Question 1

Resource use is allocatively efficient

Accepted Answer

A)  when marginal benefit equals marginal cost. 
B)  whenever marginal benefit exceeds marginal cost. 
C)  whenever marginal cost exceeds marginal benefit. 
D)  when the maximum possible quantity is being produced. 
A)  when marginal benefit equals marginal cost. 
B)  whenever marginal benefit exceeds marginal cost. 
C)  whenever marginal cost exceeds marginal benefit. 
D)  when the maximum possible quantity is being produced.

Question 2

The United States uses tax funds to build and repair the interstate highway system and to provide health care services via Medicare. Suppose Medicare services are on the horizontal axis and highway miles are on the vertical axis of a PPF. If the government decides to reduce funding to Medicare,this change would be shown as

Accepted Answer

A)  a shift out of the PPF. 
B)  the PPF becoming flatter. 
C)  a movement down along the PPF. 
D)  a movement up along the PPF. 
A)  a shift out of the PPF. 
B)  the PPF becoming flatter. 
C)  a movement down along the PPF. 
D)  a movement up along the PPF.

Question 3

-The above figure illustrates Mary's production possibilities frontier.If Mary wants to move from point d to point c,she must

Accepted Answer

A)  improve technology. 
B)  increase her accumulation of capital. 
C)  give up some of good X in order to obtain more of good Y. 
D)  give up some of good Y in order to obtain more of good X. 
A)  improve technology. 
B)  increase her accumulation of capital. 
C)  give up some of good X in order to obtain more of good Y. 
D)  give up some of good Y in order to obtain more of good X.

Question 4

When a nation is producing the allocatively efficient quantity of a product,the marginal benefit of producing the good equals the marginal cost of producing that good.

Accepted Answer

A) True 
 B)False

Question 5

Ted can study for his economics exam or go to a concert.He decides to study for his economics exam instead of going to the concert.The concert he will miss is Ted's ________ of studying for the exam.

Accepted Answer

A)  opportunity cost 
B)  explicit cost 
C)  implicit cost 
D)  discretionary cost 
A)  opportunity cost 
B)  explicit cost 
C)  implicit cost 
D)  discretionary cost

Question 6

-In the figure above,the curve is known as the

Accepted Answer

A)  production possibilities frontier. 
B)  substitution options frontier. 
C)  production function. 
D)  opportunity cost curve. 
A)  production possibilities frontier. 
B)  substitution options frontier. 
C)  production function. 
D)  opportunity cost curve.

Question 7

One of the opportunity costs of economic growth is

Accepted Answer

A)  capital accumulation. 
B)  technological change. 
C)  reduced current consumption. 
D)  the gain in future consumption. 
A)  capital accumulation. 
B)  technological change. 
C)  reduced current consumption. 
D)  the gain in future consumption.

Question 8

-According to the figure above,the opportunity cost of producing another computer is

Accepted Answer

A)  higher at A. 
B)  higher at B. 
C)  the same at every point along the frontier. 
D)  different at most points along the frontier but equal at points A and B because they are equally distant from the axes. 
A)  higher at A. 
B)  higher at B. 
C)  the same at every point along the frontier. 
D)  different at most points along the frontier but equal at points A and B because they are equally distant from the axes.

Question 9

We measure the marginal ________ of a good by what a ________ for another unit of the good.

Accepted Answer

A)  benefit; person must pay 
B)  cost; person is willing to pay 
C)  benefit; person is willing to pay 
D)  cost; person's preferences are 
A)  benefit; person must pay 
B)  cost; person is willing to pay 
C)  benefit; person is willing to pay 
D)  cost; person's preferences are

Question 10

According to the principle of comparative advantage,if a rich country trades with a poor country,then

Accepted Answer

A)  the rich country will benefit and the poor country will lose. 
B)  the rich country will lose and the poor country will benefit. 
C)  both countries will benefit. 
D)  neither of the countries will benefit. 
A)  the rich country will benefit and the poor country will lose. 
B)  the rich country will lose and the poor country will benefit. 
C)  both countries will benefit. 
D)  neither of the countries will benefit.

Question 11

A country possesses a comparative advantage in the production of a good if

Accepted Answer

A)  the opportunity cost in terms of forgone output of alternative goods is lower for this country than it is for its trading partners. 
B)  it possesses an absolute advantage in the production of this good. 
C)  it is able to produce more of this good per hour than can any other country. 
D)  all of the above 
A)  the opportunity cost in terms of forgone output of alternative goods is lower for this country than it is for its trading partners. 
B)  it possesses an absolute advantage in the production of this good. 
C)  it is able to produce more of this good per hour than can any other country. 
D)  all of the above

Question 12

China's State Council has encouraged more spending to "improve transportation links and other infrastructure...." It will also "step up its spending on vocational training and other educational programs for adults." www.nytimes.com,Keith Bradsher,October 19,2008
Suppose that capital goods are on the vertical axis while consumption goods are on the horizontal axis of China's PPF. As a result of enacting the policies,China's PPF will

Accepted Answer

A)  shift outward. 
B)  shift inward. 
C)  rotate outward. 
D)  become flatter. 
A)  shift outward. 
B)  shift inward. 
C)  rotate outward. 
D)  become flatter.

Question 13

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 is true?

Accepted Answer

A)  Washington has an absolute advantage in the production of both pecans and pears. 
B)  Washington has a comparative advantage in the production of both pecans and pears. 
C)  Washington has a comparative advantage in producing pecans and Missouri has a comparative advantage in producing pears. 
D)  Both answers A and C are correct. 
A)  Washington has an absolute advantage in the production of both pecans and pears. 
B)  Washington has a comparative advantage in the production of both pecans and pears. 
C)  Washington has a comparative advantage in producing pecans and Missouri has a comparative advantage in producing pears. 
D)  Both answers A and C are correct.

Question 14

The opportunity cost of producing one ton of wheat for Country Gamma is 4 tons of corn.The opportunity cost of producing one ton of wheat for Country Beta is 8 tons of corn.Which country has the comparative advantage in the production of wheat?

Accepted Answer

A)  Gamma 
B)  Beta 
C)  Neither country has a comparative advantage. 
D)  Both countries have the comparative advantage. 
A)  Gamma 
B)  Beta 
C)  Neither country has a comparative advantage. 
D)  Both countries have the comparative advantage.

Question 15

As we move along a bowed-out production possibility frontier,producing more tacos and less pizza,the opportunity cost of a pizza ________.

Accepted Answer

A)  increases 
B)  remains the same 
C)  decreases 
D)  increases and then decreases 
A)  increases 
B)  remains the same 
C)  decreases 
D)  increases and then decreases

Question 16

Economic growth

Accepted Answer

A)  leads to less consumption in the present and increased consumption in the future. 
B)  is free. 
C)  is the major reason we face scarcity. 
D)  allows us to increase our consumption in the present and in the future. 
A)  leads to less consumption in the present and increased consumption in the future. 
B)  is free. 
C)  is the major reason we face scarcity. 
D)  allows us to increase our consumption in the present and in the future.

Question 17

-In the above figure,when 2000 bicycles are produced each month,we can see that

Accepted Answer

A)  the marginal benefit from another bicycle is greater than the marginal cost of another bicycle. 
B)  more bicycles should be produced to reach the allocatively efficient level of output. 
C)  the economy is very efficient at the production of bicycles because the marginal benefit exceeds the marginal cost. 
D)  Both answers A and B are correct. 
A)  the marginal benefit from another bicycle is greater than the marginal cost of another bicycle. 
B)  more bicycles should be produced to reach the allocatively efficient level of output. 
C)  the economy is very efficient at the production of bicycles because the marginal benefit exceeds the marginal cost. 
D)  Both answers A and B are correct.

Question 18

Suppose that the United States and Cuba decide to open up trade.If each country specializes in the good in which it has a comparative advantage,________ will gain from that trade because ________.

Accepted Answer

A)  both countries; consumption possibilities in both Cuba and the United States will lie outside their PPFs. 
B)  neither country; their consumption possibilities will not change. 
C)  only the United States; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change. 
D)  only Cuba; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change. 
A)  both countries; consumption possibilities in both Cuba and the United States will lie outside their PPFs. 
B)  neither country; their consumption possibilities will not change. 
C)  only the United States; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change. 
D)  only Cuba; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change.

Question 19

-In the figure above,if the quantity of yogurt produced increases from 2 gallons an hour to 3 gallons an hour,the opportunity cost of a gallon of yogurt in terms of ice cream is

Accepted Answer

A)  half a gallon. 
B)  1 gallon. 
C)  3 gallons. 
D)  4 gallons. 
A)  half a gallon. 
B)  1 gallon. 
C)  3 gallons. 
D)  4 gallons.

Question 20

A marginal benefit curve shows

Accepted Answer

A)  the efficient use of resources. 
B)  the quantity of one good that must be forgone to get more of another good. 
C)  the quantity of one good that people are willing to forgo to get another unit of another good. 
D)  there are increasing opportunity costs. 
A)  the efficient use of resources. 
B)  the quantity of one good that must be forgone to get more of another good. 
C)  the quantity of one good that people are willing to forgo to get another unit of another good. 
D)  there are increasing opportunity costs.

Resource use is allocatively efficient

-The above figure illustrates Mary's production possibilities frontier.If Mary wants to move from point d to point c,she must

When a nation is producing the allocatively efficient quantity of a product,the marginal benefit of producing the good equals the marginal cost of producing that good.

Ted can study for his economics exam or go to a concert.He decides to study for his economics exam instead of going to the concert.The concert he will miss is Ted's ________ of studying for the exam.

-In the figure above,the curve is known as the

One of the opportunity costs of economic growth is

-According to the figure above,the opportunity cost of producing another computer is

We measure the marginal of a good by what a for another unit of the good.

According to the principle of comparative advantage,if a rich country trades with a poor country,then

A country possesses a comparative advantage in the production of a good if

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 is true?

The opportunity cost of producing one ton of wheat for Country Gamma is 4 tons of corn.The opportunity cost of producing one ton of wheat for Country Beta is 8 tons of corn.Which country has the comparative advantage in the production of wheat?

As we move along a bowed-out production possibility frontier,producing more tacos and less pizza,the opportunity cost of a pizza ________.

Economic growth

-In the above figure,when 2000 bicycles are produced each month,we can see that

Suppose that the United States and Cuba decide to open up trade.If each country specializes in the good in which it has a comparative advantage, will gain from that trade because .

-In the figure above,if the quantity of yogurt produced increases from 2 gallons an hour to 3 gallons an hour,the opportunity cost of a gallon of yogurt in terms of ice cream is

A marginal benefit curve shows

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

Resource use is allocatively efficient

-The above figure illustrates Mary's production possibilities frontier.If Mary wants to move from point d to point c,she must

When a nation is producing the allocatively efficient quantity of a product,the marginal benefit of producing the good equals the marginal cost of producing that good.

Ted can study for his economics exam or go to a concert.He decides to study for his economics exam instead of going to the concert.The concert he will miss is Ted's ________ of studying for the exam.

-In the figure above,the curve is known as the

One of the opportunity costs of economic growth is

-According to the figure above,the opportunity cost of producing another computer is

We measure the marginal ________ of a good by what a ________ for another unit of the good.

According to the principle of comparative advantage,if a rich country trades with a poor country,then

A country possesses a comparative advantage in the production of a good if

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 is true?

The opportunity cost of producing one ton of wheat for Country Gamma is 4 tons of corn.The opportunity cost of producing one ton of wheat for Country Beta is 8 tons of corn.Which country has the comparative advantage in the production of wheat?

As we move along a bowed-out production possibility frontier,producing more tacos and less pizza,the opportunity cost of a pizza ________.

Economic growth

-In the above figure,when 2000 bicycles are produced each month,we can see that

Suppose that the United States and Cuba decide to open up trade.If each country specializes in the good in which it has a comparative advantage,________ will gain from that trade because ________.

-In the figure above,if the quantity of yogurt produced increases from 2 gallons an hour to 3 gallons an hour,the opportunity cost of a gallon of yogurt in terms of ice cream is

A marginal benefit curve shows

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

We measure the marginal of a good by what a for another unit of the good.

Suppose that the United States and Cuba decide to open up trade.If each country specializes in the good in which it has a comparative advantage, will gain from that trade because .