Question 1

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.

Question 2

Based on the above table, as the production of pizza increases, the opportunity cost of pizza in terms of forgone cases of soda

Accepted Answer

A)  increases. 
B)  decreases. 
C)  does not change. 
D)  initially increases then decreases.

Question 3

Compare and contrast production efficiency and allocative efficiency.

Accepted Answer

The answer of Compare and contrast production efficiency and allocative...

Question 4

Explain the difference between marginal cost and marginal benefit.

Accepted Answer

The answer of Explain the difference between marginal cost and...

Question 5

-In the figure above, a point showing an inefficient production point is point

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 6

The United States uses tax funds to build and repair the interstate highway system and to provide health care services via Medicare. Suppose Medicare services are on the horizontal axis and highway miles are on the vertical axis of a PPF. If the government decides to reduce funding to Medicare, this change would be shown as

Accepted Answer

A)  a shift out of the PPF. 
B)  the PPF becoming flatter. 
C)  a movement down along the PPF. 
D)  a movement up along the PPF.

Question 7

If a country operates on its PPF, it achieves production efficiency.

Accepted Answer

A) True 
 B)False

Question 8

-Production points inside the PPF are

Accepted Answer

A)  efficient but not attainable. 
B)  efficient and attainable. 
C)  inefficient and not attainable. 
D)  inefficient and attainable.

Question 9

An efficient allocation of resources occurs when we

Accepted Answer

A)  produce the goods and services that people need. 
B)  cannot produce more of a good or service without giving up some other good or service that we value more highly. 
C)  produce the goods and services that people want. 
D)  cannot produce more of a good or service without giving up some other good or service that we need.

Question 10

Employees at Bank of America are good at providing banking services and workers at Ben & Jerry's are good at making ice cream. If some bankers are moved to making ice cream, we get a small increase in the amount of ice cream produced and a large decrease in the amount of banking services provided. If the PPF has banking services on the vertical axis and ice cream on the horizontal axis, the effect of the change reflects

Accepted Answer

A)  decreasing opportunity costs. 
B)  a bowed out PPF for banking services and ice cream. 
C)  production efficiency. 
D)  a shift to a flatter PPF.

Question 11

-Victor currently produces nuts and bolts at point a in the figure. Victor's marginal cost of producing an additional nut is

Accepted Answer

A)  1 bolt per nut. 
B)  1/2 bolt per nut. 
C)  8/6 bolts per nut. 
D)  8 bolts per nut.

Question 12

Technological progress makes the production possibilities frontier

Accepted Answer

A)  shift inward toward the origin. 
B)  become more linear and less bowed. 
C)  shift outward from the origin. 
D)  become less linear and more bowed.

Question 13

The production possibilities frontier is the boundary between

Accepted Answer

A)  those combinations of goods and services that can be produced and those that can be consumed. 
B)  those resources that are limited and those that are unlimited. 
C)  those combinations of goods and services that can be produced and those that cannot. 
D)  those wants that are limited and those that are unlimited.

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

Question 15

Which of the following statements can used to describe efficiency?
I. Efficiently using resources means that producers make the highest profits possible.
II. Using resources efficiently means that we cannot produce more of one good without producing less of another good that has a higher value.
III. Resource use is efficient when we produce goods and services that people value most highly.

Accepted Answer

A)  I only 
B)  I and II 
C)  II and III 
D)  I, II and III

Question 16

Marginal benefit curves slope

Accepted Answer

A)  upward because of increasing opportunity cost. 
B)  upward, but not because of increasing opportunity cost. 
C)  downward because of increasing opportunity cost. 
D)  downward, but not because of increasing opportunity cost.

Question 17

We are using resources efficiently if we can produce more of one good without producing less of some other good that we value more highly.

Accepted Answer

A) True 
 B)False

Question 18

Are all points inside the production possibilities frontier unattainable?

Accepted Answer

The answer of Are all points inside the production possibilities...

Question 19

Harry produces 2 balloon rides and 4 boat rides an hour. Harry could produce more balloon rides but to do so he must produce fewer boat rides. Harry is ________ his production possibilities frontier.

Accepted Answer

A)  producing inside 
B)  producing on 
C)  producing outside 
D)  producing either inside or on

Question 20

Which of the following is NOT illustrated by a production possibilities frontier?

Accepted Answer

A)  scarcity 
B)  opportunity cost 
C)  necessity for choice 
D)  who gets the goods

Exam 2: The Economic Problem

A point outside a production possibilities frontier indicates

Based on the above table, as the production of pizza increases, the opportunity cost of pizza in terms of forgone cases of soda

Compare and contrast production efficiency and allocative efficiency.

Explain the difference between marginal cost and marginal benefit.

-In the figure above, a point showing an inefficient production point is point

If a country operates on its PPF, it achieves production efficiency.

-Production points inside the PPF are

An efficient allocation of resources occurs when we

-Victor currently produces nuts and bolts at point a in the figure. Victor's marginal cost of producing an additional nut is

Technological progress makes the production possibilities frontier

The production possibilities frontier is the boundary between

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

Marginal benefit curves slope

We are using resources efficiently if we can produce more of one good without producing less of some other good that we value more highly.

Are all points inside the production possibilities frontier unattainable?

Harry produces 2 balloon rides and 4 boat rides an hour. Harry could produce more balloon rides but to do so he must produce fewer boat rides. Harry is ________ his production possibilities frontier.

Which of the following is NOT illustrated by a production possibilities frontier?