Question 1

If a country has a comparative advantage in the production of all goods, it should:

Accepted Answer

A)  specialise in the production of goods with the lowest opportunity cost. 
B)  specialise in the production of goods with the highest opportunity cost. 
C)  specialise in the production of goods with the absolute advantage. 
D)  specialise in the production of goods without the absolute advantage. 
A)  specialise in the production of goods with the lowest opportunity cost. 
B)  specialise in the production of goods with the highest opportunity cost. 
C)  specialise in the production of goods with the absolute advantage. 
D)  specialise in the production of goods without the absolute advantage.

Question 2

The production possibilities frontier demonstrates the basic economic principle that:

Accepted Answer

A)  market-based economies are more efficient. 
B)  supply will determine demand in the economy. 
C)  the production of more capital goods this year will cause the economy to produce fewer consumption goods next year. 
D)  to produce more of any one thing, assuming full employment, the economy must produce less of something else. 
A)  market-based economies are more efficient. 
B)  supply will determine demand in the economy. 
C)  the production of more capital goods this year will cause the economy to produce fewer consumption goods next year. 
D)  to produce more of any one thing, assuming full employment, the economy must produce less of something else.

Question 3

People in poor countries may have difficulties achieving economic growth because:

Accepted Answer

A)  their production possibilities curves slope upward instead of downward. 
B)  they must cut back on current consumption to increase capital goods. 
C)  they have a solid consumption base already in place. 
D)  their resource bases are fully developed. 
A)  their production possibilities curves slope upward instead of downward. 
B)  they must cut back on current consumption to increase capital goods. 
C)  they have a solid consumption base already in place. 
D)  their resource bases are fully developed.

Question 4

The opportunity cost of watching a movie is the:

Accepted Answer

A)  dollar cost of a movie ticket plus enjoyment from watching a movie. 
B)  dollar cost of a movie ticket. 
C)  alternatives foregone such as studying and fishing. 
D)  the next best alternative option foregone. 
A)  dollar cost of a movie ticket plus enjoyment from watching a movie. 
B)  dollar cost of a movie ticket. 
C)  alternatives foregone such as studying and fishing. 
D)  the next best alternative option foregone.

Question 5

The process through which an economy's production possibilities curve shifts outward is:

Accepted Answer

A)  full-employment management. 
B)  investment in research and development. 
C)  resource renewal. 
D)  out-resourcing. 
A)  full-employment management. 
B)  investment in research and development. 
C)  resource renewal. 
D)  out-resourcing.

Question 6

A nation can accelerate its economic growth by:

Accepted Answer

A)  reducing the number of immigrants allowed into the country. 
B)  increasing its total investment level. 
C)  printing more money. 
D)  imposing tariffs and quotas on imported goods. 
A)  reducing the number of immigrants allowed into the country. 
B)  increasing its total investment level. 
C)  printing more money. 
D)  imposing tariffs and quotas on imported goods.

Question 7

Narrbegin Exhibit 2.4 Production possibilities curve data
 $\begin{array}{|l|r|r|r|r|r|r|}
\hline & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } & \text { F } \
\hline \text { Capital goods } & 150 & 140 & 120 & 90 & 50 & 0 \
\hline \text { Consumer goods } & 0 & 20 & 40 & 60 & 80 & 100 \
\hline
\end{array}$ Narrend
-In Exhibit 2.4, the concept of increasing opportunity costs is represented by the fact that:

Accepted Answer

A)  the quantity of capital goods produced must be less than 150. 
B)  the quantity of consumer goods is constant for each change in the quantity of capital goods produced. 
C)  greater amounts of capital goods must be sacrificed to produce each additional unit of consumer goods. 
D)  the amount of consumer goods produced must be greater than zero. 
A)  the quantity of capital goods produced must be less than 150. 
B)  the quantity of consumer goods is constant for each change in the quantity of capital goods produced. 
C)  greater amounts of capital goods must be sacrificed to produce each additional unit of consumer goods. 
D)  the amount of consumer goods produced must be greater than zero.

Question 8

The production possibilities curve is:

Accepted Answer

A)  convex to the origin and bowed inwards. 
B)  concave to the origin and bowed outwards. 
C)  bowed inwards. 
D)  convex to the origin and bowed outwards. 
A)  convex to the origin and bowed inwards. 
B)  concave to the origin and bowed outwards. 
C)  bowed inwards. 
D)  convex to the origin and bowed outwards.

Question 9

The theory of comparative advantage:

Accepted Answer

A)  helps to analyse the absolute advantages of countries involved. 
B)  suggests that a country that does not have an absolute advantage should import everything. 
C)  analyses the basis of trade where an individual nation can gain from such trade. 
D)  suggests that a country specialise in producing goods or services for which it has a higher opportunity cost. 
A)  helps to analyse the absolute advantages of countries involved. 
B)  suggests that a country that does not have an absolute advantage should import everything. 
C)  analyses the basis of trade where an individual nation can gain from such trade. 
D)  suggests that a country specialise in producing goods or services for which it has a higher opportunity cost.

Question 10

Without the increase in immigration after the Second World War, Australia's population would now be around:

Accepted Answer

A)  5 million. 
B)  7 million. 
C)  10 million. 
D)  13 million. 
A)  5 million. 
B)  7 million. 
C)  10 million. 
D)  13 million.

Question 11

The production possibility curve is bowed outward from the origin because of:

Accepted Answer

A)  the law of increasing opportunity costs. 
B)  the finite nature of the resource base. 
C)  inefficiency. 
D)  an improper output mix. 
A)  the law of increasing opportunity costs. 
B)  the finite nature of the resource base. 
C)  inefficiency. 
D)  an improper output mix.

Question 12

Narrbegin Exhibit 2.6 Production possibilities frontier data
 $$\begin{array} { | l | r | r | r | r | r | r | } 
\hline & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } & \text { F } \
\hline \text { Capital goods } & 15 & 14 & 12 & 5 & 5 & 0 \
\hline \text { Cansumer guods } & 0 & 2 & 4 & 6 & \mathbf { 0 } & 10\
\hline
\end{array}$$ Narrend
-As shown in Exhibit 2.6, the concept of increasing opportunity costs is reflected in the fact that:

Accepted Answer

A)  the quantity of consumer goods produced can never be zero. 
B)  the labour force in the economy is homogeneous. 
C)  greater amounts of capital goods must be sacrificed to produce an additional two units of consumer goods. 
D)  a graph of the production data is a downward-sloping straight line. 
A)  the quantity of consumer goods produced can never be zero. 
B)  the labour force in the economy is homogeneous. 
C)  greater amounts of capital goods must be sacrificed to produce an additional two units of consumer goods. 
D)  a graph of the production data is a downward-sloping straight line.

Question 13

In order for an economy to shift its production possibilities curve rightward, it must:

Accepted Answer

A)  utilise all existing resources. 
B)  reduce expenditure on research and development. 
C)  increase the unemployment rate. 
D)  experience an improvement in its technology. 
A)  utilise all existing resources. 
B)  reduce expenditure on research and development. 
C)  increase the unemployment rate. 
D)  experience an improvement in its technology.

Question 14

Narrbegin Exhibit 2.2 Production possibilities frontier   Narrend
-The production possibilities in Exhibit 2.2 indicates that the opportunity cost of corn is:

Accepted Answer

A)  increasing. 
B)  decreasing. 
C)  does not change. 
D)  zero. 
A)  increasing. 
B)  decreasing. 
C)  does not change. 
D)  zero.

Question 15

Narrbegin Exhibit 2.8 Production possibilities frontier data
 $\begin{array}{|l|r|r|r|r|r|}
\hline & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } \
\hline \text { Capital goods } & 0 & 1 & 2 & 3 & 4 \
\hline \text { Consumption goods } & 25 & 23 & 19 & 13 & 0 \
\hline
\end{array}$ Narrend
-Suppose an economy is faced with the production possibilities table shown in Exhibit 2.8. The first unit of capital goods will cost the economy _____ units of consumption goods.

Accepted Answer

A)  25 
B)  2 
C)  1 
D)  23 
A)  25 
B)  2 
C)  1 
D)  23

Question 16

When the opportunity cost of producing laptops increases as more laptops are produced, then:

Accepted Answer

A)  the law of increasing costs is present. 
B)  resources are equally suited to the production of laptops and to other goods. 
C)  the production possibilities frontier is a straight line. 
D)  the production possibilities frontier becomes positively sloped. 
A)  the law of increasing costs is present. 
B)  resources are equally suited to the production of laptops and to other goods. 
C)  the production possibilities frontier is a straight line. 
D)  the production possibilities frontier becomes positively sloped.

Question 17

Narrbegin Exhibit 2.5 Production possibilities frontier   Narrend
-For the economy shown in Exhibit 2.5, which of the following is true when the economy is at point A?

Accepted Answer

A)  Not enough grain is being produced. 
B)  There must be resources that are not being used fully. 
C)  If the economy reallocates resources from A to D, it has to sacrifice some car production. 
D)  Increased grain production would be impossible. 
A)  Not enough grain is being produced. 
B)  There must be resources that are not being used fully. 
C)  If the economy reallocates resources from A to D, it has to sacrifice some car production. 
D)  Increased grain production would be impossible.

Question 18

The production possibilities curve for the nation of Economania shifts to the right. This could have been caused by:

Accepted Answer

A)  a decrease in Economania's capital stock. 
B)  a decrease in Economania's labour supply. 
C)  high unemployment in Economania for the previous time period. 
D)  improvement in the health and skill level of Economania's workforce. 
A)  a decrease in Economania's capital stock. 
B)  a decrease in Economania's labour supply. 
C)  high unemployment in Economania for the previous time period. 
D)  improvement in the health and skill level of Economania's workforce.

Question 19

Production possibilities frontier analysis allows us to identify:

Accepted Answer

A)  minimum possible combinations of goods and services. 
B)  ways to eliminate scarcity. 
C)  total benefits of production. 
D)  inefficient production. 
A)  minimum possible combinations of goods and services. 
B)  ways to eliminate scarcity. 
C)  total benefits of production. 
D)  inefficient production.

Question 20

If an economy is producing at full employment, it means that:

Accepted Answer

A)  there are idle resources in this economy. 
B)  production is not efficient. 
C)  the economy is operating at maximum technical and economic efficiency at this point of time. 
D)  the economy is producing at a point that is to the left of the production possibilities curve. 
A)  there are idle resources in this economy. 
B)  production is not efficient. 
C)  the economy is operating at maximum technical and economic efficiency at this point of time. 
D)  the economy is producing at a point that is to the left of the production possibilities curve.

If a country has a comparative advantage in the production of all goods, it should:

The production possibilities frontier demonstrates the basic economic principle that:

People in poor countries may have difficulties achieving economic growth because:

The opportunity cost of watching a movie is the:

The process through which an economy's production possibilities curve shifts outward is:

A nation can accelerate its economic growth by:

Narrbegin Exhibit 2.4 Production possibilities curve data A B C D E F Capital goods 150 140 120 90 50 0 Consumer goods 0 20 40 60 80 100 Narrend -In Exhibit 2.4, the concept of increasing opportunity costs is represented by the fact that:

The production possibilities curve is:

The theory of comparative advantage:

Without the increase in immigration after the Second World War, Australia's population would now be around:

The production possibility curve is bowed outward from the origin because of:

Narrbegin Exhibit 2.6 Production possibilities frontier data A B C D E F Capital goods 15 14 12 5 5 0 Cansumer guods 0 2 4 6 10 Narrend -As shown in Exhibit 2.6, the concept of increasing opportunity costs is reflected in the fact that:

In order for an economy to shift its production possibilities curve rightward, it must:

Narrbegin Exhibit 2.2 Production possibilities frontier Narrend -The production possibilities in Exhibit 2.2 indicates that the opportunity cost of corn is:

When the opportunity cost of producing laptops increases as more laptops are produced, then:

Narrbegin Exhibit 2.5 Production possibilities frontier Narrend -For the economy shown in Exhibit 2.5, which of the following is true when the economy is at point A?

The production possibilities curve for the nation of Economania shifts to the right. This could have been caused by:

Production possibilities frontier analysis allows us to identify:

If an economy is producing at full employment, it means that:

Thinking Like an Economist

Applying Graphs to Economics

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

Filters

Exam 3: Production Possibilities and Opportunity Cost

If a country has a comparative advantage in the production of all goods, it should:

The production possibilities frontier demonstrates the basic economic principle that:

People in poor countries may have difficulties achieving economic growth because:

The opportunity cost of watching a movie is the:

The process through which an economy's production possibilities curve shifts outward is:

A nation can accelerate its economic growth by:

Narrbegin Exhibit 2.4 Production possibilities curve data A B C D E F Capital goods 150 140 120 90 50 0 Consumer goods 0 20 40 60 80 100 Narrend -In Exhibit 2.4, the concept of increasing opportunity costs is represented by the fact that:

The production possibilities curve is:

The theory of comparative advantage:

Without the increase in immigration after the Second World War, Australia's population would now be around:

The production possibility curve is bowed outward from the origin because of:

Narrbegin Exhibit 2.6 Production possibilities frontier data A B C D E F Capital goods 15 14 12 5 5 0 Cansumer guods 0 2 4 6 10 Narrend -As shown in Exhibit 2.6, the concept of increasing opportunity costs is reflected in the fact that:

In order for an economy to shift its production possibilities curve rightward, it must:

Narrbegin Exhibit 2.2 Production possibilities frontier Narrend -The production possibilities in Exhibit 2.2 indicates that the opportunity cost of corn is:

When the opportunity cost of producing laptops increases as more laptops are produced, then:

Narrbegin Exhibit 2.5 Production possibilities frontier Narrend -For the economy shown in Exhibit 2.5, which of the following is true when the economy is at point A?

The production possibilities curve for the nation of Economania shifts to the right. This could have been caused by:

Production possibilities frontier analysis allows us to identify:

If an economy is producing at full employment, it means that:

Thinking Like an Economist

Applying Graphs to Economics

Market Demand and Supply

Markets in Action

Elasticity of Demand and Supply

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

Filters