Question 1

-The table above lists six points on the production possibilities frontier for grain and cars. Given this information, which of the following combinations is unattainable?

Accepted Answer

A)  6 tons of grain and 18 cars 
B)  4 tons of grain and 26 cars 
C)  2 tons of grain and 27 cars 
D)  7 tons of grain and 10 cars

Question 2

-In the above figure, at point a what is the opportunity cost of producing one more audio tape?

Accepted Answer

A)  1 video tape per audio tape 
B)  2 video tapes per audio tape 
C)  14 video tapes per audio tape 
D)  There is no opportunity cost.

Question 3

A person has a comparative advantage in an activity whenever he or she

Accepted Answer

A)  has an absolute advantage in the activity. 
B)  can perform the activity at a lower opportunity cost than can anyone else. 
C)  can do the activity in less time than anyone else. 
D)  can do everything better than anyone else.

Question 4

Marginal benefit is the benefit ________ one more unit of the good and ________ of the good increases.

Accepted Answer

A)  of producing; increases as production 
B)  of producing; decreases as production 
C)  from consuming; increases as consumption 
D)  from consuming; decreases as consumption

Question 5

A tradeoff is

Accepted Answer

A)  represented by a point inside a PPF. 
B)  represented by a point outside a PPF. 
C)  a constraint that requires giving up one thing to get another. 
D)  a transaction at a price either above or below the equilibrium price.

Question 6

-Two countries, Alpha and Beta, have identical production possibilities frontiers illustrated above. If Alpha produces at point a and Beta produces at point b, then ________.

Accepted Answer

A)  Beta's economic growth rate will exceed Alpha's 
B)  Alpha consumes less than Beta today, but it will grow faster than Beta 
C)  Alpha's and Beta's economic growth rates will be the same 
D)  Beta's future consumption will be greater than Alpha's

Question 7

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 8

Moving along a PPF, marginal cost is

Accepted Answer

A)  the cost of producing the first unit of a good or service. 
B)  the total cost, less the production of the other good or service. 
C)  greater than the opportunity cost. 
D)  equal to the opportunity cost of producing one more unit of a good or service.

Question 9

Opportunity cost is represented on the production possibilities frontier by

Accepted Answer

A)  attainable and unattainable points. 
B)  efficient and inefficient points. 
C)  the amount of good Y forgone when more of good X is produced. 
D)  technological progress.

Question 10

-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 11

-In the figure above, point D is

Accepted Answer

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

Question 12

-The table above shows the production possibilities frontier for the nation of Isolanda.
a) Find the marginal cost of a pound of fish using the above PPF.
b) How does the marginal cost of a pound of fish change as more fish are caught?

Accepted Answer

The answer of 
-The table above shows the production possibilities...

Question 13

-In one day, Brandon can either plow 10 acres or plant 20 acres. In one day, Christopher can either plow 14 acres or plant 14 acres. Brandon and Christopher can

Accepted Answer

A)  gain from exchange if Brandon specializes in planting and Christopher specializes in plowing. 
B)  gain from exchange if Brandon specializes in plowing and Christopher specializes in planting. 
C)  exchange, but only Brandon will gain from the exchange. 
D)  exchange, but only Christopher will gain from the exchange.

Question 14

If production point is inside the production possibilities frontier

Accepted Answer

A)  it is not possible to produce more of both goods. 
B)  production is inefficient. 
C)  in order to produce more of one good, less of the other must be produced. 
D)  production is in the "unattainable" region.

Question 15

The opportunity cost of economic growth is

Accepted Answer

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

Question 16

The nation's production possibilities frontier is bowed outward. Suppose that the government decides to increase the production of armaments by $20 billion, and that as a result the output of consumer goods falls by $20 billion. If a further $20 billion increase beyond the initial $20 billion increase in armaments output is sought, we can expect that the output of consumer goods and services will fall further by

Accepted Answer

A)  less than $20 billion. 
B)  $20 billion. 
C)  more than $20 billion. 
D)  There is not enough information to determine the answer.

Question 17

Economic growth

Accepted Answer

A)  creates unemployment. 
B)  has no opportunity cost. 
C)  shifts the PPF outward. 
D)  makes it more difficult for a nation to produce on its PPF.

Question 18

-In the figure above, suppose that Mac and Izzie trade and reach point c. Then

Accepted Answer

A)  Mac produces outside his production possibilities frontier. 
B)  Izzie produces outside her production possibilities frontier. 
C)  Mac and Izzie both produce outside their production possibilities frontiers. 
D)  neither Mac nor Izzie produce outside their production possibilities frontiers.

Question 19

-In the figure above, at the allocatively efficient level of computer production the marginal cost of producing a computer is

Accepted Answer

A)  0 televisions per computer. 
B)  between 0 and 3 televisions per computer. 
C)  3 televisions per computer. 
D)  more than 3 televisions per computer.

Question 20

Suppose that in an hour Joe can prepare 10 sandwiches or 5 pizzas. The opportunity cost of Joe producing one sandwich is

Accepted Answer

A)  2 pizzas. 
B)  1/2 pizza. 
C)  5 pizzas. 
D)  1 pizza.

Exam 2: The Economic Problem