Question 1

What economic concepts are represented in the production possibilities model?

Accepted Answer

There are a large number of economic con...

Question 2

Why does the marginal benefit curve have a negative slope?

Accepted Answer

Each successive increase in the consumpt...

Question 3

We measure the marginal ________ of a good by what a ________ for another unit of the good.

Accepted Answer

A)   benefit; person must pay
B)   cost; person is willing to pay
C)   benefit; person is willing to pay
D)   cost; person's preferences are

Question 4

What is comparative advantage? Give an example.

Accepted Answer

Comparative advantage is the ability of ...

Question 5

As residents of developing countries increase their chocolate consumption, the increased production of cocoa results in

Accepted Answer

A)   increased opportunity cost of cocoa production.
B)   decreased opportunity cost of cocoa production.
C)   no change in production of other goods and services.
D)   increased production of other goods and services.

Question 6

The country whose production possibilities frontier is illustrated above is currently at position A on the production possibilities frontier. If it wishes to move to position B, it will

Accepted Answer

A)   find this change impossible to achieve given the resources it currently possesses.
B)   have to employ all currently unemployed resources to accomplish this.
C)   incur an opportunity cost of having to give up some butter in order to make the additional amount of guns desired.
D)   be able to make the desired switch only if there is a significant improvement in the technology available to the nation.

Question 7

In an eight-hour day, Andy can produce either 24 loaves of bread or 8 pounds of butter. In an eight-hour day, Bob can produce either 8 loaves of bread or 8 pounds of butter. Andy has a comparative advantage in the production of

Accepted Answer

A)   bread, while Bob has a comparative advantage in the production of butter.
B)   butter, while Bob has a comparative advantage in the production of bread.
C)   bread and neither has a comparative advantage in the production of butter.
D)   both bread and butter.

Question 8

Both Mergatroid and the Geebocks produce only gizmos and widgets. It is possible for Mergatroid to have

Accepted Answer

A)   an absolute and a comparative advantage in both products.
B)   an absolute but not a comparative advantage in both products.
C)   a comparative but not an absolute advantage in both products.
D)   neither a comparative nor an absolute advantage in both products.

Question 9

A production possibilities frontier figure does NOT illustrate

Accepted Answer

A)   the limits on production imposed by our limited resources and technology.
B)   the exchange of one good or service for another.
C)   opportunity cost.
D)   attainable and unattainable points.

Question 10

Production possibilities
 
-In the above table, the production of 3 pizzas and 35 cases of soda is

Accepted Answer

A)   impossible unless more resources become available.
B)   feasible but would involve unemployed or misallocated resources.
C)   possible only if the economy produces with maximum efficiency.
D)   possible only if there is inflation.

Question 11

A key factor that leads to economic growth is

Accepted Answer

A)   human capital accumulation.
B)   increasing current consumption.
C)   avoiding the opportunity cost of investment.
D)   Both answers A and B are correct.

Question 12

The existence of the tradeoff along the PPF means that the PPF is

Accepted Answer

A)   bowed outward.
B)   linear.
C)   negatively sloped.
D)   positively sloped.

Question 13

Sam's production possibilities frontier has good A on the horizontal axis and good B on the vertical axis. If Sam is producing at a point inside his frontier, then he

Accepted Answer

A)   can increase production of both goods with no increase in resources.
B)   is fully using all his resources.
C)   values good A more than good B.
D)   values good B more than good A.

Question 14

Which of the following is TRUE regarding markets?
I.Economists define a market as a geographic location where trade occurs.
II.A market enables buyers and sellers to get information about each other and to buy and sell from each other.
III.Markets coordinate decisions through prices.

Accepted Answer

A)   I only
B)   I and III
C)   II and III
D)   I, II and III

Question 15

-The above figure illustrates Mary's production possibilities frontier. Which of the following movements show opportunity costs increasing?

Accepted Answer

A)   point a to point b to point c
B)   point a to point f
C)   point f to point a
D)   point c to point f to point d

Question 16

According to the principle of comparative advantage, if a rich country trades with a poor country, then

Accepted Answer

A)   the rich country will benefit and the poor country will lose.
B)   the rich country will lose and the poor country will benefit.
C)   both countries will benefit.
D)   neither of the countries will benefit.

Question 17

-In the production possibilities frontier depicted in the figure above, what is the opportunity cost of increasing the production of bananas from two million pounds to three million pounds?

Accepted Answer

A)   1/2 hat per pound of bananas
B)   1 hat per pound of bananas
C)   2 hats per pound of bananas
D)   3 hats per pound of bananas

Question 18

The tradeoff between current consumption and the production of capital goods also reflects a tradeoff between

Accepted Answer

A)   the future production of capital goods and future consumption of goods.
B)   economic growth and technological change.
C)   satisfying today the needs of the poor and the wants of the wealthy.
D)   current consumption and future consumption.

Question 19

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 20

-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

Exam 2: The Economic Problem

A key factor that leads to economic growth is

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The existence of the tradeoff along the PPF means that the PPF is

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Sam's production possibilities frontier has good A on the horizontal axis and good B on the vertical axis. If Sam is producing at a point inside his frontier, then he

Correct AnswerverifiedShow Answer

Production possibilities -In the above table, the production of 3 pizzas and 35 cases of soda is

Correct AnswerverifiedShow Answer

Why does the marginal benefit curve have a negative slope?

Correct AnswerverifiedEach successive increase in the consumpt...View AnswerShow Answer

According to the principle of comparative advantage, if a rich country trades with a poor country, then

Correct AnswerverifiedShow Answer

The country whose production possibilities frontier is illustrated above is currently at position A on the production possibilities frontier. If it wishes to move to position B, it will

Correct AnswerverifiedShow Answer

The production possibilities frontier bows outward because

Correct AnswerverifiedShow Answer

Both Mergatroid and the Geebocks produce only gizmos and widgets. It is possible for Mergatroid to have

Correct AnswerverifiedShow Answer

-In the production possibilities frontier depicted in the figure above, what is the opportunity cost of increasing the production of bananas from two million pounds to three million pounds?

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

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-The above figure illustrates Mary's production possibilities frontier. Which of the following movements show opportunity costs increasing?

Correct AnswerverifiedShow Answer

In an eight-hour day, Andy can produce either 24 loaves of bread or 8 pounds of butter. In an eight-hour day, Bob can produce either 8 loaves of bread or 8 pounds of butter. Andy has a comparative advantage in the production of

Correct AnswerverifiedShow Answer

We measure the marginal ________ of a good by what a ________ for another unit of the good.

Correct AnswerverifiedShow Answer

As residents of developing countries increase their chocolate consumption, the increased production of cocoa results in

Correct AnswerverifiedShow Answer

Which of the following is TRUE regarding markets? I.Economists define a market as a geographic location where trade occurs. II.A market enables buyers and sellers to get information about each other and to buy and sell from each other. III.Markets coordinate decisions through prices.

Correct AnswerverifiedShow Answer

The tradeoff between current consumption and the production of capital goods also reflects a tradeoff between

Correct AnswerverifiedShow Answer

A production possibilities frontier figure does NOT illustrate

Correct AnswerverifiedShow Answer

What economic concepts are represented in the production possibilities model?

Correct AnswerverifiedThere are a large number of economic con...View AnswerShow Answer

What is comparative advantage? Give an example.

Correct AnswerverifiedComparative advantage is the ability of ...View AnswerShow Answer

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Each successive increase in the consumpt...
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We measure the marginal of a good by what a for another unit of the good.

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There are a large number of economic con...
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Comparative advantage is the ability of ...
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