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

At one point along a PPF, 10 pizzas and 7 sandwiches can be produced. At another point along the same PPF, 9 pizzas and 10 sandwiches can be produced. The opportunity cost of a pizza between these points is ________ per pizza.

Accepted Answer

A)  7/10 of a sandwich 
B)  10/7 of a sandwich 
C)  1/3 of a sandwich 
D)  3 sandwiches 
A)  7/10 of a sandwich 
B)  10/7 of a sandwich 
C)  1/3 of a sandwich 
D)  3 sandwiches

Question 3

In the United States, the government coordinates most of the economic activity.

Accepted Answer

A) True 
 B)False

Question 4

Marginal benefit curves slope

Accepted Answer

A)  upward because of increasing opportunity cost. 
B)  upward, but not because of increasing opportunity cost. 
C)  downward because of increasing opportunity cost. 
D)  downward, but not because of increasing opportunity cost. 
A)  upward because of increasing opportunity cost. 
B)  upward, but not because of increasing opportunity cost. 
C)  downward because of increasing opportunity cost. 
D)  downward, but not because of increasing opportunity cost.

Question 5

Explain the difference between marginal cost and marginal benefit.

Accepted Answer

Marginal benefit is the benefit someone

Question 6

In order to societies to reap the gains from trade, it is necessary to

Accepted Answer

A)  define and enforce property rights. 
B)  foster economic growth. 
C)  distribute resources equally. 
D)  achieve productive efficiency. 
A)  define and enforce property rights. 
B)  foster economic growth. 
C)  distribute resources equally. 
D)  achieve productive efficiency.

Question 7

Missouri can produce 10,000 tons of pecans per year or 5,000 tons of pears per year. Washington can produce 12,000 tons of pecans per year or 48,000 tons of pears per year. Which of the following statements about opportunity cost is CORRECT?

Accepted Answer

A)  The opportunity cost of a ton of pecans is 2 tons of pears per ton of pecans for Missouri and 1/4 ton of pears per ton of pecans for Washington. 
B)  The opportunity cost of a ton of pears is 2 tons of pecans per ton of pears for Missouri and 1/4 ton of pecans per ton of pears for Washington. 
C)  The opportunity cost of a ton of pecans is 1/2 ton of pears per ton of pecans for Missouri and 4 tons of pears per ton of pecans for Washington. 
D)  Both answers B and C are correct. 
A)  The opportunity cost of a ton of pecans is 2 tons of pears per ton of pecans for Missouri and 1/4 ton of pears per ton of pecans for Washington. 
B)  The opportunity cost of a ton of pears is 2 tons of pecans per ton of pears for Missouri and 1/4 ton of pecans per ton of pears for Washington. 
C)  The opportunity cost of a ton of pecans is 1/2 ton of pears per ton of pecans for Missouri and 4 tons of pears per ton of pecans for Washington. 
D)  Both answers B and C are correct.

Question 8

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 9

Increasing opportunity cost occurs along a production possibilities frontier because

Accepted Answer

A)  resources are not equally productive in all activities. 
B)  increasing wants need to be satisfied. 
C)  in order to produce more of one good decreasing amounts of another good must be sacrificed. 
D)  production takes time. 
A)  resources are not equally productive in all activities. 
B)  increasing wants need to be satisfied. 
C)  in order to produce more of one good decreasing amounts of another good must be sacrificed. 
D)  production takes time.

Question 10

In the figure above

Accepted Answer

A)  moving from point a to point b would require new technology. 
B)  production at point b is efficient whereas production at point a is not efficient. 
C)  some resources must be unemployed at point c. 
D)  opportunity costs are decreasing. 
A)  moving from point a to point b would require new technology. 
B)  production at point b is efficient whereas production at point a is not efficient. 
C)  some resources must be unemployed at point c. 
D)  opportunity costs are decreasing.

Question 11

-Suppose a factory can be designed to produce either trucks or cars. The figure above shows the marginal cost and marginal benefit of producing trucks in terms of the forgone cars.
a)What is the marginal benefit of the 25th truck?
b)What is the marginal cost of the 25th truck?
c)Should the 25th truck be produced? Why or why not.
d)What is the marginal benefit of the 75th truck?
e)What is the marginal cost of the 75th truck?
f)Should the 75th truck be produced? Why or why not?
g)What is the allocatively efficient quantity of trucks?

Accepted Answer

a)3 cars per truck
b)1 car per truck
c)T

Question 12

-In the figure above, the marginal cost of the fifth computer is

Accepted Answer

A)  0 television sets per computer. 
B)  4 television sets per computer. 
C)  20 television sets per computer. 
D)  35 television sets per computer. 
A)  0 television sets per computer. 
B)  4 television sets per computer. 
C)  20 television sets per computer. 
D)  35 television sets per computer.

Question 13

When economists state that the opportunity cost of a product increases as more of it is produced, what do they mean? What is the opportunity cost?

Accepted Answer

In general, the opportunity cost of incr

Question 14

-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 15

An opportunity cost of economic growth is

Accepted Answer

A)  essentially zero because economic growth leads to such large gains in the long run. 
B)  the decrease in production of consumption goods in the present time period. 
C)  decreased by the creation of capital goods rather than consumption goods. 
D)  so high that places such as Hong Kong have had to do without it. 
A)  essentially zero because economic growth leads to such large gains in the long run. 
B)  the decrease in production of consumption goods in the present time period. 
C)  decreased by the creation of capital goods rather than consumption goods. 
D)  so high that places such as Hong Kong have had to do without it.

Question 16

Blue Violet's	Sweet Pansy's
production possibilities	production possibilities
  
-Two countries, Blue Violet and Sweet Pansy, produce only two goods: teapots and coffeepots. The table above gives their production possibilities.

Accepted Answer

A)  Blue Violet has a comparative advantage in teapots. 
B)  Sweet Pansy has a comparative advantage in teapots. 
C)  Both have a comparative advantage in teapots. 
D)  Sweet Pansy has an absolute advantage in teapots. 
A)  Blue Violet has a comparative advantage in teapots. 
B)  Sweet Pansy has a comparative advantage in teapots. 
C)  Both have a comparative advantage in teapots. 
D)  Sweet Pansy has an absolute advantage in teapots.

Question 17

-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 18

-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 19

If the marginal benefit of consuming another unit of a good is positive, then to reach the allocatively efficient level of output more of the good should be produced and consumed

Accepted Answer

A)  no matter what. 
B)  as long as the consumer can afford to pay for it. 
C)  if the total benefit of the good is greater than its total cost. 
D)  if the marginal benefit of the good is greater than its marginal cost. 
A)  no matter what. 
B)  as long as the consumer can afford to pay for it. 
C)  if the total benefit of the good is greater than its total cost. 
D)  if the marginal benefit of the good is greater than its marginal cost.

Question 20

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

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

At one point along a PPF, 10 pizzas and 7 sandwiches can be produced. At another point along the same PPF, 9 pizzas and 10 sandwiches can be produced. The opportunity cost of a pizza between these points is ________ per pizza.

In the United States, the government coordinates most of the economic activity.

Marginal benefit curves slope

Explain the difference between marginal cost and marginal benefit.

In order to societies to reap the gains from trade, it is necessary to

Missouri can produce 10,000 tons of pecans per year or 5,000 tons of pears per year. Washington can produce 12,000 tons of pecans per year or 48,000 tons of pears per year. Which of the following statements about opportunity cost is CORRECT?

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

Increasing opportunity cost occurs along a production possibilities frontier because

In the figure above

-In the figure above, the marginal cost of the fifth computer is

When economists state that the opportunity cost of a product increases as more of it is produced, what do they mean? What is the opportunity cost?

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

An opportunity cost of economic growth is

Blue Violet's Sweet Pansy's production possibilities production possibilities -Two countries, Blue Violet and Sweet Pansy, produce only two goods: teapots and coffeepots. The table above gives their production possibilities.

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

If the marginal benefit of consuming another unit of a good is positive, then to reach the allocatively efficient level of output more of the good should be produced and consumed

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?

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

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

At one point along a PPF, 10 pizzas and 7 sandwiches can be produced. At another point along the same PPF, 9 pizzas and 10 sandwiches can be produced. The opportunity cost of a pizza between these points is ________ per pizza.

In the United States, the government coordinates most of the economic activity.

Marginal benefit curves slope

Explain the difference between marginal cost and marginal benefit.

In order to societies to reap the gains from trade, it is necessary to

Missouri can produce 10,000 tons of pecans per year or 5,000 tons of pears per year. Washington can produce 12,000 tons of pecans per year or 48,000 tons of pears per year. Which of the following statements about opportunity cost is CORRECT?

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

Increasing opportunity cost occurs along a production possibilities frontier because

In the figure above

-In the figure above, the marginal cost of the fifth computer is

When economists state that the opportunity cost of a product increases as more of it is produced, what do they mean? What is the opportunity cost?

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

An opportunity cost of economic growth is

Blue Violet's Sweet Pansy's production possibilities production possibilities -Two countries, Blue Violet and Sweet Pansy, produce only two goods: teapots and coffeepots. The table above gives their production possibilities.

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

If the marginal benefit of consuming another unit of a good is positive, then to reach the allocatively efficient level of output more of the good should be produced and consumed

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?

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