Question 1

To obtain the gains available from comparative advantage, individuals or countries must do more than specialize; they must also

Accepted Answer

A)  save. 
B)  invest. 
C)  engage in research and development. 
D)  trade. 
A)  save. 
B)  invest. 
C)  engage in research and development. 
D)  trade.

Question 2

Before the first Gulf War in 1991, 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 had been set 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 3

Production possibilities  
-Based on the above table, as the production of pizza increases, the opportunity cost of pizza in terms of forgone cases of soda

Accepted Answer

A)  increases. 
B)  decreases. 
C)  does not change. 
D)  initially increases then decreases. 
A)  increases. 
B)  decreases. 
C)  does not change. 
D)  initially increases then decreases.

Question 4

Susan likes to drink sodas. The ________ soda Susan drinks, the ________ of the last soda.

Accepted Answer

A)  more; higher the marginal benefit 
B)  less; higher the opportunity cost 
C)  less; lower the marginal benefit 
D)  more; lower the marginal benefit 
A)  more; higher the marginal benefit 
B)  less; higher the opportunity cost 
C)  less; lower the marginal benefit 
D)  more; lower the marginal benefit

Question 5

-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 6

-The opportunity cost of producing a unit of consumption at point b in the figure ________ point a.

Accepted Answer

A)  is greater than at 
B)  is less than at 
C)  cannot be compared with 
D)  is the same as 
A)  is greater than at 
B)  is less than at 
C)  cannot be compared with 
D)  is the same as

Question 7

-Refer to the table above, which gives five points on a nation's PPF. As we increase the production of X,

Accepted Answer

A)  the output of Y increases. 
B)  unemployment increases. 
C)  the opportunity cost of each new unit of X increases. 
D)  the opportunity cost of each new unit of X decreases. 
A)  the output of Y increases. 
B)  unemployment increases. 
C)  the opportunity cost of each new unit of X increases. 
D)  the opportunity cost of each new unit of X decreases.

Question 8

The United States has an absolute advantage in producing sugar over all of the other sugar producing countries. Does this fact mean that we should not import any sugar from the other countries?

Accepted Answer

Having an absolute advantage doesn't mea

Question 9

-Using the values for the marginal benefit and the marginal cost of a bushel of apples given in the table above, what is the allocatively efficient quantity of apples? Suppose 10 million bushels of apples are produced. Should the quantity be increased or deceased? What if 20 million bushels are produced; should the quantity be increased or decreased?

Accepted Answer

The allocatively efficient quantity of a

Question 10

The more we have of a good or service, the smaller is its marginal benefit and the less we are willing to pay for an additional unit of it.

Accepted Answer

A) True 
 B)False

Question 11

What is comparative advantage? Give an example.

Accepted Answer

Comparative advantage is the ability of

Question 12

Which of the following is NOT true concerning a society's production possibilities frontier (PPF)?

Accepted Answer

A)  It reveals the maximum amount of any two goods that can be produced from a given quantity of resources. 
B)  Tradeoffs occur when moving along a PPF. 
C)  Production efficiency occurs when production is on the frontier itself. 
D)  Consumers will receive equal benefits from the two goods illustrated in the PPF. 
A)  It reveals the maximum amount of any two goods that can be produced from a given quantity of resources. 
B)  Tradeoffs occur when moving along a PPF. 
C)  Production efficiency occurs when production is on the frontier itself. 
D)  Consumers will receive equal benefits from the two goods illustrated in the PPF.

Question 13

-In the above figure, at point b what is the opportunity cost of producing 2 more audio tapes?

Accepted Answer

A)  1/2 video tape per audio tape 
B)  1 video tape per audio tape 
C)  6 video tapes per audio tape 
D)  There is no opportunity cost. 
A)  1/2 video tape per audio tape 
B)  1 video tape per audio tape 
C)  6 video tapes per audio tape 
D)  There is no opportunity cost.

Question 14

Claire and Dag are farmers who produce beef and corn. In a year, Claire can produce 16 tons of beef or 40 bushels of corn, while Dag can produce 5 tons of beef or 25 bushels of corn. The opportunity cost of producing a ton of beef is

Accepted Answer

A)  10 bushels of corn for Dag and 8 bushels of corn for Claire. 
B)  5 bushels of corn for Dag and 2.5 bushels of corn for Claire. 
C)  20 bushels of corn for Dag and 50 bushels of corn for Claire. 
D)  36.5 days for Dag and 45.6 days for Claire. 
A)  10 bushels of corn for Dag and 8 bushels of corn for Claire. 
B)  5 bushels of corn for Dag and 2.5 bushels of corn for Claire. 
C)  20 bushels of corn for Dag and 50 bushels of corn for Claire. 
D)  36.5 days for Dag and 45.6 days for Claire.

Question 15

-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 16

-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 17

What is the relationship between the bowed out shape of the production possibilities frontier and the increasing opportunity cost of a good as more of it is produced?

Accepted Answer

The production possibilities frontier is

Question 18

-In the production possibilities frontier depicted in the figure above, which of the following combinations of hats and bananas is unattainable?

Accepted Answer

A)  4 million pounds of bananas and 4 million hats 
B)  2 million pounds of bananas and 5 million hats 
C)  0 pounds of bananas and 6 million hats 
D)  1 million pounds of bananas and 3 million hats 
A)  4 million pounds of bananas and 4 million hats 
B)  2 million pounds of bananas and 5 million hats 
C)  0 pounds of bananas and 6 million hats 
D)  1 million pounds of bananas and 3 million hats

Question 19

The kitchen manager at an Italian restaurant is deciding what assignments he should give to his two cooks, John and David. John can make 25 pizzas or 40 servings of pasta per hour and David can make 20 pizzas or 30 servings of pasta. Which of the following should be the manager's choice?

Accepted Answer

A)  Fire David because he is not as productive as John. John will do both jobs. 
B)  John will make pizza because he has comparative advantage in making pizza. 
C)  David will make pizza because he has comparative advantage in making pizza. 
D)  John and David both will spend half their time making pizza and half their time making pasta because each has a comparative advantage in making pizza. 
A)  Fire David because he is not as productive as John. John will do both jobs. 
B)  John will make pizza because he has comparative advantage in making pizza. 
C)  David will make pizza because he has comparative advantage in making pizza. 
D)  John and David both will spend half their time making pizza and half their time making pasta because each has a comparative advantage in making pizza.

Question 20

A society that is producing on its production possibilities frontier is

Accepted Answer

A)  not utilizing all of its resources. 
B)  not being technologically efficient. 
C)  producing too much output. 
D)  fully utilizing all of its productive resources. 
A)  not utilizing all of its resources. 
B)  not being technologically efficient. 
C)  producing too much output. 
D)  fully utilizing all of its productive resources.

To obtain the gains available from comparative advantage, individuals or countries must do more than specialize; they must also

Production possibilities -Based on the above table, as the production of pizza increases, the opportunity cost of pizza in terms of forgone cases of soda

Susan likes to drink sodas. The soda Susan drinks, the of the last soda.

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

-The opportunity cost of producing a unit of consumption at point b in the figure ________ point a.

-Refer to the table above, which gives five points on a nation's PPF. As we increase the production of X,

The United States has an absolute advantage in producing sugar over all of the other sugar producing countries. Does this fact mean that we should not import any sugar from the other countries?

The more we have of a good or service, the smaller is its marginal benefit and the less we are willing to pay for an additional unit of it.

What is comparative advantage? Give an example.

Which of the following is NOT true concerning a society's production possibilities frontier (PPF)?

-In the above figure, at point b what is the opportunity cost of producing 2 more audio tapes?

Claire and Dag are farmers who produce beef and corn. In a year, Claire can produce 16 tons of beef or 40 bushels of corn, while Dag can produce 5 tons of beef or 25 bushels of corn. The opportunity cost of producing a ton of beef is

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. Which of the following statements is TRUE?

What is the relationship between the bowed out shape of the production possibilities frontier and the increasing opportunity cost of a good as more of it is produced?

-In the production possibilities frontier depicted in the figure above, which of the following combinations of hats and bananas is unattainable?

The kitchen manager at an Italian restaurant is deciding what assignments he should give to his two cooks, John and David. John can make 25 pizzas or 40 servings of pasta per hour and David can make 20 pizzas or 30 servings of pasta. Which of the following should be the manager's choice?

A society that is producing on its production possibilities frontier is

What Is Economics

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 2: The Economic Problem

To obtain the gains available from comparative advantage, individuals or countries must do more than specialize; they must also

Production possibilities -Based on the above table, as the production of pizza increases, the opportunity cost of pizza in terms of forgone cases of soda

Susan likes to drink sodas. The ________ soda Susan drinks, the ________ of the last soda.

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

-The opportunity cost of producing a unit of consumption at point b in the figure ________ point a.

-Refer to the table above, which gives five points on a nation's PPF. As we increase the production of X,

The United States has an absolute advantage in producing sugar over all of the other sugar producing countries. Does this fact mean that we should not import any sugar from the other countries?

The more we have of a good or service, the smaller is its marginal benefit and the less we are willing to pay for an additional unit of it.

What is comparative advantage? Give an example.

Which of the following is NOT true concerning a society's production possibilities frontier (PPF)?

-In the above figure, at point b what is the opportunity cost of producing 2 more audio tapes?

Claire and Dag are farmers who produce beef and corn. In a year, Claire can produce 16 tons of beef or 40 bushels of corn, while Dag can produce 5 tons of beef or 25 bushels of corn. The opportunity cost of producing a ton of beef is

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. Which of the following statements is TRUE?

What is the relationship between the bowed out shape of the production possibilities frontier and the increasing opportunity cost of a good as more of it is produced?

-In the production possibilities frontier depicted in the figure above, which of the following combinations of hats and bananas is unattainable?

The kitchen manager at an Italian restaurant is deciding what assignments he should give to his two cooks, John and David. John can make 25 pizzas or 40 servings of pasta per hour and David can make 20 pizzas or 30 servings of pasta. Which of the following should be the manager's choice?

A society that is producing on its production possibilities frontier is

What Is Economics

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Susan likes to drink sodas. The soda Susan drinks, the of the last soda.