Question 1

The production possibilities frontier is the boundary between the

Accepted Answer

A) goods and services that the economy can produce. 
B) attainable and unattainable combinations of goods and services. 
C) wanted and unwanted combinations of goods and services. 
D) rational and irrational choices facing a society. 
E) affordable and unaffordable combinations of production. 
A) goods and services that the economy can produce. 
B) attainable and unattainable combinations of goods and services. 
C) wanted and unwanted combinations of goods and services. 
D) rational and irrational choices facing a society. 
E) affordable and unaffordable combinations of production.

Question 2

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 3

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 4

Suppose that in a PPF graph, wheat is on the vertical axis and jets are on the horizontal axis. Moving down along the PPF, the

Accepted Answer

A) number of jets increases and the opportunity cost of jets increases. 
B) amount of wheat increases and the opportunity cost of wheat increases. 
C) number of jets increases and the opportunity cost of jets decreases. 
D) amount of wheat increases and opportunity cost of wheat decreases. 
E) opportunity cost of jets and wheat both increase. 
A) number of jets increases and the opportunity cost of jets increases. 
B) amount of wheat increases and the opportunity cost of wheat increases. 
C) number of jets increases and the opportunity cost of jets decreases. 
D) amount of wheat increases and opportunity cost of wheat decreases. 
E) opportunity cost of jets and wheat both increase.

Question 5

In a production possibilities frontier diagram, the attainable production points are shown as

Accepted Answer

A) only the points on the production possibilities frontier. 
B) only the points beyond the production possibilities frontier. 
C) only the points inside the production possibilities frontier. 
D) the points inside and the points on the production possibilities frontier. 
E) any of the production points. 
A) only the points on the production possibilities frontier. 
B) only the points beyond the production possibilities frontier. 
C) only the points inside the production possibilities frontier. 
D) the points inside and the points on the production possibilities frontier. 
E) any of the production points.

Question 6

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 7

-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 8

The United States can use all of its resources to produce 50 computers or 4,000 shoes. Suppose that at world market prices, one computer exchanges for 100 shoes. Explain how the United States can gain from trade.

Accepted Answer

In the United States, the opportunity co

Question 9

-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 10

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 11

When a country's production possibilities frontier shifts outward over time, the country is experiencing

Accepted Answer

A) no opportunity cost. 
B) economic growth. 
C) higher unemployment of resources. 
D) a decrease in unemployment of resources. 
E) an end to opportunity cost. 
A) no opportunity cost. 
B) economic growth. 
C) higher unemployment of resources. 
D) a decrease in unemployment of resources. 
E) an end to opportunity cost.

Question 12

Consider a PPF with consumption goods on the horizontal axis and capital goods on the vertical axis. If the country operates on its PPF near its ________ axis, this country ________.

Accepted Answer

A) vertical; will experience greater economic growth 
B) vertical; will not face opportunity costs 
C) horizontal; will have a larger chance at economic growth 
D) horizontal; faces larger trade offs 
E) vertical; is operating at an inefficient point 
A) vertical; will experience greater economic growth 
B) vertical; will not face opportunity costs 
C) horizontal; will have a larger chance at economic growth 
D) horizontal; faces larger trade offs 
E) vertical; is operating at an inefficient point

Question 13

-The figure above shows Prakash's and Gail's production possibilities frontiers for writing books and magazine articles.
a. What is Prakash's opportunity cost of a book?
 What is Gail's opportunity cost?
 Who has the comparative advantage in writing books?
b. Who has the comparative advantage in writing magazine articles?
c. According to their comparative advantages, who should write books and who should write magazine articles?

Accepted Answer

a. In a year, Prakash can write 2 books

Question 14

-Which point in the figure above is an attainable combination that would have unemployed resources?

Accepted Answer

A) point A 
B) point B 
C) point C 
D) point D 
E) point A and point B 
A) point A 
B) point B 
C) point C 
D) point D 
E) point A and point B

Question 15

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 16

Why does a nation experience increasing opportunity cost?

Accepted Answer

A) As the nation moves from a production point within the PPF to one on the PPF, opportunity costs increase. 
B) As the nation moves from a production point within the PPF to another point also within the PPF, opportunity costs increase. 
C) When the amount of resources increases, the opportunity cost of all goods and services increases. 
D) Resources are not equally productive in producing different kinds of goods and services. 
E) Because the nation cannot produce at the unattainable production points that lie beyond the PPF. 
A) As the nation moves from a production point within the PPF to one on the PPF, opportunity costs increase. 
B) As the nation moves from a production point within the PPF to another point also within the PPF, opportunity costs increase. 
C) When the amount of resources increases, the opportunity cost of all goods and services increases. 
D) Resources are not equally productive in producing different kinds of goods and services. 
E) Because the nation cannot produce at the unattainable production points that lie beyond the PPF.

Question 17

What is comparative advantage?
 Give an example.

Accepted Answer

Comparative advantage is the ability of

Question 18

-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 incur an opportunity cost of

Accepted Answer

A) 1 million SUVs. 
B) 3 million SUVs. 
C) 4 million SUVs. 
D) 3 million compact cars. 
E) 0 because the gain in compact cars exceeds the loss in SUVs. 
A) 1 million SUVs. 
B) 3 million SUVs. 
C) 4 million SUVs. 
D) 3 million compact cars. 
E) 0 because the gain in compact cars exceeds the loss in SUVs.

Question 19

When Mik has an absolute advantage in the production of two goods over Tommy, Mik

Accepted Answer

A) is less productive than Tommy. 
B) is better off if he does not engage in specialization and trade with Tommy. 
C) is more productive in producing both goods than Tommy. 
D) always has a comparative advantage over Tommy in the production of both goods. 
E) cannot gain from trade with Tommy. 
A) is less productive than Tommy. 
B) is better off if he does not engage in specialization and trade with Tommy. 
C) is more productive in producing both goods than Tommy. 
D) always has a comparative advantage over Tommy in the production of both goods. 
E) cannot gain from trade with Tommy.

Question 20

As technology advances,

Accepted Answer

A) all opportunity costs decrease. 
B) the PPF shifts outward. 
C) a country moves toward the midpoint along its PPF and can produce more of both goods. 
D) all opportunity costs increase. 
E) the PPF shifts inward because unemployment occurs. 
A) all opportunity costs decrease. 
B) the PPF shifts outward. 
C) a country moves toward the midpoint along its PPF and can produce more of both goods. 
D) all opportunity costs increase. 
E) the PPF shifts inward because unemployment occurs.

The production possibilities frontier is the boundary between the

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

Suppose that in a PPF graph, wheat is on the vertical axis and jets are on the horizontal axis. Moving down along the PPF, the

In a production possibilities frontier diagram, the attainable production points are shown as

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

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

The United States can use all of its resources to produce 50 computers or 4,000 shoes. Suppose that at world market prices, one computer exchanges for 100 shoes. Explain how the United States can gain from trade.

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

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?

When a country's production possibilities frontier shifts outward over time, the country is experiencing

Consider a PPF with consumption goods on the horizontal axis and capital goods on the vertical axis. If the country operates on its PPF near its axis, this country .

-Which point in the figure above is an attainable combination that would have unemployed resources?

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

Why does a nation experience increasing opportunity cost?

What is comparative advantage? Give an example.

-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 incur an opportunity cost of

When Mik has an absolute advantage in the production of two goods over Tommy, Mik

As technology advances,

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

The production possibilities frontier is the boundary between the

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

Suppose that in a PPF graph, wheat is on the vertical axis and jets are on the horizontal axis. Moving down along the PPF, the

In a production possibilities frontier diagram, the attainable production points are shown as

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

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

The United States can use all of its resources to produce 50 computers or 4,000 shoes. Suppose that at world market prices, one computer exchanges for 100 shoes. Explain how the United States can gain from trade.

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

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?

When a country's production possibilities frontier shifts outward over time, the country is experiencing

Consider a PPF with consumption goods on the horizontal axis and capital goods on the vertical axis. If the country operates on its PPF near its ________ axis, this country ________.

-Which point in the figure above is an attainable combination that would have unemployed resources?

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

Why does a nation experience increasing opportunity cost?

What is comparative advantage? Give an example.

-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 incur an opportunity cost of

When Mik has an absolute advantage in the production of two goods over Tommy, Mik

As technology advances,

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

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

Consider a PPF with consumption goods on the horizontal axis and capital goods on the vertical axis. If the country operates on its PPF near its axis, this country .