Question 1

What does it mean when a "free lunch" is available?
 Relate your answer to the production possibilities frontier.

Accepted Answer

A free lunch means that there is no trad

Question 2

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 3

-The figure above shows the production possibilities frontier for a country. If the economy is operating at point B, then the opportunity cost of another million gallons of milk is

Accepted Answer

A) 4 gallons of ice cream for a gallon of milk. 
B) 3 gallons of ice cream for a gallon of milk. 
C) 1 gallon of ice cream for a gallon of milk. 
D) 1/3 of a gallon of ice cream for a gallon of milk. 
E) zero because after producing another million gallons of milk then zero gallons of ice cream are produced. 
A) 4 gallons of ice cream for a gallon of milk. 
B) 3 gallons of ice cream for a gallon of milk. 
C) 1 gallon of ice cream for a gallon of milk. 
D) 1/3 of a gallon of ice cream for a gallon of milk. 
E) zero because after producing another million gallons of milk then zero gallons of ice cream are produced.

Question 4

Hank requires 1 hour to cut the grass and 3 hours to clean the house. His sister Holly requires 1 hour to cut the grass and 4 hours to clean the house. Which of the following statements is true?

Accepted Answer

A) Hank has a comparative advantage in both cutting the grass and cleaning the house. 
B) Hank and Holly both have a comparative advantage in cutting the grass. 
C) Hank has a lower opportunity cost of cutting the grass. 
D) Hank has an absolute advantage in both cutting the grass and cleaning the house. 
E) Holly has a comparative advantage in cutting the grass. 
A) Hank has a comparative advantage in both cutting the grass and cleaning the house. 
B) Hank and Holly both have a comparative advantage in cutting the grass. 
C) Hank has a lower opportunity cost of cutting the grass. 
D) Hank has an absolute advantage in both cutting the grass and cleaning the house. 
E) Holly has a comparative advantage in cutting the grass.

Question 5

-The figure above illustrates a small country's production possibilities frontier. Moving from point C to point B, the per unit opportunity cost of computers is ________ per computer.

Accepted Answer

A) 4 VCRs 
B) 5/4 of a VCR 
C) 4/5 of a VCR 
D) 1/4 of a VCR 
E) 1 computer 
A) 4 VCRs 
B) 5/4 of a VCR 
C) 4/5 of a VCR 
D) 1/4 of a VCR 
E) 1 computer

Question 6

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 7

-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. If Deb and Pete specialize and trade, how many packets will be assembled?

Accepted Answer

A) 40 
B) more than 40 and less than 80 
C) 80 
D) 160 
E) more than 80 and less than 160 
A) 40 
B) more than 40 and less than 80 
C) 80 
D) 160 
E) more than 80 and less than 160

Question 8

If Toni has an absolute advantage in both sewing and ironing when compared to Tom, then

Accepted Answer

A) they might benefit from trading, but we need more information to determine in which task they should specialize. 
B) neither Toni nor Tom can benefit from trading with each other. 
C) Toni should specialize in sewing, and Tom should specialize in ironing. 
D) Toni cannot benefit from trading with Tom, but Tom can benefit from trading with Toni. 
E) Tom cannot benefit from trading with Toni, but Toni can benefit from trading with Tom. 
A) they might benefit from trading, but we need more information to determine in which task they should specialize. 
B) neither Toni nor Tom can benefit from trading with each other. 
C) Toni should specialize in sewing, and Tom should specialize in ironing. 
D) Toni cannot benefit from trading with Tom, but Tom can benefit from trading with Toni. 
E) Tom cannot benefit from trading with Toni, but Toni can benefit from trading with Tom.

Question 9

Other things equal, if Mexico devotes more resources to train its population than Spain,

Accepted Answer

A) Mexico will be able to eliminate opportunity cost faster than Spain. 
B) Mexico will be able to eliminate scarcity faster than Spain. 
C) Spain will grow faster than Mexico. 
D) Mexico will have more current consumption than Spain. 
E) Mexico will grow faster than Spain. 
A) Mexico will be able to eliminate opportunity cost faster than Spain. 
B) Mexico will be able to eliminate scarcity faster than Spain. 
C) Spain will grow faster than Mexico. 
D) Mexico will have more current consumption than Spain. 
E) Mexico will grow faster than Spain.

Question 10

Once you find the opportunity cost of producing one unit of a good, to find the opportunity cost of producing the other good, you must

Accepted Answer

A) take the inverse. 
B) multiply by the total amount produced of the second good. 
C) divide by the total amount produced of the second good. 
D) do nothing because the opportunity cost for the first good is the same as the opportunity cost for the second good. 
E) None of the answers is correct. 
A) take the inverse. 
B) multiply by the total amount produced of the second good. 
C) divide by the total amount produced of the second good. 
D) do nothing because the opportunity cost for the first good is the same as the opportunity cost for the second good. 
E) None of the answers is correct.

Question 11

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 12

What is the relationship between the bowed out shape of the production possibilities frontier and the increasing opportunity cost of a good as more of it is produced?

Accepted Answer

The production possibilities frontier is

Question 13

If the production possibilities frontier between two goods were a straight line, then the opportunity cost of one good in terms of another would be

Accepted Answer

A) constant. 
B) increasing. 
C) decreasing. 
D) zero. 
E) either constant, increasing, or decreasing but more information is needed to determine which. 
A) constant. 
B) increasing. 
C) decreasing. 
D) zero. 
E) either constant, increasing, or decreasing but more information is needed to determine which.

Question 14

$$\begin{array} { c c c } 
\text { Possibility } & \text { Robots } & \text { Pizza } \
\hline A & 0 & 40 \
B & 1 & 39 \
C & 2 & 37 \
D & 3 & 34 \
E & 4 & 30 \
F & 5 & 20 \
G & 6 & 0
\end{array}$$
-The table above shows a nation's production possibilities frontier. If the nation wants to produce 4 robots and 34 pizzas,

Accepted Answer

A) it will shift the production possibilities frontier. 
B) the opportunity cost is 9 pizzas. 
C) the nation will be producing inefficiently. 
D) it will be unable to do so because the production point is unattainable. 
E) the nation will then be producing at a production efficient point. 
A) it will shift the production possibilities frontier. 
B) the opportunity cost is 9 pizzas. 
C) the nation will be producing inefficiently. 
D) it will be unable to do so because the production point is unattainable. 
E) the nation will then be producing at a production efficient point.

Question 15

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 16

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 17

-The above figure shows the PPF for a country that produces computers and computer factories. Which of the following would most likely shift the PPF from PPF₀ in one year to PPF₁ in the next?

Accepted Answer

A) Nothing, because the PPF does not shift. 
B) Increase the production of computers from 9 million (at point 
C) to 11 million (at point 
B) . 
C) Decrease the production of computers from 11 million (at point 
E) points A and D. 
A) Nothing, because the PPF does not shift. 
B) Increase the production of computers from 9 million (at point 
C) to 11 million (at point 
B) . 
C) Decrease the production of computers from 11 million (at point 
E) points A and D.

Question 18

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

Accepted Answer

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

Question 19

With no international trade, a country ________ consume at a point outside of its PPF; with international trade, a country ________ consume at a point outside of its PPF.

Accepted Answer

A) cannot; can 
B) can; cannot 
C) can; can 
D) cannot; cannot 
E) None of the above answers is correct because the presence or absence of international trade has nothing to do with where a country consumes in comparison to its PPF. 
A) cannot; can 
B) can; cannot 
C) can; can 
D) cannot; cannot 
E) None of the above answers is correct because the presence or absence of international trade has nothing to do with where a country consumes in comparison to its PPF.

Question 20

What does the vertical intercept of a production possibilities frontier represent?

Accepted Answer

The vertical intercept is the

What does it mean when a "free lunch" is available? Relate your answer to the production possibilities frontier.

To increase its economic growth, a nation should

-The figure above shows the production possibilities frontier for a country. If the economy is operating at point B, then the opportunity cost of another million gallons of milk is

Hank requires 1 hour to cut the grass and 3 hours to clean the house. His sister Holly requires 1 hour to cut the grass and 4 hours to clean the house. Which of the following statements is true?

-The figure above illustrates a small country's production possibilities frontier. Moving from point C to point B, the per unit opportunity cost of computers is ________ per computer.

If a country has

-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. If Deb and Pete specialize and trade, how many packets will be assembled?

If Toni has an absolute advantage in both sewing and ironing when compared to Tom, then

Other things equal, if Mexico devotes more resources to train its population than Spain,

Once you find the opportunity cost of producing one unit of a good, to find the opportunity cost of producing the other good, you must

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

What is the relationship between the bowed out shape of the production possibilities frontier and the increasing opportunity cost of a good as more of it is produced?

If the production possibilities frontier between two goods were a straight line, then the opportunity cost of one good in terms of another would be

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. If the nation wants to produce 4 robots and 34 pizzas,

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

-The above figure shows the PPF for a country that produces computers and computer factories. Which of the following would most likely shift the PPF from PPF₀ in one year to PPF₁ in the next?

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

With no international trade, a country consume at a point outside of its PPF; with international trade, a country consume at a point outside of its PPF.

What does the vertical intercept of a production possibilities frontier represent?

Getting Started

The Us and Global Economies

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 3: The Economic Problem

What does it mean when a "free lunch" is available? Relate your answer to the production possibilities frontier.

To increase its economic growth, a nation should

-The figure above shows the production possibilities frontier for a country. If the economy is operating at point B, then the opportunity cost of another million gallons of milk is

Hank requires 1 hour to cut the grass and 3 hours to clean the house. His sister Holly requires 1 hour to cut the grass and 4 hours to clean the house. Which of the following statements is true?

-The figure above illustrates a small country's production possibilities frontier. Moving from point C to point B, the per unit opportunity cost of computers is ________ per computer.

If a country has

-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. If Deb and Pete specialize and trade, how many packets will be assembled?

If Toni has an absolute advantage in both sewing and ironing when compared to Tom, then

Other things equal, if Mexico devotes more resources to train its population than Spain,

Once you find the opportunity cost of producing one unit of a good, to find the opportunity cost of producing the other good, you must

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

What is the relationship between the bowed out shape of the production possibilities frontier and the increasing opportunity cost of a good as more of it is produced?

If the production possibilities frontier between two goods were a straight line, then the opportunity cost of one good in terms of another would be

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. If the nation wants to produce 4 robots and 34 pizzas,

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

-The above figure shows the PPF for a country that produces computers and computer factories. Which of the following would most likely shift the PPF from PPF₀ in one year to PPF₁ in the next?

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

With no international trade, a country ________ consume at a point outside of its PPF; with international trade, a country ________ consume at a point outside of its PPF.

What does the vertical intercept of a production possibilities frontier represent?

Getting Started

The Us and Global Economies

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

With no international trade, a country consume at a point outside of its PPF; with international trade, a country consume at a point outside of its PPF.