Question 1

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

Accepted Answer

The statement is true. Points within the...

Question 2

A point inside a production possibilities frontier

Accepted Answer

A)   could indicate that resources are misallocated.
B)   is more efficient than a point on the production possibilities frontier.
C)   reflects the fact that more technology needs to be developed to fully employ all resources.
D)   implies that too much labor and not enough capital is being used.

Question 3

-Two nations can produce computers and software in the amounts given in the table above. Does either nation have an absolute advantage in producing the products? Which nation has a comparative advantage in computers? Which nation has a comparative advantage in software? Explain your answers.

Accepted Answer

Nation B has an absolute advantage in pr...

Question 4

A circular flow diagram shows the flows from the goods and resources markets.

Accepted Answer

A) True 
 B)False

Question 5

Country A Country B
 
-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)   1/2 unit of X per unit of Y.
B)   2/3 unit of X per unit of Y.
C)   2 units of X per unit of Y.
D)   3 units of X per unit of Y.

Question 6

Draw a production possibilities frontier between beans and peas. Label the unattainable points, the attainable points with fully employed resources, and the attainable points with unemployed resources.

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> The production possibilities frontier, ...

Question 7

The production possibilities frontier bows outward because

Accepted Answer

A)   opportunity costs are decreasing as the production of a good increases.
B)   opportunity costs are increasing as the production of a good increases.
C)   opportunity costs are fixed as the production of a good increases.
D)   resources are of uniform quality.

Question 8

Allocative efficiency occurs when it is

Accepted Answer

A)   possible to produce more of one good without giving up the production of some other good.
B)   possible to produce more of all goods.
C)   not possible to produce more of one good without giving up the production of some other good that is valued less highly.
D)   not possible to produce more of one good without giving up the production of some other good that is valued more highly.

Question 9

In a world lacking property rights, it would be ________ to realize the gains from trade and there would be ________ specialization.

Accepted Answer

A)   easier; less
B)   easier; more
C)   harder; less
D)   harder; more

Question 10

Property rights facilitate the development of trade.

Accepted Answer

A) True 
 B)False

Question 11

As long as the marginal benefit from a good is greater than its marginal cost, an economy is operating efficiently.

Accepted Answer

A) True 
 B)False

Question 12

-In the above figure, which point represents an unattainable production combination of the two goods?

Accepted Answer

A)   point C
B)   point L
C)   point D
D)   point N

Question 13

Economic growth is shown on the production possibilities frontier as

Accepted Answer

A)   a movement from one point on the PPF to another.
B)   an outward shift in the PPF.
C)   an inward shift in the PPF.
D)   the curvature of the PPF.

Question 14

The production possibilities frontier itself shows

Accepted Answer

A)   the maximum amount of resources available at any given time.
B)   combinations of goods and services that do not fully use available resources.
C)   the maximum rate of growth of output possible for an economy.
D)   the maximum levels of production that can be attained.

Question 15

-In the figure above, point A is undesirable because

Accepted Answer

A)   there is an inefficient use of resources.
B)   too much health care is being produced.
C)   the opportunity costs of health care is too high.
D)   point E is a more realistic option in this economy.

Question 16

-In the figure above, Jill is producing at point A. Jill's opportunity cost producing one pair of pants is

Accepted Answer

A)   2 shirts per pair of pants.
B)   3 shirts per pair of pants.
C)   3/5 of a shirt per pair of pants.
D)   5/3 of a shirt per pair of pants.

Question 17

The principle of decreasing marginal benefit means that as the quantity of a good consumed

Accepted Answer

A)   decreases, its marginal benefit decreases.
B)   increases, its marginal benefit decreases.
C)   increases, its total benefit decreases.
D)   None of the above answers is correct.

Question 18

In goods markets ________ and in factor markets ________.

Accepted Answer

A)   households sell to firms; firms sell to households
B)   firms sell to households; households sell to firms
C)   households sell to firms; households sell to firms
D)   firms sell to households; firms sell to households

Question 19

-Consider the PPF for office buildings and housing shown in the figure above. Which point in the diagram shows that resources to produce office buildings and housing are being misallocated, unused, or both?

Accepted Answer

A)   point F
B)   point G
C)   point H
D)   point I

Question 20

-The above table shows the tons of steel and concrete that can be produced by the United States and France in an hour. From the data in the table

Accepted Answer

A)   France has a comparative advantage in the production of concrete.
B)   the United States has a comparative advantage in the production of concrete.
C)   France has an absolute advantage in the production of concrete.
D)   the United States has a comparative advantage in the production of both goods.

Exam 2: The Economic Problem

A circular flow diagram shows the flows from the goods and resources markets.

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The principle of decreasing marginal benefit means that as the quantity of a good consumed

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Country A Country B -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

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-In the figure above, Jill is producing at point A. Jill's opportunity cost producing one pair of pants is

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Allocative efficiency occurs when it is

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

Correct AnswerverifiedThe statement is true. Points within the...View AnswerShow Answer

-In the figure above, point A is undesirable because

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-Two nations can produce computers and software in the amounts given in the table above. Does either nation have an absolute advantage in producing the products? Which nation has a comparative advantage in computers? Which nation has a comparative advantage in software? Explain your answers.

Correct AnswerverifiedNation B has an absolute advantage in pr...View AnswerShow Answer

Draw a production possibilities frontier between beans and peas. Label the unattainable points, the attainable points with fully employed resources, and the attainable points with unemployed resources.

Correct Answerverified The production possibilities frontier, ...View AnswerShow Answer

In goods markets ________ and in factor markets ________.

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-In the above figure, which point represents an unattainable production combination of the two goods?

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Property rights facilitate the development of trade.

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The production possibilities frontier bows outward because

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-The above table shows the tons of steel and concrete that can be produced by the United States and France in an hour. From the data in the table

Correct AnswerverifiedShow Answer

A point inside a production possibilities frontier

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Economic growth is shown on the production possibilities frontier as

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In a world lacking property rights, it would be ________ to realize the gains from trade and there would be ________ specialization.

Correct AnswerverifiedShow Answer

-Consider the PPF for office buildings and housing shown in the figure above. Which point in the diagram shows that resources to produce office buildings and housing are being misallocated, unused, or both?

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The production possibilities frontier itself shows

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As long as the marginal benefit from a good is greater than its marginal cost, an economy is operating efficiently.

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The statement is true. Points within the...
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Nation B has an absolute advantage in pr...
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The production possibilities frontier, ...
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In goods markets and in factor markets .

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In a world lacking property rights, it would be to realize the gains from trade and there would be specialization.

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