Question 1

-In the above figure, if 2 million computers are produced per year then the ________ should be produced to achieve the allocatively efficient use of resources.

Accepted Answer

A)  marginal cost of a computer exceeds the marginal benefit of a computer, so more computers 
B)  marginal cost of a computer exceeds the marginal benefit of a computer, so fewer computers 
C)  marginal benefit of a computer exceeds the marginal cost of a computer, so more computers 
D)  marginal benefit of a computer exceeds the marginal cost of a computer, so fewer computers 
A)  marginal cost of a computer exceeds the marginal benefit of a computer, so more computers 
B)  marginal cost of a computer exceeds the marginal benefit of a computer, so fewer computers 
C)  marginal benefit of a computer exceeds the marginal cost of a computer, so more computers 
D)  marginal benefit of a computer exceeds the marginal cost of a computer, so fewer computers

Question 2

One point on a PPF shows production levels at 50 tons of coffee and 100 tons of bananas. Remaining on the PPF, an increase of banana production to 140 tons shows coffee production at 30 tons. Still remaining on the PPF, coffee production at 10 tons allows banana production at 160 tons. The opportunity cost of a ton of bananas is

Accepted Answer

A)  constant because coffee production decreased by the same amount each time. 
B)  decreasing, since the increase in banana production is less at each point considered. 
C)  16 to 1, that is every 1 ton of coffee given up will result in 16 more tons of bananas. 
D)  increasing from 1/2 ton of coffee per ton of bananas to 1 ton of coffee per ton of bananas. 
A)  constant because coffee production decreased by the same amount each time. 
B)  decreasing, since the increase in banana production is less at each point considered. 
C)  16 to 1, that is every 1 ton of coffee given up will result in 16 more tons of bananas. 
D)  increasing from 1/2 ton of coffee per ton of bananas to 1 ton of coffee per ton of bananas.

Question 3

-In the figure above, how can the economy represented by the production possibilities frontier move from point C to point F?

Accepted Answer

A)  Increase the available amount of resources. 
B)  Increase the level of technology. 
C)  Redistribute the existing resources to produce more apples and fewer oranges. 
D)  First move to point B and then move to point F. 
A)  Increase the available amount of resources. 
B)  Increase the level of technology. 
C)  Redistribute the existing resources to produce more apples and fewer oranges. 
D)  First move to point B and then move to point F.

Question 4

Increasing opportunity cost implies that

Accepted Answer

A)  producing additional units of one good results in proportionately smaller reductions in the output of the other good. 
B)  producing additional units of one good results in increasing amounts of lost output of the other good. 
C)  the production possibilities frontier will be a straight line. 
D)  the society will be producing inside its production possibilities frontier. 
A)  producing additional units of one good results in proportionately smaller reductions in the output of the other good. 
B)  producing additional units of one good results in increasing amounts of lost output of the other good. 
C)  the production possibilities frontier will be a straight line. 
D)  the society will be producing inside its production possibilities frontier.

Question 5

Technological progress makes the production possibilities frontier

Accepted Answer

A)  shift inward toward the origin. 
B)  become more linear and less bowed. 
C)  shift outward from the origin. 
D)  become less linear and more bowed. 
A)  shift inward toward the origin. 
B)  become more linear and less bowed. 
C)  shift outward from the origin. 
D)  become less linear and more bowed.

Question 6

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. Tom has a comparative advantage in ________ and Jerry has a comparative advantage in ________.

Accepted Answer

A)  cooking eggs; making sandwiches 
B)  making sandwiches; cooking eggs 
C)  neither of these activities; both activities 
D)  both activities; neither of these activities 
A)  cooking eggs; making sandwiches 
B)  making sandwiches; cooking eggs 
C)  neither of these activities; both activities 
D)  both activities; neither of these activities

Question 7

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 8

An efficient allocation of resources occurs when we

Accepted Answer

A)  produce the goods and services that people need. 
B)  cannot produce more of a good or service without giving up some other good or service that we value more highly. 
C)  produce the goods and services that people want. 
D)  cannot produce more of a good or service without giving up some other good or service that we need. 
A)  produce the goods and services that people need. 
B)  cannot produce more of a good or service without giving up some other good or service that we value more highly. 
C)  produce the goods and services that people want. 
D)  cannot produce more of a good or service without giving up some other good or service that we need.

Question 9

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

Question 10

Marginal benefit is the benefit ________ one more unit of the good and ________ of the good increases.

Accepted Answer

A)  of producing; increases as production 
B)  of producing; decreases as production 
C)  from consuming; increases as consumption 
D)  from consuming; decreases as consumption 
A)  of producing; increases as production 
B)  of producing; decreases as production 
C)  from consuming; increases as consumption 
D)  from consuming; decreases as consumption

Question 11

Economic growth is the result of all of the following except

Accepted Answer

A)  technological change. 
B)  capital accumulation. 
C)  opportunity cost. 
D)  investment in human capital. 
A)  technological change. 
B)  capital accumulation. 
C)  opportunity cost. 
D)  investment in human capital.

Question 12

-The above figure illustrates that if this country wishes to move from its current production point (labeled "Current")and have 10 more tons of food, it can do this by producing

Accepted Answer

A)  10 more tons of clothing. 
B)  10 fewer tons of clothing. 
C)  5 more tons of clothing. 
D)  5 fewer tons of clothing. 
A)  10 more tons of clothing. 
B)  10 fewer tons of clothing. 
C)  5 more tons of clothing. 
D)  5 fewer tons of clothing.

Question 13

-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 14

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 15

-Refer to the table above, which gives five points on a nation's PPF. The opportunity cost of increasing the production of Y from 16 to 36 units is a total of

Accepted Answer

A)  1/5 unit of X per unit of Y. 
B)  2/5 unit of X per unit of Y. 
C)  1/2 unit of X per unit of Y. 
D)  3/5 unit of X per unit of Y. 
A)  1/5 unit of X per unit of Y. 
B)  2/5 unit of X per unit of Y. 
C)  1/2 unit of X per unit of Y. 
D)  3/5 unit of X per unit of Y.

Question 16

Some time ago the government of China required many highly skilled technicians and scientists to engage in unskilled agricultural labor in order to develop "proper social attitudes." This policy probably caused China to produce

Accepted Answer

A)  at an inappropriate point along its production possibilities frontier. 
B)  outside its production possibilities frontier with respect to food, but inside with respect to high-technology goods. 
C)  inside its production possibilities frontier with respect to food, but outside with respect to high-technology goods. 
D)  inside its production possibilities frontier. 
A)  at an inappropriate point along its production possibilities frontier. 
B)  outside its production possibilities frontier with respect to food, but inside with respect to high-technology goods. 
C)  inside its production possibilities frontier with respect to food, but outside with respect to high-technology goods. 
D)  inside its production possibilities frontier.

Question 17

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 18

When producing goods and services along a PPF, tradeoffs exist because

Accepted Answer

A)  not all production is efficient. 
B)  society has only a limited amount of productive resources. 
C)  buyers and sellers often must negotiate prices. 
D)  human wants and needs are limited at a particular point in time. 
A)  not all production is efficient. 
B)  society has only a limited amount of productive resources. 
C)  buyers and sellers often must negotiate prices. 
D)  human wants and needs are limited at a particular point in time.

Question 19

BAE, a British defense company, has the contract to produce Tornado aircraft for the Royal Air Force. The BBC produces high-quality mystery shows for the British government. Both produce at the lowest possible cost. On a PPF with aircraft and mystery shows on the axes

Accepted Answer

A)  BAE and the BBC do not face increasing opportunity costs. 
B)  BAE and the BBC are achieving production efficiency. 
C)  BAE and the BBC are producing at a point outside the PPF. 
D)  the British government is operating outside its PPF. 
A)  BAE and the BBC do not face increasing opportunity costs. 
B)  BAE and the BBC are achieving production efficiency. 
C)  BAE and the BBC are producing at a point outside the PPF. 
D)  the British government is operating outside its PPF.

Question 20

Jane produces only corn, measured in tons, and cloth, measured in bolts. For her, the opportunity cost of one more ton of corn is

Accepted Answer

A)  the same as the opportunity cost of one more bolt of cloth. 
B)  the inverse of the opportunity cost of one more bolt of cloth. 
C)  the ratio of all the bolts of cloth she produces to all the tons of corn she produces. 
D)  the ratio of all the tons of corn she produces to all the bolts of cloth she produces. 
A)  the same as the opportunity cost of one more bolt of cloth. 
B)  the inverse of the opportunity cost of one more bolt of cloth. 
C)  the ratio of all the bolts of cloth she produces to all the tons of corn she produces. 
D)  the ratio of all the tons of corn she produces to all the bolts of cloth she produces.

-In the above figure, if 2 million computers are produced per year then the ________ should be produced to achieve the allocatively efficient use of resources.

-In the figure above, how can the economy represented by the production possibilities frontier move from point C to point F?

Increasing opportunity cost implies that

Technological progress makes the production possibilities frontier

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. Tom has a comparative advantage in and Jerry has a comparative advantage in .

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

An efficient allocation of resources occurs when we

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.

Marginal benefit is the benefit one more unit of the good and of the good increases.

Economic growth is the result of all of the following except

-The above figure illustrates that if this country wishes to move from its current production point (labeled "Current")and have 10 more tons of food, it can do this by producing

-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?

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

-Refer to the table above, which gives five points on a nation's PPF. The opportunity cost of increasing the production of Y from 16 to 36 units is a total of

Some time ago the government of China required many highly skilled technicians and scientists to engage in unskilled agricultural labor in order to develop "proper social attitudes." This policy probably caused China to produce

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

When producing goods and services along a PPF, tradeoffs exist because

BAE, a British defense company, has the contract to produce Tornado aircraft for the Royal Air Force. The BBC produces high-quality mystery shows for the British government. Both produce at the lowest possible cost. On a PPF with aircraft and mystery shows on the axes

Jane produces only corn, measured in tons, and cloth, measured in bolts. For her, the opportunity cost of one more ton of corn is

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

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 2: The Economic Problem

-In the above figure, if 2 million computers are produced per year then the ________ should be produced to achieve the allocatively efficient use of resources.

-In the figure above, how can the economy represented by the production possibilities frontier move from point C to point F?

Increasing opportunity cost implies that

Technological progress makes the production possibilities frontier

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. Tom has a comparative advantage in ________ and Jerry has a comparative advantage in ________.

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

An efficient allocation of resources occurs when we

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.

Marginal benefit is the benefit ________ one more unit of the good and ________ of the good increases.

Economic growth is the result of all of the following except

-The above figure illustrates that if this country wishes to move from its current production point (labeled "Current")and have 10 more tons of food, it can do this by producing

-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?

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

-Refer to the table above, which gives five points on a nation's PPF. The opportunity cost of increasing the production of Y from 16 to 36 units is a total of

Some time ago the government of China required many highly skilled technicians and scientists to engage in unskilled agricultural labor in order to develop "proper social attitudes." This policy probably caused China to produce

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

When producing goods and services along a PPF, tradeoffs exist because

BAE, a British defense company, has the contract to produce Tornado aircraft for the Royal Air Force. The BBC produces high-quality mystery shows for the British government. Both produce at the lowest possible cost. On a PPF with aircraft and mystery shows on the axes

Jane produces only corn, measured in tons, and cloth, measured in bolts. For her, the opportunity cost of one more ton of corn is

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

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. Tom has a comparative advantage in and Jerry has a comparative advantage in .

Marginal benefit is the benefit one more unit of the good and of the good increases.