Question 1

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 2

When a nation is producing on its production possibilities frontier, if more resources are used to produce one good, then the production of other goods

Accepted Answer

A) must increase. 
B) must decrease. 
C) must remain the same. 
D) must change but they might increase or decrease. 
E) might increase if the nation can produce more efficiently. 
A) must increase. 
B) must decrease. 
C) must remain the same. 
D) must change but they might increase or decrease. 
E) might increase if the nation can produce more efficiently.

Question 3

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

Accepted Answer

A) smoothies; her opportunity cost of producing smoothies is lower than Joe's 
B) salads; her opportunity cost of producing salads is lower than Joe's 
C) smoothies; she can produce more smoothies per hour than Joe can 
D) salads; she can produce more salads per hour than Joe can 
E) both goods; she can produce more of both goods per hour than Joe can 
A) smoothies; her opportunity cost of producing smoothies is lower than Joe's 
B) salads; her opportunity cost of producing salads is lower than Joe's 
C) smoothies; she can produce more smoothies per hour than Joe can 
D) salads; she can produce more salads per hour than Joe can 
E) both goods; she can produce more of both goods per hour than Joe can

Question 4

The figure above show Liz's and Joe's production possibilities for Salads and Smoothies.
-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 5

The production possibilities frontier is the

Accepted Answer

A) maximum output that can be produced at an opportunity cost of zero. 
B) minimum output that can be produced when resources are used inefficiently. 
C) boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology. 
D) boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced when technology is changing. 
E) maximum opportunity cost combinations of goods and services. 
A) maximum output that can be produced at an opportunity cost of zero. 
B) minimum output that can be produced when resources are used inefficiently. 
C) boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology. 
D) boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced when technology is changing. 
E) maximum opportunity cost combinations of goods and services.

Question 6

Before the first Gulf War, Kuwait had the capacity to produce a certain amount of oil from its oil wells. After the war, it found that capacity greatly diminished because the oil wells were on fire. Draw Kuwait's PPF before and after the war, assuming that the only two goods produced are oil and food. Further assume that setting the oil wells on fire did not affect Kuwait's ability to produce food. Explain why the PPF before the war is different from the PPF after the war.

Accepted Answer

@#IMG-DLM& When a PPF is drawn, we draw it for a f

Question 7

If there is unemployment in an economy, then the

Accepted Answer

A) production possibilities frontier will shift inwards. 
B) economy is operating at an unattainable point. 
C) production possibilities frontier will shift outwards. 
D) economy is producing at a point inside the production possibilities frontier. 
E) production possibilities frontier must be bowed inward. 
A) production possibilities frontier will shift inwards. 
B) economy is operating at an unattainable point. 
C) production possibilities frontier will shift outwards. 
D) economy is producing at a point inside the production possibilities frontier. 
E) production possibilities frontier must be bowed inward.

Question 8

-The above figure shows the production possibility frontier for a country. Suppose the country is producing at point D. What would be the opportunity cost to move to point C?

Accepted Answer

A) 6 thousand bottles of wine 
B) 15 thousand bottles of wine 
C) 12 tons of rice 
D) Nothing, it is a free lunch 
E) This movement is not possible without economic growth. 
A) 6 thousand bottles of wine 
B) 15 thousand bottles of wine 
C) 12 tons of rice 
D) Nothing, it is a free lunch 
E) This movement is not possible without economic growth.

Question 9

Production efficiency occurs

Accepted Answer

A) anywhere inside or on the production possibilities frontier. 
B) when the total cost of production is minimized. 
C) at all points on the production possibilities frontier. 
D) at only one point on the production possibilities frontier. 
E) at all points inside the production possibilities frontier. 
A) anywhere inside or on the production possibilities frontier. 
B) when the total cost of production is minimized. 
C) at all points on the production possibilities frontier. 
D) at only one point on the production possibilities frontier. 
E) at all points inside the production possibilities frontier.

Question 10

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 11

As an economy grows,

Accepted Answer

A) its PPF shifts outward. 
B) it can eliminate scarcity. 
C) the opportunity cost of production will approach 0. 
D) the opportunity cost of production will increase. 
E) its PPF does not shift; instead, the production point moves from inside the PPF to be closer to the PPF. 
A) its PPF shifts outward. 
B) it can eliminate scarcity. 
C) the opportunity cost of production will approach 0. 
D) the opportunity cost of production will increase. 
E) its PPF does not shift; instead, the production point moves from inside the PPF to be closer to the PPF.

Question 12

-Suppose India and France have the same PPF, shown in the figure above. Based on their current production points, which is France's most likely future PPF?

Accepted Answer

A) PPF₂. 
B) PPF₁. 
C) PPF₀. 
D) Either PPF₀ or PPF₁. 
E) None of the above because economic growth will not happen in India. 
A) PPF₂. 
B) PPF₁. 
C) PPF₀. 
D) Either PPF₀ or PPF₁. 
E) None of the above because economic growth will not happen in India.

Question 13

David takes 10 minutes to process a customer, and 20 minutes to stock the shelves. Danny takes 15 minutes to process a customer, and 15 minutes to stock the shelves. Which of the following statements is true?

Accepted Answer

A) David has an absolute advantage in performing both tasks. 
B) Danny has an absolute advantage in performing both tasks. 
C) David has a comparative advantage in processing customers but not in stocking shelves. 
D) Danny has a comparative advantage in processing customers but not in stocking shelves. 
E) Danny has a comparative advantage in processing customers and in stocking shelves. 
A) David has an absolute advantage in performing both tasks. 
B) Danny has an absolute advantage in performing both tasks. 
C) David has a comparative advantage in processing customers but not in stocking shelves. 
D) Danny has a comparative advantage in processing customers but not in stocking shelves. 
E) Danny has a comparative advantage in processing customers and in stocking shelves.

Question 14

"When countries specialize in producing the good in which they have a comparative advantage and then trade with each other, only the country with the absolute advantage gains." Is the previous statement correct or incorrect?
 Briefly explain your answer.

Accepted Answer

The statement is incorrect. Absolute adv

Question 15

Are all points inside the production possibilities frontier unattainable?

Accepted Answer

No, all points within the prod

Question 16

-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 17

A country has a comparative advantage in the production of a good if it can

Accepted Answer

A) produce more of the good than another country. 
B) produce more of the good most efficiently. 
C) produce the good on and remain on its production possibilities frontier. 
D) tradeoff producing the good for another good. 
E) produce the good at the lowest opportunity cost. 
A) produce more of the good than another country. 
B) produce more of the good most efficiently. 
C) produce the good on and remain on its production possibilities frontier. 
D) tradeoff producing the good for another good. 
E) produce the good at the lowest opportunity cost.

Question 18

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

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 19

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

Question 20

To calculate the opportunity cost per unit, you divide the decrease in the quantity of the forgone item by the

Accepted Answer

A) decrease in the quantity of the other item. 
B) increase in the quantity of the other item obtained. 
C) price of the item obtained. 
D) price of the item forgone. 
E) price of the item obtained and then multiply by the price of the item forgone. 
A) decrease in the quantity of the other item. 
B) increase in the quantity of the other item obtained. 
C) price of the item obtained. 
D) price of the item forgone. 
E) price of the item obtained and then multiply by the price of the item forgone.

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

When a nation is producing on its production possibilities frontier, if more resources are used to produce one good, then the production of other goods

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

The figure above show Liz's and Joe's production possibilities for Salads and Smoothies. -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

The production possibilities frontier is the

If there is unemployment in an economy, then the

-The above figure shows the production possibility frontier for a country. Suppose the country is producing at point D. What would be the opportunity cost to move to point C?

Production efficiency occurs

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

As an economy grows,

-Suppose India and France have the same PPF, shown in the figure above. Based on their current production points, which is France's most likely future PPF?

David takes 10 minutes to process a customer, and 20 minutes to stock the shelves. Danny takes 15 minutes to process a customer, and 15 minutes to stock the shelves. Which of the following statements is true?

"When countries specialize in producing the good in which they have a comparative advantage and then trade with each other, only the country with the absolute advantage gains." Is the previous statement correct or incorrect? Briefly explain your answer.

Are all points inside the production possibilities frontier unattainable?

A country has a comparative advantage in the production of a good if it can

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

-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?

To calculate the opportunity cost per unit, you divide the decrease in the quantity of the forgone item by the

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

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

When a nation is producing on its production possibilities frontier, if more resources are used to produce one good, then the production of other goods

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

The figure above show Liz's and Joe's production possibilities for Salads and Smoothies. -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

The production possibilities frontier is the

If there is unemployment in an economy, then the

-The above figure shows the production possibility frontier for a country. Suppose the country is producing at point D. What would be the opportunity cost to move to point C?

Production efficiency occurs

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

As an economy grows,

-Suppose India and France have the same PPF, shown in the figure above. Based on their current production points, which is France's most likely future PPF?

David takes 10 minutes to process a customer, and 20 minutes to stock the shelves. Danny takes 15 minutes to process a customer, and 15 minutes to stock the shelves. Which of the following statements is true?

"When countries specialize in producing the good in which they have a comparative advantage and then trade with each other, only the country with the absolute advantage gains." Is the previous statement correct or incorrect? Briefly explain your answer.

Are all points inside the production possibilities frontier unattainable?

A country has a comparative advantage in the production of a good if it can

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

-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?

To calculate the opportunity cost per unit, you divide the decrease in the quantity of the forgone item by the

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

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