Question 1

-The table above represents different points along a production possibilities curve. What is the marginal cost of moving from 2 bushels to 3 bushels of beans?

Accepted Answer

A)  9 bushels of carrots per bushel of beans 
B)  12 bushels of carrots per bushel of beans 
C)  3 bushels of carrots per bushel of beans 
D)  21 bushels of carrots per bushel of beans 
A)  9 bushels of carrots per bushel of beans 
B)  12 bushels of carrots per bushel of beans 
C)  3 bushels of carrots per bushel of beans 
D)  21 bushels of carrots per bushel of beans

Question 2

Allocative efficiency occurs when

Accepted Answer

A)  we cannot produce more of any good without giving up some other good that we value more highly. 
B)  we cannot produce more of any one good without giving up some other good. 
C)  marginal benefit exceeds marginal cost. 
D)  opportunity costs are decreasing. 
A)  we cannot produce more of any good without giving up some other good that we value more highly. 
B)  we cannot produce more of any one good without giving up some other good. 
C)  marginal benefit exceeds marginal cost. 
D)  opportunity costs are decreasing.

Question 3

-Molly just graduated from high school. The figure shows her possibilities frontier. If Molly goes to college, she will move from point M to point K. In terms of consumption goods, Molly's opportunity cost of going to college is

Accepted Answer

A)  MK. 
B)  OL. 
C)  KL. 
D)  LM. 
A)  MK. 
B)  OL. 
C)  KL. 
D)  LM.

Question 4

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. If Germany produces one less computer and switches resources to cameras, and the United States produces one more computer and takes resources out of cameras, then the net change in camera production in both countries taken together is

Accepted Answer

A)  0. 
B)  minus 10 cameras. 
C)  plus 10 cameras. 
D)  plus 20 cameras. 
A)  0. 
B)  minus 10 cameras. 
C)  plus 10 cameras. 
D)  plus 20 cameras.

Question 5

A bowed outward production possibilities frontier occurs when

Accepted Answer

A)  opportunity costs are constant. 
B)  resources are not scarce. 
C)  as more of a good is produced, producing additional units of it require greater reductions in the other good. 
D)  the society is operating on the production possibilities frontier. 
A)  opportunity costs are constant. 
B)  resources are not scarce. 
C)  as more of a good is produced, producing additional units of it require greater reductions in the other good. 
D)  the society is operating on the production possibilities frontier.

Question 6

The production possibilities frontier represents

Accepted Answer

A)  the maximum amount of labor and capital available to society. 
B)  combinations of goods and services among which consumers are indifferent. 
C)  the maximum levels of production that can be attained. 
D)  the maximum rate of growth of capital and labor in a country. 
A)  the maximum amount of labor and capital available to society. 
B)  combinations of goods and services among which consumers are indifferent. 
C)  the maximum levels of production that can be attained. 
D)  the maximum rate of growth of capital and labor in a country.

Question 7

Moving along a bowed-out PPF between milk and cotton, as more milk is produced the marginal cost of an additional gallon of milk

Accepted Answer

A)  rises. 
B)  does not change. 
C)  falls. 
D)  probably changes, but in an ambiguous direction. 
A)  rises. 
B)  does not change. 
C)  falls. 
D)  probably changes, but in an ambiguous direction.

Question 8

Scarcity is represented on a production possibilities frontier figure by

Accepted Answer

A)  the amount of the good on the horizontal axis forgone. 
B)  the fact that there are only two goods in the diagram. 
C)  technological progress. 
D)  the fact there are attainable and unattainable points. 
A)  the amount of the good on the horizontal axis forgone. 
B)  the fact that there are only two goods in the diagram. 
C)  technological progress. 
D)  the fact there are attainable and unattainable points.

Question 9

-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 10

-The table above represents the marginal cost and marginal benefit associated with pizza (in terms of movies). What quantity of pizza should be produced if resources are to be used efficiently?

Accepted Answer

A)  5 pizzas 
B)  6 pizzas 
C)  7 pizzas 
D)  8 pizzas 
A)  5 pizzas 
B)  6 pizzas 
C)  7 pizzas 
D)  8 pizzas

Question 11

The principle of decreasing marginal benefit implies that the

Accepted Answer

A)  additional benefit from obtaining one more of a good or service decreases as more is consumed. 
B)  additional benefit from obtaining one more of a good or service increases as more is consumed. 
C)  total benefit from obtaining more of a good or service decreases as more is consumed. 
D)  total benefit from obtaining more of a good or service remains the same as more is consumed. 
A)  additional benefit from obtaining one more of a good or service decreases as more is consumed. 
B)  additional benefit from obtaining one more of a good or service increases as more is consumed. 
C)  total benefit from obtaining more of a good or service decreases as more is consumed. 
D)  total benefit from obtaining more of a good or service remains the same as more is consumed.

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

-Harry usually spends 10 hours a week playing Quidditch. However, his Defense Against the Dark Arts exam is coming and he needs more time to study for the exam. If he does not study at all, the lowest grade he will receive is 55. But Harry realizes that this grade is unacceptable and so he has to give up some of his Quidditch time. But how much? He asks his friend Hermione, who is very good at Magical Economics, to help him figure this out. Together, they come up with the schedules of Harry's possibilities and values in the tables above. Then Hermione quickly finds the solution. But Harry still looks puzzled. Help Hermione to explain her solution to Harry.
a) Draw Harry's production possibilities frontier with the Quidditch hours on the horizontal axis and Harry's grade, starting at 55, on the vertical axis.
b) What is the opportunity cost of the first two hours of Quidditch? What is the marginal cost of the 5th hour?
c) What is Harry's opportunity cost of raising his grade from 82 points to 87 points?
d) Draw Harry's marginal cost of playing Quidditch curve. What happens to the marginal cost if Harry spends more time playing Quidditch?
e) Draw Harry's marginal benefit from playing Quidditch curve. Describe the relationship between Harry's time spent playing Quidditch and the marginal benefit from playing Quidditch.
f) For how many extra hours did Hermione recommend Harry to study? Why? If Harry follows her advice, what grade will he expect? What do you think Hermione said when Harry asked why he should not spend more time playing Quidditch?

Accepted Answer

@#IMG-DLM& a) The figure above shows Harry's produ

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

An increase in the nation's capital stock will

Accepted Answer

A)  shift the PPF outward. 
B)  cause a movement along the PPF upward and leftward. 
C)  cause a movement along the PPF downward and rightward. 
D)  move the nation from producing within the PPF to producing at a point closer to the PPF. 
A)  shift the PPF outward. 
B)  cause a movement along the PPF upward and leftward. 
C)  cause a movement along the PPF downward and rightward. 
D)  move the nation from producing within the PPF to producing at a point closer to the PPF.

Question 16

We have achieved production efficiency if we can produce more of one good without producing less of some other good.

Accepted Answer

A) True 
 B)False

Question 17

-The table above lists six points on the production possibilities frontier for grain and cars. What is the opportunity cost of producing the 5th ton of grain?

Accepted Answer

A)  16 cars per ton of grain 
B)  6 cars per ton of grain 
C)  3 cars per ton of grain 
D)  2 cars per ton of grain 
A)  16 cars per ton of grain 
B)  6 cars per ton of grain 
C)  3 cars per ton of grain 
D)  2 cars per ton of grain

Question 18

-The above table shows the tons of steel and concrete that can be produced by the United States and France in an hour. From the data in the table

Accepted Answer

A)  France has a comparative advantage in the production of concrete. 
B)  the United States has a comparative advantage in the production of concrete. 
C)  France has an absolute advantage in the production of concrete. 
D)  the United States has a comparative advantage in the production of both goods. 
A)  France has a comparative advantage in the production of concrete. 
B)  the United States has a comparative advantage in the production of concrete. 
C)  France has an absolute advantage in the production of concrete. 
D)  the United States has a comparative advantage in the production of both goods.

Question 19

The production possibilities frontier shifts as

Accepted Answer

A)  tastes and preferences change. 
B)  the money supply grows or shrinks. 
C)  technology changes. 
D)  the unemployment rate changes. 
A)  tastes and preferences change. 
B)  the money supply grows or shrinks. 
C)  technology changes. 
D)  the unemployment rate changes.

Question 20

-Employees at Bank of America are good at providing banking services and workers at Ben & Jerry's are good at making ice cream. The figure above shows the marginal cost and marginal benefit curves for ice cream. A movement from point a to point b reflects

Accepted Answer

A)  the economy must give up banking services to get extra gallons of ice cream. 
B)  the opportunity cost of banking services increases. 
C)  a decrease in the tradeoff between ice cream and banking services. 
D)  a leftward shift in the marginal benefit curve. 
A)  the economy must give up banking services to get extra gallons of ice cream. 
B)  the opportunity cost of banking services increases. 
C)  a decrease in the tradeoff between ice cream and banking services. 
D)  a leftward shift in the marginal benefit curve.

-The table above represents different points along a production possibilities curve. What is the marginal cost of moving from 2 bushels to 3 bushels of beans?

Allocative efficiency occurs when

-Molly just graduated from high school. The figure shows her possibilities frontier. If Molly goes to college, she will move from point M to point K. In terms of consumption goods, Molly's opportunity cost of going to college is

A bowed outward production possibilities frontier occurs when

The production possibilities frontier represents

Moving along a bowed-out PPF between milk and cotton, as more milk is produced the marginal cost of an additional gallon of milk

Scarcity is represented on a production possibilities frontier figure by

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

-The table above represents the marginal cost and marginal benefit associated with pizza (in terms of movies). What quantity of pizza should be produced if resources are to be used efficiently?

The principle of decreasing marginal benefit implies that the

An increase in the production of capital goods

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?

An increase in the nation's capital stock will

We have achieved production efficiency if we can produce more of one good without producing less of some other good.

-The table above lists six points on the production possibilities frontier for grain and cars. What is the opportunity cost of producing the 5th ton of grain?

-The above table shows the tons of steel and concrete that can be produced by the United States and France in an hour. From the data in the table

The production possibilities frontier shifts as

-Employees at Bank of America are good at providing banking services and workers at Ben & Jerry's are good at making ice cream. The figure above shows the marginal cost and marginal benefit curves for ice cream. A movement from point a to point b reflects

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

-The table above represents different points along a production possibilities curve. What is the marginal cost of moving from 2 bushels to 3 bushels of beans?

Allocative efficiency occurs when

-Molly just graduated from high school. The figure shows her possibilities frontier. If Molly goes to college, she will move from point M to point K. In terms of consumption goods, Molly's opportunity cost of going to college is

A bowed outward production possibilities frontier occurs when

The production possibilities frontier represents

Moving along a bowed-out PPF between milk and cotton, as more milk is produced the marginal cost of an additional gallon of milk

Scarcity is represented on a production possibilities frontier figure by

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

-The table above represents the marginal cost and marginal benefit associated with pizza (in terms of movies). What quantity of pizza should be produced if resources are to be used efficiently?

The principle of decreasing marginal benefit implies that the

An increase in the production of capital goods

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?

An increase in the nation's capital stock will

We have achieved production efficiency if we can produce more of one good without producing less of some other good.

-The table above lists six points on the production possibilities frontier for grain and cars. What is the opportunity cost of producing the 5th ton of grain?

-The above table shows the tons of steel and concrete that can be produced by the United States and France in an hour. From the data in the table

The production possibilities frontier shifts as

-Employees at Bank of America are good at providing banking services and workers at Ben & Jerry's are good at making ice cream. The figure above shows the marginal cost and marginal benefit curves for ice cream. A movement from point a to point b reflects

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