Question 1

Technological innovations will cause:

Accepted Answer

A)  the production possibilities curve to stay the same. 
B)  the production possibilities curve to shift to the left. 
C)  the production possibilities curve to shift to the right. 
D)  an economy to operate below its production possibilities curve. 
A)  the production possibilities curve to stay the same. 
B)  the production possibilities curve to shift to the left. 
C)  the production possibilities curve to shift to the right. 
D)  an economy to operate below its production possibilities curve.

Question 2

Narrbegin Exhibit 2.10 Production possibilities frontierS1U1B1S1U1B 
-In Exhibit 2.10, which of the following points on the production possibilities curve are full-employment production points?

Accepted Answer

A)  A, B, C, D. 
B)  A, B, C, D, U. 
C)  E, U, W. 
D)  B, C, D, U. 
E)  A, B, C, U. 
A)  A, B, C, D. 
B)  A, B, C, D, U. 
C)  E, U, W. 
D)  B, C, D, U. 
E)  A, B, C, U.

Question 3

What are the advantages of specialisation?

Accepted Answer

A)  Decreased skills of workers. 
B)  More time spent on the performance of each task. 
C)  Training is easier to perform. 
D)  Higher unemployment. 
A)  Decreased skills of workers. 
B)  More time spent on the performance of each task. 
C)  Training is easier to perform. 
D)  Higher unemployment.

Question 4

Narrbegin Exhibit 2–9 Production possibilities frontier
 
-In Exhibit 2.9, it can be inferred that:

Accepted Answer

A)  point A is preferred to point B. 
B)  point A is preferred to point E. 
C)  point A is preferred to point D. 
D)  point B is preferred to point A. 
E)  point B is preferred to point C. 
A)  point A is preferred to point B. 
B)  point A is preferred to point E. 
C)  point A is preferred to point D. 
D)  point B is preferred to point A. 
E)  point B is preferred to point C.

Question 5

Law of increasing opportunity cost states:

Accepted Answer

A)  that opportunity cost decreases as production of one output expands. 
B)  the production possibilities frontier bows outwards. 
C)  that the stock of technology is increasing. 
D)  the production possibilities frontier bows inwards. 
A)  that opportunity cost decreases as production of one output expands. 
B)  the production possibilities frontier bows outwards. 
C)  that the stock of technology is increasing. 
D)  the production possibilities frontier bows inwards.

Question 6

Narrbegin Exhibit 2.10 Production possibilities frontierS1U1B1S1U1B 
-In Exhibit 2.10, which of the following points on the production possibilities curve are unattainable with the resources and technology currently available?

Accepted Answer

A)  A, B, C, U. 
B)  A, B, C, D, U. 
C)  E and W. 
D)  B, C, D, U. 
E)  A, B, C, D. 
A)  A, B, C, U. 
B)  A, B, C, D, U. 
C)  E and W. 
D)  B, C, D, U. 
E)  A, B, C, D.

Question 7

Narrabegin Exhibit 2.11 Production possibilities frontiers  
-In 2002 a country, in Exhibit 2.11, is located at point A on its 2002 production possibilities curve. In 2003 this same country is located at point B on its 2003 production possibility curve. Which of the following could have brought about this shift in production possibilities curves?

Accepted Answer

A)  More efficient production in 2002. 
B)  A natural disaster in 2002 which leads to a destruction of resources. 
C)  Higher unemployment in 2002. 
D)  An advance in technology occurring in 2002. 
A)  More efficient production in 2002. 
B)  A natural disaster in 2002 which leads to a destruction of resources. 
C)  Higher unemployment in 2002. 
D)  An advance in technology occurring in 2002.

Question 8

Narrbegin Exhibit 2.1 Production possibilities frontier data
 $$\begin{array} { | c | c | } 
\hline \text { Consumption gads } & \text { Capital goods } \
\hline 10 & 0 \
\hline 9 & 1 \
\hline 7 & 2 \
\hline 4 & 3 \
\hline 0 & 4 \
\hline
\end{array}$$ Narrend
-In Exhibit 2.1, according to the information, the opportunity cost of producing three units of capital goods is:

Accepted Answer

A)  three units of consumption goods. 
B)  four units of consumption goods. 
C)  six units of consumption goods. 
D)  seven units of consumption goods. 
A)  three units of consumption goods. 
B)  four units of consumption goods. 
C)  six units of consumption goods. 
D)  seven units of consumption goods.

Question 9

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. As additional units of capital goods are being produced, the number of consumption goods produced must _____, because _____.

Accepted Answer

A)  increase; the production possibility table shows only the maximum efficiency points 
B)  increase; of the law of increasing costs 
C)  decrease; of the law of decreasing costs 
D)  decrease; of the limited resource base 
A)  increase; the production possibility table shows only the maximum efficiency points 
B)  increase; of the law of increasing costs 
C)  decrease; of the law of decreasing costs 
D)  decrease; of the limited resource base

Question 10

Which of the following does not illustrate opportunity cost?

Accepted Answer

A)  If I study, I must give up going to the movies. 
B)  If I buy a computer, I must do without an iPod. 
C)  The more I spend on consumption expenditure now means that the more I can spend on the same in the future. 
D)  If I spend more on books, I must spend less on jewellery. 
A)  If I study, I must give up going to the movies. 
B)  If I buy a computer, I must do without an iPod. 
C)  The more I spend on consumption expenditure now means that the more I can spend on the same in the future. 
D)  If I spend more on books, I must spend less on jewellery.

Question 11

Compare two economies A and B that start out with identical production possibilities curves. Economy A chooses an efficient point with six consumption goods and three capital goods, while economy B chooses an efficient point with four consumption goods and five capital goods. In the future we can predict:

Accepted Answer

A)  economy A will operate inefficiently. 
B)  economy B will operate inefficiently. 
C)  economy B will grow faster than economy A. 
D)  economy A will grow faster than economy B. 
A)  economy A will operate inefficiently. 
B)  economy B will operate inefficiently. 
C)  economy B will grow faster than economy A. 
D)  economy A will grow faster than economy B.

Question 12

Which of the following is not true about a production possibilities curve? The curve:

Accepted Answer

A)  indicates the combinations of goods and services that can be produced with given
Technology. 
B)  indicates the efficient production points. 
C)  indicates the non-efficient production points. 
D)  indicates which production point will be chosen. 
A)  indicates the combinations of goods and services that can be produced with given
Technology. 
B)  indicates the efficient production points. 
C)  indicates the non-efficient production points. 
D)  indicates which production point will be chosen.

Question 13

Narrbegin Exhibit 2.2 Production possibilities frontier   Narrend
-In Exhibit 2.2, the opportunity cost of coffee when moving from B to C is:

Accepted Answer

A)  2 million bushels of corn. 
B)  6 million bushels of corn. 
C)  8 million bushels of corn. 
D)  14 million bushels of corn. 
A)  2 million bushels of corn. 
B)  6 million bushels of corn. 
C)  8 million bushels of corn. 
D)  14 million bushels of corn.

Question 14

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 second unit of capital goods production will cost _____ units of consumption goods and the third unit of capital goods production will cost _____ units of consumption goods.

Accepted Answer

A)  4; 6 
B)  25; 23 
C)  23; 19 
D)  1; 23 
A)  4; 6 
B)  25; 23 
C)  23; 19 
D)  1; 23

Question 15

The most efficient point on the production possibilities curve is the midpoint on the curve.

Accepted Answer

A) True 
 B)False

Question 16

A country has a comparative advantage in producing a good when it has the lowest opportunity cost of producing that good.

Accepted Answer

A) True 
 B)False

Question 17

If Japan gives up 10 bushels of rice to produce one bicycle, while Australia gives up five bushels of rice to produce one bicycle, then:

Accepted Answer

A)  the opportunity cost of producing bicycles in Australia is higher than in Japan. 
B)  Japan has a comparative advantage in the production of bicycles. 
C)  total output will be highest if Japan specialises in rice and Australia specialises
In bicycles. 
D)  total output will be highest if Australia specialises in rice and Japan specialises In bicycles. 
A)  the opportunity cost of producing bicycles in Australia is higher than in Japan. 
B)  Japan has a comparative advantage in the production of bicycles. 
C)  total output will be highest if Japan specialises in rice and Australia specialises
In bicycles. 
D)  total output will be highest if Australia specialises in rice and Japan specialises In bicycles.

Question 18

When the production possibilities curve is bowed out, resources are:

Accepted Answer

A)  equally well-suited to production of both goods. 
B)  not being used efficiently. 
C)  not equally suited to the production of both types of goods. 
D)  of an inferior quality. 
A)  equally well-suited to production of both goods. 
B)  not being used efficiently. 
C)  not equally suited to the production of both types of goods. 
D)  of an inferior quality.

Question 19

Efficient production means producing:

Accepted Answer

A)  less than feasible output for a given amount of resources. 
B)  more than feasible output for a given amount of resources. 
C)  less than what is needed. 
D)  the maximum feasible output for a given amount of resources. 
A)  less than feasible output for a given amount of resources. 
B)  more than feasible output for a given amount of resources. 
C)  less than what is needed. 
D)  the maximum feasible output for a given amount of resources.

Question 20

According to the principle of comparative advantage, total output and consumption levels will be highest when goods are produced in nations according to which of the following conditions?

Accepted Answer

A)  Opportunity costs are lowest. 
B)  Absolute advantages are highest. 
C)  Opportunity costs are equal. 
D)  Absolute advantages are lowest. 
A)  Opportunity costs are lowest. 
B)  Absolute advantages are highest. 
C)  Opportunity costs are equal. 
D)  Absolute advantages are lowest.

Technological innovations will cause:

Narrbegin Exhibit 2.10 Production possibilities frontier -In Exhibit 2.10, which of the following points on the production possibilities curve are full-employment production points?

What are the advantages of specialisation?

Narrbegin Exhibit 2–9 Production possibilities frontier -In Exhibit 2.9, it can be inferred that:

Law of increasing opportunity cost states:

Narrbegin Exhibit 2.10 Production possibilities frontier -In Exhibit 2.10, which of the following points on the production possibilities curve are unattainable with the resources and technology currently available?

Narrbegin Exhibit 2.1 Production possibilities frontier data Consumption gads Capital goods 10 0 9 1 7 2 4 3 0 4 Narrend -In Exhibit 2.1, according to the information, the opportunity cost of producing three units of capital goods is:

Which of the following does not illustrate opportunity cost?

Which of the following is not true about a production possibilities curve? The curve:

Narrbegin Exhibit 2.2 Production possibilities frontier Narrend -In Exhibit 2.2, the opportunity cost of coffee when moving from B to C is:

The most efficient point on the production possibilities curve is the midpoint on the curve.

A country has a comparative advantage in producing a good when it has the lowest opportunity cost of producing that good.

If Japan gives up 10 bushels of rice to produce one bicycle, while Australia gives up five bushels of rice to produce one bicycle, then:

When the production possibilities curve is bowed out, resources are:

Efficient production means producing:

According to the principle of comparative advantage, total output and consumption levels will be highest when goods are produced in nations according to which of the following conditions?

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

Technological innovations will cause:

Narrbegin Exhibit 2.10 Production possibilities frontier -In Exhibit 2.10, which of the following points on the production possibilities curve are full-employment production points?

What are the advantages of specialisation?

Narrbegin Exhibit 2–9 Production possibilities frontier -In Exhibit 2.9, it can be inferred that:

Law of increasing opportunity cost states:

Narrbegin Exhibit 2.10 Production possibilities frontier -In Exhibit 2.10, which of the following points on the production possibilities curve are unattainable with the resources and technology currently available?

Narrbegin Exhibit 2.1 Production possibilities frontier data Consumption gads Capital goods 10 0 9 1 7 2 4 3 0 4 Narrend -In Exhibit 2.1, according to the information, the opportunity cost of producing three units of capital goods is:

Which of the following does not illustrate opportunity cost?

Which of the following is not true about a production possibilities curve? The curve:

Narrbegin Exhibit 2.2 Production possibilities frontier Narrend -In Exhibit 2.2, the opportunity cost of coffee when moving from B to C is:

The most efficient point on the production possibilities curve is the midpoint on the curve.

A country has a comparative advantage in producing a good when it has the lowest opportunity cost of producing that good.

If Japan gives up 10 bushels of rice to produce one bicycle, while Australia gives up five bushels of rice to produce one bicycle, then:

When the production possibilities curve is bowed out, resources are:

Efficient production means producing:

According to the principle of comparative advantage, total output and consumption levels will be highest when goods are produced in nations according to which of the following conditions?

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