Question 1

Specialization and trade make a country better off because with trade,the country can consume at a point

Accepted Answer

A)  outside its production possibilities frontier. 
B)  inside its production possibilities frontier. 
C)  on its production possibilities frontier. 
D)  on its trading partner's production possibilities frontier. 
E)  inside its trading partner's production possibilities frontier. 
A)  outside its production possibilities frontier. 
B)  inside its production possibilities frontier. 
C)  on its production possibilities frontier. 
D)  on its trading partner's production possibilities frontier. 
E)  inside its trading partner's production possibilities frontier.

Question 2

The production possibilities frontier is the boundary between the

Accepted Answer

A)  goods and services that the economy can produce. 
B)  attainable and unattainable combinations of goods and services. 
C)  wanted and unwanted combinations of goods and services. 
D)  rational and irrational choices facing a society. 
E)  affordable and unaffordable combinations of production. 
A)  goods and services that the economy can produce. 
B)  attainable and unattainable combinations of goods and services. 
C)  wanted and unwanted combinations of goods and services. 
D)  rational and irrational choices facing a society. 
E)  affordable and unaffordable combinations of production.

Question 3

The opportunity cost of a good increases as more of it is produced because

Accepted Answer

A)  there is no such thing as a free lunch. 
B)  resources are not equally productive in all activities. 
C)  producing more of a good requires additional resources. 
D)  the number of forgone alternatives also increases. 
E)  people want the good less as more is produced. 
A)  there is no such thing as a free lunch. 
B)  resources are not equally productive in all activities. 
C)  producing more of a good requires additional resources. 
D)  the number of forgone alternatives also increases. 
E)  people want the good less as more is produced.

Question 4

What is gained when people engage in specialization and trade?

Accepted Answer

A)  Specialization and trade allow people to consume outside their individual production possibilities frontiers. 
B)  Specialization and trade allow people to consume inside their production possibilities frontiers. 
C)  Specialization and trade allow people to consume at a point on their production possibilities frontiers. 
D)  Specialization and trade allow people to produce outside their individual production possibilities frontiers. 
E)  There are no gains from specialization and trade. 
A)  Specialization and trade allow people to consume outside their individual production possibilities frontiers. 
B)  Specialization and trade allow people to consume inside their production possibilities frontiers. 
C)  Specialization and trade allow people to consume at a point on their production possibilities frontiers. 
D)  Specialization and trade allow people to produce outside their individual production possibilities frontiers. 
E)  There are no gains from specialization and trade.

Question 5

To increase its economic growth,a nation should

Accepted Answer

A)  limit the number of people in college because they produce nothing. 
B)  encourage spending on goods and services. 
C)  encourage education because that increases the quality of labor. 
D)  increase current consumption. 
E)  eliminate expenditure on capital goods. 
A)  limit the number of people in college because they produce nothing. 
B)  encourage spending on goods and services. 
C)  encourage education because that increases the quality of labor. 
D)  increase current consumption. 
E)  eliminate expenditure on capital goods.

Question 6

"Comparative advantage" is defined as a situation in which one person can produce

Accepted Answer

A)  more of all goods than another person. 
B)  more of a good than another person. 
C)  a good for a lower dollar cost than another person. 
D)  a good for a lower opportunity cost than another person. 
E)  all goods for lower opportunity costs than another person. 
A)  more of all goods than another person. 
B)  more of a good than another person. 
C)  a good for a lower dollar cost than another person. 
D)  a good for a lower opportunity cost than another person. 
E)  all goods for lower opportunity costs than another person.

Question 7

-Huey and Steve can grow potatoes or tomatoes.The table above shows the pounds of potatoes and tomatoes Huey and Steve can grow in a week.Based on the table,which of the following statements is correct?

Accepted Answer

A)  Steve has an absolute advantage in both potatoes and tomatoes. 
B)  Steve has a comparative advantage in both potatoes and tomatoes. 
C)  Steve has an absolute advantage in potatoes only. 
D)  Huey has an absolute advantage in potatoes only. 
E)  Huey has an absolute advantage in both potatoes and tomatoes. 
A)  Steve has an absolute advantage in both potatoes and tomatoes. 
B)  Steve has a comparative advantage in both potatoes and tomatoes. 
C)  Steve has an absolute advantage in potatoes only. 
D)  Huey has an absolute advantage in potatoes only. 
E)  Huey has an absolute advantage in both potatoes and tomatoes.

Question 8

The production possibilities frontier is a graph showing the

Accepted Answer

A)  exact point of greatest efficiency for producing goods and services. 
B)  tradeoff between free lunches. 
C)  maximum combinations of goods and services that can be produced. 
D)  minimum combinations of goods and services that can be produced. 
E)  resources available for the economy's production use. 
A)  exact point of greatest efficiency for producing goods and services. 
B)  tradeoff between free lunches. 
C)  maximum combinations of goods and services that can be produced. 
D)  minimum combinations of goods and services that can be produced. 
E)  resources available for the economy's production use.

Question 9

A movement from a point inside the production possibilities frontier to a point on the production possibilities frontier represents

Accepted Answer

A)  a tradeoff. 
B)  a free lunch. 
C)  full employment of labor but not capital. 
D)  unemployment of labor but not capital. 
E)  an infinite opportunity cost. 
A)  a tradeoff. 
B)  a free lunch. 
C)  full employment of labor but not capital. 
D)  unemployment of labor but not capital. 
E)  an infinite opportunity cost.

Question 10

Consider a production possibility frontier with jeans on the vertical axis and shoes on the horizontal axis.As a country moves along the frontier closer to the vertical axis,

Accepted Answer

A)  the opportunity cost of producing jeans increases. 
B)  the opportunity cost of producing shoes increases. 
C)  there are fewer tradeoffs. 
D)  inefficient production occurs. 
E)  the opportunity cost of producing jeans decreases. 
A)  the opportunity cost of producing jeans increases. 
B)  the opportunity cost of producing shoes increases. 
C)  there are fewer tradeoffs. 
D)  inefficient production occurs. 
E)  the opportunity cost of producing jeans decreases.

Question 11

-The figure above shows a nation's production possibilities frontier for apples and oranges.
a.What combination of goods is represented by point A?
b.What combination of goods is represented by point B?
c.Which point represents an unattainable combination of goods?
d.The movement from point C to point D results in a free lunch.What is the free lunch?

Accepted Answer

a.3 million bushels of apples and 3 mill

Question 12

-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 spends all her time assembling packets,how many can she assemble?

Accepted Answer

A)  32 
B)  40 
C)  64 
D)  160 
E)  22 
A)  32 
B)  40 
C)  64 
D)  160 
E)  22

Question 13

Having a comparative advantage means a nation can

Accepted Answer

A)  benefit from trade. 
B)  produce at a higher opportunity cost. 
C)  produce more of the good. 
D)  produce without incurring an opportunity cost. 
E)  produce the good at a point beyond its PPF. 
A)  benefit from trade. 
B)  produce at a higher opportunity cost. 
C)  produce more of the good. 
D)  produce without incurring an opportunity cost. 
E)  produce the good at a point beyond its PPF.

Question 14

Why is it likely that the United States has an absolute advantage in goods and yet it still ends up importing them from other countries?

Accepted Answer

The United States might have an absolute

Question 15

As an economy produces more of one of the goods on a bowed out production possibilities frontier,what happens to the opportunity cost of producing the good?

Accepted Answer

A)  It remains constant. 
B)  It decreases. 
C)  It increases. 
D)  It might increase, decrease, or remain constant depending on how much people value the additional units of the good. 
E)  None of these depicts what happens to opportunity cost. 
A)  It remains constant. 
B)  It decreases. 
C)  It increases. 
D)  It might increase, decrease, or remain constant depending on how much people value the additional units of the good. 
E)  None of these depicts what happens to opportunity cost.

Question 16

Points on the PPF are all

Accepted Answer

A)  unattainable and have fully employed resources. 
B)  free lunches. 
C)  inefficient. 
D)  attainable and have some unemployed resources. 
E)  production efficient. 
A)  unattainable and have fully employed resources. 
B)  free lunches. 
C)  inefficient. 
D)  attainable and have some unemployed resources. 
E)  production efficient.

Question 17

Production efficiency occurs

Accepted Answer

A)  anywhere inside or on the production possibilities frontier. 
B)  when the total cost of production is minimized. 
C)  at all points on the production possibilities frontier. 
D)  at only one point on the production possibilities frontier. 
E)  at all points inside the production possibilities frontier. 
A)  anywhere inside or on the production possibilities frontier. 
B)  when the total cost of production is minimized. 
C)  at all points on the production possibilities frontier. 
D)  at only one point on the production possibilities frontier. 
E)  at all points inside the production possibilities frontier.

Question 18

Scott and Cindy both produce only pizza and tacos.In one hour,Scott can produce 20 pizzas or 40 tacos.In one hour,Cindy can produce 30 pizzas or 40 tacos.Based on these data,

Accepted Answer

A)  Cindy has a comparative advantage at producing tacos. 
B)  Scott has a comparative advantage at producing tacos. 
C)  Cindy and Scott have the same comparative advantage in producing tacos. 
D)  neither Cindy nor Scott has a comparative advantage in producing tacos. 
E)  Cindy and Scott have the same comparative advantage in producing pizzas. 
A)  Cindy has a comparative advantage at producing tacos. 
B)  Scott has a comparative advantage at producing tacos. 
C)  Cindy and Scott have the same comparative advantage in producing tacos. 
D)  neither Cindy nor Scott has a comparative advantage in producing tacos. 
E)  Cindy and Scott have the same comparative advantage in producing pizzas.

Question 19

In one hour John can produce 20 loaves of bread or 16 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 20

The saying "There's no such thing as a free lunch," applies

Accepted Answer

A)  when there is some unemployment. 
B)  on the production possibilities frontier. 
C)  to unattainable combinations of goods and services. 
D)  when more of one good can be produced without decreasing production of another. 
E)  at all points inside the PPF. 
A)  when there is some unemployment. 
B)  on the production possibilities frontier. 
C)  to unattainable combinations of goods and services. 
D)  when more of one good can be produced without decreasing production of another. 
E)  at all points inside the PPF.

Specialization and trade make a country better off because with trade,the country can consume at a point

The production possibilities frontier is the boundary between the

The opportunity cost of a good increases as more of it is produced because

What is gained when people engage in specialization and trade?

To increase its economic growth,a nation should

"Comparative advantage" is defined as a situation in which one person can produce

-Huey and Steve can grow potatoes or tomatoes.The table above shows the pounds of potatoes and tomatoes Huey and Steve can grow in a week.Based on the table,which of the following statements is correct?

The production possibilities frontier is a graph showing the

A movement from a point inside the production possibilities frontier to a point on the production possibilities frontier represents

Consider a production possibility frontier with jeans on the vertical axis and shoes on the horizontal axis.As a country moves along the frontier closer to the vertical axis,

-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 spends all her time assembling packets,how many can she assemble?

Having a comparative advantage means a nation can

Why is it likely that the United States has an absolute advantage in goods and yet it still ends up importing them from other countries?

As an economy produces more of one of the goods on a bowed out production possibilities frontier,what happens to the opportunity cost of producing the good?

Points on the PPF are all

Production efficiency occurs

Scott and Cindy both produce only pizza and tacos.In one hour,Scott can produce 20 pizzas or 40 tacos.In one hour,Cindy can produce 30 pizzas or 40 tacos.Based on these data,

In one hour John can produce 20 loaves of bread or 16 cakes.In one hour Phyllis can produce 30 loaves of bread or 15 cakes.Which of the following statements is true?

The saying "There's no such thing as a free lunch," applies

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

Specialization and trade make a country better off because with trade,the country can consume at a point

The production possibilities frontier is the boundary between the

The opportunity cost of a good increases as more of it is produced because

What is gained when people engage in specialization and trade?

To increase its economic growth,a nation should

"Comparative advantage" is defined as a situation in which one person can produce

-Huey and Steve can grow potatoes or tomatoes.The table above shows the pounds of potatoes and tomatoes Huey and Steve can grow in a week.Based on the table,which of the following statements is correct?

The production possibilities frontier is a graph showing the

A movement from a point inside the production possibilities frontier to a point on the production possibilities frontier represents

Consider a production possibility frontier with jeans on the vertical axis and shoes on the horizontal axis.As a country moves along the frontier closer to the vertical axis,

-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 spends all her time assembling packets,how many can she assemble?

Having a comparative advantage means a nation can

Why is it likely that the United States has an absolute advantage in goods and yet it still ends up importing them from other countries?

As an economy produces more of one of the goods on a bowed out production possibilities frontier,what happens to the opportunity cost of producing the good?

Points on the PPF are all

Production efficiency occurs

Scott and Cindy both produce only pizza and tacos.In one hour,Scott can produce 20 pizzas or 40 tacos.In one hour,Cindy can produce 30 pizzas or 40 tacos.Based on these data,

In one hour John can produce 20 loaves of bread or 16 cakes.In one hour Phyllis can produce 30 loaves of bread or 15 cakes.Which of the following statements is true?

The saying "There's no such thing as a free lunch," applies

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