Question 1

Marginal benefit curves slope ________ and marginal cost curves slope ________.

Accepted Answer

A)  upward; upward 
B)  upward; downward 
C)  downward; downward 
D)  downward; upward 
A)  upward; upward 
B)  upward; downward 
C)  downward; downward 
D)  downward; upward

Question 2

President Obama has proposed a goal that everyone complete at least one year of formal education or training beyond high school.This policy would

Accepted Answer

A)  increase human capital and increase economic growth. 
B)  increase physical capital and increase economic growth. 
C)  increase financial capital and increase economic growth. 
D)  eliminate opportunity costs and increase economic growth. 
A)  increase human capital and increase economic growth. 
B)  increase physical capital and increase economic growth. 
C)  increase financial capital and increase economic growth. 
D)  eliminate opportunity costs and increase economic growth.

Question 3

Suppose the country of Popcorn produces only jets and corn.If Popcorn cannot produce any more jets without giving up corn,we say that Popcorn has achieved

Accepted Answer

A)  the highest marginal benefit. 
B)  production efficiency. 
C)  the lowest marginal cost. 
D)  the highest opportunity cost. 
A)  the highest marginal benefit. 
B)  production efficiency. 
C)  the lowest marginal cost. 
D)  the highest opportunity cost.

Question 4

$$\begin{array} { | c | c | c | } 
\hline \text { Point } & \begin{array} { c } 
\text { Production of } \
\text { grain } \
\text { (tons) }
\end{array} & \begin{array} { c } 
\text { Production of cars } \
\text { (cars) }
\end{array} \
\hline \text { A } & 0 & 30 \
\hline \text { B } & 2 & 28 \
\hline \text { C } & 4 & 24 \
\hline \text { D } & 6 & 18 \
\hline \text { E } & 8 & 10 \
\hline \text { F } & 10 & 0 \
\hline
\end{array}$$
-The table above lists six points on the production possibilities frontier for grain and cars.What is the opportunity cost of producing the 26th car?

Accepted Answer

A)  2 tons of grain per car 
B)  4 tons of grain per car 
C)  0.25 tons of grain per car 
D)  0.5 tons of grain per car 
A)  2 tons of grain per car 
B)  4 tons of grain per car 
C)  0.25 tons of grain per car 
D)  0.5 tons of grain per car

Question 5

-Refer to the production possibilities frontier in the figure above.Which of the following movements requires the largest opportunity cost,in terms of good Y forgone,per extra unit of good X?

Accepted Answer

A)  from point a to point b 
B)  from point b to point c 
C)  from point c to point d 
D)  from point d to point e 
A)  from point a to point b 
B)  from point b to point c 
C)  from point c to point d 
D)  from point d to point e

Question 6

-In the figure above,the marginal cost of the second computer is

Accepted Answer

A)  2 television sets per computer. 
B)  3 television sets per computer. 
C)  5 television sets per computer. 
D)  30 television sets per computer. 
A)  2 television sets per computer. 
B)  3 television sets per computer. 
C)  5 television sets per computer. 
D)  30 television sets per computer.

Question 7

Suppose that when NBC produces 1 new drama series in a season it gives up the chance to produce 3 new reality shows. This means that

Accepted Answer

A)  the opportunity cost of a new drama series is 1/3 of a new reality show. 
B)  the opportunity cost of a 1 new reality show is 1/3 of a new drama series. 
C)  NBC has a comparative advantage in producing new drama series. 
D)  NBC has a comparative advantage in producing new reality shows. 
A)  the opportunity cost of a new drama series is 1/3 of a new reality show. 
B)  the opportunity cost of a 1 new reality show is 1/3 of a new drama series. 
C)  NBC has a comparative advantage in producing new drama series. 
D)  NBC has a comparative advantage in producing new reality shows.

Question 8

Points outside the production possibilities frontier illustrate production points that cannot be attained.

Accepted Answer

A) True 
 B)False

Question 9

A country produces only pencils and erasers.Pencil production is allocatively efficient if the marginal ________ of a pencil equals the marginal ________ of ________.

Accepted Answer

A)  cost; benefit; an eraser 
B)  cost; cost; an eraser 
C)  benefit; benefit; an eraser 
D)  benefit; cost; a pencil 
A)  cost; benefit; an eraser 
B)  cost; cost; an eraser 
C)  benefit; benefit; an eraser 
D)  benefit; cost; a pencil

Question 10

Sarah and her boyfriend Mike want to save some money to pay for their wedding.So they decided to help people in the neighborhood by cleaning their garages and mowing lawns.Sarah takes 60 minutes to clean a garage and 80 minutes to mow a lawn.Mike takes 80 minutes to clean a garage and 80 minutes to mow a lawn.Sarah and Mike devote 10 hours per week each to these activities and get paid $25 for each garage they clean and $25 for each lawn they mow.Sarah says to Mike: "I have an absolute advantage in cleaning and we are equally productive in mowing.Therefore I should do both cleaning and mowing but you should only mow lawns." Mike disagrees.He thinks Sarah should specialize in cleaning garages and he should specialize in mowing lawns.Help Sarah and Mike to resolve their dispute.
a) Who has an absolute advantage in cleaning garages?
In mowing lawns?
Explain.
b) Draw Sarah's and Mike's production possibilities frontiers.What are each individual's opportunity costs?
c) Who has a comparative advantage in cleaning garages?
In mowing lawns?
Explain.
d) Is Sarah right when she says that she should do both cleaning and mowing while Mike should only mow lawns?
Or may be Mike is right when he suggests that Sarah specializes in cleaning and he specializes in mowing?
Illustrate and substantiate your answer with a numerical example.

Accepted Answer

a)Sarah has an absolute advantage in cle

Question 11

$\begin{array}{c}
\begin{array}{|l|}
\hline \text {Omar's production in}\
\text {1 day}\
\hline \text {Computers fixed}\
\text {12}\
\text {Lines of code}\
\text {800}\
\hline
\end{array}
\begin{array}{l|}
\hline \text {John's production in 1}\
 \text {day}\
\hline \text {Computers fixed}\
 \text { 4}\
 \text {Lines of code }\
 \text {200}\
\hline 
\end{array}
\end{array}$

-Omar and John can fix computers or write computer programs.The table above shows the number of computers they can fix and the lines of code they can write in a day.
a) Who,if anyone,has the absolute advantage?
b) Who has the comparative advantage in fixing computers?
Why?
c) Who has the comparative advantage in writing programs?
Why?

Accepted Answer

a)Omar has an absolute advantage in fixi

Question 12

An increase in the production of capital goods

Accepted Answer

A)  must increase the current production of consumer goods. 
B)  must decrease the future production of consumer goods. 
C)  shifts the production possibilities frontier inward in the future. 
D)  shifts the production possibilities frontier outward in the future. 
A)  must increase the current production of consumer goods. 
B)  must decrease the future production of consumer goods. 
C)  shifts the production possibilities frontier inward in the future. 
D)  shifts the production possibilities frontier outward in the future.

Question 13

When the production possibilities frontier is bowed outwards,the opportunity cost of producing more of one good

Accepted Answer

A)  increases in terms of the amount foregone of the other good. 
B)  decreases in terms of the amount foregone of the other good. 
C)  remains constant. 
D)  cannot be determined. 
A)  increases in terms of the amount foregone of the other good. 
B)  decreases in terms of the amount foregone of the other good. 
C)  remains constant. 
D)  cannot be determined.

Question 14

$$\begin{array} { | c | c | c | } 
\hline & \begin{array} { c } 
\text { U.S. production } \
\text { possibilities }
\end{array} & \begin{array} { c } 
\text { France's production } \
\text { possibilities }
\end{array} \
\hline \text { Steel } & 100 & 25 \
\hline \text { Concrete } & 200 & 100 \
\hline
\end{array}$$
-Agnes can produce either 1 unit of X or 1 unit of Y in an hour,while Brenda can produce either 2 units of X or 4 units of Y in an hour.The opportunity cost of producing a unit of Y is

Accepted Answer

A)  1 unit of X per unit of Y for Agnes and 2 units of X per unit of Y for Brenda. 
B)  1 unit of X per unit of Y for Agnes and 1/2 unit of X per unit of Y for Brenda. 
C)  1 hour for Agnes and 1/2 hour for Brenda. 
D)  1 hour for Agnes and 2 hours for Brenda. 
A)  1 unit of X per unit of Y for Agnes and 2 units of X per unit of Y for Brenda. 
B)  1 unit of X per unit of Y for Agnes and 1/2 unit of X per unit of Y for Brenda. 
C)  1 hour for Agnes and 1/2 hour for Brenda. 
D)  1 hour for Agnes and 2 hours for Brenda.

Question 15

As a country that has a bowed-out production possibilities frontier produces more of one good,the opportunity cost of a unit of that good ________.

Accepted Answer

A)  might increase or decrease 
B)  remains the same 
C)  increases 
D)  decreases 
A)  might increase or decrease 
B)  remains the same 
C)  increases 
D)  decreases

Question 16

-In the figure above,both Joe and Jill initially produce at point A.If Joe and Jill realize that they each possess a comparative advantage,which outcome can we expect?

Accepted Answer

A)  Joe will specialize in shirts and Jill will specialize in pants. 
B)  Joe will specialize in pants and Jill will specialize in shirts. 
C)  Joe and Jill each will be able to consume more than 2 shirts and 2 pairs of pants. 
D)  Both answers B and C are correct. 
A)  Joe will specialize in shirts and Jill will specialize in pants. 
B)  Joe will specialize in pants and Jill will specialize in shirts. 
C)  Joe and Jill each will be able to consume more than 2 shirts and 2 pairs of pants. 
D)  Both answers B and C are correct.

Question 17

A circular flow diagram shows the flows from the goods and resources markets.

Accepted Answer

A) True 
 B)False

Question 18

Employees at Bank of America are good at providing banking services and workers at Ben & Jerry's are good at making ice cream. If some bankers are moved to making ice cream,we get a small increase in the amount of ice cream produced and a large decrease in the amount of banking services provided.If the PPF has banking services on the vertical axis and ice cream on the horizontal axis,the effect of the change reflects

Accepted Answer

A)  decreasing opportunity costs. 
B)  a bowed out PPF for banking services and ice cream. 
C)  production efficiency. 
D)  a shift to a flatter PPF. 
A)  decreasing opportunity costs. 
B)  a bowed out PPF for banking services and ice cream. 
C)  production efficiency. 
D)  a shift to a flatter PPF.

Question 19

A country that has a comparative advantage in producing capital goods will ________ a country that has a comparative advantage in consumption goods.

Accepted Answer

A)  reap all of the gains from trade when it trades with 
B)  grow slower than 
C)  reap fewer of the gains from trade when it trades with 
D)  specialize in producing capital goods and trade with 
A)  reap all of the gains from trade when it trades with 
B)  grow slower than 
C)  reap fewer of the gains from trade when it trades with 
D)  specialize in producing capital goods and trade with

Question 20

Economic growth

Accepted Answer

A)  creates unemployment. 
B)  has no opportunity cost. 
C)  shifts the PPF outward. 
D)  makes it more difficult for a nation to produce on its PPF. 
A)  creates unemployment. 
B)  has no opportunity cost. 
C)  shifts the PPF outward. 
D)  makes it more difficult for a nation to produce on its PPF.

Marginal benefit curves slope and marginal cost curves slope .

President Obama has proposed a goal that everyone complete at least one year of formal education or training beyond high school.This policy would

Suppose the country of Popcorn produces only jets and corn.If Popcorn cannot produce any more jets without giving up corn,we say that Popcorn has achieved

Point Production of grain (tons) Production of cars (cars) A 0 30 B 2 28 C 4 24 D 6 18 E 8 10 F 10 0 -The table above lists six points on the production possibilities frontier for grain and cars.What is the opportunity cost of producing the 26th car?

-Refer to the production possibilities frontier in the figure above.Which of the following movements requires the largest opportunity cost,in terms of good Y forgone,per extra unit of good X?

-In the figure above,the marginal cost of the second computer is

Suppose that when NBC produces 1 new drama series in a season it gives up the chance to produce 3 new reality shows. This means that

Points outside the production possibilities frontier illustrate production points that cannot be attained.

A country produces only pencils and erasers.Pencil production is allocatively efficient if the marginal of a pencil equals the marginal of .

An increase in the production of capital goods

When the production possibilities frontier is bowed outwards,the opportunity cost of producing more of one good

U.S. production possibilities France's production possibilities Steel 100 25 Concrete 200 100 -Agnes can produce either 1 unit of X or 1 unit of Y in an hour,while Brenda can produce either 2 units of X or 4 units of Y in an hour.The opportunity cost of producing a unit of Y is

As a country that has a bowed-out production possibilities frontier produces more of one good,the opportunity cost of a unit of that good ________.

-In the figure above,both Joe and Jill initially produce at point A.If Joe and Jill realize that they each possess a comparative advantage,which outcome can we expect?

A circular flow diagram shows the flows from the goods and resources markets.

A country that has a comparative advantage in producing capital goods will ________ a country that has a comparative advantage in consumption goods.

Economic growth

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

Marginal benefit curves slope ________ and marginal cost curves slope ________.

President Obama has proposed a goal that everyone complete at least one year of formal education or training beyond high school.This policy would

Suppose the country of Popcorn produces only jets and corn.If Popcorn cannot produce any more jets without giving up corn,we say that Popcorn has achieved

Point Production of grain (tons) Production of cars (cars) A 0 30 B 2 28 C 4 24 D 6 18 E 8 10 F 10 0 -The table above lists six points on the production possibilities frontier for grain and cars.What is the opportunity cost of producing the 26th car?

-Refer to the production possibilities frontier in the figure above.Which of the following movements requires the largest opportunity cost,in terms of good Y forgone,per extra unit of good X?

-In the figure above,the marginal cost of the second computer is

Suppose that when NBC produces 1 new drama series in a season it gives up the chance to produce 3 new reality shows. This means that

Points outside the production possibilities frontier illustrate production points that cannot be attained.

A country produces only pencils and erasers.Pencil production is allocatively efficient if the marginal ________ of a pencil equals the marginal ________ of ________.

An increase in the production of capital goods

When the production possibilities frontier is bowed outwards,the opportunity cost of producing more of one good

U.S. production possibilities France's production possibilities Steel 100 25 Concrete 200 100 -Agnes can produce either 1 unit of X or 1 unit of Y in an hour,while Brenda can produce either 2 units of X or 4 units of Y in an hour.The opportunity cost of producing a unit of Y is

As a country that has a bowed-out production possibilities frontier produces more of one good,the opportunity cost of a unit of that good ________.

-In the figure above,both Joe and Jill initially produce at point A.If Joe and Jill realize that they each possess a comparative advantage,which outcome can we expect?

A circular flow diagram shows the flows from the goods and resources markets.

A country that has a comparative advantage in producing capital goods will ________ a country that has a comparative advantage in consumption goods.

Economic growth

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

Marginal benefit curves slope and marginal cost curves slope .

A country produces only pencils and erasers.Pencil production is allocatively efficient if the marginal of a pencil equals the marginal of .