Question 1

A major earthquake occurs in the central part of the United States.What impact would this have on the nation's production possibilities frontier and why?

Accepted Answer

A)   It would shift outward because unemployment would be reduced.
B)   Nothing would happen because the nation would still have the same capabilities.
C)   A tradeoff would occur to replace the resources and goods destroyed.
D)   It would shift inward because some of the nation's resources, such as capital and labor, would be destroyed.
E)   It would not shift because people would get to work to replace any capital that was destroyed.

Question 2

Economic growth depends upon which of the following?
I.Increasing the quantity of labor.
Ii. Lowering the prices of goods and services.
Iii. Advancing technology.

Accepted Answer

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

Question 3

As an economy produces more of one of the goods on a bowed out production possibilities frontier, what happens to the opportunity cost of producing the good?

Accepted Answer

A)   It remains constant.
B)   It decreases.
C)   It increases.
D)   It might increase, decrease, or remain constant depending on how much people value the additional units of the good.
E)   None of these depict what happens to opportunity cost.

Question 4

Moving along a country's PPF, a reason opportunity costs increase is that

Accepted Answer

A)   unemployment decreases as a country produces more and more of one good.
B)   unemployment increases as a country produces more and more of one good.
C)   technology declines as a country produces more and more of one good.
D)   some resources are better suited for producing one good rather than the other.
E)   technology must advance in order to produce more and more of one good.

Question 5

Given the information in the figure above, Liz ________ benefit from trade with Joe because ________.

Accepted Answer

A)   can; each of them has a comparative advantage in one of the goods
B)   can; each of them has an absolute advantage in one of the goods
C)   cannot; she has an absolute advantage in both goods
D)   cannot; she has a comparative advantage in both goods
E)   can; Joe is more productive in producing one of the goods

Question 6

-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, which country is most likely to expand its PPF to PPF₁?

Accepted Answer

A)   France and Germany equally.
B)   India
C)   Estonia
D)   France
E)   Germany

Question 7

Possibility  Airplanes  (number)   Cruise ships  (number)   A 1000 B 8020 C 5040 D 060\begin{array}{ccc}	ext { Possibility } & \begin{array}{c}	ext { Airplanes } \	ext { (number)  }\end{array} & \begin{array}{c}	ext { Cruise ships } \	ext { (number)  }\end{array} \\hline 	ext { A } & 100 & 0 \	ext { B } & 80 & 20 \	ext { C } & 50 & 40 \	ext { D } & 0 & 60\end{array} Possibility  A  B  C  D ​ Airplanes  (number)  ​10080500​ Cruise ships  (number)  ​0204060​​ 
-The table above gives four production possibilities for airplanes and cruise ships.In possibility A, how many resources are devoted to the production of cruise ships?

Accepted Answer

A)   0
B)   few
C)   most
D)   all
E)   It is impossible to tell without more information about the prices of airplanes and cruise ships.

Question 8

As we move along the production possibilities frontier,

Accepted Answer

A)   the production of one good increases as the production of the other good decreases.
B)   the possibilities of tradeoffs diminish.
C)   a tradeoff is not possible because nations need all goods.
D)   more of both goods can be produced.
E)   less of both goods can be produced.

Question 9

A point on the production possibilities frontier reflects an

Accepted Answer

A)   attainable point with full employment of all resources.
B)   attainable point without full employment of all resources.
C)   unattainable point with full employment of all resources.
D)   unattainable point without full employment of all resources.
E)   None of the above answers are correct.

Question 10

-The figure above illustrates a small country's production possibilities frontier.Moving from point C to point B, the per unit opportunity cost of computers is ________ per computer.

Accepted Answer

A)   4 VCRs
B)   5/4 of a VCR
C)   4/5 of a VCR
D)   1/4 of a VCR
E)   1 computer

Question 11

-The figure above shows the production possibilities frontiers for the United Kingdom and France.What is the opportunity cost of one bushel of wheat for the United Kingdom?

Accepted Answer

A)   1/4 of a pound of fish
B)   1/2 of a pound of fish
C)   1 pound of fish
D)   200 pounds of fish
E)   2 pounds of fish

Question 12

"When a person can produce more of 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 assertion is incorrect.The statement...

Question 13

Moving from one point to another on a production possibilities frontier implies

Accepted Answer

A)   increasing the production of both goods.
B)   decreasing the production of both goods.
C)   increasing the production of one good and decreasing the production of another.
D)   holding the production levels of both goods constant.
E)   changing the amount of factors of production that are employed.

Question 14

When all of the available factors of production are being efficiently employed, the

Accepted Answer

A)   economy is producing at a point within its PPF.
B)   economy is producing at a point on its PPF.
C)   economy is producing at a point beyond its PPF.
D)   PPF disappears.
E)   opportunity cost of changing production is infinite.

Question 15

Moving on a bowed out PPF, what happens to the opportunity cost of its production as a nation specializes more in one product?

Accepted Answer

The bowed out PPF indicates th...

Question 16

On a production possibilities frontier, 500 pounds of apples and 1,200 pounds of bananas can be produced while at another point on the same frontier, 300 pounds of apples and 1,300 pounds of bananas can be produced.Between these points, what is the opportunity cost of producing a pound of bananas?

Accepted Answer

A)   2 pounds of bananas
B)   200 pounds of apples
C)   2 pounds of apples
D)   0.5 a pound of apples
E)   12/5 = 2.4 pounds of apples

Question 17

Moving between two points on a PPF, a country gains 8 desktop computers and forgoes 4 laptop computers.The opportunity cost of 1 desktop computer is

Accepted Answer

A)   4 laptops.
B)   8 desktops.
C)   1 desktop.
D)   2 laptops.
E)   1/2 of a laptop.

Question 18

The production possibilities frontier is a boundary that separates

Accepted Answer

A)   the combinations of goods that can be produced from the combinations of services.
B)   attainable combinations of goods and services that can be produced from unattainable ones.
C)   equitable combinations of goods and services that can be produced from inequitable ones.
D)   fair combinations of goods and services that can be consumed from unfair ones.
E)   affordable production points from unaffordable points.

Question 19

Relative to Al, Joe has ________ if Joe can produce a good at a lower opportunity cost than Al.

Accepted Answer

A)   a comparative advantage
B)   more production efficiency
C)   a comparative benefit
D)   a marginal benefit
E)   a free lunch

Question 20

Possibility  Bread  (number)   Books  (number)   A 01,000 B 100900 C 200700 D 300400 E 4000\begin{array}{ccc}	ext { Possibility } & \begin{array}{c}	ext { Bread } \	ext { (number)  }\end{array} & \begin{array}{c}	ext { Books } \	ext { (number)  }\end{array} \\hline 	ext { A } & 0 & 1,000 \	ext { B } & 100 & 900 \	ext { C } & 200 & 700 \	ext { D } & 300 & 400 \	ext { E } & 400 & 0\end{array} Possibility  A  B  C  D  E ​ Bread  (number)  ​0100200300400​ Books  (number)  ​1,0009007004000​​ 
-The table above shows the production possibilities for an economy.Drawing a PPF with books on the vertical axis and bread on the horizontal axis, a movement from possibility B to possibility C to possibility D shows the opportunity cost of ________ moving down along the PPF.

Accepted Answer

A)   books decreasing
B)   bread decreasing
C)   bread increases
D)   books is constant
E)   books and bread are both increasing

Exam 3: The Economic Problem

Correct Answer
verified

Economic growth depends upon which of the following? I.Increasing the quantity of labor. Ii. Lowering the prices of goods and services. Iii. Advancing technology.

Correct Answer
verified

"When a person can produce more of 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.

Correct Answer
verified
The assertion is incorrect.The statement...
View Answer

On a production possibilities frontier, 500 pounds of apples and 1,200 pounds of bananas can be produced while at another point on the same frontier, 300 pounds of apples and 1,300 pounds of bananas can be produced.Between these points, what is the opportunity cost of producing a pound of bananas?

Correct Answer
verified

-The figure above shows the production possibilities frontiers for the United Kingdom and France.What is the opportunity cost of one bushel of wheat for the United Kingdom?

Correct Answer
verified

The production possibilities frontier is a boundary that separates

Correct Answer
verified

A major earthquake occurs in the central part of the United States.What impact would this have on the nation's production possibilities frontier and why?

Correct Answer
verified

As an economy produces more of one of the goods on a bowed out production possibilities frontier, what happens to the opportunity cost of producing the good?

Correct Answer
verified

Moving on a bowed out PPF, what happens to the opportunity cost of its production as a nation specializes more in one product?

Correct Answer
verified
The bowed out PPF indicates th...
View Answer

Correct Answer
verified

As we move along the production possibilities frontier,

Correct Answer
verified

-The figure above illustrates a small country's production possibilities frontier.Moving from point C to point B, the per unit opportunity cost of computers is ________ per computer.

Correct Answer
verified

Given the information in the figure above, Liz benefit from trade with Joe because .

Correct Answer
verified

Moving from one point to another on a production possibilities frontier implies

Correct Answer
verified

A point on the production possibilities frontier reflects an

Correct Answer
verified

-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, which country is most likely to expand its PPF to PPF₁?

Correct Answer
verified

Relative to Al, Joe has ________ if Joe can produce a good at a lower opportunity cost than Al.

Correct Answer
verified

When all of the available factors of production are being efficiently employed, the

Correct Answer
verified

Moving along a country's PPF, a reason opportunity costs increase is that

Correct Answer
verified

Moving between two points on a PPF, a country gains 8 desktop computers and forgoes 4 laptop computers.The opportunity cost of 1 desktop computer is

Correct Answer
verified

Exam 3: The Economic Problem

Correct AnswerverifiedShow Answer

Economic growth depends upon which of the following? I.Increasing the quantity of labor. Ii. Lowering the prices of goods and services. Iii. Advancing technology.

Correct AnswerverifiedShow Answer

"When a person can produce more of 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.

Correct AnswerverifiedThe assertion is incorrect.The statement...View AnswerShow Answer

On a production possibilities frontier, 500 pounds of apples and 1,200 pounds of bananas can be produced while at another point on the same frontier, 300 pounds of apples and 1,300 pounds of bananas can be produced.Between these points, what is the opportunity cost of producing a pound of bananas?

Correct AnswerverifiedShow Answer

-The figure above shows the production possibilities frontiers for the United Kingdom and France.What is the opportunity cost of one bushel of wheat for the United Kingdom?

Correct AnswerverifiedShow Answer

The production possibilities frontier is a boundary that separates

Correct AnswerverifiedShow Answer

A major earthquake occurs in the central part of the United States.What impact would this have on the nation's production possibilities frontier and why?

Correct AnswerverifiedShow Answer

As an economy produces more of one of the goods on a bowed out production possibilities frontier, what happens to the opportunity cost of producing the good?

Correct AnswerverifiedShow Answer

Moving on a bowed out PPF, what happens to the opportunity cost of its production as a nation specializes more in one product?

Correct AnswerverifiedThe bowed out PPF indicates th...View AnswerShow Answer

Correct AnswerverifiedShow Answer

As we move along the production possibilities frontier,

Correct AnswerverifiedShow Answer

-The figure above illustrates a small country's production possibilities frontier.Moving from point C to point B, the per unit opportunity cost of computers is ________ per computer.

Correct AnswerverifiedShow Answer

Given the information in the figure above, Liz ________ benefit from trade with Joe because ________.

Correct AnswerverifiedShow Answer

Moving from one point to another on a production possibilities frontier implies

Correct AnswerverifiedShow Answer

A point on the production possibilities frontier reflects an

Correct AnswerverifiedShow Answer

-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, which country is most likely to expand its PPF to PPF₁?

Correct AnswerverifiedShow Answer

Relative to Al, Joe has ________ if Joe can produce a good at a lower opportunity cost than Al.

Correct AnswerverifiedShow Answer

When all of the available factors of production are being efficiently employed, the

Correct AnswerverifiedShow Answer

Moving along a country's PPF, a reason opportunity costs increase is that

Correct AnswerverifiedShow Answer

Moving between two points on a PPF, a country gains 8 desktop computers and forgoes 4 laptop computers.The opportunity cost of 1 desktop computer is

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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verified
The assertion is incorrect.The statement...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
The bowed out PPF indicates th...
View Answer

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Correct Answer
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Correct Answer
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Given the information in the figure above, Liz benefit from trade with Joe because .

Correct Answer
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Correct Answer
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