Question 1

$$\begin{array} { c c c } 
\text { Possibility } & \begin{array} { c } 
\text { Fish } \
\text { (pounds) }
\end{array} & \begin{array} { c } 
\text { Fruit } \
\text { (pounds) }
\end{array} \
\hline \text { A } & 37 & 56 \
\text { B } & 31 & 78 \
\text { C } & 20 & 90 \
\text { D } & 9 & 99
\end{array}$$
-Robinson Crusoe divides his time between catching fish and gathering fruit.Part of his production possibilities frontier is given in the above table.Mr.Crusoe,while lonesome,is efficient and always stays on his PPF.Mr.Crusoe is consuming 20 pounds of fish.Then he decides to slowly become a vegetarian and decrease his consumption of fish to 9 pounds.This decision means that Mr.Crusoe will

Accepted Answer

A)  incur an opportunity cost of 9 pounds of fruit. 
B)  incur an opportunity cost of 20 pounds of fish. 
C)  be able to enjoy a gain of 9 pounds of fruit. 
D)  incur an opportunity cost of 99 pounds of fruit. 
E)  incur an opportunity cost of 9 pounds of fish.

Question 2

$$\begin{array} { c c c } 
\hline \text { Possibility } & \text { Robots } & \text { Pizza } \
\hline A & 0 & 40 \
B & 1 & 39 \
\text { C } & 2 & 37 \
D & 3 & 34 \
E & 4 & 30 \
F & 5 & 20 \
G & 6 & 0
\end{array}$$
-The table above shows a nation's production possibilities frontier.If the nation wants to produce 4 robots and 34 pizzas,

Accepted Answer

A)  it will shift the production possibilities frontier. 
B)  the opportunity cost is 9 pizzas. 
C)  the nation will be producing inefficiently. 
D)  it will be unable to do so because the production point is unattainable. 
E)  the nation will then be producing at a production efficient point.

Question 3

The gains from trade include:
i.lower prices from competition
ii.greater output from specialization
iii.greater variety of goods and services available

Accepted Answer

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

Question 4

-Suppose that Germany,France,Estonia,and India all have the same production possibilities,illustrated in the figure above.Based on the production points in the figure,Germany is most likely to expand its PPF to

Accepted Answer

A)  PPF₃ or PPF₂. 
B)  PPF₃. 
C)  PPF₁. 
D)  PPF₁. or PPF₂. 
E)  PPF₂.

Question 5

During a time of high unemployment,a country can increase the production of one good or service

Accepted Answer

A)  without decreasing the production of something else. 
B)  but must decrease the production of something else. 
C)  and must increase the production of something else. 
D)  by using resources in the production process twice. 
E)  but the opportunity cost is infinite.

Question 6

-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.

Question 7

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

Question 8

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.

Question 9

-The figure above shows a nation's production possibilities frontier.In the figure,point A shows

Accepted Answer

A)  the maximum quantity of pizza that can be produced. 
B)  the minimum quantity of pizza that the society must produce. 
C)  an unattainable point. 
D)  an attainable point with unemployed resources. 
E)  More information is needed to determine which of the above answers is correct.

Question 10

Gains from trade

Accepted Answer

A)  occur when one party to the trade has an absolute advantage in both goods. 
B)  result in being able to consume beyond the trading individuals' production possibilities frontiers. 
C)  occur when people do not specialize. 
D)  occur when opportunity costs are equal. 
E)  always benefit one party but not the other party of any trade.

Question 11

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.

Question 12

A bowed out PPF reflects which of the following ideas?
i.Increasing opportunity cost
ii.Resources are not equally productive in all activities.
iii.Prices of goods increase over time.

Accepted Answer

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

Question 13

Describe the differences between tradeoffs and free lunches in terms of a PPF.

Accepted Answer

The answer of Describe the differences between tradeoffs and free...

Question 14

-The figure above shows a production possibilities frontier.In the figure,when the economy moves from point E to point D,what is the opportunity cost of a DVD?

Accepted Answer

A)  0.25 cell phones 
B)  0.5 cell phones 
C)  1 cell phone 
D)  4 cell phones 
E)  zero

Question 15

Explain why specialization and trade increases a country's overall level of consumption.

Accepted Answer

The answer of Explain why specialization and trade increases a...

Question 16

If a country has

Accepted Answer

A)  an absolute advantage in producing a good, it definitely also has a comparative advantage in producing that good. 
B)  an absolute advantage in producing a good, it might or might not have a comparative advantage in producing that good. 
C)  a comparative advantage in production of a good, it must also have an absolute advantage in producing that good. 
D)  an absolute advantage in producing a good, it definitely will not have a comparative advantage in producing that good. 
E)  None of the above answers is correct.

Question 17

"When a person is more productive in producing a good or service than another person,the first person has the comparative advantage in producing the good." Is this assertion correct or incorrect? Explain your answer.

Accepted Answer

The answer of "When a person is more productive in...

Question 18

$$\begin{array} { l | c c c } 
& \begin{array} { l } 
\text { Potatoes } \
\text { (pounds) }
\end{array} & \begin{array} { c } 
 \text { Tomatoes } \
\text { (pounds) }
\end{array} \
\hline \text { Huey } & 12 & \text { or } & 8 \
\text { Steve } & 6 & \text { or } & 2
\end{array}$$
-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.

Question 19

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

Accepted Answer

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

Question 20

Hank requires 1 hour to cut the grass and 3 hours to clean the house.His sister Holly requires 1 hour to cut the grass and 4 hours to clean the house.Which of the following statements is true?

Accepted Answer

A)  Hank has a comparative advantage in both cutting the grass and cleaning the house. 
B)  Hank and Holly both have a comparative advantage in cutting the grass. 
C)  Hank has a lower opportunity cost of cutting the grass. 
D)  Hank has an absolute advantage in both cutting the grass and cleaning the house. 
E)  Holly has a comparative advantage in cutting the grass.

Exam 3: The Economic Problem

The gains from trade include: i.lower prices from competition ii.greater output from specialization iii.greater variety of goods and services available