Question 1

Why does the production possibilities frontier have a bowed out shape rather than being a straight line?

Accepted Answer

The fact that as the production of one g

Question 2

As an economy grows,

Accepted Answer

A) its PPF shifts outward. 
B) it can eliminate scarcity. 
C) the opportunity cost of production will approach 0. 
D) the opportunity cost of production will increase. 
E) its PPF does not shift;instead,the production point moves from inside the PPF to be closer to the PPF. 
A) its PPF shifts outward. 
B) it can eliminate scarcity. 
C) the opportunity cost of production will approach 0. 
D) the opportunity cost of production will increase. 
E) its PPF does not shift;instead,the production point moves from inside the PPF to be closer to the PPF.

Question 3

The production possibilities frontier illustrates which of the following economic ideas?

Accepted Answer

A) efficiency 
B) tradeoffs 
C) opportunity cost 
D) all of the above 
E) none of the above 
A) efficiency 
B) tradeoffs 
C) opportunity cost 
D) all of the above 
E) none of the above

Question 4

-The figure above shows the production possibilities frontier for a country.In order for it to move from producing at point A to producing at point B,the country would need to incur an opportunity cost of

Accepted Answer

A) 1 million SUVs. 
B) 3 million SUVs. 
C) 4 million SUVs. 
D) 3 million compact cars. 
E) 0 because the gain in compact cars exceeds the loss in SUVs. 
A) 1 million SUVs. 
B) 3 million SUVs. 
C) 4 million SUVs. 
D) 3 million compact cars. 
E) 0 because the gain in compact cars exceeds the loss in SUVs.

Question 5

-The figure above illustrates a small country's production possibilities frontier.Based on the figure,we can tell that the nation's resources are

Accepted Answer

A) equally productive in all tasks because the slope is negative. 
B) equally productive in all tasks because the production possibilities frontier is bowed out. 
C) not equally productive in all tasks because the slope is negative. 
D) not equally productive in all tasks because the production possibilities frontier is bowed out. 
E) unlimited because the slope is negative and the PPF is bowed out. 
A) equally productive in all tasks because the slope is negative. 
B) equally productive in all tasks because the production possibilities frontier is bowed out. 
C) not equally productive in all tasks because the slope is negative. 
D) not equally productive in all tasks because the production possibilities frontier is bowed out. 
E) unlimited because the slope is negative and the PPF is bowed out.

Question 6

"If Mexico is currently operating at a point inside its production possibilities frontier,then there are unemployed or misallocated resources in Mexico." Is this statement true or false? Briefly explain your answer.

Accepted Answer

The statement is true.Points within the

Question 7

-Deb and Pete have volunteered to help their favorite charity mail out fundraiser information.The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes.What is Deb's opportunity cost of assembling 1 packet?

Accepted Answer

A) 160 envelopes 
B) 40 envelopes 
C) 4 envelopes 
D) 1/4 of an envelope 
E) 4 packets 
A) 160 envelopes 
B) 40 envelopes 
C) 4 envelopes 
D) 1/4 of an envelope 
E) 4 packets

Question 8

-Deb and Pete have volunteered to help their favorite charity mail out fundraiser information.The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes.If Deb and Pete specialize and trade,how many packets will be assembled?

Accepted Answer

A) 40 
B) more than 40 and less than 80 
C) 80 
D) 160 
E) more than 80 and less than 160 
A) 40 
B) more than 40 and less than 80 
C) 80 
D) 160 
E) more than 80 and less than 160

Question 9

"Because the United States is the largest economy in the world and can produce anything it needs domestically,there are no gains from trade for the United States." Is the previous statement correct or incorrect?

Accepted Answer

The statement is incorrect.The

Question 10

If there is increasing opportunity cost,then when moving downward on a production possibilities frontier,the opportunity cost of the good on the horizontal axis ________ as more of the good is produced.

Accepted Answer

A) increases and the PPF gets steeper 
B) increases and the PPF gets flatter 
C) decreases and the PPF gets steeper 
D) decreases and the PPF gets flatter 
E) does not change and the PPF gets steeper 
A) increases and the PPF gets steeper 
B) increases and the PPF gets flatter 
C) decreases and the PPF gets steeper 
D) decreases and the PPF gets flatter 
E) does not change and the PPF gets steeper

Question 11

What is comparative advantage? Give an example.

Accepted Answer

Comparative advantage is the ability of

Question 12

Describe the differences between tradeoffs and free lunches in terms of a PPF.

Accepted Answer

A tradeoff is a constraint or limit that

Question 13

-The table above shows a production possibilities frontier for an economy.If the economy tried to produce a combination of 250 loaves of bread and 800 books,

Accepted Answer

A) there is some unemployment. 
B) there is full employment. 
C) the tradeoff between bread and books is inefficient. 
D) it cannot produce this combination because it lacks enough resources or technology. 
E) it is enjoying a free lunch. 
A) there is some unemployment. 
B) there is full employment. 
C) the tradeoff between bread and books is inefficient. 
D) it cannot produce this combination because it lacks enough resources or technology. 
E) it is enjoying a free lunch.

Question 14

The United States is one of the richest nations in the world,

Accepted Answer

A) so it does not need to trade with poor nations in order to achieve any gains from trade. 
B) so it might not have a comparative advantage in producing any goods. 
C) but it can still benefit from specialization and trade. 
D) so it must have a comparative advantage in the production of all goods. 
E) so it must have an absolute advantage in the production of all goods. 
A) so it does not need to trade with poor nations in order to achieve any gains from trade. 
B) so it might not have a comparative advantage in producing any goods. 
C) but it can still benefit from specialization and trade. 
D) so it must have a comparative advantage in the production of all goods. 
E) so it must have an absolute advantage in the production of all goods.

Question 15

-Suppose that Germany,France,Estonia,and India all have the same production possibilities,illustrated in the figure above.Based on the production points in the figure,India is most likely to expand its PPF to

Accepted Answer

A) PPF3 or PPF2. 
B) PPF3. 
C) PPF1. 
D) PPF1.or PPF2. 
E) PPF2. 
A) PPF3 or PPF2. 
B) PPF3. 
C) PPF1. 
D) PPF1.or PPF2. 
E) PPF2.

Question 16

-The figure above shows Prakash's and Gail's production possibilities frontiers for writing books and magazine articles.
a.What is Prakash's opportunity cost of a book? What is Gail's opportunity cost? Who has the comparative advantage in writing books?
b.Who has the comparative advantage in writing magazine articles?
c.According to their comparative advantages,who should write books and who should write magazine articles?

Accepted Answer

a.In a year,Prakash can write 2 books or

Question 17

When Mik has an absolute advantage in the production of two goods over Tommy,Mik

Accepted Answer

A) is less productive than Tommy. 
B) is better off if he does not engage in specialization and trade with Tommy. 
C) is more productive in producing both goods than Tommy. 
D) always has a comparative advantage over Tommy in the production of both goods. 
E) cannot gain from trade with Tommy. 
A) is less productive than Tommy. 
B) is better off if he does not engage in specialization and trade with Tommy. 
C) is more productive in producing both goods than Tommy. 
D) always has a comparative advantage over Tommy in the production of both goods. 
E) cannot gain from trade with Tommy.

Question 18

A country produces only cans of soup and ink pens.If the country produces on its bowed outward PPF and increases the production of cans of soup,the opportunity cost of additional

Accepted Answer

A) cans of soup is increasing. 
B) cans of soup is decreasing. 
C) cans of soup remains unchanged. 
D) ink pens is increasing. 
E) More information is needed to determine what happens to the opportunity cost. 
A) cans of soup is increasing. 
B) cans of soup is decreasing. 
C) cans of soup remains unchanged. 
D) ink pens is increasing. 
E) More information is needed to determine what happens to the opportunity cost.

Question 19

The figure above shows Liz's and Joe's production possibilities for Salads and Smoothies.
-Given the information in the figure above,Liz has a comparative advantage in ________ because ________.

Accepted Answer

A) smoothies;her opportunity cost of producing smoothies is lower than Joe's 
B) salads;her opportunity cost of producing salads is lower than Joe's 
C) smoothies;she can produce more smoothies per hour than Joe can 
D) salads;she can produce more salads per hour than Joe can 
E) both goods;she can produce more of both goods per hour than Joe can 
A) smoothies;her opportunity cost of producing smoothies is lower than Joe's 
B) salads;her opportunity cost of producing salads is lower than Joe's 
C) smoothies;she can produce more smoothies per hour than Joe can 
D) salads;she can produce more salads per hour than Joe can 
E) both goods;she can produce more of both goods per hour than Joe can

Question 20

The opportunity cost of producing one more unit of a good is calculated by dividing the

Accepted Answer

A) increase in the quantity of that good by the decrease in the quantity of other good. 
B) total quantity of that good by the total quantity of other good. 
C) decrease in the quantity of the other good by the increase in the quantity of the good whose opportunity cost we're calculating. 
D) total quantity of the other good by the total quantity of the good whose opportunity cost we're calculating. 
E) price of the good whose opportunity cost we are calculating by the number of units of the other good that are forgone. 
A) increase in the quantity of that good by the decrease in the quantity of other good. 
B) total quantity of that good by the total quantity of other good. 
C) decrease in the quantity of the other good by the increase in the quantity of the good whose opportunity cost we're calculating. 
D) total quantity of the other good by the total quantity of the good whose opportunity cost we're calculating. 
E) price of the good whose opportunity cost we are calculating by the number of units of the other good that are forgone.

Why does the production possibilities frontier have a bowed out shape rather than being a straight line?

As an economy grows,

The production possibilities frontier illustrates which of the following economic ideas?

-The figure above shows the production possibilities frontier for a country.In order for it to move from producing at point A to producing at point B,the country would need to incur an opportunity cost of

-The figure above illustrates a small country's production possibilities frontier.Based on the figure,we can tell that the nation's resources are

"If Mexico is currently operating at a point inside its production possibilities frontier,then there are unemployed or misallocated resources in Mexico." Is this statement true or false? Briefly explain your answer.

-Deb and Pete have volunteered to help their favorite charity mail out fundraiser information.The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes.What is Deb's opportunity cost of assembling 1 packet?

-Deb and Pete have volunteered to help their favorite charity mail out fundraiser information.The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes.If Deb and Pete specialize and trade,how many packets will be assembled?

"Because the United States is the largest economy in the world and can produce anything it needs domestically,there are no gains from trade for the United States." Is the previous statement correct or incorrect?

If there is increasing opportunity cost,then when moving downward on a production possibilities frontier,the opportunity cost of the good on the horizontal axis ________ as more of the good is produced.

What is comparative advantage? Give an example.

Describe the differences between tradeoffs and free lunches in terms of a PPF.

-The table above shows a production possibilities frontier for an economy.If the economy tried to produce a combination of 250 loaves of bread and 800 books,

The United States is one of the richest nations in the world,

-Suppose that Germany,France,Estonia,and India all have the same production possibilities,illustrated in the figure above.Based on the production points in the figure,India is most likely to expand its PPF to

When Mik has an absolute advantage in the production of two goods over Tommy,Mik

A country produces only cans of soup and ink pens.If the country produces on its bowed outward PPF and increases the production of cans of soup,the opportunity cost of additional

The figure above shows Liz's and Joe's production possibilities for Salads and Smoothies. -Given the information in the figure above,Liz has a comparative advantage in because .

The opportunity cost of producing one more unit of a good is calculated by dividing the

Getting Started

The Usand Global Economies

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 3: The Economic Problem

Why does the production possibilities frontier have a bowed out shape rather than being a straight line?

As an economy grows,

The production possibilities frontier illustrates which of the following economic ideas?

-The figure above shows the production possibilities frontier for a country.In order for it to move from producing at point A to producing at point B,the country would need to incur an opportunity cost of

-The figure above illustrates a small country's production possibilities frontier.Based on the figure,we can tell that the nation's resources are

"If Mexico is currently operating at a point inside its production possibilities frontier,then there are unemployed or misallocated resources in Mexico." Is this statement true or false? Briefly explain your answer.

-Deb and Pete have volunteered to help their favorite charity mail out fundraiser information.The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes.What is Deb's opportunity cost of assembling 1 packet?

-Deb and Pete have volunteered to help their favorite charity mail out fundraiser information.The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes.If Deb and Pete specialize and trade,how many packets will be assembled?

"Because the United States is the largest economy in the world and can produce anything it needs domestically,there are no gains from trade for the United States." Is the previous statement correct or incorrect?

If there is increasing opportunity cost,then when moving downward on a production possibilities frontier,the opportunity cost of the good on the horizontal axis ________ as more of the good is produced.

What is comparative advantage? Give an example.

Describe the differences between tradeoffs and free lunches in terms of a PPF.

-The table above shows a production possibilities frontier for an economy.If the economy tried to produce a combination of 250 loaves of bread and 800 books,

The United States is one of the richest nations in the world,

-Suppose that Germany,France,Estonia,and India all have the same production possibilities,illustrated in the figure above.Based on the production points in the figure,India is most likely to expand its PPF to

When Mik has an absolute advantage in the production of two goods over Tommy,Mik

A country produces only cans of soup and ink pens.If the country produces on its bowed outward PPF and increases the production of cans of soup,the opportunity cost of additional

The figure above shows Liz's and Joe's production possibilities for Salads and Smoothies. -Given the information in the figure above,Liz has a comparative advantage in ________ because ________.

The opportunity cost of producing one more unit of a good is calculated by dividing the

Getting Started

The Usand Global Economies

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

The figure above shows Liz's and Joe's production possibilities for Salads and Smoothies. -Given the information in the figure above,Liz has a comparative advantage in because .