Question 1

Suppose Joe can prepare 20 sandwiches or 10 pizzas in an hour and Beth can produce 36 sandwiches or 27 pizzas.The concept of comparative advantage concludes that

Accepted Answer

A)  Beth should produce both goods because she can produce more of both goods in an hour than can Joe. 
B)  Beth should produce sandwiches and Joe should produce pizza. 
C)  Beth should produce pizza and Joe should produce sandwiches. 
D)  Beth should produce both goods and Joe should produce sandwiches. 
A)  Beth should produce both goods because she can produce more of both goods in an hour than can Joe. 
B)  Beth should produce sandwiches and Joe should produce pizza. 
C)  Beth should produce pizza and Joe should produce sandwiches. 
D)  Beth should produce both goods and Joe should produce sandwiches.

Question 2

Individuals A and B both produce good X.A has a comparative advantage in the production of good X if A

Accepted Answer

A)  has a lower opportunity cost of producing good X than has B. 
B)  has a lower opportunity cost of producing good X than of producing good Y. 
C)  can produce more units of X in a given time period than can B. 
D)  can produce X using newer technology than can B. 
A)  has a lower opportunity cost of producing good X than has B. 
B)  has a lower opportunity cost of producing good X than of producing good Y. 
C)  can produce more units of X in a given time period than can B. 
D)  can produce X using newer technology than can B.

Question 3

Why does the marginal benefit curve have a negative slope?

Accepted Answer

Each successive increase in the consumpt

Question 4

A reduction in the amount of unemployment

Accepted Answer

A)  shifts the production possibilities frontier outward. 
B)  moves the economy's point of production closer to the production possibilities frontier. 
C)  moves the economy's point of production along the production possibilities frontier. 
D)  moves the economy's point of production further away from the production possibilities frontier. 
A)  shifts the production possibilities frontier outward. 
B)  moves the economy's point of production closer to the production possibilities frontier. 
C)  moves the economy's point of production along the production possibilities frontier. 
D)  moves the economy's point of production further away from the production possibilities frontier.

Question 5

Generally,opportunity costs increase and the production possibilities frontier bows outward.Why?

Accepted Answer

A)  Unemployment is inevitable. 
B)  Resources are not equally useful in all activities. 
C)  Technology is slow to change. 
D)  Labor is scarcer than capital. 
A)  Unemployment is inevitable. 
B)  Resources are not equally useful in all activities. 
C)  Technology is slow to change. 
D)  Labor is scarcer than capital.

Question 6

If the marginal benefit of consuming another unit of a good is positive,then to reach the allocatively efficient level of output more of the good should be produced and consumed

Accepted Answer

A)  no matter what. 
B)  as long as the consumer can afford to pay for it. 
C)  if the total benefit of the good is greater than its total cost. 
D)  if the marginal benefit of the good is greater than its marginal cost. 
A)  no matter what. 
B)  as long as the consumer can afford to pay for it. 
C)  if the total benefit of the good is greater than its total cost. 
D)  if the marginal benefit of the good is greater than its marginal cost.

Question 7

$\begin{array}{c}
\begin{array}{|l|}
\hline\text {Nation A's production}\
\text {in 1 day}\
\hline\text {Computers $ \quad \quad \quad 100 $}\
\text {Software $ \quad \quad \quad \quad 140 $}\
\hline
\end{array}
\begin{array}{l|}
\hline\text {Nation B's production}\
\text {in 1 day}\
\hline\text {Computers $ \quad  \quad120 $}\
\text {Software $ \quad  \quad \quad150 $}\
\hline
\end{array}
\end{array}$

-Two nations can produce computers and software in the amounts given in the table above.Does either nation have an absolute advantage in producing the products?
Which nation has a comparative advantage in computers?
Which nation has a comparative advantage in software?
Explain your answers.

Accepted Answer

Nation B has an absolute advantage in pr

Question 8

$$\begin{array} { | c | c | c | } 
\hline \text { Point } & \text { Production of } X & \text { Production of } Y \
\hline \text { A } & 0 & 40 \
\hline \text { B } & 3 & 36 \
\hline \text { C } & 6 & 28 \
\hline \text { D } & 9 & 16 \
\hline \text { E } & 12 & 0 \
\hline
\end{array}$$
-The above table shows production combinations on a country's production possibilities frontier.What is the opportunity cost of increasing the production of X from 0 to 3 units?

Accepted Answer

A)  40 units of good Y per unit of good X 
B)  3 units of good Y per unit of good X 
C)  4/3 units of good Y per unit of good X 
D)  0 units of good Y per unit of good X 
A)  40 units of good Y per unit of good X 
B)  3 units of good Y per unit of good X 
C)  4/3 units of good Y per unit of good X 
D)  0 units of good Y per unit of good X

Question 9

Intellectual property

Accepted Answer

A)  is protected by common law rather than by written laws. 
B)  is protected by people's sense of decency rather than by written laws. 
C)  belongs to everyone with the necessary human capital to use it. 
D)  is often protected by copyrights and patents. 
A)  is protected by common law rather than by written laws. 
B)  is protected by people's sense of decency rather than by written laws. 
C)  belongs to everyone with the necessary human capital to use it. 
D)  is often protected by copyrights and patents.

Question 10

Production possibilities
 $$\begin{array} { | c | c | c | } 
\hline \text { Possibility } & \begin{array} { c } 
\text { Pizza } \
\text { (per hour) }
\end{array} & \begin{array} { c } 
\text { Soda } \
\text { (cases per } \
\text { hour) }
\end{array} \
\hline \text { A } & 0 & 100 \
\hline \text { B } & 1 & 95 \
\hline \text { C } & 2 & 80 \
\hline \text { D } & 3 & 60 \
\hline \text { E } & 4 & 35 \
\hline \text { F } & 5 & 0 \
\hline
\end{array}$$
-In the above table,the production of 3 pizzas and 80 cases of soda is

Accepted Answer

A)  impossible unless more resources become available or technology improves. 
B)  feasible but would involve unemployed or misallocated resources. 
C)  possible only if the economy produces with maximum efficiency. 
D)  possible only if there is inflation. 
A)  impossible unless more resources become available or technology improves. 
B)  feasible but would involve unemployed or misallocated resources. 
C)  possible only if the economy produces with maximum efficiency. 
D)  possible only if there is inflation.

Question 11

"If Mexico is currently operating at a point beyond its production possibilities frontier,then there are unemployed resources in Mexico." Is this statement true or false?
Briefly explain your answer.

Accepted Answer

The statement is false.It is false on tw

Question 12

Suppose Joe can prepare 10 sandwiches or 5 pizzas in an hour and Beth can produce 12 sandwiches or 9 pizzas.Which of the following is true?

Accepted Answer

A)  Beth should produce pizza because she has a higher opportunity cost of producing pizza than does Joe. 
B)  Beth should produce pizza because she has a lower opportunity cost of producing pizza than does Joe. 
C)  Joe should produce pizza because he has a higher opportunity cost of producing pizza than does Beth. 
D)  Joe should produce pizza because he has a lower opportunity cost of producing pizza than does Beth. 
A)  Beth should produce pizza because she has a higher opportunity cost of producing pizza than does Joe. 
B)  Beth should produce pizza because she has a lower opportunity cost of producing pizza than does Joe. 
C)  Joe should produce pizza because he has a higher opportunity cost of producing pizza than does Beth. 
D)  Joe should produce pizza because he has a lower opportunity cost of producing pizza than does Beth.

Question 13

The production possibilities frontier is the boundary between

Accepted Answer

A)  those combinations of goods and services that can be produced and those that can be consumed. 
B)  those resources that are limited and those that are unlimited. 
C)  those combinations of goods and services that can be produced and those that cannot. 
D)  those wants that are limited and those that are unlimited. 
A)  those combinations of goods and services that can be produced and those that can be consumed. 
B)  those resources that are limited and those that are unlimited. 
C)  those combinations of goods and services that can be produced and those that cannot. 
D)  those wants that are limited and those that are unlimited.

Question 14

After Hurricane Katrina devastated parts of Mississippi and New Orleans in 2005,we can be sure that the production possibilities frontier for that area temporarily

Accepted Answer

A)  shifted inward, toward the origin. 
B)  shifted outward, away from the origin. 
C)  became flatter. 
D)  became steeper. 
A)  shifted inward, toward the origin. 
B)  shifted outward, away from the origin. 
C)  became flatter. 
D)  became steeper.

Question 15

"If Mexico is currently operating at a point inside its production possibilities frontier,then there are unemployed resources in Mexico." Is this statement true or false?
Briefly explain your answer.

Accepted Answer

The statement is true.Points within the

Question 16

-Refer to the production possibilities frontier in the figure above.More of good X must be given up per unit of good Y gained when moving from point b to point a than when moving from point c to point b.This fact

Accepted Answer

A)  illustrates decreasing opportunity cost. 
B)  illustrates increasing opportunity cost. 
C)  indicates that good X is more capital intensive than good Y. 
D)  indicates that good Y is more capital intensive than good X. 
A)  illustrates decreasing opportunity cost. 
B)  illustrates increasing opportunity cost. 
C)  indicates that good X is more capital intensive than good Y. 
D)  indicates that good Y is more capital intensive than good X.

Question 17

-In the above figure,in order for this country to move from production possibilities frontier PPF₁ to PPF₂,it might

Accepted Answer

A)  increase the skills and productivity of its work force. 
B)  put all unemployed resources to work producing desired output. 
C)  engage in exchange with other nations. 
D)  increase the average level of prices for all goods produced and consumed. 
A)  increase the skills and productivity of its work force. 
B)  put all unemployed resources to work producing desired output. 
C)  engage in exchange with other nations. 
D)  increase the average level of prices for all goods produced and consumed.

Question 18

$\begin{array}{c}
\begin{array}{|c|}
\hline\text { Production } \
\text { point }\
\hline A\
\hline B\
\hline C\
\hline D \
\hline E\
\hline
\end{array}
\begin{array}{c|}
\hline\text { Fish } \
\text { (pounds) }\
\hline 0\
\hline 1\
\hline 2\
\hline 3\
\hline 4\
\hline
\end{array}
\begin{array}{c|}
\hline\
\
\hline\text { and }\ 
\hline\text { and }\ 
\hline\text { and }\ 
\hline\text { and }\ 
\hline\text { and }\ 
\hline
\end{array}
\begin{array}{|c|}
\hline\text { Berries } \
\text { (pounds) }\
\hline 50\
\hline 45\
\hline35\
\hline 20\
\hline 0\
\hline
\end{array}
\end{array}$

-The table above shows the production possibilities frontier for the nation of Isolanda.
a) Find the marginal cost of a pound of fish using the above PPF.
b) How does the marginal cost of a pound of fish change as more fish are caught?

Accepted Answer

\[\begin{array} { | c | c | } 
\hline \b

Question 19

Production possibilities
 $$\begin{array} { | c | c | c | } 
\hline \text { Possibility } & \begin{array} { c } 
\text { Pizza } \
\text { (per hour) }
\end{array} & \begin{array} { c } 
\text { Soda } \
\text { (cases per } \
\text { hour) }
\end{array} \
\hline \text { A } & 0 & 100 \
\hline \text { B } & 1 & 95 \
\hline \text { C } & 2 & 80 \
\hline \text { D } & 3 & 60 \
\hline \text { E } & 4 & 35 \
\hline \text { F } & 5 & 0 \
\hline
\end{array}$$
-In the above table,the production of 3 pizzas and 35 cases of soda is

Accepted Answer

A)  impossible unless more resources become available. 
B)  feasible but would involve unemployed or misallocated resources. 
C)  possible only if the economy produces with maximum efficiency. 
D)  possible only if there is inflation. 
A)  impossible unless more resources become available. 
B)  feasible but would involve unemployed or misallocated resources. 
C)  possible only if the economy produces with maximum efficiency. 
D)  possible only if there is inflation.

Question 20

The opportunity cost of economic growth is

Accepted Answer

A)  future consumption that a nation gets if it gives up some present consumption. 
B)  future consumption that a nation gives up to consume more today 
C)  present consumption that a nation gives up to accumulate capital 
D)  present investment that a nation gives up to increase its economic growth. 
A)  future consumption that a nation gets if it gives up some present consumption. 
B)  future consumption that a nation gives up to consume more today 
C)  present consumption that a nation gives up to accumulate capital 
D)  present investment that a nation gives up to increase its economic growth.

Suppose Joe can prepare 20 sandwiches or 10 pizzas in an hour and Beth can produce 36 sandwiches or 27 pizzas.The concept of comparative advantage concludes that

Individuals A and B both produce good X.A has a comparative advantage in the production of good X if A

Why does the marginal benefit curve have a negative slope?

A reduction in the amount of unemployment

Generally,opportunity costs increase and the production possibilities frontier bows outward.Why?

If the marginal benefit of consuming another unit of a good is positive,then to reach the allocatively efficient level of output more of the good should be produced and consumed

Point Production of X Production of Y A 0 40 B 3 36 C 6 28 D 9 16 E 12 0 -The above table shows production combinations on a country's production possibilities frontier.What is the opportunity cost of increasing the production of X from 0 to 3 units?

Intellectual property

Production possibilities Possibility Pizza (per hour) Soda (cases per hour) A 0 100 B 1 95 C 2 80 D 3 60 E 4 35 F 5 0 -In the above table,the production of 3 pizzas and 80 cases of soda is

"If Mexico is currently operating at a point beyond its production possibilities frontier,then there are unemployed resources in Mexico." Is this statement true or false? Briefly explain your answer.

Suppose Joe can prepare 10 sandwiches or 5 pizzas in an hour and Beth can produce 12 sandwiches or 9 pizzas.Which of the following is true?

The production possibilities frontier is the boundary between

After Hurricane Katrina devastated parts of Mississippi and New Orleans in 2005,we can be sure that the production possibilities frontier for that area temporarily

"If Mexico is currently operating at a point inside its production possibilities frontier,then there are unemployed resources in Mexico." Is this statement true or false? Briefly explain your answer.

-Refer to the production possibilities frontier in the figure above.More of good X must be given up per unit of good Y gained when moving from point b to point a than when moving from point c to point b.This fact

-In the above figure,in order for this country to move from production possibilities frontier PPF₁ to PPF₂,it might

Production possibilities Possibility Pizza (per hour) Soda (cases per hour) A 0 100 B 1 95 C 2 80 D 3 60 E 4 35 F 5 0 -In the above table,the production of 3 pizzas and 35 cases of soda is

The opportunity cost of economic growth 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

Suppose Joe can prepare 20 sandwiches or 10 pizzas in an hour and Beth can produce 36 sandwiches or 27 pizzas.The concept of comparative advantage concludes that

Individuals A and B both produce good X.A has a comparative advantage in the production of good X if A

Why does the marginal benefit curve have a negative slope?

A reduction in the amount of unemployment

Generally,opportunity costs increase and the production possibilities frontier bows outward.Why?

If the marginal benefit of consuming another unit of a good is positive,then to reach the allocatively efficient level of output more of the good should be produced and consumed

Point Production of X Production of Y A 0 40 B 3 36 C 6 28 D 9 16 E 12 0 -The above table shows production combinations on a country's production possibilities frontier.What is the opportunity cost of increasing the production of X from 0 to 3 units?

Intellectual property

Production possibilities Possibility Pizza (per hour) Soda (cases per hour) A 0 100 B 1 95 C 2 80 D 3 60 E 4 35 F 5 0 -In the above table,the production of 3 pizzas and 80 cases of soda is

"If Mexico is currently operating at a point beyond its production possibilities frontier,then there are unemployed resources in Mexico." Is this statement true or false? Briefly explain your answer.

Suppose Joe can prepare 10 sandwiches or 5 pizzas in an hour and Beth can produce 12 sandwiches or 9 pizzas.Which of the following is true?

The production possibilities frontier is the boundary between

After Hurricane Katrina devastated parts of Mississippi and New Orleans in 2005,we can be sure that the production possibilities frontier for that area temporarily

"If Mexico is currently operating at a point inside its production possibilities frontier,then there are unemployed resources in Mexico." Is this statement true or false? Briefly explain your answer.

-Refer to the production possibilities frontier in the figure above.More of good X must be given up per unit of good Y gained when moving from point b to point a than when moving from point c to point b.This fact

-In the above figure,in order for this country to move from production possibilities frontier PPF₁ to PPF₂,it might

Production possibilities Possibility Pizza (per hour) Soda (cases per hour) A 0 100 B 1 95 C 2 80 D 3 60 E 4 35 F 5 0 -In the above table,the production of 3 pizzas and 35 cases of soda is

The opportunity cost of economic growth 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