Question 1

Moving downward along a PPF, the opportunity cost of another unit of the good measured along the horizontal axis decreases.

Accepted Answer

A) True 
 B)False

Question 2

-The figure above shows the production possibilities frontiers for four nations that have identical production possibilities frontiers in the present. The one that will grow most rapidly in the future is most likely to be producing at point

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 3

In the United States, Texas ranks number one in the amount of installed megawatts for wind power generation and Florida ranks number one in the number of beach vacations. These facts point out that

Accepted Answer

A)  Texas has a comparative advantage in wind power generation. 
B)  Texas definitely has an absolute advantage in wind power generation. 
C)  Florida should produce more wind energy. 
D)  Florida can produce wind energy at a lower opportunity cost than can Texas. 
A)  Texas has a comparative advantage in wind power generation. 
B)  Texas definitely has an absolute advantage in wind power generation. 
C)  Florida should produce more wind energy. 
D)  Florida can produce wind energy at a lower opportunity cost than can Texas.

Question 4

Homer and Teddy are stranded on a desert island. To feed themselves each day they can either catch fish or pick fruit. In a day, Teddy could pick 60 pieces of fruit or catch 20 fish. Homer could pick 100 pieces of fruit or catch 150 fish. Which of the following is CORRECT?

Accepted Answer

A)  Homer has a comparative advantage in catching fish and Teddy has a comparative advantage in picking fruit. 
B)  Homer has a comparative advantage in picking fruit and Teddy has a comparative advantage in catching fish. 
C)  Homer has a comparative advantage in both catching fish and picking fruit. 
D)  Teddy has a comparative advantage in both catching fish and picking fruit. 
A)  Homer has a comparative advantage in catching fish and Teddy has a comparative advantage in picking fruit. 
B)  Homer has a comparative advantage in picking fruit and Teddy has a comparative advantage in catching fish. 
C)  Homer has a comparative advantage in both catching fish and picking fruit. 
D)  Teddy has a comparative advantage in both catching fish and picking fruit.

Question 5

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 6

-A (very, very small) country produces milk and shirts and its production possibilities frontier is in the table above. The nation is currently producing at point B. What is the opportunity cost of two additional gallons of milk? At point C? At point D? What do your results show?

Accepted Answer

At point B, the opportunity cost of 2 ad

Question 7

In the movie Cast Away, Tom Hanks plays a FedEx efficiency expert stranded on a deserted island. While on the island, he divides his time between catching fish, gathering coconuts, painting, and building a raft. Suppose that these were Mr. Hanks' only activities. Did he face an opportunity cost from pursuing any of these activities? Why or why not?

Accepted Answer

Yes, Mr. Hanks faces an opportunity cost

Question 8

-In order to achieve the maximum gains from trade, people should specialize according to

Accepted Answer

A)  property rights. 
B)  PPF. 
C)  absolute advantage. 
D)  comparative advantage. 
A)  property rights. 
B)  PPF. 
C)  absolute advantage. 
D)  comparative advantage.

Question 9

Betty and Ann live on a desert island. With a day's labor, Ann can produce 6 fish or 4 coconuts; Betty can produce 3 fish or 1 coconut. Betty's opportunity cost of producing 1 fish is ________, and she should specialize in the production of ________.

Accepted Answer

A)  1/3 coconut per fish; fish 
B)  2/3 coconut per fish; coconuts 
C)  1 coconut per fish; fish 
D)  4 coconuts per fish; fish 
A)  1/3 coconut per fish; fish 
B)  2/3 coconut per fish; coconuts 
C)  1 coconut per fish; fish 
D)  4 coconuts per fish; fish

Question 10

Compare and contrast production efficiency and allocative efficiency.

Accepted Answer

Production efficiency means that we are

Question 11

-Refer to the table above, which gives five points on a nation's PPF. The production of 7 units of X and 28 units of Y is

Accepted Answer

A)  impossible given the available resources. 
B)  possible but leaves some resources less than fully used or misallocated. 
C)  on the production possibilities frontier between points c and d. 
D)  on the production possibilities frontier between points b and c. 
A)  impossible given the available resources. 
B)  possible but leaves some resources less than fully used or misallocated. 
C)  on the production possibilities frontier between points c and d. 
D)  on the production possibilities frontier between points b and c.

Question 12

If the marginal benefit of a good exceeds its marginal cost

Accepted Answer

A)  we've achieved efficient resource use. 
B)  we should produce more to achieve the allocatively efficient use of resources. 
C)  we should produce less to achieve the allocatively efficient use of resources. 
D)  we cannot tell if more or less should be produced to achieve the allocatively efficient use of resources. 
A)  we've achieved efficient resource use. 
B)  we should produce more to achieve the allocatively efficient use of resources. 
C)  we should produce less to achieve the allocatively efficient use of resources. 
D)  we cannot tell if more or less should be produced to achieve the allocatively efficient use of resources.

Question 13

-The table above lists seven points on the production possibilities frontier for pizza and CDs. Graph the PPF. What is the opportunity cost of producing the first four pizzas? What is the opportunity cost of producing the 10th pizza. What is the opportunity cost of producing the first 12 CDs? What is the opportunity cost of producing the 26th CD?

Accepted Answer

@#IMG-DLM& The PPF graph is shown above. The oppor

Question 14

The social arrangement that gives John Grisham, the writer of best-selling novels, the ownership of his novels is

Accepted Answer

A)  a market. 
B)  property rights. 
C)  absolute advantage. 
D)  dynamic comparative advantage. 
A)  a market. 
B)  property rights. 
C)  absolute advantage. 
D)  dynamic comparative advantage.

Question 15

Marginal benefit is the

Accepted Answer

A)  benefit that a person receives from consuming one more unit of a good or service. 
B)  amount of one good or service that a person gains when another good or service is consumed. 
C)  minimum amount a person is willing to pay for one more unit of a good or service. 
D)  dollars sacrificed to purchase a good or service. 
A)  benefit that a person receives from consuming one more unit of a good or service. 
B)  amount of one good or service that a person gains when another good or service is consumed. 
C)  minimum amount a person is willing to pay for one more unit of a good or service. 
D)  dollars sacrificed to purchase a good or service.

Question 16

-The bowed outward shape of the production possibilities frontier in the above figure indicates that

Accepted Answer

A)  some resources are better suited for producing computers. 
B)  the opportunity cost of producing more computers decreases as more computers are produced. 
C)  computer technology is subject to the principle of decreasing costs. 
D)  All of the above answers are correct. 
A)  some resources are better suited for producing computers. 
B)  the opportunity cost of producing more computers decreases as more computers are produced. 
C)  computer technology is subject to the principle of decreasing costs. 
D)  All of the above answers are correct.

Question 17

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

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 18

If an economy is operating at a point inside the production possibilities frontier, then

Accepted Answer

A)  society's resources are being inefficiently utilized. 
B)  the PPF curve will shift inward. 
C)  society's resources are being used to produce too many consumer goods. 
D)  economic policy must retard further growth of the economy. 
A)  society's resources are being inefficiently utilized. 
B)  the PPF curve will shift inward. 
C)  society's resources are being used to produce too many consumer goods. 
D)  economic policy must retard further growth of the economy.

Question 19

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 20

Which of the following is TRUE regarding marginal benefit? I) The marginal benefit curve shows the benefit firms receive by producing another unit of a good.
II) Marginal benefit increases as more of a good is consumed.

Accepted Answer

A)  I and II 
B)  I only 
C)  II only 
D)  neither I nor II 
A)  I and II 
B)  I only 
C)  II only 
D)  neither I nor II

Moving downward along a PPF, the opportunity cost of another unit of the good measured along the horizontal axis decreases.

-The figure above shows the production possibilities frontiers for four nations that have identical production possibilities frontiers in the present. The one that will grow most rapidly in the future is most likely to be producing at point

In the United States, Texas ranks number one in the amount of installed megawatts for wind power generation and Florida ranks number one in the number of beach vacations. These facts point out that

Homer and Teddy are stranded on a desert island. To feed themselves each day they can either catch fish or pick fruit. In a day, Teddy could pick 60 pieces of fruit or catch 20 fish. Homer could pick 100 pieces of fruit or catch 150 fish. Which of the following is CORRECT?

A reduction in the amount of unemployment

-A (very, very small) country produces milk and shirts and its production possibilities frontier is in the table above. The nation is currently producing at point B. What is the opportunity cost of two additional gallons of milk? At point C? At point D? What do your results show?

-In order to achieve the maximum gains from trade, people should specialize according to

Betty and Ann live on a desert island. With a day's labor, Ann can produce 6 fish or 4 coconuts; Betty can produce 3 fish or 1 coconut. Betty's opportunity cost of producing 1 fish is , and she should specialize in the production of .

Compare and contrast production efficiency and allocative efficiency.

-Refer to the table above, which gives five points on a nation's PPF. The production of 7 units of X and 28 units of Y is

If the marginal benefit of a good exceeds its marginal cost

The social arrangement that gives John Grisham, the writer of best-selling novels, the ownership of his novels is

Marginal benefit is the

-The bowed outward shape of the production possibilities frontier in the above figure indicates that

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

If an economy is operating at a point inside the production possibilities frontier, then

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?

Which of the following is TRUE regarding marginal benefit? I) The marginal benefit curve shows the benefit firms receive by producing another unit of a good. II) Marginal benefit increases as more of a good is consumed.

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

Moving downward along a PPF, the opportunity cost of another unit of the good measured along the horizontal axis decreases.

-The figure above shows the production possibilities frontiers for four nations that have identical production possibilities frontiers in the present. The one that will grow most rapidly in the future is most likely to be producing at point

In the United States, Texas ranks number one in the amount of installed megawatts for wind power generation and Florida ranks number one in the number of beach vacations. These facts point out that

Homer and Teddy are stranded on a desert island. To feed themselves each day they can either catch fish or pick fruit. In a day, Teddy could pick 60 pieces of fruit or catch 20 fish. Homer could pick 100 pieces of fruit or catch 150 fish. Which of the following is CORRECT?

A reduction in the amount of unemployment

-A (very, very small) country produces milk and shirts and its production possibilities frontier is in the table above. The nation is currently producing at point B. What is the opportunity cost of two additional gallons of milk? At point C? At point D? What do your results show?

-In order to achieve the maximum gains from trade, people should specialize according to

Betty and Ann live on a desert island. With a day's labor, Ann can produce 6 fish or 4 coconuts; Betty can produce 3 fish or 1 coconut. Betty's opportunity cost of producing 1 fish is ________, and she should specialize in the production of ________.

Compare and contrast production efficiency and allocative efficiency.

-Refer to the table above, which gives five points on a nation's PPF. The production of 7 units of X and 28 units of Y is

If the marginal benefit of a good exceeds its marginal cost

The social arrangement that gives John Grisham, the writer of best-selling novels, the ownership of his novels is

Marginal benefit is the

-The bowed outward shape of the production possibilities frontier in the above figure indicates that

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

If an economy is operating at a point inside the production possibilities frontier, then

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?

Which of the following is TRUE regarding marginal benefit? I) The marginal benefit curve shows the benefit firms receive by producing another unit of a good. II) Marginal benefit increases as more of a good is consumed.

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

Betty and Ann live on a desert island. With a day's labor, Ann can produce 6 fish or 4 coconuts; Betty can produce 3 fish or 1 coconut. Betty's opportunity cost of producing 1 fish is , and she should specialize in the production of .