Question 1

-Suppose Puerto Rico and Hawaii currently have the same production possibilities so that the above figure is the PPF for hotels and consumption goods in the two areas. Hotels are a capital good that,once built, will help produce still more consumption goods. If Puerto Rico produces more hotels than Hawaii,

Accepted Answer

A)  Hawaii's PPF will shift outward further than Puerto Rico's PPF.
B)  Hawaii's PPF will shift inward.
C)  Puerto Rico's PPF will not shift.
D)  Puerto Rico's and Hawaii's PPF will shift outward by the same amount.
E)  Puerto Rico's PPF will shift outward further than Hawaii's PPF.

Question 2

-The figure above shows the production possibilities frontier for a country. In order for it to move from producing at point A to producing at point B, the country would need to

Accepted Answer

A)  decrease SUV production by 1 million.
B)  decrease SUV production by 3 million.
C)  decrease SUV production by 4 million.
D)  decrease compact car production by 3 million.
E)  acquire more resources and/or more advanced technology.

Question 3

-The figure above shows how the PPF for cell phones and new cell-phone factories can expand. In the figure, if the economy chose the point on this year's PPF that is above point K, the next year's PPF would

Accepted Answer

A)  shift outward along the horizontal axis farther than the new PPF shown in the figure.
B)  shift outward along the horizontal axis, but not as far as the new PPF shown in the figure.
C)  shift outward along the vertical axis, not along the horizontal axis.
D)  shift inward along the horizontal axis.
E)  shift inward along the vertical axis.

Question 4

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 5

A country produces only apples and bananas. Moving from point A to point B along its production possibilities frontier, 5 apples are gained and 4 bananas are forgone. What is the opportunity cost of an apple?

Accepted Answer

A)  4 bananas
B)  5/4 of a banana
C)  4/5 of a banana
D)  1 apple
E)  None of the above answers is correct.

Question 6

A country produces only apples and bananas. Moving from point A to point B along its production possibilities frontier, 5 apples are forgone and 4 bananas are gained. What is the opportunity cost of a banana?

Accepted Answer

A)  4 apples
B)  5/4 of an apple
C)  4/5 of an apple
D)  1 banana
E)  None of the above answers is correct.

Question 7

Using the figure above, suppose with no trade Liz and Joe each produce at point A on their respective PPFs. Then, Joe suggests that they specialize and trade. He would produces only salads and Liz would produce only smoothies. Then, Joe says, he would buy 16 smoothies from Liz at a price of 1.5 salads per smoothie. Liz should

Accepted Answer

A)  accept Joe's offer since she will gain 4 smoothies and 4 salads.
B)  accept Joe's offer as she will be as well off as with no trade.
C)  not accept Joe's offer as the price he offers is too low for her to gain from trade.
D)  not accept Joe's offer since she would lose 2 smoothies and 2 salads.
E)  accept Joe's offer since she will gain 4 salads.

Question 8

-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 9

-In the table above, how many jackets must Mary forgo for every dress she makes?

Accepted Answer

A)  12 jackets
B)  3/4 of a jacket
C)  2/3 of a jacket
D)  1 1/2 jackets
E)  8 jackets

Question 10

To find the opportunity cost of producing one more unit of any product while on the production possibilities frontier requires

Accepted Answer

A)  setting the amounts of the two products equal to each other.
B)  setting the change in one product equal to the change in the other product.
C)  dividing the amount of the product forgone by the amount of the product gained.
D)  subtracting the change in the product whose production increased from the change in the product whose production decreased.
E)  None of these describe how to find opportunity cost.

Question 11

-The figure above shows the production possibilities frontier for a country. If the country is producing at point D, then the

Accepted Answer

A)  resources are being used efficiently.
B)  technology associated with producing SUVs and compact cars is advancing.
C)  resources are not being used efficiently and/or are unemployed.
D)  production of SUVs and compact cars is maximized.
E)  None of the above answers are correct because it is not possible to produce at point D.

Question 12

Specialization and trade

Accepted Answer

A)  does not benefit anyone.
B)  allows nations to produce inside their individual production possibilities frontier.
C)  allows nations to consume combinations of products that are outside their individual production possibilities frontier.
D)  shifts the production possibilities frontier inward.
E)  shifts the production possibilities frontier outward.

Question 13

As an economy increasingly specializes in producing one good, the opportunity cost of that good increases. The opportunity cost increases because

Accepted Answer

A)  resources are not equally productive in all activities.
B)  what must be paid to resources increases.
C)  human wants are virtually unlimited.
D)  not all goods are equally valuable.
E)  as more of a good is produced, the profit from its production must rise.

Question 14

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 15

Which of the following is an assumption used when drawing a production possibilities frontier?
I. Human wants and desires are limited to what is available.
Ii. Only two goods are considered.
Iii. The level of technology is fixed and unchanging.

Accepted Answer

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

Question 16

Possibility  Bread  (number)   Books  (number)   A 01,000 B 100900 C 200700 D 300400 E 4000\begin{array} { c c c } 	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 \\hline\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. The opportunity cost of a loaf of bread is ________ when moving from possibility B to possibility C.

Accepted Answer

A)  1/2 of a book
B)  2 books
C)  200 books
D)  100 loaves of bread
E)  1 loaf of bread

Question 17

-The above figure shows the production possibility frontier for a country. Suppose the country is producing at point E. What would be the opportunity cost to increase the production of wine to 9 thousand bottles?

Accepted Answer

A)  12 tons of rice
B)  15 thousand bottles of wine
C)  9 thousand bottles of wine
D)  3 tons of rice
E)  Nothing, it is a free lunch

Question 18

How can a combination of goods be unattainable?

Accepted Answer

A combination of goods can be ...

Question 19

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 20

What is the opportunity cost of economic growth?

Accepted Answer

A)  Current period consumption goods
B)  Current period capital goods
C)  Land
D)  Both current period consumption and capital goods
E)  Both current period capital goods and land

Exam 3: The Economic Problem

-In the table above, how many jackets must Mary forgo for every dress she makes?

Correct Answer
verified

-The figure above shows the production possibilities frontier for a country. In order for it to move from producing at point A to producing at point B, the country would need to

Correct Answer
verified

A country produces only apples and bananas. Moving from point A to point B along its production possibilities frontier, 5 apples are gained and 4 bananas are forgone. What is the opportunity cost of an apple?

Correct Answer
verified

-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

Correct Answer
verified

Correct Answer
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-The figure above shows the production possibilities frontier for a country. If the country is producing at point D, then the

Correct Answer
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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

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

A country produces only apples and bananas. Moving from point A to point B along its production possibilities frontier, 5 apples are forgone and 4 bananas are gained. What is the opportunity cost of a banana?

Correct Answer
verified

To find the opportunity cost of producing one more unit of any product while on the production possibilities frontier requires

Correct Answer
verified

Which of the following is an assumption used when drawing a production possibilities frontier? I. Human wants and desires are limited to what is available. Ii. Only two goods are considered. Iii. The level of technology is fixed and unchanging.

Correct Answer
verified

Specialization and trade

Correct Answer
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As an economy increasingly specializes in producing one good, the opportunity cost of that good increases. The opportunity cost increases because

Correct Answer
verified

-The above figure shows the production possibility frontier for a country. Suppose the country is producing at point E. What would be the opportunity cost to increase the production of wine to 9 thousand bottles?

Correct Answer
verified

How can a combination of goods be unattainable?

Correct Answer
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A combination of goods can be ...
View Answer

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

Correct Answer
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Correct Answer
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What is the opportunity cost of economic growth?

Correct Answer
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-The figure above shows how the PPF for cell phones and new cell-phone factories can expand. In the figure, if the economy chose the point on this year's PPF that is above point K, the next year's PPF would

Correct Answer
verified

Correct Answer
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Exam 3: The Economic Problem

-In the table above, how many jackets must Mary forgo for every dress she makes?

Correct AnswerverifiedShow Answer

-The figure above shows the production possibilities frontier for a country. In order for it to move from producing at point A to producing at point B, the country would need to

Correct AnswerverifiedShow Answer

A country produces only apples and bananas. Moving from point A to point B along its production possibilities frontier, 5 apples are gained and 4 bananas are forgone. What is the opportunity cost of an apple?

Correct AnswerverifiedShow Answer

-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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

-The figure above shows the production possibilities frontier for a country. If the country is producing at point D, then the

Correct AnswerverifiedShow 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

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

A country produces only apples and bananas. Moving from point A to point B along its production possibilities frontier, 5 apples are forgone and 4 bananas are gained. What is the opportunity cost of a banana?

Correct AnswerverifiedShow Answer

To find the opportunity cost of producing one more unit of any product while on the production possibilities frontier requires

Correct AnswerverifiedShow Answer

Which of the following is an assumption used when drawing a production possibilities frontier? I. Human wants and desires are limited to what is available. Ii. Only two goods are considered. Iii. The level of technology is fixed and unchanging.

Correct AnswerverifiedShow Answer

Specialization and trade

Correct AnswerverifiedShow Answer

As an economy increasingly specializes in producing one good, the opportunity cost of that good increases. The opportunity cost increases because

Correct AnswerverifiedShow Answer

-The above figure shows the production possibility frontier for a country. Suppose the country is producing at point E. What would be the opportunity cost to increase the production of wine to 9 thousand bottles?

Correct AnswerverifiedShow Answer

How can a combination of goods be unattainable?

Correct AnswerverifiedA combination of goods can be ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What is the opportunity cost of economic growth?

Correct AnswerverifiedShow Answer

-The figure above shows how the PPF for cell phones and new cell-phone factories can expand. In the figure, if the economy chose the point on this year's PPF that is above point K, the next year's PPF would

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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A combination of goods can be ...
View Answer

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