Question 1

-As Rainclouds Inc. moves downward along its production possibilities frontier, illustrated in the figure above, the opportunity cost of a raincoat ________.

Accepted Answer

A)  decreases 
B)  depends on the initial quantity produced 
C)  increases 
D)  remains the same 
A)  decreases 
B)  depends on the initial quantity produced 
C)  increases 
D)  remains the same

Question 2

A tradeoff is

Accepted Answer

A)  represented by a point inside a PPF. 
B)  represented by a point outside a PPF. 
C)  a constraint that requires giving up one thing to get another. 
D)  a transaction at a price either above or below the equilibrium price. 
A)  represented by a point inside a PPF. 
B)  represented by a point outside a PPF. 
C)  a constraint that requires giving up one thing to get another. 
D)  a transaction at a price either above or below the equilibrium price.

Question 3

-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 4

As we move along a bowed-out production possibility frontier, producing more tacos and less pizza, the opportunity cost of a pizza ________.

Accepted Answer

A)  increases 
B)  remains the same 
C)  decreases 
D)  increases and then decreases 
A)  increases 
B)  remains the same 
C)  decreases 
D)  increases and then decreases

Question 5

-The above table shows production combinations on a country's production possibilities frontier. Which of the following is an example of a point that is unattainable?

Accepted Answer

A)  0 units of good X and 40 units of good Y 
B)  6 units of good X and 28 units of good Y 
C)  10 units of good X and 16 units of good Y 
D)  3 units of good X and 35 units of good Y 
A)  0 units of good X and 40 units of good Y 
B)  6 units of good X and 28 units of good Y 
C)  10 units of good X and 16 units of good Y 
D)  3 units of good X and 35 units of good Y

Question 6

According to the diagram in the figure above, what is the marginal cost of producing the 3 millionth gallon of gasoline per month?

Accepted Answer

A)  5 pounds of shrimp per gallon of gasoline 
B)  4 pounds of shrimp per gallon of gasoline 
C)  3 pounds of shrimp per gallon of gasoline 
D)  1 pound of shrimp per gallon of gasoline 
A)  5 pounds of shrimp per gallon of gasoline 
B)  4 pounds of shrimp per gallon of gasoline 
C)  3 pounds of shrimp per gallon of gasoline 
D)  1 pound of shrimp per gallon of gasoline

Question 7

-Jake takes 40 minutes to fry a chicken and 10 minutes to toast a slice of bread. His brother Elwood takes 60 minutes to fry a chicken and 4 minutes to toast a slice of bread. Calculate each brother's opportunity cost. Who has a comparative advantage in which activity? Explain. Will the brothers gain if they specialize?

Accepted Answer

Jake can spend an hour to fry 1.5 chicke

Question 8

-Point C on the production possibilities frontier in the above diagram illustrates

Accepted Answer

A)  a point that achieves production efficiency. 
B)  a combination of goods and services that cannot be produced efficiently 
C)  all goods and services that are desired but cannot be produced due to scarce resources. 
D)  a production point that has underutilization of resources 
A)  a point that achieves production efficiency. 
B)  a combination of goods and services that cannot be produced efficiently 
C)  all goods and services that are desired but cannot be produced due to scarce resources. 
D)  a production point that has underutilization of resources

Question 9

-Mary takes 4 minutes to make a sandwich and 6 minutes to mix a cocktail. Her sister Ash takes 4 minutes to make a sandwich and 4 minutes to mix a cocktail. Calculate each sister's opportunity cost. Which of the two sisters has an absolute advantage in making sandwiches? In mixing cocktails? Which of the two has a comparative advantage in making sandwiches? In mixing cocktails?

Accepted Answer

Mary can spend an hour to make 15 sandwi

Question 10

-In the above figure, when 2000 bicycles are produced each month, we can see that

Accepted Answer

A)  the marginal benefit from another bicycle is greater than the marginal cost of another bicycle. 
B)  more bicycles should be produced to reach the allocatively efficient level of output. 
C)  the economy is very efficient at the production of bicycles because the marginal benefit exceeds the marginal cost. 
D)  Both answers A and B are correct. 
A)  the marginal benefit from another bicycle is greater than the marginal cost of another bicycle. 
B)  more bicycles should be produced to reach the allocatively efficient level of output. 
C)  the economy is very efficient at the production of bicycles because the marginal benefit exceeds the marginal cost. 
D)  Both answers A and B are correct.

Question 11

Most students attending college pay tuition and are unable to hold a full-time job. For these students, tuition is

Accepted Answer

A)  part of the opportunity cost of going to college. So are their forgone earnings from not holding a full-time job. 
B)  part of the opportunity cost of going to college. Their forgone earnings from not holding a full-time job are not part of the opportunity cost of attending college. 
C)  not part of the opportunity cost of going to college, but their forgone earnings from not holding a full-time job are part of the opportunity cost of attending college. 
D)  not part of the opportunity cost of going to college. Neither are their forgone earnings from not holding a full-time job. 
A)  part of the opportunity cost of going to college. So are their forgone earnings from not holding a full-time job. 
B)  part of the opportunity cost of going to college. Their forgone earnings from not holding a full-time job are not part of the opportunity cost of attending college. 
C)  not part of the opportunity cost of going to college, but their forgone earnings from not holding a full-time job are part of the opportunity cost of attending college. 
D)  not part of the opportunity cost of going to college. Neither are their forgone earnings from not holding a full-time job.

Question 12

When operating on its PPF, a country can produce 2 tons of butter and 200 cars OR 3 tons of butter and 150 cars. The opportunity cost of 1 ton of butter is ________ cars per ton of butter.

Accepted Answer

A)  300 
B)  200 
C)  50 
D)  0.75 
A)  300 
B)  200 
C)  50 
D)  0.75

Question 13

Marginal cost

Accepted Answer

A)  increases as more is produced. 
B)  remains constant as more is produced. 
C)  decreases as more is produced. 
D)  decreases as marginal benefits decrease. 
A)  increases as more is produced. 
B)  remains constant as more is produced. 
C)  decreases as more is produced. 
D)  decreases as marginal benefits decrease.

Question 14

According to the diagram in the figure above, an allocatively efficient use of resources requires that production and consumption of gasoline be

Accepted Answer

A)  1 million gallons of gasoline per month. 
B)  2 million gallons of gasoline per month. 
C)  3 million gallons of gasoline per month. 
D)  4 million gallons of gasoline per month. 
A)  1 million gallons of gasoline per month. 
B)  2 million gallons of gasoline per month. 
C)  3 million gallons of gasoline per month. 
D)  4 million gallons of gasoline per month.

Question 15

Compare and contrast production efficiency and allocative efficiency.

Accepted Answer

Production efficiency means that we are

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Betty and Ann live on a desert island. With a day's labor, Ann can produce 8 fish or 4 coconuts; Betty can produce 6 fish or 2 coconuts. Ann's opportunity cost of producing 1 coconut is ________ and she should specialize in the production of ________.

Accepted Answer

A)  8 fish per coconut; fish 
B)  2 fish per coconut; coconuts 
C)  6 fish per coconut; coconuts 
D)  0 fish per coconut; coconuts 
A)  8 fish per coconut; fish 
B)  2 fish per coconut; coconuts 
C)  6 fish per coconut; coconuts 
D)  0 fish per coconut; coconuts

Question 18

Abe can catch 10 pounds of fish an hour or pick 10 pounds of fruit. Zeb can catch 30 pounds of fish an hour or pick 20 pounds of fruit. The opportunity cost of fish is ________ for Abe than for Zeb, and the opportunity cost of fruit is ________ for Abe than for Zeb.

Accepted Answer

A)  higher, lower 
B)  lower, higher 
C)  higher, higher 
D)  lower, lower 
A)  higher, lower 
B)  lower, higher 
C)  higher, higher 
D)  lower, lower

Question 19

In a world lacking property rights, it would be ________ to realize the gains from trade and there would be ________ specialization.

Accepted Answer

A)  easier; less 
B)  easier; more 
C)  harder; less 
D)  harder; more 
A)  easier; less 
B)  easier; more 
C)  harder; less 
D)  harder; more

Question 20

Suppose that the United States and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, ________ will gain from that trade because ________.

Accepted Answer

A)  both countries; consumption possibilities in both Cuba and the United States will lie outside their PPFs. 
B)  neither country; their consumption possibilities will not change. 
C)  only the United States; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change. 
D)  only Cuba; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change. 
A)  both countries; consumption possibilities in both Cuba and the United States will lie outside their PPFs. 
B)  neither country; their consumption possibilities will not change. 
C)  only the United States; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change. 
D)  only Cuba; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change.

-As Rainclouds Inc. moves downward along its production possibilities frontier, illustrated in the figure above, the opportunity cost of a raincoat ________.

A tradeoff is

-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 we move along a bowed-out production possibility frontier, producing more tacos and less pizza, the opportunity cost of a pizza ________.

-The above table shows production combinations on a country's production possibilities frontier. Which of the following is an example of a point that is unattainable?

According to the diagram in the figure above, what is the marginal cost of producing the 3 millionth gallon of gasoline per month?

-Point C on the production possibilities frontier in the above diagram illustrates

-In the above figure, when 2000 bicycles are produced each month, we can see that

Most students attending college pay tuition and are unable to hold a full-time job. For these students, tuition is

When operating on its PPF, a country can produce 2 tons of butter and 200 cars OR 3 tons of butter and 150 cars. The opportunity cost of 1 ton of butter is ________ cars per ton of butter.

Marginal cost

According to the diagram in the figure above, an allocatively efficient use of resources requires that production and consumption of gasoline be

Compare and contrast production efficiency and allocative efficiency.

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

Betty and Ann live on a desert island. With a day's labor, Ann can produce 8 fish or 4 coconuts; Betty can produce 6 fish or 2 coconuts. Ann's opportunity cost of producing 1 coconut is and she should specialize in the production of .

Abe can catch 10 pounds of fish an hour or pick 10 pounds of fruit. Zeb can catch 30 pounds of fish an hour or pick 20 pounds of fruit. The opportunity cost of fish is for Abe than for Zeb, and the opportunity cost of fruit is for Abe than for Zeb.

In a world lacking property rights, it would be to realize the gains from trade and there would be specialization.

Suppose that the United States and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, will gain from that trade because .

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

-As Rainclouds Inc. moves downward along its production possibilities frontier, illustrated in the figure above, the opportunity cost of a raincoat ________.

A tradeoff is

-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 we move along a bowed-out production possibility frontier, producing more tacos and less pizza, the opportunity cost of a pizza ________.

-The above table shows production combinations on a country's production possibilities frontier. Which of the following is an example of a point that is unattainable?

According to the diagram in the figure above, what is the marginal cost of producing the 3 millionth gallon of gasoline per month?

-Point C on the production possibilities frontier in the above diagram illustrates

-In the above figure, when 2000 bicycles are produced each month, we can see that

Most students attending college pay tuition and are unable to hold a full-time job. For these students, tuition is

When operating on its PPF, a country can produce 2 tons of butter and 200 cars OR 3 tons of butter and 150 cars. The opportunity cost of 1 ton of butter is ________ cars per ton of butter.

Marginal cost

According to the diagram in the figure above, an allocatively efficient use of resources requires that production and consumption of gasoline be

Compare and contrast production efficiency and allocative efficiency.

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

Betty and Ann live on a desert island. With a day's labor, Ann can produce 8 fish or 4 coconuts; Betty can produce 6 fish or 2 coconuts. Ann's opportunity cost of producing 1 coconut is ________ and she should specialize in the production of ________.

Abe can catch 10 pounds of fish an hour or pick 10 pounds of fruit. Zeb can catch 30 pounds of fish an hour or pick 20 pounds of fruit. The opportunity cost of fish is ________ for Abe than for Zeb, and the opportunity cost of fruit is ________ for Abe than for Zeb.

In a world lacking property rights, it would be ________ to realize the gains from trade and there would be ________ specialization.

Suppose that the United States and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, ________ will gain from that trade because ________.

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

Betty and Ann live on a desert island. With a day's labor, Ann can produce 8 fish or 4 coconuts; Betty can produce 6 fish or 2 coconuts. Ann's opportunity cost of producing 1 coconut is and she should specialize in the production of .

Abe can catch 10 pounds of fish an hour or pick 10 pounds of fruit. Zeb can catch 30 pounds of fish an hour or pick 20 pounds of fruit. The opportunity cost of fish is for Abe than for Zeb, and the opportunity cost of fruit is for Abe than for Zeb.

In a world lacking property rights, it would be to realize the gains from trade and there would be specialization.

Suppose that the United States and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, will gain from that trade because .