Question 1

-Jean can either type her term paper or create Web pages during the limited time she has available. The table above shows her PPF.
a) Can Jean type 90 pages and create 2 Web pages?
b) Use the above numbers to calculate the opportunity cost of a typed page as she increases her time typing and decreases time creating a Web page.

Accepted Answer

The answer of 
-Jean can either type her term paper...

Question 2

We have achieved production efficiency if we can produce more of one good without producing less of some other good.

Accepted Answer

A) True 
 B)False

Question 3

-A PPF, such as the one above, that bows outward illustrates

Accepted Answer

A)  decreasing opportunity cost. 
B)  increasing opportunity cost. 
C)  that technology is improving. 
D)  that productivity is falling.

Question 4

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. What is the opportunity cost of one can of cola if Sweet-tooth Land moves from point C to point B?

Accepted Answer

A)  20 chocolate bars per can of cola 
B)  10 chocolate bars per can of cola 
C)  2 chocolate bars per can of cola 
D)  1/2 chocolate bars per can of cola

Question 5

-In the figure above, the allocatively efficient output of computers is

Accepted Answer

A)  2 million per year. 
B)  3 million per year. 
C)  4 million per year. 
D)  the largest amount possible.

Question 6

Opportunity cost is best defined as

Accepted Answer

A)  the amount of money that an individual is willing to pay to purchase a good that means a great deal to that person. 
B)  the amount of money lost by one individual in an exchange process so that another individual might gain. 
C)  the highest-valued alternative that is forgone when choosing among various alternatives. 
D)  a situation in which one individual cannot have an absolute advantage over another individual in the production of all goods.

Question 7

Suppose Joe can prepare 20 sandwiches or 10 pizzas in an hour and Beth can produce 36 sandwiches or 27 pizzas. The concept of comparative advantage concludes that

Accepted Answer

A)  Beth should produce both goods because she can produce more of both goods in an hour than can Joe. 
B)  Beth should produce sandwiches and Joe should produce pizza. 
C)  Beth should produce pizza and Joe should produce sandwiches. 
D)  Beth should produce both goods and Joe should produce sandwiches.

Question 8

Households are buyers in factor markets and sellers in goods markets.

Accepted Answer

A) True 
 B)False

Question 9

-In the above figure, if 2 million computers are produced per year then the ________ should be produced to achieve the allocatively efficient use of resources

Accepted Answer

A)  marginal cost of a computer exceeds the marginal benefit of a computer, so more computers 
B)  marginal cost of a computer exceeds the marginal benefit of a computer, so fewer computers 
C)  marginal benefit of a computer exceeds the marginal cost of a computer, so more computers 
D)  marginal benefit of a computer exceeds the marginal cost of a computer, so fewer computers

Question 10

One of the largest categories of exports from the United States is now pop culture: movies, music, TV programming, and videos. A direct conclusion from this information is that, compared to other countries, the United States has

Accepted Answer

A)  lower wages for producers of pop culture. 
B)  higher wages for producers of pop culture. 
C)  a higher opportunity cost of producing pop culture. 
D)  a lower opportunity cost of producing pop culture.

Question 11

-Before the first Gulf War in 1991, Kuwait had the capacity to produce a certain amount of oil from its oil wells. After the war, it found that capacity greatly diminished because the oil wells had been set on fire. Draw Kuwait's PPF before and after the war, assuming that the only two goods produced are oil and food. Further assume that setting the oil wells on fire did not affect Kuwait's ability to produce food. Explain why the PPF before the war is different from the PPF after the war.

Accepted Answer

The answer of 
-Before the first Gulf War in 1991,...

Question 12

Susan likes to drink sodas. The ________ soda Susan drinks, the ________ of the last soda.

Accepted Answer

A)  more; higher the marginal benefit 
B)  less; higher the opportunity cost 
C)  less; lower the marginal benefit 
D)  more; lower the marginal benefit

Question 13

-The above table shows production combinations on a country's production possibilities frontier. The opportunity cost of increasing the production of Y from 16 to 28 units is ________ units of good X per unit of good Y.

Accepted Answer

A)  12 
B)  6 
C)  3 
D)  There is no opportunity cost when moving from one point to another along a production possibilities frontier so none of the above answers is correct.

Question 14

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

Accepted Answer

The answer of "If Mexico is currently operating at a...

Question 15

Country A Country B 
-Both Mergatroid and the Geebocks produce only gizmos and widgets. It is possible for Mergatroid to have

Accepted Answer

A)  an absolute and a comparative advantage in both products. 
B)  an absolute but not a comparative advantage in both products. 
C)  a comparative but not an absolute advantage in both products. 
D)  neither a comparative nor an absolute advantage in both products.

Question 16

-Production efficiency means that

Accepted Answer

A)  scarcity is no longer a problem. 
B)  producing more of one good is possible only if the production of some other good is decreased. 
C)  as few resources as possible are being used in production. 
D)  producing another unit of the good has no opportunity cost.

Question 17

-The above table shows production combinations on a country's production possibilities frontier. Which of the following is an example of a point that is unattainable?

Accepted Answer

A)  0 units of good X and 40 units of good Y 
B)  6 units of good X and 28 units of good Y 
C)  10 units of good X and 16 units of good Y 
D)  3 units of good X and 35 units of good Y

Question 18

The more we have of a good or service, the smaller is its marginal benefit and the less we are willing to pay for an additional unit of it.

Accepted Answer

A) True 
 B)False

Question 19

Betty and Ann live on a desert island. With a day's labor, Ann can produce 6 fish or 4 coconuts; Betty can produce 3 fish or 1 coconut. Betty's opportunity cost of producing 1 fish is ________, and she should specialize in the production of ________.

Accepted Answer

A)  1/3 coconut per fish; fish 
B)  2/3 coconut per fish; coconuts 
C)  1 coconut per fish; fish 
D)  4 coconuts per fish; fish

Question 20

A point outside a production possibilities frontier indicates

Accepted Answer

A)  that resources are not being used efficiently. 
B)  an output combination that society cannot attain given its current level of resources and technology. 
C)  that resources are being used very efficiently. 
D)  that both goods are characterized by increasing costs.

Exam 2: The Economic Problem

We have achieved production efficiency if we can produce more of one good without producing less of some other good.

-A PPF, such as the one above, that bows outward illustrates

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. What is the opportunity cost of one can of cola if Sweet-tooth Land moves from point C to point B?

-In the figure above, the allocatively efficient output of computers is

Opportunity cost is best defined as

Suppose Joe can prepare 20 sandwiches or 10 pizzas in an hour and Beth can produce 36 sandwiches or 27 pizzas. The concept of comparative advantage concludes that

Households are buyers in factor markets and sellers in goods markets.

-In the above figure, if 2 million computers are produced per year then the ________ should be produced to achieve the allocatively efficient use of resources

One of the largest categories of exports from the United States is now pop culture: movies, music, TV programming, and videos. A direct conclusion from this information is that, compared to other countries, the United States has

Susan likes to drink sodas. The soda Susan drinks, the of the last soda.

-The above table shows production combinations on a country's production possibilities frontier. The opportunity cost of increasing the production of Y from 16 to 28 units is ________ units of good X per unit of good Y.

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

Country A Country B -Both Mergatroid and the Geebocks produce only gizmos and widgets. It is possible for Mergatroid to have

-Production efficiency means that

-The above table shows production combinations on a country's production possibilities frontier. Which of the following is an example of a point that is unattainable?

The more we have of a good or service, the smaller is its marginal benefit and the less we are willing to pay for an additional unit of it.

Betty and Ann live on a desert island. With a day's labor, Ann can produce 6 fish or 4 coconuts; Betty can produce 3 fish or 1 coconut. Betty's opportunity cost of producing 1 fish is , and she should specialize in the production of .

A point outside a production possibilities frontier indicates