Question 1

-The figure above shows a production possibilities frontier.In the figure,the economy faces a tradeoff when ________ cell phones and ________ DVDs.are produced.

Accepted Answer

A)  3 million; 9 million 
B)  2 million; 9 million 
C)  3 million; 8 million 
D)  4.5 million; no 
E)  5 million; 15 million 
A)  3 million; 9 million 
B)  2 million; 9 million 
C)  3 million; 8 million 
D)  4.5 million; no 
E)  5 million; 15 million

Question 2

-The figure above shows how the PPF for cell phones and new cell-phone factories can expand.In the figure,if the economy produced 4 million cell phones using the resources efficiently,the PPF would

Accepted Answer

A)  expand, but not as far as shown in the figure. 
B)  not expand. 
C)  expand farther than shown in the figure. 
D)  expand along the vertical axis and not along the horizontal axis. 
E)  expand evenly along both axes. 
A)  expand, but not as far as shown in the figure. 
B)  not expand. 
C)  expand farther than shown in the figure. 
D)  expand along the vertical axis and not along the horizontal axis. 
E)  expand evenly along both axes.

Question 3

If a country is operating at a point of production efficiency,

Accepted Answer

A)  it enjoys a free lunch when increasing production. 
B)  it produces on its production possibilities frontier. 
C)  it must specialize in the production of a good. 
D)  it operates on its trade line. 
E)  it cannot be producing at its point of comparative advantage. 
A)  it enjoys a free lunch when increasing production. 
B)  it produces on its production possibilities frontier. 
C)  it must specialize in the production of a good. 
D)  it operates on its trade line. 
E)  it cannot be producing at its point of comparative advantage.

Question 4

Which of the following is the best definition of economic growth?

Accepted Answer

A)  The investment in capital and consumption goods by an economy 
B)  The opportunity cost of capital 
C)  The opportunity cost of consumption 
D)  Increased development of land and entrepreneurship 
E)  The sustained expansion of production possibilities 
A)  The investment in capital and consumption goods by an economy 
B)  The opportunity cost of capital 
C)  The opportunity cost of consumption 
D)  Increased development of land and entrepreneurship 
E)  The sustained expansion of production possibilities

Question 5

If an economy cannot produce more of one good without producing less of another good,this implies that which of the following has been achieved?

Accepted Answer

A)  allocative efficiency 
B)  minimum marginal cost 
C)  PPF efficiency 
D)  production efficiency 
E)  maximum marginal benefit 
A)  allocative efficiency 
B)  minimum marginal cost 
C)  PPF efficiency 
D)  production efficiency 
E)  maximum marginal benefit

Question 6

Comparative advantage is directly related to which of the following concepts?

Accepted Answer

A)  productivity 
B)  efficiency 
C)  opportunity cost 
D)  competition 
E)  fairness 
A)  productivity 
B)  efficiency 
C)  opportunity cost 
D)  competition 
E)  fairness

Question 7

Assume that an association of young workers has lobbied Congress to require that all workers retire once they reach the age of fifty.What impact would this law have on the nation's production possibilities frontier?

Accepted Answer

A)  no impact at all 
B)  The level of unemployment would decrease so the production possibilities frontier would shift outward. 
C)  The nation would move to a new position on its production possibilities frontier but the frontier itself would not shift. 
D)  The production possibilities frontier would shift inward. 
E)  The number of young workers would increase so the production possibilities frontier would shift outward. 
A)  no impact at all 
B)  The level of unemployment would decrease so the production possibilities frontier would shift outward. 
C)  The nation would move to a new position on its production possibilities frontier but the frontier itself would not shift. 
D)  The production possibilities frontier would shift inward. 
E)  The number of young workers would increase so the production possibilities frontier would shift outward.

Question 8

The figure above shows Liz's and Joe's production possibilities for Salads and Smoothies.
-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 9

Economic growth depends upon which of the following?
i.Improving the quality of labor
ii.Technological advancement
iii.Increasing the amount of capital

Accepted Answer

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

Question 10

On a typical acre of land,Iowa can produce either 300 pounds of beef or 100 pounds of soybeans in a year.On a typical acre of land,Nebraska can produce 150 pounds of beef or 200 pounds of soybeans.Which of the following is correct?

Accepted Answer

A)  Nebraska should produce soybeans because its opportunity cost of soybeans is lower. 
B)  Nebraska should produce soybeans because its opportunity cost of soybeans is higher. 
C)  Iowa should produce soybeans because its opportunity cost of soybeans is lower. 
D)  Iowa should produce soybeans because its opportunity cost of soybeans is higher. 
E)  Nebraska and Iowa should divide each acre evenly between soybean and beef production. 
A)  Nebraska should produce soybeans because its opportunity cost of soybeans is lower. 
B)  Nebraska should produce soybeans because its opportunity cost of soybeans is higher. 
C)  Iowa should produce soybeans because its opportunity cost of soybeans is lower. 
D)  Iowa should produce soybeans because its opportunity cost of soybeans is higher. 
E)  Nebraska and Iowa should divide each acre evenly between soybean and beef production.

Question 11

-Suppose Puerto Rico and Hawaii currently have the same production possibilities so that the above figure is the PPF for hotels and consumption goods in the two areas.Hotels are a capital good that,once built,will help produce still more consumption goods.If Puerto Rico produces more hotels than Hawaii,

Accepted Answer

A)  Hawaii's PPF will shift outward further than Puerto Rico's PPF. 
B)  Hawaii's PPF will shift inward. 
C)  Puerto Rico's PPF will not shift. 
D)  Puerto Rico's and Hawaii's PPF will shift outward by the same amount. 
E)  Puerto Rico's PPF will shift outward further than Hawaii's PPF. 
A)  Hawaii's PPF will shift outward further than Puerto Rico's PPF. 
B)  Hawaii's PPF will shift inward. 
C)  Puerto Rico's PPF will not shift. 
D)  Puerto Rico's and Hawaii's PPF will shift outward by the same amount. 
E)  Puerto Rico's PPF will shift outward further than Hawaii's PPF.

Question 12

-The above figure shows the production possibility frontier for a country.What is the opportunity cost to move from point D to point B?

Accepted Answer

A)  12 tons of rice 
B)  15 thousand bottles of wine 
C)  6 thousand bottles of wine 
D)  9 thousand bottles of wine 
E)  Nothing, it is a free lunch. 
A)  12 tons of rice 
B)  15 thousand bottles of wine 
C)  6 thousand bottles of wine 
D)  9 thousand bottles of wine 
E)  Nothing, it is a free lunch.

Question 13

-The figure above shows the production possibilities frontier for a country.In order for it to produce at point E,the

Accepted Answer

A)  country would need to acquire more resources and/or more advanced technology. 
B)  production of compact cars would need to decrease. 
C)  production of SUVs would need to decrease. 
D)  country would need to use its resources more efficiently. 
E)  country would need to determine that compact cars and SUVs are equally important to it. 
A)  country would need to acquire more resources and/or more advanced technology. 
B)  production of compact cars would need to decrease. 
C)  production of SUVs would need to decrease. 
D)  country would need to use its resources more efficiently. 
E)  country would need to determine that compact cars and SUVs are equally important to it.

Question 14

-The table above gives four production possibilities for airplanes and cruise ships.In possibility A,how many resources are devoted to the production of airplanes?

Accepted Answer

A)  0 
B)  few 
C)  most 
D)  all 
E)  It is impossible to tell without more information about the prices of airplanes and cruise ships. 
A)  0 
B)  few 
C)  most 
D)  all 
E)  It is impossible to tell without more information about the prices of airplanes and cruise ships.

Question 15

As technology advances,

Accepted Answer

A)  all opportunity costs decrease. 
B)  the PPF shifts outward. 
C)  a country moves toward the midpoint along its PPF and can produce more of both goods. 
D)  all opportunity costs increase. 
E)  the PPF shifts inward because unemployment occurs. 
A)  all opportunity costs decrease. 
B)  the PPF shifts outward. 
C)  a country moves toward the midpoint along its PPF and can produce more of both goods. 
D)  all opportunity costs increase. 
E)  the PPF shifts inward because unemployment occurs.

Question 16

-The above figure shows the production possibility frontier for an economy.The point or points that are attainable are

Accepted Answer

A)  points B and C. 
B)  points A, B, and C. 
C)  point E. 
D)  points A, B, C, and D. 
E)  points A and D. 
A)  points B and C. 
B)  points A, B, and C. 
C)  point E. 
D)  points A, B, C, and D. 
E)  points A and D.

Question 17

While moving along a production possibilities frontier,the amount of labor ________,the amount of capital ________,and the level of technology ________.

Accepted Answer

A)  is fixed; is fixed; varies 
B)  varies; is fixed; varies 
C)  varies; is fixed; is fixed 
D)  is fixed; is fixed; is fixed 
E)  varies; varies; varies 
A)  is fixed; is fixed; varies 
B)  varies; is fixed; varies 
C)  varies; is fixed; is fixed 
D)  is fixed; is fixed; is fixed 
E)  varies; varies; varies

Question 18

A country produces only apples and bananas.Moving from point A to point B along its production possibilities frontier,5 apples are gained and 4 bananas are forgone.What is the opportunity cost of an apple?

Accepted Answer

A)  4 bananas 
B)  5/4 of a banana 
C)  4/5 of a banana 
D)  1 apple 
E)  None of the above answers is correct. 
A)  4 bananas 
B)  5/4 of a banana 
C)  4/5 of a banana 
D)  1 apple 
E)  None of the above answers is correct.

Question 19

-In the above figure,Jack's opportunity cost of producing 1 gallon of bottled water is ________ of soda.

Accepted Answer

A)  2 gallons 
B)  1/2 of a gallon 
C)  6 gallons 
D)  1/4 of a gallon 
E)  1 gallon 
A)  2 gallons 
B)  1/2 of a gallon 
C)  6 gallons 
D)  1/4 of a gallon 
E)  1 gallon

Question 20

What is the relationship between the bowed out shape of the production possibilities frontier and the increasing opportunity cost of a good as more of it is produced?

Accepted Answer

The production possibilities frontier is

-The figure above shows a production possibilities frontier.In the figure,the economy faces a tradeoff when cell phones and DVDs.are produced.

-The figure above shows how the PPF for cell phones and new cell-phone factories can expand.In the figure,if the economy produced 4 million cell phones using the resources efficiently,the PPF would

If a country is operating at a point of production efficiency,

Which of the following is the best definition of economic growth?

If an economy cannot produce more of one good without producing less of another good,this implies that which of the following has been achieved?

Comparative advantage is directly related to which of the following concepts?

Assume that an association of young workers has lobbied Congress to require that all workers retire once they reach the age of fifty.What impact would this law have on the nation's production possibilities frontier?

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

Economic growth depends upon which of the following? i.Improving the quality of labor ii.Technological advancement iii.Increasing the amount of capital

On a typical acre of land,Iowa can produce either 300 pounds of beef or 100 pounds of soybeans in a year.On a typical acre of land,Nebraska can produce 150 pounds of beef or 200 pounds of soybeans.Which of the following is correct?

-The above figure shows the production possibility frontier for a country.What is the opportunity cost to move from point D to point B?

-The figure above shows the production possibilities frontier for a country.In order for it to produce at point E,the

-The table above gives four production possibilities for airplanes and cruise ships.In possibility A,how many resources are devoted to the production of airplanes?

As technology advances,

-The above figure shows the production possibility frontier for an economy.The point or points that are attainable are

While moving along a production possibilities frontier,the amount of labor ,the amount of capital ,and the level of technology .

A country produces only apples and bananas.Moving from point A to point B along its production possibilities frontier,5 apples are gained and 4 bananas are forgone.What is the opportunity cost of an apple?

-In the above figure,Jack's opportunity cost of producing 1 gallon of bottled water is ________ of soda.

What is the relationship between the bowed out shape of the production possibilities frontier and the increasing opportunity cost of a good as more of it is produced?

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

-The figure above shows a production possibilities frontier.In the figure,the economy faces a tradeoff when ________ cell phones and ________ DVDs.are produced.

-The figure above shows how the PPF for cell phones and new cell-phone factories can expand.In the figure,if the economy produced 4 million cell phones using the resources efficiently,the PPF would

If a country is operating at a point of production efficiency,

Which of the following is the best definition of economic growth?

If an economy cannot produce more of one good without producing less of another good,this implies that which of the following has been achieved?

Comparative advantage is directly related to which of the following concepts?

Assume that an association of young workers has lobbied Congress to require that all workers retire once they reach the age of fifty.What impact would this law have on the nation's production possibilities frontier?

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

Economic growth depends upon which of the following? i.Improving the quality of labor ii.Technological advancement iii.Increasing the amount of capital

On a typical acre of land,Iowa can produce either 300 pounds of beef or 100 pounds of soybeans in a year.On a typical acre of land,Nebraska can produce 150 pounds of beef or 200 pounds of soybeans.Which of the following is correct?

-The above figure shows the production possibility frontier for a country.What is the opportunity cost to move from point D to point B?

-The figure above shows the production possibilities frontier for a country.In order for it to produce at point E,the

-The table above gives four production possibilities for airplanes and cruise ships.In possibility A,how many resources are devoted to the production of airplanes?

As technology advances,

-The above figure shows the production possibility frontier for an economy.The point or points that are attainable are

While moving along a production possibilities frontier,the amount of labor ________,the amount of capital ________,and the level of technology ________.

A country produces only apples and bananas.Moving from point A to point B along its production possibilities frontier,5 apples are gained and 4 bananas are forgone.What is the opportunity cost of an apple?

-In the above figure,Jack's opportunity cost of producing 1 gallon of bottled water is ________ of soda.

What is the relationship between the bowed out shape of the production possibilities frontier and the increasing opportunity cost of a good as more of it is produced?

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

-The figure above shows a production possibilities frontier.In the figure,the economy faces a tradeoff when cell phones and DVDs.are produced.

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

While moving along a production possibilities frontier,the amount of labor ,the amount of capital ,and the level of technology .