Question 1

Moving between two points on a PPF, a country gains 6 automobiles and forgoes 3 trucks. The opportunity cost of 1 automobile is

Accepted Answer

A) 3 trucks. 
B) 6 automobiles - 3 trucks. 
C) 2 trucks. 
D) 1/2 of a truck. 
E) 1 automobile. 
A) 3 trucks. 
B) 6 automobiles - 3 trucks. 
C) 2 trucks. 
D) 1/2 of a truck. 
E) 1 automobile.

Question 2

The idea of increasing opportunity cost is reflected in the

Accepted Answer

A) bowed out shape of the production possibilities frontier. 
B) bowed in shape of the production possibilities frontier. 
C) linear shape of the production possibilities frontier. 
D) positive slope of the production possibilities frontier. 
E) fact that the PPF shows there are unattainable production points. 
A) bowed out shape of the production possibilities frontier. 
B) bowed in shape of the production possibilities frontier. 
C) linear shape of the production possibilities frontier. 
D) positive slope of the production possibilities frontier. 
E) fact that the PPF shows there are unattainable production points.

Question 3

Gains from trade

Accepted Answer

A) occur when one party to the trade has an absolute advantage in both goods. 
B) result in being able to consume beyond the trading individuals' production possibilities frontiers. 
C) occur when people do not specialize. 
D) occur when opportunity costs are equal. 
E) always benefit one party but not the other party of any trade. 
A) occur when one party to the trade has an absolute advantage in both goods. 
B) result in being able to consume beyond the trading individuals' production possibilities frontiers. 
C) occur when people do not specialize. 
D) occur when opportunity costs are equal. 
E) always benefit one party but not the other party of any trade.

Question 4

-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 5

-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 6

If a nation devotes a larger share of its current production to consumption goods, then

Accepted Answer

A) its economic growth will slow down. 
B) its PPF will shift outward. 
C) its PPF will shift inward. 
D) some productive factors will become unemployed. 
E) it must produce at a point within its PPF. 
A) its economic growth will slow down. 
B) its PPF will shift outward. 
C) its PPF will shift inward. 
D) some productive factors will become unemployed. 
E) it must produce at a point within its PPF.

Question 7

-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 8

$$\begin{array} { l | c c c } 
& \begin{array} { l } 
\text { Potatoes } \
\text { (pounds) }
\end{array} & \begin{array} { l } 
\text { Tomatoes } \
\text { (pounds) }
\end{array} \
\hline \text { Huey } & 12 & \text { or } & 8 \
\text { Steve } & 6 & \text { or } & 2
\end{array}$$
-Huey and Steve can grow potatoes or tomatoes. The table above shows the pounds of potatoes and tomatoes Huey and Steve can grow in a week. Based on the table, Steve has a comparative advantage in

Accepted Answer

A) both potatoes and tomatoes. 
B) neither potatoes nor tomatoes. 
C) potatoes. 
D) tomatoes. 
E) More information is needed about Huey's comparative advantage in order to determine Steve's comparative advantage. 
A) both potatoes and tomatoes. 
B) neither potatoes nor tomatoes. 
C) potatoes. 
D) tomatoes. 
E) More information is needed about Huey's comparative advantage in order to determine Steve's comparative advantage.

Question 9

-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 10

3.5 Chapter Figures
  
-The figure above shows a production possibilities frontier. In the figure, when the economy moves from point D to point C, the opportunity cost of producing one more DVD ________, and when it moves from point C to D, the opportunity cost of producing one more cell phone ________.

Accepted Answer

A) increases; increases 
B) increases; decreases 
C) decreases; decreases 
D) decreases; increases 
E) increases; remains the same 
A) increases; increases 
B) increases; decreases 
C) decreases; decreases 
D) decreases; increases 
E) increases; remains the same

Question 11

Mac can bake more cookies than Monica per hour. It must be true that

Accepted Answer

A) Monica has an absolute advantage in cookie baking. 
B) Mac has an absolute advantage in baking cookies. 
C) Mac has a comparative advantage in baking cookies. 
D) Monica has a comparative advantage in baking cookies. 
E) Mac cannot benefit by trade between the two of them. 
A) Monica has an absolute advantage in cookie baking. 
B) Mac has an absolute advantage in baking cookies. 
C) Mac has a comparative advantage in baking cookies. 
D) Monica has a comparative advantage in baking cookies. 
E) Mac cannot benefit by trade between the two of them.

Question 12

$$\begin{array} { l | c c c } 
& \begin{array} { l } 
\text { Potatoes } \
\text { (pounds) }
\end{array} & \begin{array} { l } 
\text { Tomatoes } \
\text { (pounds) }
\end{array} \
\hline \text { Huey } & 12 & \text { or } & 8 \
\text { Steve } & 6 & \text { or } & 2
\end{array}$$
-Huey and Steve can grow potatoes or tomatoes. The table above shows the pounds of potatoes and tomatoes Huey and Steve can grow in a week. Based on the table, which of the following statements is correct?

Accepted Answer

A) Steve has an absolute advantage in both potatoes and tomatoes. 
B) Steve has a comparative advantage in both potatoes and tomatoes. 
C) Steve has an absolute advantage in potatoes only. 
D) Huey has an absolute advantage in potatoes only. 
E) Huey has an absolute advantage in both potatoes and tomatoes. 
A) Steve has an absolute advantage in both potatoes and tomatoes. 
B) Steve has a comparative advantage in both potatoes and tomatoes. 
C) Steve has an absolute advantage in potatoes only. 
D) Huey has an absolute advantage in potatoes only. 
E) Huey has an absolute advantage in both potatoes and tomatoes.

Question 13

When production efficiency does NOT occur, i. an economy is producing at a point within its PPF.
Ii. there are unemployed resources.
Iii. allocative efficiency can not occur.

Accepted Answer

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

Question 14

Increasing opportunity cost exists

Accepted Answer

A) in the real world. 
B) as long as there is high unemployment. 
C) only in theory but not in real life. 
D) for a country but not for an individual. 
E) inside the PPF but not on the PPF. 
A) in the real world. 
B) as long as there is high unemployment. 
C) only in theory but not in real life. 
D) for a country but not for an individual. 
E) inside the PPF but not on the PPF.

Question 15

$$\begin{array} { c c c } 
\hline \text { Possibility } & \text { Capital goods } & \text { Consumption goods } \
\hline \text { A } & 0 & 60 \
\text { B } & 2 & 55 \
\text { C } & 4 & 45 \
\text { D } & 6 & 25 \
\text { E } & 8 & 0 \
\hline
\end{array}$$
-The table above presents the production possibilities frontier for a nation. Using the information in the table, when moving from possibility C to D, the cost of 1 unit of a capital good in terms of the consumption goods forgone is ________ consumption goods per capital good.

Accepted Answer

A) 25 
B) 15 
C) 20 
D) 10 
E) an undefined amount of 
A) 25 
B) 15 
C) 20 
D) 10 
E) an undefined amount of

Question 16

-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, which country is most likely to expand its PPF to PPF₁?

Accepted Answer

A) France and Germany equally. 
B) India 
C) Estonia 
D) France 
E) Germany 
A) France and Germany equally. 
B) India 
C) Estonia 
D) France 
E) Germany

Question 17

Using the figure above, suppose with no trade Liz and Joe each produce at point A on their respective PPFs. Then, Liz suggests that they specialize and trade. She would produces only smoothies and Joe would produce only salads. Then she would sell 10 smoothies to Joe at a price of 2.5 salads per smoothie. In this scenario,

Accepted Answer

A) Liz gains 10 smoothies and 5 salads, and Joe gains 5 smoothies. 
B) Liz gains 5 smoothies, and Joe gains 10 smoothies. 
C) Liz gains 10 smoothies, and Joe loses 5 smoothies. 
D) Liz gains 5 smoothies and 5 salads, and Joe loses 5 salads. 
E) None of the individuals gain from trade. 
A) Liz gains 10 smoothies and 5 salads, and Joe gains 5 smoothies. 
B) Liz gains 5 smoothies, and Joe gains 10 smoothies. 
C) Liz gains 10 smoothies, and Joe loses 5 smoothies. 
D) Liz gains 5 smoothies and 5 salads, and Joe loses 5 salads. 
E) None of the individuals gain from trade.

Question 18

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

Accepted Answer

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

Question 19

In order for Ireland to grow more potatoes, wool production must decrease. This situation is an example of

Accepted Answer

A) producing at a point that lies beyond the PPF. 
B) zero opportunity cost. 
C) opportunity benefit. 
D) a free lunch. 
E) a tradeoff. 
A) producing at a point that lies beyond the PPF. 
B) zero opportunity cost. 
C) opportunity benefit. 
D) a free lunch. 
E) a tradeoff.

Question 20

The production possibilities frontier is a boundary that separates

Accepted Answer

A) the combinations of goods that can be produced from the combinations of services. 
B) attainable combinations of goods and services that can be produced from unattainable ones. 
C) equitable combinations of goods and services that can be produced from inequitable ones. 
D) fair combinations of goods and services that can be consumed from unfair ones. 
E) affordable production points from unaffordable points. 
A) the combinations of goods that can be produced from the combinations of services. 
B) attainable combinations of goods and services that can be produced from unattainable ones. 
C) equitable combinations of goods and services that can be produced from inequitable ones. 
D) fair combinations of goods and services that can be consumed from unfair ones. 
E) affordable production points from unaffordable points.

Moving between two points on a PPF, a country gains 6 automobiles and forgoes 3 trucks. The opportunity cost of 1 automobile is

The idea of increasing opportunity cost is reflected in the

Gains from trade

-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 .

-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?

If a nation devotes a larger share of its current production to consumption goods, then

-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?

Potatoes (pounds) Tomatoes (pounds) Huey 12 or 8 Steve 6 or 2 -Huey and Steve can grow potatoes or tomatoes. The table above shows the pounds of potatoes and tomatoes Huey and Steve can grow in a week. Based on the table, Steve has a comparative advantage in

-The table above gives the production possibilities frontier for two countries, Anaconda and Bear. This table shows that

3.5 Chapter Figures -The figure above shows a production possibilities frontier. In the figure, when the economy moves from point D to point C, the opportunity cost of producing one more DVD , and when it moves from point C to D, the opportunity cost of producing one more cell phone .

Mac can bake more cookies than Monica per hour. It must be true that

Potatoes (pounds) Tomatoes (pounds) Huey 12 or 8 Steve 6 or 2 -Huey and Steve can grow potatoes or tomatoes. The table above shows the pounds of potatoes and tomatoes Huey and Steve can grow in a week. Based on the table, which of the following statements is correct?

When production efficiency does NOT occur, i. an economy is producing at a point within its PPF. Ii. there are unemployed resources. Iii. allocative efficiency can not occur.

Increasing opportunity cost exists

-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, which country is most likely to expand its PPF to PPF₁?

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

In order for Ireland to grow more potatoes, wool production must decrease. This situation is an example of

The production possibilities frontier is a boundary that separates

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

Moving between two points on a PPF, a country gains 6 automobiles and forgoes 3 trucks. The opportunity cost of 1 automobile is

The idea of increasing opportunity cost is reflected in the

Gains from trade

-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 ________.

-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?

If a nation devotes a larger share of its current production to consumption goods, then

-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?

Potatoes (pounds) Tomatoes (pounds) Huey 12 or 8 Steve 6 or 2 -Huey and Steve can grow potatoes or tomatoes. The table above shows the pounds of potatoes and tomatoes Huey and Steve can grow in a week. Based on the table, Steve has a comparative advantage in

-The table above gives the production possibilities frontier for two countries, Anaconda and Bear. This table shows that

Mac can bake more cookies than Monica per hour. It must be true that

Potatoes (pounds) Tomatoes (pounds) Huey 12 or 8 Steve 6 or 2 -Huey and Steve can grow potatoes or tomatoes. The table above shows the pounds of potatoes and tomatoes Huey and Steve can grow in a week. Based on the table, which of the following statements is correct?

When production efficiency does NOT occur, i. an economy is producing at a point within its PPF. Ii. there are unemployed resources. Iii. allocative efficiency can not occur.

Increasing opportunity cost exists

-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, which country is most likely to expand its PPF to PPF₁?

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

In order for Ireland to grow more potatoes, wool production must decrease. This situation is an example of

The production possibilities frontier is a boundary that separates

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

-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 .