoff when cell phones and DVDs.are produced.

If Country A can produce an extra plane by giving up two boats, and Country B can produce an extra plane by giving up three boats, then

-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?

"When a person has an absolute advantage in producing a good, the person necessarily has a lower opportunity cost of producing it." Is this assertion true or false?

In a production possibilities frontier graph, the cost of producing more units of a good is measured by the

Moving along the production possibilities frontier itself illustrates

What is the opportunity cost of economic growth?

-The figure above shows the production possibilities frontier for a country.In order for it to move from producing at point A to producing at point B, the country would need to

The fact of increasing opportunity cost when moving on the PPF means that

-The figure above shows how the PPF for cell phones and new cell-phone factories can expand.In the figure, if the economy chose the point on this year's PPF that is above point K, the next year's PPF would

If a country is operating at a point of production efficiency,

To increase its economic growth, a nation should

When drawing a production possibilities frontier, which of the following is held constant?

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

When one person's opportunity cost of producing a good is lower than another person's opportunity cost of producing the same good, it is called

-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?

Possibility Robots Pizza A 0 40 B 1 39 C 2 37 D 3 34 E 4 30 F 5 20 G 6 0 -The table above shows a nation's production possibilities frontier.The opportunity cost of a robot between combination D and E is

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

A production point beyond the production possibilities frontier represents what?

-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.Which of the following statements is correct?

Economic growth depends upon which of the following? I.Improving the quality of labor Ii. Technological advancement Iii. Increasing the amount of capital

-The figure above shows a production possibilities frontier.In the figure, the economy faces a tradeoff when ________ cell phones and ________ DVDs.are produced.

If Country A can produce an extra plane by giving up two boats, and Country B can produce an extra plane by giving up three boats, then

-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?

"When a person has an absolute advantage in producing a good, the person necessarily has a lower opportunity cost of producing it." Is this assertion true or false?

In a production possibilities frontier graph, the cost of producing more units of a good is measured by the

Moving along the production possibilities frontier itself illustrates

What is the opportunity cost of economic growth?

-The figure above shows the production possibilities frontier for a country.In order for it to move from producing at point A to producing at point B, the country would need to

The fact of increasing opportunity cost when moving on the PPF means that

-The figure above shows how the PPF for cell phones and new cell-phone factories can expand.In the figure, if the economy chose the point on this year's PPF that is above point K, the next year's PPF would

If a country is operating at a point of production efficiency,

To increase its economic growth, a nation should

When drawing a production possibilities frontier, which of the following is held constant?

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 a production possibilities frontier.In the figure, the economy faces a tradeoff when cell phones and DVDs.are produced.