Question 1

-In the figure above, if the quantity of yogurt produced increases from 2 gallons an hour to 3 gallons an hour, the opportunity cost of a gallon of yogurt in terms of ice cream is

Accepted Answer

A)  1 gallon. 
B)  half a gallon. 
C)  3 gallons. 
D)  4 gallons.

Question 2

When production is efficient, .

Accepted Answer

A)  we can satisfy our all wants 
B)  the opportunity cost is as low as possible 
C)  our choice of the goods can be either on or within the production possibilities frontier 
D)  we face a tradeoff and incur an opportunity cost

Question 3

Consider a production possibilities frontier with corn on the vertical axis and cars on the horizontal. Unusually good weather for growing corn shifts

Accepted Answer

A)  the vertical intercept upward but does not shift the horizontal intercept. 
B)  the horizontal intercept rightward and the vertical intercept upward. 
C)  the horizontal intercept rightward but does not shift the vertical intercept. 
D)  neither the horizontal intercept nor the vertical intercept.

Question 4

A key factor that leads to economic growth is

Accepted Answer

A)  avoiding the opportunity cost of investment. 
B)  human capital accumulation. 
C)  increasing current consumption. 
D)  Both answers A and B are correct.

Question 5

A country produces only pencils and erasers. Pencil production is allocatively efficient if the marginal of a pencil equals the marginal _ _ of .

Accepted Answer

A)  cost; benefit; an eraser 
B)  benefit; benefit; an eraser 
C)  benefit; cost; a pencil 
D)  cost; cost; an eraser

Question 6

The opportunity cost of economic growth is

Accepted Answer

A)  present consumption that a nation gives up to accumulate capital 
B)  investment that a nation gives up to increase its economic growth. 
C)  future consumption that a nation gives up to consume more today 
D)  future consumption that a nation gets if it gives up some present consumption.

Question 7

Why does it make sense for economies to specialize according to comparative advantage and trade?

Accepted Answer

The answer of Why does it make sense for economies...

Question 8

-In the table above, country A is producing 4 units of X and 8 units of Y and country B is producing 4 units of X and 6 units of Y. Regarding the production of good X

Accepted Answer

A)  country B has a comparative advantage. 
B)  country A has an absolute advantage. 
C)  country B has an absolute advantage. 
D)  country A has a comparative advantage.

Question 9

-Refer to the production possibilities frontier in the figure above. Which of the following movements requires the largest opportunity cost, in terms of good Y forgone, per extra unit of good X?

Accepted Answer

A)  from point a to point b 
B)  from point d to point e 
C)  from point b to point c 
D)  from point c to point d

Question 10

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

Accepted Answer

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

Question 11

Suppose that the United States and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, will gain from that trade because
)

Accepted Answer

A)  only Cuba; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change. 
B)  neither country; their consumption possibilities will not change. 
C)  only the United States; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change. 
D)  both countries; consumption possibilities in both Cuba and the United States will lie outside their PPFs.

Question 12

-The above table shows production combinations on a country's production possibilities frontier. What is the opportunity cost of one unit of Y when the production of good Y increases from 16 to 28 units?

Accepted Answer

A)  4 units of good X 
B)  1/4 unit of good X 
C)  3 units of good X 
D)  There is no opportunity cost when moving from one point to another along a production possibilities frontier.

Question 13

-In the figure above, point D is

Accepted Answer

A)  production efficient and point A is not production efficient. 
B)  not production efficient and point B is production efficient. 
C)  less production efficient than point C. 
D)  production efficient and point B is not production efficient.

Question 14

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)  an absolute advantage in producing pop culture. 
C)  a comparative advantage in producing pop culture. 
D)  higher wages for producers of pop culture.

Question 15

Draw and describe a marginal benefit curve for slices of pizza where the opportunity cost of consuming a slice of pizza is measured as tacos forgone.

Accepted Answer

The answer of Draw and describe a marginal benefit curve...

Question 16

-In the table above, country B is producing 4 units of X and 6 units of Y. For country B, the opportunity cost of producing an additional unit of Y is

Accepted Answer

A)  3 units of X. 
B)  1/2 unit of X. 
C)  2/3 unit of X. 
D)  2 units of X.

Question 17

Explain how the production possibilities frontier illustrates scarcity.

Accepted Answer

The answer of Explain how the production possibilities frontier illustrates...

Question 18

If the marginal benefit from another computer exceeds the marginal cost of the computer, then to use resources allocatively efficiently,

Accepted Answer

A)  fewer resources should be used to produce computers. 
B)  if the marginal benefit exceeds the marginal cost by as much as possible, the efficient amount of resources are being used to produce computers. 
C)  more resources should be used to produce computers. 
D)  None of the above is correct because marginal benefit and marginal cost have nothing to do with using resources allocatively efficiently.

Question 19

If two countries specialize in the production of goods in which they have a comparative advantage, they can experience gains from trade.

Accepted Answer

A) True 
 B)False

Question 20

The table above shows the amounts of cloth and cheese that China and Pakistan can produce in an hour. Which country has the comparative advantage in cloth and which country has the comparative advantage in cheese?

Accepted Answer

The answer of The table above shows the amounts of...

Exam 2: The Economic Problem