Question 1

-Refer to the production possibilities frontier in the figure above.Which production point is unattainable?

Accepted Answer

A)  Point a 
B)  Point b 
C)  Point c 
D)  Point e 
A)  Point a 
B)  Point b 
C)  Point c 
D)  Point e

Question 2

If production point is inside the production possibilities frontier

Accepted Answer

A)  it is not possible to produce more of both goods 
B)  production is inefficient. 
C)  in order to produce more of one good, less of the other must be produced. 
D)  production is in the "unattainable" region. 
A)  it is not possible to produce more of both goods 
B)  production is inefficient. 
C)  in order to produce more of one good, less of the other must be produced. 
D)  production is in the "unattainable" region.

Question 3

When a nation has a comparative advantage in the production of a particular good,

Accepted Answer

A)  the nation tends to avoid specialization. 
B)  the comparative advantage encourages self-sufficiency. 
C)  the opportunity cost of producing that good is higher than that of other goods. 
D)  the nation can gain from trade. 
A)  the nation tends to avoid specialization. 
B)  the comparative advantage encourages self-sufficiency. 
C)  the opportunity cost of producing that good is higher than that of other goods. 
D)  the nation can gain from trade.

Question 4

$$\begin{array} { | c | c | c | } 
\hline \text { Point } & \begin{array} { c } 
\text { Production } \
\text { chocolate bars }
\end{array} & \begin{array} { c } 
\text { Production } \
\text { cans of cola }
\end{array} \
\hline \text { A } & 0 & 100 \
\hline \text { B } & 10 & 90 \
\hline \text { C } & 20 & 70 \
\hline \text { D } & 30 & 40 \
\hline \text { E } & 40 & 0 \
\hline
\end{array}$$
-The above table shows production points on Sweet-Tooth Land's production possibilities frontier.Which of the following statements is TRUE?

Accepted Answer

A)  Producing 0 chocolate bars and 100 cans of cola is both attainable and efficient. 
B)  Producing 20 chocolate bars and 80 cans of cola is attainable, but inefficient. 
C)  Producing 30 chocolate bars and 38 cans of cola is only attainable with an increase in technology. 
D)  Producing 40 chocolate bars and 0 cans of cola is unattainable and inefficient. 
A)  Producing 0 chocolate bars and 100 cans of cola is both attainable and efficient. 
B)  Producing 20 chocolate bars and 80 cans of cola is attainable, but inefficient. 
C)  Producing 30 chocolate bars and 38 cans of cola is only attainable with an increase in technology. 
D)  Producing 40 chocolate bars and 0 cans of cola is unattainable and inefficient.

Question 5

In markets,people's decisions are coordinated by

Accepted Answer

A)  specialization according to absolute advantage. 
B)  changes in property rights. 
C)  learning-by-doing. 
D)  adjustments in prices. 
A)  specialization according to absolute advantage. 
B)  changes in property rights. 
C)  learning-by-doing. 
D)  adjustments in prices.

Question 6

Suppose that a typical German factory can produce 20 cameras or 1 computer in an hour,and that a typical American factory can produce 10 cameras or one computer in an hour.Germany wishes to purchase computers from the United States in exchange for cameras.What is the maximum number of cameras per computer that Germany would be willing to pay the United States?

Accepted Answer

A)  10 cameras per computer 
B)  20 cameras per computer 
C)  1 camera per computer 
D)  2 cameras per computer 
A)  10 cameras per computer 
B)  20 cameras per computer 
C)  1 camera per computer 
D)  2 cameras per computer

Question 7

Missouri can produce 10,000 tons of pecans per year or 5,000 tons of pears per year.Washington can produce 12,000 tons of pecans per year or 48,000 tons of pears per year.Which of the following statements about opportunity cost is correct?

Accepted Answer

A)  The opportunity cost of a ton of pecans is 2 tons of pears per ton of pecans for Missouri and 1/4 ton of pears per ton of pecans for Washington. 
B)  The opportunity cost of a ton of pears is 2 tons of pecans per ton of pears for Missouri and 1/4 ton of pecans per ton of pears for Washington. 
C)  The opportunity cost of a ton of pecans is 1/2 ton of pears per ton of pecans for Missouri and 4 tons of pears per ton of pecans for Washington. 
D)  Both answers B and C are correct. 
A)  The opportunity cost of a ton of pecans is 2 tons of pears per ton of pecans for Missouri and 1/4 ton of pears per ton of pecans for Washington. 
B)  The opportunity cost of a ton of pears is 2 tons of pecans per ton of pears for Missouri and 1/4 ton of pecans per ton of pears for Washington. 
C)  The opportunity cost of a ton of pecans is 1/2 ton of pears per ton of pecans for Missouri and 4 tons of pears per ton of pecans for Washington. 
D)  Both answers B and C are correct.

Question 8

$$\begin{array} { | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Production } \
\text { point }
\end{array} & \begin{array} { c } 
\text { Beef } \
\text { (pounds) }
\end{array} & & \begin{array} { c } 
\text { Wheat } \
\text { (bushels) }
\end{array} \
\hline A & 0 & \text { and } & 9 \
\hline B & 2 & \text { and } & 7 \
\hline C & 4 & \text { and } & 4 \
\hline D & 6 & \text { and } & 0 \
\hline
\end{array}$$
-The table above presents the production possibilities of Farmer Brown.Use these data to calculate Farmer Brown's opportunity cost of additional beef as Farmer Brown moves from point A to B to C to D.Also use the data to calculate Farmer Brown's opportunity cost of additional wheat as Farmer Brown moves from point D to C to B to A.Based on these costs,does Farmer Brown use resources that are more productive in one activity than the other?
Explain your answer.

Accepted Answer

The opportunity cost of a pound of beef

Question 9

A person who has an absolute advantage in the production of all goods will

Accepted Answer

A)  also have a comparative advantage in the production of all goods. 
B)  not be able to gain from specialization and exchange. 
C)  have a production possibilities frontier with a constant slope. 
D)  have a comparative advantage in the production of some goods but not in the production of others. 
A)  also have a comparative advantage in the production of all goods. 
B)  not be able to gain from specialization and exchange. 
C)  have a production possibilities frontier with a constant slope. 
D)  have a comparative advantage in the production of some goods but not in the production of others.

Question 10

-Anna and Maria produce shirts and ties.The figure above shows Anna's PPF and Maria's PPF.Anna and Maria can achieve the gains from trade if Anna produces ________ and Maria produces ________.

Accepted Answer

A)  ties; shirts 
B)  shirts and ties; only ties 
C)  only ties; shirts and ties 
D)  shirts; ties 
A)  ties; shirts 
B)  shirts and ties; only ties 
C)  only ties; shirts and ties 
D)  shirts; ties

Question 11

"The United States is more productive in most activities than are most of other countries because it has an absolute advantage in the production of most goods and services.Therefore we should restrict international trade as it only benefits other countries at the expense of the United States." Comment on this statement.

Accepted Answer

The United States may be more productive

Question 12

Economic growth comes from ________.

Accepted Answer

A)  people willing to increase their skills in which case, economic growth is free 
B)  producing more goods than people want to consume 
C)  capital accumulation and the avoidance of opportunity cost 
D)  capital accumulation and technological advance 
A)  people willing to increase their skills in which case, economic growth is free 
B)  producing more goods than people want to consume 
C)  capital accumulation and the avoidance of opportunity cost 
D)  capital accumulation and technological advance

Question 13

-The bowed outward shape of the production possibilities frontier in the above figure indicates that

Accepted Answer

A)  some resources are better suited for producing computers. 
B)  the opportunity cost of producing more computers decreases as more computers are produced. 
C)  computer technology is subject to the principle of decreasing costs. 
D)  All of the above answers are correct. 
A)  some resources are better suited for producing computers. 
B)  the opportunity cost of producing more computers decreases as more computers are produced. 
C)  computer technology is subject to the principle of decreasing costs. 
D)  All of the above answers are correct.

Question 14

The production possibilities frontier

Accepted Answer

A)  depicts the boundary between those combinations of goods and services that can be produced and those that cannot given resources and the current state of technology. 
B)  shows how many goods and services are consumed by each person in a country. 
C)  is a model that assumes there is no scarcity and no opportunity cost. 
D)  is a graph with price on the vertical axis and income on the horizontal axis. 
A)  depicts the boundary between those combinations of goods and services that can be produced and those that cannot given resources and the current state of technology. 
B)  shows how many goods and services are consumed by each person in a country. 
C)  is a model that assumes there is no scarcity and no opportunity cost. 
D)  is a graph with price on the vertical axis and income on the horizontal axis.

Question 15

What factors generate economic growth?

Accepted Answer

Two key factors create economic growth:

Question 16

A PPF bows outward because

Accepted Answer

A)  not all resources are equally productive in all activities. 
B)  consumers prefer about equal amounts of the different goods. 
C)  entrepreneurial talent is more abundant than human capital. 
D)  resources are used inefficiently. 
A)  not all resources are equally productive in all activities. 
B)  consumers prefer about equal amounts of the different goods. 
C)  entrepreneurial talent is more abundant than human capital. 
D)  resources are used inefficiently.

Question 17

$$\begin{array} { | c | c | c | } 
\hline \text { Point } & \begin{array} { c } 
\text { Production } \
\text { of } X
\end{array} & \begin{array} { c } 
\text { Production } \
\text { of } Y
\end{array} \
\hline a & 0 & 40 \
\hline b & 4 & 36 \
\hline c & 8 & 28 \
\hline d & 12 & 16 \
\hline e & 16 & 0 \
\hline
\end{array}$$
-Refer to the table above,which gives five points on a nation's PPF.The production of 7 units of X and 28 units of Y is

Accepted Answer

A)  impossible given the available resources. 
B)  possible but leaves some resources less than fully used or misallocated. 
C)  on the production possibilities frontier between points c and d. 
D)  on the production possibilities frontier between points b and c. 
A)  impossible given the available resources. 
B)  possible but leaves some resources less than fully used or misallocated. 
C)  on the production possibilities frontier between points c and d. 
D)  on the production possibilities frontier between points b and c.

Question 18

By specialization and trade,two individuals can

Accepted Answer

A)  consume at a point beyond their individual production possibilities frontiers. 
B)  increase their comparative advantage. 
C)  increase their absolute advantage. 
D)  shift their individual production possibilities frontiers outward. 
A)  consume at a point beyond their individual production possibilities frontiers. 
B)  increase their comparative advantage. 
C)  increase their absolute advantage. 
D)  shift their individual production possibilities frontiers outward.

Question 19

The fact of increasing opportunity costs means that a production possibilities frontier will

Accepted Answer

A)  be a straight line. 
B)  reach a maximum and then gradually decrease. 
C)  bow outward. 
D)  shift outward over time. 
A)  be a straight line. 
B)  reach a maximum and then gradually decrease. 
C)  bow outward. 
D)  shift outward over time.

Question 20

Suppose that a typical German factory can produce 20 cameras or 1 computer in an hour,and that a typical American factory can produce 10 cameras or one computer in an hour.The opportunity cost of 20 cameras in terms of computers in the United States is

Accepted Answer

A)  10 computers per camera. 
B)  2 computers per camera. 
C)  1 computer per camera. 
D)  1/20 of a computer per camera. 
A)  10 computers per camera. 
B)  2 computers per camera. 
C)  1 computer per camera. 
D)  1/20 of a computer per camera.

-Refer to the production possibilities frontier in the figure above.Which production point is unattainable?

If production point is inside the production possibilities frontier

When a nation has a comparative advantage in the production of a particular good,

Point Production chocolate bars Production cans of cola A 0 100 B 10 90 C 20 70 D 30 40 E 40 0 -The above table shows production points on Sweet-Tooth Land's production possibilities frontier.Which of the following statements is TRUE?

In markets,people's decisions are coordinated by

Missouri can produce 10,000 tons of pecans per year or 5,000 tons of pears per year.Washington can produce 12,000 tons of pecans per year or 48,000 tons of pears per year.Which of the following statements about opportunity cost is correct?

A person who has an absolute advantage in the production of all goods will

-Anna and Maria produce shirts and ties.The figure above shows Anna's PPF and Maria's PPF.Anna and Maria can achieve the gains from trade if Anna produces and Maria produces .

Economic growth comes from ________.

-The bowed outward shape of the production possibilities frontier in the above figure indicates that

The production possibilities frontier

What factors generate economic growth?

A PPF bows outward because

Point Production of X Production of Y a 0 40 b 4 36 c 8 28 d 12 16 e 16 0 -Refer to the table above,which gives five points on a nation's PPF.The production of 7 units of X and 28 units of Y is

By specialization and trade,two individuals can

The fact of increasing opportunity costs means that a production possibilities frontier will

Suppose that a typical German factory can produce 20 cameras or 1 computer in an hour,and that a typical American factory can produce 10 cameras or one computer in an hour.The opportunity cost of 20 cameras in terms of computers in the United States is

What Is Economics

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, The Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

Exam 2: The Economic Problem

-Refer to the production possibilities frontier in the figure above.Which production point is unattainable?

If production point is inside the production possibilities frontier

When a nation has a comparative advantage in the production of a particular good,

Point Production chocolate bars Production cans of cola A 0 100 B 10 90 C 20 70 D 30 40 E 40 0 -The above table shows production points on Sweet-Tooth Land's production possibilities frontier.Which of the following statements is TRUE?

In markets,people's decisions are coordinated by

Missouri can produce 10,000 tons of pecans per year or 5,000 tons of pears per year.Washington can produce 12,000 tons of pecans per year or 48,000 tons of pears per year.Which of the following statements about opportunity cost is correct?

A person who has an absolute advantage in the production of all goods will

-Anna and Maria produce shirts and ties.The figure above shows Anna's PPF and Maria's PPF.Anna and Maria can achieve the gains from trade if Anna produces ________ and Maria produces ________.

Economic growth comes from ________.

-The bowed outward shape of the production possibilities frontier in the above figure indicates that

The production possibilities frontier

What factors generate economic growth?

A PPF bows outward because

Point Production of X Production of Y a 0 40 b 4 36 c 8 28 d 12 16 e 16 0 -Refer to the table above,which gives five points on a nation's PPF.The production of 7 units of X and 28 units of Y is

By specialization and trade,two individuals can

The fact of increasing opportunity costs means that a production possibilities frontier will

Suppose that a typical German factory can produce 20 cameras or 1 computer in an hour,and that a typical American factory can produce 10 cameras or one computer in an hour.The opportunity cost of 20 cameras in terms of computers in the United States is

What Is Economics

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, The Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

Inflation, Jobs, and the Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Introduction

Monitoring Macroeconomic Performance

Macroeconomic Trends

Macroeconomic Fluctuations

Macroeconomic Policy

Filters

-Anna and Maria produce shirts and ties.The figure above shows Anna's PPF and Maria's PPF.Anna and Maria can achieve the gains from trade if Anna produces and Maria produces .