Question 1

If the production possibilities frontier between two goods were a straight line,then the opportunity cost of one good in terms of another would be

Accepted Answer

A)  constant. 
B)  increasing. 
C)  decreasing. 
D)  zero. 
E)  either constant, increasing, or decreasing but more information is needed to determine which. 
A)  constant. 
B)  increasing. 
C)  decreasing. 
D)  zero. 
E)  either constant, increasing, or decreasing but more information is needed to determine which.

Question 2

Suppose that after specializing according to comparative advantage,a country is trading with another nation that also specializes according to its comparative advantage.Which of the following statements are true for the first country?
i.It enjoys gains from trade.
ii.It must have an absolute advantage in the production of the good it produces.
iii.It is producing at a point beyond its PPF.

Accepted Answer

A)  i only 
B)  i and ii 
C)  i and iii 
D)  ii and iii 
E)  i, ii, and iii 
A)  i only 
B)  i and ii 
C)  i and iii 
D)  ii and iii 
E)  i, ii, and iii

Question 3

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 4

-The figure above shows the production possibilities frontiers for the United Kingdom and France.What is the opportunity cost of one bushel of wheat in France?

Accepted Answer

A)  1/4 of a pound of fish 
B)  4 pounds of fish 
C)  1 pound of fish 
D)  100 pounds of fish 
E)  2 pounds of fish 
A)  1/4 of a pound of fish 
B)  4 pounds of fish 
C)  1 pound of fish 
D)  100 pounds of fish 
E)  2 pounds of fish

Question 5

If workers in Mexico produce fewer goods and services per hour than workers in the United States in all areas of production,then

Accepted Answer

A)  the United States will benefit from trade with Mexico but Mexico will not. 
B)  Mexico will benefit from trade with the United States but the United States will not. 
C)  neither Mexico nor the United States will benefit from trade with the other. 
D)  both the United States and Mexico will benefit from trade with the other. 
E)  it is unknown whether either country can benefit from trade with the other. 
A)  the United States will benefit from trade with Mexico but Mexico will not. 
B)  Mexico will benefit from trade with the United States but the United States will not. 
C)  neither Mexico nor the United States will benefit from trade with the other. 
D)  both the United States and Mexico will benefit from trade with the other. 
E)  it is unknown whether either country can benefit from trade with the other.

Question 6

How can a combination of goods be unattainable?

Accepted Answer

A combination of goods can be

Question 7

Why do nations engage in international trade?

Accepted Answer

Nations engage in international trade be

Question 8

The sustained expansion of production possibilities is called

Accepted Answer

A)  economic investment. 
B)  production expansion. 
C)  opportunity cost of growth. 
D)  economic growth. 
E)  production possibilities. 
A)  economic investment. 
B)  production expansion. 
C)  opportunity cost of growth. 
D)  economic growth. 
E)  production possibilities.

Question 9

Moving between two points on a PPF,a country gains 8 desktop computers and forgoes 4 laptop computers.The opportunity cost of 1 desktop computer is

Accepted Answer

A)  4 laptops. 
B)  8 desktops. 
C)  1 desktop. 
D)  2 laptops. 
E)  1/2 of a laptop. 
A)  4 laptops. 
B)  8 desktops. 
C)  1 desktop. 
D)  2 laptops. 
E)  1/2 of a laptop.

Question 10

In one hour John can produce 20 loaves of bread or 8 cakes.In one hour Phyllis can produce 30 loaves of bread or 15 cakes.Which of the following statements is true?

Accepted Answer

A)  Phyllis has a comparative advantage in producing bread. 
B)  John has a comparative advantage in producing cakes. 
C)  Phyllis has an absolute advantage in both goods. 
D)  John has an absolute advantage in both goods. 
E)  Phyllis has a comparative advantage in producing both cakes and bread. 
A)  Phyllis has a comparative advantage in producing bread. 
B)  John has a comparative advantage in producing cakes. 
C)  Phyllis has an absolute advantage in both goods. 
D)  John has an absolute advantage in both goods. 
E)  Phyllis has a comparative advantage in producing both cakes and bread.

Question 11

If Tom can wax a car in fewer hours than Jerry,then Tom definitely has

Accepted Answer

A)  a comparative advantage in car waxing. 
B)  an absolute advantage in car waxing. 
C)  both a comparative and an absolute advantage in car waxing. 
D)  neither a comparative nor an absolute advantage in car waxing. 
E)  an undetermined advantage because we do not know how long it takes Tom and Jerry to wash a car. 
A)  a comparative advantage in car waxing. 
B)  an absolute advantage in car waxing. 
C)  both a comparative and an absolute advantage in car waxing. 
D)  neither a comparative nor an absolute advantage in car waxing. 
E)  an undetermined advantage because we do not know how long it takes Tom and Jerry to wash a car.

Question 12

Explain why specialization and trade increases a country's overall level of consumption.

Accepted Answer

A country specializes in the activities

Question 13

In terms of a nation's production possibilities frontier,what impact does international trade have?

Accepted Answer

A)  International trade shifts the nation's production possibilities frontier outward. 
B)  International trade shifts the nation's production possibilities frontier inward. 
C)  International trade allows the nation to consume at a point outside its production possibilities frontier. 
D)  International trade shifts the production possibilities frontier outward for the goods that are exported and inward for the goods that are imported. 
E)  International trade shifts the production possibilities frontier outward for the goods that are imported and inward for the goods that are exported. 
A)  International trade shifts the nation's production possibilities frontier outward. 
B)  International trade shifts the nation's production possibilities frontier inward. 
C)  International trade allows the nation to consume at a point outside its production possibilities frontier. 
D)  International trade shifts the production possibilities frontier outward for the goods that are exported and inward for the goods that are imported. 
E)  International trade shifts the production possibilities frontier outward for the goods that are imported and inward for the goods that are exported.

Question 14

-In the table above,Jack's opportunity cost for 1 pound of food is ________ and his opportunity cost for 1 pound of clothing is ________.

Accepted Answer

A)  1 pound of clothing; 4 pounds of food 
B)  1/2 of a pound of clothing; 2 pounds of food 
C)  1/3 of a pound of clothing; 3 pounds of food 
D)  2 pounds of clothing; 2 pounds of food 
E)  1 pound of food; 1 pound of clothing 
A)  1 pound of clothing; 4 pounds of food 
B)  1/2 of a pound of clothing; 2 pounds of food 
C)  1/3 of a pound of clothing; 3 pounds of food 
D)  2 pounds of clothing; 2 pounds of food 
E)  1 pound of food; 1 pound of clothing

Question 15

Rika's opportunity cost of producing 100 t-shirts is 50 jackets.Jeff's opportunity cost of producing 75 t-shirts is 25 jackets.Who should specialize in jackets?

Accepted Answer

A)  Rika 
B)  Jeff 
C)  neither 
D)  both 
E)  More information is needed about their production possibilities frontiers to determine who should specialize in jackets. 
A)  Rika 
B)  Jeff 
C)  neither 
D)  both 
E)  More information is needed about their production possibilities frontiers to determine who should specialize in jackets.

Question 16

Suppose that in a PPF graph,wheat is on the vertical axis and jets are on the horizontal axis.Moving down along the PPF,the

Accepted Answer

A)  number of jets increases and the opportunity cost of jets increases. 
B)  amount of wheat increases and the opportunity cost of wheat increases. 
C)  number of jets increases and the opportunity cost of jets decreases. 
D)  amount of wheat increases and opportunity cost of wheat decreases. 
E)  opportunity cost of jets and wheat both increase. 
A)  number of jets increases and the opportunity cost of jets increases. 
B)  amount of wheat increases and the opportunity cost of wheat increases. 
C)  number of jets increases and the opportunity cost of jets decreases. 
D)  amount of wheat increases and opportunity cost of wheat decreases. 
E)  opportunity cost of jets and wheat both increase.

Question 17

A production point beyond the production possibilities frontier represents what?

Accepted Answer

A production point beyond the

Question 18

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

Question 19

Mac can bake more cookies than Monica per hour.It must be true that

Accepted Answer

A)  Monica has an absolute advantage in cookie baking. 
B)  Mac has an absolute advantage in baking cookies. 
C)  Mac has a comparative advantage in baking cookies. 
D)  Monica has a comparative advantage in baking cookies. 
E)  Mac cannot benefit by trade between the two of them. 
A)  Monica has an absolute advantage in cookie baking. 
B)  Mac has an absolute advantage in baking cookies. 
C)  Mac has a comparative advantage in baking cookies. 
D)  Monica has a comparative advantage in baking cookies. 
E)  Mac cannot benefit by trade between the two of them.

Question 20

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.

If the production possibilities frontier between two goods were a straight line,then the opportunity cost of one good in terms of another would be

As an economy grows,

-The figure above shows the production possibilities frontiers for the United Kingdom and France.What is the opportunity cost of one bushel of wheat in France?

If workers in Mexico produce fewer goods and services per hour than workers in the United States in all areas of production,then

How can a combination of goods be unattainable?

Why do nations engage in international trade?

The sustained expansion of production possibilities is called

Moving between two points on a PPF,a country gains 8 desktop computers and forgoes 4 laptop computers.The opportunity cost of 1 desktop computer is

In one hour John can produce 20 loaves of bread or 8 cakes.In one hour Phyllis can produce 30 loaves of bread or 15 cakes.Which of the following statements is true?

If Tom can wax a car in fewer hours than Jerry,then Tom definitely has

Explain why specialization and trade increases a country's overall level of consumption.

In terms of a nation's production possibilities frontier,what impact does international trade have?

-In the table above,Jack's opportunity cost for 1 pound of food is and his opportunity cost for 1 pound of clothing is .

Rika's opportunity cost of producing 100 t-shirts is 50 jackets.Jeff's opportunity cost of producing 75 t-shirts is 25 jackets.Who should specialize in jackets?

Suppose that in a PPF graph,wheat is on the vertical axis and jets are on the horizontal axis.Moving down along the PPF,the

A production point beyond the production possibilities frontier represents what?

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?

Mac can bake more cookies than Monica per hour.It must be true that

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

Getting Started

The U.S.and Global Economies

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 3: The Economic Problem

If the production possibilities frontier between two goods were a straight line,then the opportunity cost of one good in terms of another would be

As an economy grows,

-The figure above shows the production possibilities frontiers for the United Kingdom and France.What is the opportunity cost of one bushel of wheat in France?

If workers in Mexico produce fewer goods and services per hour than workers in the United States in all areas of production,then

How can a combination of goods be unattainable?

Why do nations engage in international trade?

The sustained expansion of production possibilities is called

Moving between two points on a PPF,a country gains 8 desktop computers and forgoes 4 laptop computers.The opportunity cost of 1 desktop computer is

In one hour John can produce 20 loaves of bread or 8 cakes.In one hour Phyllis can produce 30 loaves of bread or 15 cakes.Which of the following statements is true?

If Tom can wax a car in fewer hours than Jerry,then Tom definitely has

Explain why specialization and trade increases a country's overall level of consumption.

In terms of a nation's production possibilities frontier,what impact does international trade have?

-In the table above,Jack's opportunity cost for 1 pound of food is ________ and his opportunity cost for 1 pound of clothing is ________.

Rika's opportunity cost of producing 100 t-shirts is 50 jackets.Jeff's opportunity cost of producing 75 t-shirts is 25 jackets.Who should specialize in jackets?

Suppose that in a PPF graph,wheat is on the vertical axis and jets are on the horizontal axis.Moving down along the PPF,the

A production point beyond the production possibilities frontier represents what?

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?

Mac can bake more cookies than Monica per hour.It must be true that

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

Getting Started

The U.S.and Global Economies

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

-In the table above,Jack's opportunity cost for 1 pound of food is and his opportunity cost for 1 pound of clothing is .