Question 1

Moving along the production possibilities frontier itself illustrates

Accepted Answer

A) the existence of tradeoffs. 
B) the existence of unemployment of some factors of production. 
C) the benefits of free lunches. 
D) how free lunches can be exploited through trade. 
E) how tradeoffs need not occur if the economy is efficient. 
A) the existence of tradeoffs. 
B) the existence of unemployment of some factors of production. 
C) the benefits of free lunches. 
D) how free lunches can be exploited through trade. 
E) how tradeoffs need not occur if the economy is efficient. A

Question 2

The United States can use all its resources to produce 250 DVDs or 500 shoes.China can use all of its resources to produce 30 DVDs or 300 shoes.The opportunity cost of producing a DVD in the United States is

Accepted Answer

A) 2 shoes. 
B) 1/2 of a shoe. 
C) 20 shoes. 
D) 500 shoes. 
E) 1 DVD. 
A) 2 shoes. 
B) 1/2 of a shoe. 
C) 20 shoes. 
D) 500 shoes. 
E) 1 DVD. A

Question 3

The production possibilities frontier is the boundary between the

Accepted Answer

A) goods and services that the economy can produce. 
B) attainable and unattainable combinations of goods and services. 
C) wanted and unwanted combinations of goods and services. 
D) rational and irrational choices facing a society. 
E) affordable and unaffordable combinations of production. 
A) goods and services that the economy can produce. 
B) attainable and unattainable combinations of goods and services. 
C) wanted and unwanted combinations of goods and services. 
D) rational and irrational choices facing a society. 
E) affordable and unaffordable combinations of production. B

Question 4

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 
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 5

-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. 
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.

Question 6

-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. 
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 7

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. 
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 8

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. 
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 9

Production efficiency occurs

Accepted Answer

A) anywhere inside or on the production possibilities frontier. 
B) when the total cost of production is minimized. 
C) at all points on the production possibilities frontier. 
D) at only one point on the production possibilities frontier. 
E) at all points inside the production possibilities frontier. 
A) anywhere inside or on the production possibilities frontier. 
B) when the total cost of production is minimized. 
C) at all points on the production possibilities frontier. 
D) at only one point on the production possibilities frontier. 
E) at all points inside the production possibilities frontier.

Question 10

-The figure above shows the production possibilities frontier for a country.A combination of 2 million gallons of milk and 2 million gallons of ice cream is

Accepted Answer

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

Question 11

The bowed out (concave)shape of the production possibilities curve implies that as production of one good

Accepted Answer

A) increases, society must forgo increasing amounts of another good. 
B) increases, society must forgo decreasing amounts of another good. 
C) decreases, production of other goods decreases as well. 
D) increases, production of other goods increases as well. 
E) increases, society can obtain a free lunch. 
A) increases, society must forgo increasing amounts of another good. 
B) increases, society must forgo decreasing amounts of another good. 
C) decreases, production of other goods decreases as well. 
D) increases, production of other goods increases as well. 
E) increases, society can obtain a free lunch.

Question 12

Gains from trade

Accepted Answer

A) occur when one party to the trade has an absolute advantage in both goods. 
B) result in being able to consume beyond the trading individuals' production possibilities frontiers. 
C) occur when people do not specialize. 
D) occur when opportunity costs are equal. 
E) always benefit one party but not the other party of any trade. 
A) occur when one party to the trade has an absolute advantage in both goods. 
B) result in being able to consume beyond the trading individuals' production possibilities frontiers. 
C) occur when people do not specialize. 
D) occur when opportunity costs are equal. 
E) always benefit one party but not the other party of any trade.

Question 13

If Toni has an absolute advantage in both sewing and ironing when compared to Tom, then

Accepted Answer

A) they might benefit from trading, but we need more information to determine in which task they should specialize. 
B) neither Toni nor Tom can benefit from trading with each other. 
C) Toni should specialize in sewing, and Tom should specialize in ironing. 
D) Toni cannot benefit from trading with Tom, but Tom can benefit from trading with Toni. 
E) Tom cannot benefit from trading with Toni, but Toni can benefit from trading with Tom. 
A) they might benefit from trading, but we need more information to determine in which task they should specialize. 
B) neither Toni nor Tom can benefit from trading with each other. 
C) Toni should specialize in sewing, and Tom should specialize in ironing. 
D) Toni cannot benefit from trading with Tom, but Tom can benefit from trading with Toni. 
E) Tom cannot benefit from trading with Toni, but Toni can benefit from trading with Tom.

Question 14

The figure above show Liz's and Joe's production possibilities for Salads and Smoothies.
-Liz has a comparative advantage in ________ and an absolute advantage in ________.

Accepted Answer

A) smoothies only; both goods 
B) smoothies only; smoothies only 
C) both goods; both goods 
D) salads only; both goods 
E) salads only; salads only 
A) smoothies only; both goods 
B) smoothies only; smoothies only 
C) both goods; both goods 
D) salads only; both goods 
E) salads only; salads only

Question 15

The saying "There's no such thing as a free lunch," applies

Accepted Answer

A) when there is some unemployment. 
B) on the production possibilities frontier. 
C) to unattainable combinations of goods and services. 
D) when more of one good can be produced without decreasing production of another. 
E) at all points inside the PPF. 
A) when there is some unemployment. 
B) on the production possibilities frontier. 
C) to unattainable combinations of goods and services. 
D) when more of one good can be produced without decreasing production of another. 
E) at all points inside the PPF.

Question 16

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 17

When one person's opportunity cost of producing a good is lower than another person's opportunity cost of producing the same good, it is called

Accepted Answer

A) an absolute advantage. 
B) a comparative advantage. 
C) specialization. 
D) production possibilities. 
E) a trade off. 
A) an absolute advantage. 
B) a comparative advantage. 
C) specialization. 
D) production possibilities. 
E) a trade off.

Question 18

Consider a PPF with consumption goods on the horizontal axis and capital goods on the vertical axis.If the country operates on its PPF near its ____________ axis, this country __________.

Accepted Answer

A) vertical; will experience greater economic growth 
B) vertical; will not face opportunity costs 
C) horizontal; will have a larger chance at economic growth 
D) horizontal; faces larger trade offs 
E) vertical; is operating at an inefficient point 
A) vertical; will experience greater economic growth 
B) vertical; will not face opportunity costs 
C) horizontal; will have a larger chance at economic growth 
D) horizontal; faces larger trade offs 
E) vertical; is operating at an inefficient point

Question 19

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. 
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 20

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

Moving along the production possibilities frontier itself illustrates

The United States can use all its resources to produce 250 DVDs or 500 shoes.China can use all of its resources to produce 30 DVDs or 300 shoes.The opportunity cost of producing a DVD in the United States is

The production possibilities frontier is the boundary between the

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?

-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

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

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

Production efficiency occurs

-The figure above shows the production possibilities frontier for a country.A combination of 2 million gallons of milk and 2 million gallons of ice cream is

The bowed out (concave)shape of the production possibilities curve implies that as production of one good

Gains from trade

If Toni has an absolute advantage in both sewing and ironing when compared to Tom, then

The figure above show Liz's and Joe's production possibilities for Salads and Smoothies. -Liz has a comparative advantage in and an absolute advantage in .

The saying "There's no such thing as a free lunch," applies

The production possibilities frontier is the

When one person's opportunity cost of producing a good is lower than another person's opportunity cost of producing the same good, it is called

Consider a PPF with consumption goods on the horizontal axis and capital goods on the vertical axis.If the country operates on its PPF near its __ axis, this country .

The production possibilities frontier is a boundary that separates

-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.

Getting Started

The Usand 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

Moving along the production possibilities frontier itself illustrates

The United States can use all its resources to produce 250 DVDs or 500 shoes.China can use all of its resources to produce 30 DVDs or 300 shoes.The opportunity cost of producing a DVD in the United States is

The production possibilities frontier is the boundary between the

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?

-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

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

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

Production efficiency occurs

-The figure above shows the production possibilities frontier for a country.A combination of 2 million gallons of milk and 2 million gallons of ice cream is

The bowed out (concave)shape of the production possibilities curve implies that as production of one good

Gains from trade

If Toni has an absolute advantage in both sewing and ironing when compared to Tom, then

The figure above show Liz's and Joe's production possibilities for Salads and Smoothies. -Liz has a comparative advantage in ________ and an absolute advantage in ________.

The saying "There's no such thing as a free lunch," applies

The production possibilities frontier is the

When one person's opportunity cost of producing a good is lower than another person's opportunity cost of producing the same good, it is called

Consider a PPF with consumption goods on the horizontal axis and capital goods on the vertical axis.If the country operates on its PPF near its ____________ axis, this country __________.

The production possibilities frontier is a boundary that separates

-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.

Getting Started

The Usand 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

The figure above show Liz's and Joe's production possibilities for Salads and Smoothies. -Liz has a comparative advantage in and an absolute advantage in .

Consider a PPF with consumption goods on the horizontal axis and capital goods on the vertical axis.If the country operates on its PPF near its __ axis, this country .