Question 1

In the production possibilities model,the vertical axis measures ________ and the horizontal axis measures ________.

Accepted Answer

A)  the quantity of a good or service;the quantity of another good or service
B)  the price of a good or service;the quantity of the good or service
C)  the price of a good or service;the price of another good or service
D)  the quantity of a good or service;time
E)  people's wants;the quantity of a good or serviceF) None of the above
G) A) and E)

Question 2

If the production possibilities frontier between two goods were a straight line,then the opportunity cost of one good in terms of another would be

Accepted Answer

A)  constant.
B)  increasing.
C)  decreasing.
D)  zero.
E)  either constant,increasing,or decreasing but more information is needed to determine which.F) B) and D)
G) A) and E)

Question 3

-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..According to the figure,which island will have more rapid economic growth?

Accepted Answer

A)  Hawaii
B)  Both Hawaii and Puerto Rico will grow at the same speed.
C)  Puerto Rico
D)  Neither Hawaii nor Puerto Rico will grow.
E)  More than one of the above answers is correct.F) B) and D)
G) A) and B)

Question 4

Suppose that in a PPF graph,wheat is on the vertical axis and jets are on the horizontal axis.Moving down along the PPF,the

Accepted Answer

A)  number of jets increases and the opportunity cost of jets increases.
B)  amount of wheat increases and the opportunity cost of wheat increases.
C)  number of jets increases and the opportunity cost of jets decreases.
D)  amount of wheat increases and opportunity cost of wheat decreases.
E)  opportunity cost of jets and wheat both increase.F) C) and D)
G) A) and B)

Question 5

On a typical acre of land,Iowa can produce either 300 pounds of beef or 100 pounds of soybeans in a year.On a typical acre of land,Nebraska can produce 150 pounds of beef or 200 pounds of soybeans.Which of the following is correct?

Accepted Answer

A)  Nebraska should produce soybeans because its opportunity cost of soybeans is lower.
B)  Nebraska should produce soybeans because its opportunity cost of soybeans is higher.
C)  Iowa should produce soybeans because its opportunity cost of soybeans is lower.
D)  Iowa should produce soybeans because its opportunity cost of soybeans is higher.
E)  Nebraska and Iowa should divide each acre evenly between soybean and beef production.F) A) and B)
G) C) and E)

Question 6

-The figure above shows the production possibilities frontier for a country.A combination of 3 million gallons of milk and 3 million gallons of ice cream is

Accepted Answer

A)  unattainable.
B)  attainable and production efficient.
C)  attainable and production inefficient.
D)  unattainable and production efficient.
E)  More information is needed to determine if the point is attainable or not.F) A) and C)
G) B) and E)

Question 7

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 lunchF) A) and B)
G) A) and C)

Question 8

Suppose that an economy is currently producing at a point that lies inside of its production possibilities set.Which of the following would best explain this circumstance?

Accepted Answer

A)  The economy does not have enough resources to produce at a point closer to the frontier of the production possibilities set.
B)  The prevailing level of technology prevents the economy from producing at a point closer to the frontier of the production possibilities set.
C)  The economy is experiencing a high level of unemployment.
D)  Any of the above statements could explain this situation.
E)  None of the above statements could explain this situation.F) A) and E)
G) None of the above

Question 9

The idea of increasing opportunity cost is reflected in the

Accepted Answer

A)  bowed out shape of the production possibilities frontier.
B)  bowed in shape of the production possibilities frontier.
C)  linear shape of the production possibilities frontier.
D)  positive slope of the production possibilities frontier.
E)  fact that the PPF shows there are unattainable production points.F) B) and D)
G) C) and D)

Question 10

-Suppose India and France have the same PPF,shown in the figure above.Based on their current production points,which is France's most likely future PPF?

Accepted Answer

A)  PPF2
B)  PPF1
C)  PPF0
D)  either PPF0 or PPF1
E)  None of the above because economic growth will not happen in India.F) B) and C)
G) D) and E)

Question 11

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 12

-Which point in the figure above is an attainable combination that would have unemployed resources?

Accepted Answer

A)  point A
B)  point B
C)  point C
D)  point D
E)  point A and point BF) A) and E)
G) A) and D)

Question 13

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

Accepted Answer

A)  1/4 of a pound of fish
B)  4 pounds of fish
C)  1 pound of fish
D)  100 pounds of fish
E)  2 pounds of fishF) All of the above
G) A) and D)

Question 14

If John can produce 10 chairs or 20 lamps during a week while Mary can produce 12 chairs or 22 lamps in the same time,who has the absolute advantage in producing each good?

Accepted Answer

A)  Mary in producing both goods
B)  John in producing both goods
C)  Mary in producing chairs,John in producing lamps
D)  John in producing chairs,Mary in producing lamps
E)  Both Mary and John in both goodsF) B) and E)
G) B) and C)

Question 15

-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 below 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.F) A) and B)
G) A) and E)

Question 16

Mac can bake more cookies than Monica per hour.It must be true that

Accepted Answer

A)  Monica has an absolute advantage in cookie baking.
B)  Mac has an absolute advantage in baking cookies.
C)  Mac has a comparative advantage in baking cookies.
D)  Monica has a comparative advantage in baking cookies.
E)  Mac cannot benefit by trade between the two of them.F) D) and E)
G) B) and E)

Question 17

Why is a production possibilities frontier bowed out (concave) ?

Accepted Answer

A)  The bowed shape reflects constant opportunity cost.
B)  The bowed shape reflects decreasing opportunity cost.
C)  The bowed shape indicates that opportunity cost at first decreases at a decreasing rate,and then begins to decrease at an increasing rate.
D)  The bowed shape indicates that opportunity cost at first increases at a decreasing rate,and then begins to increase at an increasing rate.
E)  The bowed shape reflects increasing opportunity cost.F) A) and C)
G) All of the above

Question 18

Which of the following correctly describes the relationship between productivity growth,unemployment,and the economy's production possibilities frontier?

Accepted Answer

A)  An increase in productivity moves the economy from inside the production possibilities set to its frontier.
B)  An increase in productivity shifts the economy from the production possibilities frontier to a point outside the production possibilities set.
C)  An increase in unemployment shifts the economy further inside its production possibilities set.
D)  An increase in unemployment shifts the economy from a point outside the production set back to the production possibilities frontier.
E)  A reduction in unemployment shifts the entire production possibilities frontier outward.F) A) and D)
G) None of the above

Question 19

The negative slope of the production possibilities frontier represents the idea

Accepted Answer

A)  that free lunches are possible.
B)  of tradeoffs,that in order to produce more of one good,the nation must produce less of another.
C)  of unemployment.
D)  of inefficient production.
E)  that prices rise as less is produced.F) All of the above
G) A) and E)

Question 20

-The table above presents the production possibilities frontier for a nation.Using the information in the table,when moving from possibility C to D,the cost of 1 unit of a capital good in terms of the consumption goods forgone is ________ consumption goods per capital good.

Accepted Answer

A)  25
B)  15
C)  20
D)  10
E)  an undefined amount ofF) C) and E)
G) A) and B)

Exam 3: The Economic Problem

Why is a production possibilities frontier bowed out (concave) ?

Correct Answer
verified

-Which point in the figure above is an attainable combination that would have unemployed resources?

Correct Answer
verified

Mac can bake more cookies than Monica per hour.It must be true that

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

-Suppose India and France have the same PPF,shown in the figure above.Based on their current production points,which is France's most likely future PPF?

Correct Answer
verified

Suppose that an economy is currently producing at a point that lies inside of its production possibilities set.Which of the following would best explain this circumstance?

Correct Answer
verified

Which of the following correctly describes the relationship between productivity growth,unemployment,and the economy's production possibilities frontier?

Correct Answer
verified

If the production possibilities frontier between two goods were a straight line,then the opportunity cost of one good in terms of another would be

Correct Answer
verified

In the production possibilities model,the vertical axis measures and the horizontal axis measures .

Correct Answer
verified

The idea of increasing opportunity cost is reflected in the

Correct Answer
verified

On a typical acre of land,Iowa can produce either 300 pounds of beef or 100 pounds of soybeans in a year.On a typical acre of land,Nebraska can produce 150 pounds of beef or 200 pounds of soybeans.Which of the following is correct?

Correct Answer
verified

-The table above presents the production possibilities frontier for a nation.Using the information in the table,when moving from possibility C to D,the cost of 1 unit of a capital good in terms of the consumption goods forgone is ________ consumption goods per capital good.

Correct Answer
verified

If John can produce 10 chairs or 20 lamps during a week while Mary can produce 12 chairs or 22 lamps in the same time,who has the absolute advantage in producing each good?

Correct Answer
verified

-The figure above shows the production possibilities frontier for a country.A combination of 3 million gallons of milk and 3 million gallons of ice cream is

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 in France?

Correct Answer
verified

The negative slope of the production possibilities frontier represents the idea

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 chose the point on this year's PPF that is below point K,the next year's PPF would

Correct Answer
verified

Suppose that in a PPF graph,wheat is on the vertical axis and jets are on the horizontal axis.Moving down along the PPF,the

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Exam 3: The Economic Problem

Why is a production possibilities frontier bowed out (concave) ?

Correct AnswerverifiedShow Answer

-Which point in the figure above is an attainable combination that would have unemployed resources?

Correct AnswerverifiedShow Answer

Mac can bake more cookies than Monica per hour.It must be true that

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

-Suppose India and France have the same PPF,shown in the figure above.Based on their current production points,which is France's most likely future PPF?

Correct AnswerverifiedShow Answer

Suppose that an economy is currently producing at a point that lies inside of its production possibilities set.Which of the following would best explain this circumstance?

Correct AnswerverifiedShow Answer

Which of the following correctly describes the relationship between productivity growth,unemployment,and the economy's production possibilities frontier?

Correct AnswerverifiedShow Answer

If the production possibilities frontier between two goods were a straight line,then the opportunity cost of one good in terms of another would be

Correct AnswerverifiedShow Answer

In the production possibilities model,the vertical axis measures ________ and the horizontal axis measures ________.

Correct AnswerverifiedShow Answer

The idea of increasing opportunity cost is reflected in the

Correct AnswerverifiedShow Answer

On a typical acre of land,Iowa can produce either 300 pounds of beef or 100 pounds of soybeans in a year.On a typical acre of land,Nebraska can produce 150 pounds of beef or 200 pounds of soybeans.Which of the following is correct?

Correct AnswerverifiedShow Answer

-The table above presents the production possibilities frontier for a nation.Using the information in the table,when moving from possibility C to D,the cost of 1 unit of a capital good in terms of the consumption goods forgone is ________ consumption goods per capital good.

Correct AnswerverifiedShow Answer

If John can produce 10 chairs or 20 lamps during a week while Mary can produce 12 chairs or 22 lamps in the same time,who has the absolute advantage in producing each good?

Correct AnswerverifiedShow Answer

-The figure above shows the production possibilities frontier for a country.A combination of 3 million gallons of milk and 3 million gallons of ice cream is

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 in France?

Correct AnswerverifiedShow Answer

The negative slope of the production possibilities frontier represents the idea

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 below point K,the next year's PPF would

Correct AnswerverifiedShow Answer

Suppose that in a PPF graph,wheat is on the vertical axis and jets are on the horizontal axis.Moving down along the PPF,the

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

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In the production possibilities model,the vertical axis measures and the horizontal axis measures .

Correct Answer
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