Question 1

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. 
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. E

Question 2

The United States can use all of its resources to produce 50 computers or 4,000 shoes.Suppose that at world market prices,one computer exchanges for 100 shoes.Explain how the United States can gain from trade.

Accepted Answer

In the United States,the opportunity cost to produce 1 computer is 80 pairs of shoes.The United States can then sell the computers on the world market for 100 shoes each and thereby be ahead by 20 shoes per computer.

Question 3

$$\begin{array} { l | c c c } 
& \begin{array} { l } 
\text { Potatoes } \
\text { (pounds) }
\end{array} & \begin{array} { c } 
 \text { Tomatoes } \
\text { (pounds) }
\end{array} \
\hline \text { Huey } & 12 & \text { or } & 8 \
\text { Steve } & 6 & \text { or } & 2
\end{array}$$
-Huey and Steve can grow potatoes or tomatoes.The table above shows the pounds of potatoes and tomatoes Huey and Steve can grow in a week.Based on the table,Steve has a comparative advantage in

Accepted Answer

A)  both potatoes and tomatoes. 
B)  neither potatoes nor tomatoes. 
C)  potatoes. 
D)  tomatoes. 
E)  More information is needed about Huey's comparative advantage in order to determine Steve's comparative advantage. 
A)  both potatoes and tomatoes. 
B)  neither potatoes nor tomatoes. 
C)  potatoes. 
D)  tomatoes. 
E)  More information is needed about Huey's comparative advantage in order to determine Steve's comparative advantage. C

Question 4

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

Accepted Answer

The statement is false.It is false on tw

Question 5

$\begin{array}{c}
\begin{array}{c}
\hline \text { China's production in 1 hour } \
\hline \text { Cloth } & 8\
\text { Cheese } & 16\
\end{array}
\begin{array}{c}
 \hline\text { Pakistan's production in 1 hour } \
\hline  \text { Cloth } & 4 \
\text { Cheese } & 12 \
\end{array}
\end{array}$
-The table above shows the amounts of cloth and cheese that China and Pakistan can produce in an hour.Which country has the comparative advantage in cloth and which country has the comparative advantage in cheese?

Accepted Answer

In China,to produce 8 cloths has an oppo

Question 6

-Point D in the above PPF figure is

Accepted Answer

A)  an attainable production combination with unemployed resources. 
B)  a tradeoff. 
C)  an unattainable production combination. 
D)  a production combination that can be attained once resources are fully employed. 
E)  More information is needed to determine which of the above answers is correct. 
A)  an attainable production combination with unemployed resources. 
B)  a tradeoff. 
C)  an unattainable production combination. 
D)  a production combination that can be attained once resources are fully employed. 
E)  More information is needed to determine which of the above answers is correct.

Question 7

$\begin{array}{c}
\begin{array}{lll}
\text { Mary's production in 1 day }\
\hline \text { Dresses }\quad  8\
\text { Jackets } \quad 12\
\end{array}
\begin{array}{lll}
\text { Mark's production in 1 day }\
\hline \text { Dresses }\quad 24\
\text { Jackets } \quad  16\
\end{array}
\end{array}$

-In the above table,for Mary the opportunity cost of producing a dress is ________,and the opportunity cost for Mark of producing a dress is ________.

Accepted Answer

A)  1 1/2 jackets; 2/3 of a jacket 
B)  1 1/2 jackets; 2 1/2 jackets 
C)  1 1/4 jackets; 1/2 of a jacket 
D)  1 jacket; 1 jacket 
E)  1 dress; 1 dress 
A)  1 1/2 jackets; 2/3 of a jacket 
B)  1 1/2 jackets; 2 1/2 jackets 
C)  1 1/4 jackets; 1/2 of a jacket 
D)  1 jacket; 1 jacket 
E)  1 dress; 1 dress

Question 8

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. 
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.

Question 9

Points inside the PPF are all

Accepted Answer

A)  unattainable and have fully employed resources. 
B)  attainable and have fully employed resources. 
C)  unattainable and have some unemployed resources. 
D)  attainable and have some unemployed resources. 
E)  unaffordable. 
A)  unattainable and have fully employed resources. 
B)  attainable and have fully employed resources. 
C)  unattainable and have some unemployed resources. 
D)  attainable and have some unemployed resources. 
E)  unaffordable.

Question 10

If an economy cannot produce more of one good without producing less of another good,this implies that which of the following has been achieved?

Accepted Answer

A)  allocative efficiency 
B)  minimum marginal cost 
C)  PPF efficiency 
D)  production efficiency 
E)  maximum marginal benefit 
A)  allocative efficiency 
B)  minimum marginal cost 
C)  PPF efficiency 
D)  production efficiency 
E)  maximum marginal benefit

Question 11

-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 B 
A)  point A 
B)  point B 
C)  point C 
D)  point D 
E)  point A and point B

Question 12

The production possibilities frontier illustrates which of the following economic ideas?

Accepted Answer

A)  efficiency 
B)  tradeoffs 
C)  opportunity cost 
D)  all of the above 
E)  none of the above 
A)  efficiency 
B)  tradeoffs 
C)  opportunity cost 
D)  all of the above 
E)  none of the above

Question 13

-The figure above shows a nation's production possibilities frontier for apples and oranges.
a.What combination of goods is represented by point A?
b.What combination of goods is represented by point B?
c.Which point represents an unattainable combination of goods?
d.The movement from point C to point D results in a free lunch.What is the free lunch?

Accepted Answer

a.3 million bushels of apples and 3 mill

Question 14

The production possibilities frontier is the

Accepted Answer

A)  maximum output that can be produced at an opportunity cost of zero. 
B)  minimum output that can be produced when resources are used inefficiently. 
C)  boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology. 
D)  boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced when technology is changing. 
E)  maximum opportunity cost combinations of goods and services. 
A)  maximum output that can be produced at an opportunity cost of zero. 
B)  minimum output that can be produced when resources are used inefficiently. 
C)  boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology. 
D)  boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced when technology is changing. 
E)  maximum opportunity cost combinations of goods and services.

Question 15

When drawing a production possibilities frontier,which of the following is held constant?

Accepted Answer

A)  the amount of money in the economy 
B)  the available factors of production and the state of technology 
C)  the prices of goods and services 
D)  the quantity of the goods and services that are produced 
E)  None of the above because nothing is held constant when drawing the production possibilities frontier. 
A)  the amount of money in the economy 
B)  the available factors of production and the state of technology 
C)  the prices of goods and services 
D)  the quantity of the goods and services that are produced 
E)  None of the above because nothing is held constant when drawing the production possibilities frontier.

Question 16

If Country A can produce an extra plane by giving up two boats,and Country B can produce an extra plane by giving up three boats,then

Accepted Answer

A)  Country A has a comparative advantage over Country B in the production of planes. 
B)  Country B has a comparative advantage over Country A in the production of planes. 
C)  the two countries have no incentive to trade with one another. 
D)  Country A would like to trade with B, but B cannot gain by trading with A. 
E)  Country A has an absolute advantage in producing planes and a comparative advantage in producing boats. 
A)  Country A has a comparative advantage over Country B in the production of planes. 
B)  Country B has a comparative advantage over Country A in the production of planes. 
C)  the two countries have no incentive to trade with one another. 
D)  Country A would like to trade with B, but B cannot gain by trading with A. 
E)  Country A has an absolute advantage in producing planes and a comparative advantage in producing boats.

Question 17

The opportunity cost of economic growth is

Accepted Answer

A)  0, because it means an expansion of production possibilities. 
B)  the decrease in the current production of productive factors. 
C)  a slower accumulation of human capital. 
D)  the decrease in the current production of consumption goods. 
E)  the increase in the nation's capital stock and/or its technology. 
A)  0, because it means an expansion of production possibilities. 
B)  the decrease in the current production of productive factors. 
C)  a slower accumulation of human capital. 
D)  the decrease in the current production of consumption goods. 
E)  the increase in the nation's capital stock and/or its technology.

Question 18

Alice and Gene work in the mailroom,sorting and delivering mail.In order for them to benefit from specialization and trade,Alice must

Accepted Answer

A)  be able to both sort and deliver faster than Gene. 
B)  be equally productive in both sorting and delivering. 
C)  have a comparative advantage in both sorting and delivering. 
D)  have a comparative advantage in one task and Gene must have a comparative advantage in the other task. 
E)  be equally productive as Gene in both sorting and delivering. 
A)  be able to both sort and deliver faster than Gene. 
B)  be equally productive in both sorting and delivering. 
C)  have a comparative advantage in both sorting and delivering. 
D)  have a comparative advantage in one task and Gene must have a comparative advantage in the other task. 
E)  be equally productive as Gene in both sorting and delivering.

Question 19

In one hour John can produce 20 loaves of bread or 8 cakes.In one hour Phyllis can produce 30 loaves of bread or 15 cakes.Which of the following statements is true?

Accepted Answer

A)  Phyllis has a comparative advantage in producing bread. 
B)  John has a comparative advantage in producing cakes. 
C)  Phyllis has an absolute advantage in both goods. 
D)  John has an absolute advantage in both goods. 
E)  Phyllis has a comparative advantage in producing both cakes and bread. 
A)  Phyllis has a comparative advantage in producing bread. 
B)  John has a comparative advantage in producing cakes. 
C)  Phyllis has an absolute advantage in both goods. 
D)  John has an absolute advantage in both goods. 
E)  Phyllis has a comparative advantage in producing both cakes and bread.

Question 20

Consider a production possibility frontier with jeans on the vertical axis and shoes on the horizontal axis.As the country moves along the frontier closer to the horizontal axis,

Accepted Answer

A)  more jeans are produced. 
B)  the country eventually chooses an unattainable point. 
C)  free lunches occur. 
D)  more tradeoffs occur. 
E)  more shoes are produced. 
A)  more jeans are produced. 
B)  the country eventually chooses an unattainable point. 
C)  free lunches occur. 
D)  more tradeoffs occur. 
E)  more shoes are produced.

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

The United States can use all of its resources to produce 50 computers or 4,000 shoes.Suppose that at world market prices,one computer exchanges for 100 shoes.Explain how the United States can gain from trade.

Potatoes (pounds) Tomatoes (pounds) Huey 12 or 8 Steve 6 or 2 -Huey and Steve can grow potatoes or tomatoes.The table above shows the pounds of potatoes and tomatoes Huey and Steve can grow in a week.Based on the table,Steve has a comparative advantage in

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

-Point D in the above PPF figure is

Mary's production in 1 day Dresses 8 Jackets 12 Mark's production in 1 day Dresses 24 Jackets 16 -In the above table,for Mary the opportunity cost of producing a dress is ,and the opportunity cost for Mark of producing a dress is .

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

Points inside the PPF are all

If an economy cannot produce more of one good without producing less of another good,this implies that which of the following has been achieved?

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

The production possibilities frontier illustrates which of the following economic ideas?

The production possibilities frontier is the

When drawing a production possibilities frontier,which of the following is held constant?

If Country A can produce an extra plane by giving up two boats,and Country B can produce an extra plane by giving up three boats,then

The opportunity cost of economic growth is

Alice and Gene work in the mailroom,sorting and delivering mail.In order for them to benefit from specialization and trade,Alice must

In one hour John can produce 20 loaves of bread or 8 cakes.In one hour Phyllis can produce 30 loaves of bread or 15 cakes.Which of the following statements is true?

Consider a production possibility frontier with jeans on the vertical axis and shoes on the horizontal axis.As the country moves along the frontier closer to the horizontal axis,

Getting Started

The U.S.and Global Economies

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 3: The Economic Problem

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

The United States can use all of its resources to produce 50 computers or 4,000 shoes.Suppose that at world market prices,one computer exchanges for 100 shoes.Explain how the United States can gain from trade.

Potatoes (pounds) Tomatoes (pounds) Huey 12 or 8 Steve 6 or 2 -Huey and Steve can grow potatoes or tomatoes.The table above shows the pounds of potatoes and tomatoes Huey and Steve can grow in a week.Based on the table,Steve has a comparative advantage in

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

-Point D in the above PPF figure is

Mary's production in 1 day Dresses 8 Jackets 12 Mark's production in 1 day Dresses 24 Jackets 16 -In the above table,for Mary the opportunity cost of producing a dress is ________,and the opportunity cost for Mark of producing a dress is ________.

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

Points inside the PPF are all

If an economy cannot produce more of one good without producing less of another good,this implies that which of the following has been achieved?

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

The production possibilities frontier illustrates which of the following economic ideas?

The production possibilities frontier is the

When drawing a production possibilities frontier,which of the following is held constant?

If Country A can produce an extra plane by giving up two boats,and Country B can produce an extra plane by giving up three boats,then

The opportunity cost of economic growth is

Alice and Gene work in the mailroom,sorting and delivering mail.In order for them to benefit from specialization and trade,Alice must

In one hour John can produce 20 loaves of bread or 8 cakes.In one hour Phyllis can produce 30 loaves of bread or 15 cakes.Which of the following statements is true?

Consider a production possibility frontier with jeans on the vertical axis and shoes on the horizontal axis.As the country moves along the frontier closer to the horizontal axis,

Getting Started

The U.S.and Global Economies

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Mary's production in 1 day Dresses 8 Jackets 12 Mark's production in 1 day Dresses 24 Jackets 16 -In the above table,for Mary the opportunity cost of producing a dress is ,and the opportunity cost for Mark of producing a dress is .