Question 1

The ability of one producer to produce a good at a lower opportunity cost than another producer is called:

Accepted Answer

A)  a normative statement. 
B)  a zero-sum game. 
C)  absolute advantage. 
D)  comparative advantage. 
E)  the law of increasing relative cost. 
A)  a normative statement. 
B)  a zero-sum game. 
C)  absolute advantage. 
D)  comparative advantage. 
E)  the law of increasing relative cost.

Question 2

Consider the production possibilities frontier (PPF) shown in the figure below to answer the next three questions.
  
-The set of efficient points is best described as:

Accepted Answer

A)  only area O: points outside the PPF. 
B)  points on the PPF only. 
C)  only area I: points inside the PPF. 
D)  area I: inside the PPF and points on the PPF. 
E)  area O: outside the PPF and points on the PPF. 
A)  only area O: points outside the PPF. 
B)  points on the PPF only. 
C)  only area I: points inside the PPF. 
D)  area I: inside the PPF and points on the PPF. 
E)  area O: outside the PPF and points on the PPF.

Question 3

Which of the following is NOT an assumption that economists make when developing a production possibilities frontier (PPF)?

Accepted Answer

A)  We live in a world with only two goods. 
B)  There are no increases in technology. 
C)  There is no change in available resources. 
D)  Society will always be producing somewhere on the PPF. 
E)  There are no decreases in technology. 
A)  We live in a world with only two goods. 
B)  There are no increases in technology. 
C)  There is no change in available resources. 
D)  Society will always be producing somewhere on the PPF. 
E)  There are no decreases in technology.

Question 4

Draw a production possibilities frontier (PPF) that shows a pizza shop's production trade-offs between producing pizzas and stromboli.Suppose the pizza shop upgrades to a larger,more-automated oven.On the same graph,show how the PPF changes.(The oven is used to bake both pizzas and stromboli.)

Accepted Answer

The answer of Draw a production possibilities frontier (PPF) that...

Question 5

Which of the following would NOT lead to an outward shift of a future production possibilities frontier (PPF)?

Accepted Answer

A)  population growth 
B)  increased investment today 
C)  an increase in technology 
D)  the discovery of new resources 
E)  a decline in life expectancy 
A)  population growth 
B)  increased investment today 
C)  an increase in technology 
D)  the discovery of new resources 
E)  a decline in life expectancy

Question 6

The scientific method and the tools of economics are useful in examining:

Accepted Answer

A)  only how individuals make decisions. 
B)  only how business firms make decisions. 
C)  only how government policies affect macroeconomic outcomes. 
D)  only the trade-offs evident in production possibilities frontier (PPF). 
E)  anything; economists will use their tools to study anything in the world around them. 
A)  only how individuals make decisions. 
B)  only how business firms make decisions. 
C)  only how government policies affect macroeconomic outcomes. 
D)  only the trade-offs evident in production possibilities frontier (PPF). 
E)  anything; economists will use their tools to study anything in the world around them.

Question 7

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the next two questions.
  
-Suppose that,on a particular Saturday,Mark Zuckerberg and Bill Gates can either plant trees or spread mulch in their gardens.Their maximum output per day is listed in the following table,along with spaces where you can calculate the opportunity cost.Who has an absolute advantage in spreading mulch?

Accepted Answer

A)  Zuckerberg has the advantage because he gives up fewer trees each time he spreads 1 cubic yard of mulch. 
B)  Gates has the advantage because he gives up fewer trees each time he spreads 1 cubic yard of mulch. 
C)  Zuckerberg has the advantage because he gives up more trees each time he spreads 1 cubic yard of mulch. 
D)  Neither has an absolute advantage in spreading mulch. 
E)  Both parties have an absolute advantage in planting trees. 
A)  Zuckerberg has the advantage because he gives up fewer trees each time he spreads 1 cubic yard of mulch. 
B)  Gates has the advantage because he gives up fewer trees each time he spreads 1 cubic yard of mulch. 
C)  Zuckerberg has the advantage because he gives up more trees each time he spreads 1 cubic yard of mulch. 
D)  Neither has an absolute advantage in spreading mulch. 
E)  Both parties have an absolute advantage in planting trees.

Question 8

As you move from one efficient point on the production possibilities frontier (PPF) to another efficient point on the PPF,you experience:

Accepted Answer

A)  decreasing relative cost. 
B)  opportunity cost. 
C)  macroeconomics. 
D)  unlimited resources. 
E)  unattainable combinations. 
A)  decreasing relative cost. 
B)  opportunity cost. 
C)  macroeconomics. 
D)  unlimited resources. 
E)  unattainable combinations.

Question 9

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the next three questions.
  
-What is DiNozzo's opportunity cost of making a wooden boat?

Accepted Answer

A)  20 solved crimes 
B)  30 solved crimes 
C)  10 solved crimes 
D)  1/20 of a boat 
E)  1/10 of a boat 
A)  20 solved crimes 
B)  30 solved crimes 
C)  10 solved crimes 
D)  1/20 of a boat 
E)  1/10 of a boat

Question 10

Which of the following is a positive statement?

Accepted Answer

A)  My dog should lose some weight. 
B)  Legally requiring dogs to have rabies shots will reduce the number of rabid dogs. 
C)  You should take your dog to the veterinarian once a year for a checkup. 
D)  Chihuahuas are cuter than bulldogs. 
E)  All dogs should be required to wear leashes at all times. 
A)  My dog should lose some weight. 
B)  Legally requiring dogs to have rabies shots will reduce the number of rabid dogs. 
C)  You should take your dog to the veterinarian once a year for a checkup. 
D)  Chihuahuas are cuter than bulldogs. 
E)  All dogs should be required to wear leashes at all times.

Question 11

An increase in the labor force would be reflected in a society's production possibilities frontier (PPF) by an:

Accepted Answer

A)  increase in opportunity cost. 
B)  inward shift of the PPF. 
C)  outward shift of the PPF. 
D)  outward rotation along the x axis. 
E)  outward rotation along the y axis. 
A)  increase in opportunity cost. 
B)  inward shift of the PPF. 
C)  outward shift of the PPF. 
D)  outward rotation along the x axis. 
E)  outward rotation along the y axis.

Question 12

Suppose that Dwight and Jim can either make salads or grill steaks.Their maximum output per hour is listed in the following table.Given the same quantity of resources,at what terms of trade (relative price ratio) could they specialize and trade so that both consume outside their own production possibilities frontier (PPF)?

Accepted Answer

A)  1 salad per 1 steak 
B)  2 salads per 1 steak 
C)  2.5 salads per 1 steak 
D)  3 salads per 1 steak 
E)  3.5 salads per 1 steak 
A)  1 salad per 1 steak 
B)  2 salads per 1 steak 
C)  2.5 salads per 1 steak 
D)  3 salads per 1 steak 
E)  3.5 salads per 1 steak

Question 13

Consumer goods:

Accepted Answer

A)  are produced today to be used to produce more goods in the future. 
B)  are produced today to be consumed at some point in the future. 
C)  are invested today in order to consume more today. 
D)  are produced today to be consumed today. 
E)  generate economic growth. 
A)  are produced today to be used to produce more goods in the future. 
B)  are produced today to be consumed at some point in the future. 
C)  are invested today in order to consume more today. 
D)  are produced today to be consumed today. 
E)  generate economic growth.

Question 14

Variables that are controlled for in a model are called:

Accepted Answer

A)  normative statements. 
B)  positive statements. 
C)  endogenous factors. 
D)  exogenous factors. 
E)  the scientific method. 
A)  normative statements. 
B)  positive statements. 
C)  endogenous factors. 
D)  exogenous factors. 
E)  the scientific method.

Question 15

Refer to the following figure to answer the next four questions.
  
-The _________ states that the opportunity cost of producing a good always rises as you produce more of it.

Accepted Answer

A)  law of increasing relative cost 
B)  law of positive economics 
C)  law of demand 
D)  production possibilities frontier (PPF) model 
E)  zero-sum game 
A)  law of increasing relative cost 
B)  law of positive economics 
C)  law of demand 
D)  production possibilities frontier (PPF) model 
E)  zero-sum game

Question 16

Refer to the following table to answer the next three questions.
  
-Given an eight-hour workday,and to experience gains from trade,

Accepted Answer

A)  Alicia should make pizzas and Jay-Z should make cheesesteaks. 
B)  Alicia should make cheesesteaks and Jay-Z should make pizzas. 
C)  each should make their own cheesesteaks and pizzas. 
D)  Alicia should produce both pizzas and cheesesteaks. 
E)  Jay-Z should produce both pizzas and cheesesteaks. 
A)  Alicia should make pizzas and Jay-Z should make cheesesteaks. 
B)  Alicia should make cheesesteaks and Jay-Z should make pizzas. 
C)  each should make their own cheesesteaks and pizzas. 
D)  Alicia should produce both pizzas and cheesesteaks. 
E)  Jay-Z should produce both pizzas and cheesesteaks.

Question 17

The opportunity cost of every investment in capital goods is:

Accepted Answer

A)  current consumption (consumer goods). 
B)  future consumption (capital goods today). 
C)  absolute advantage. 
D)  comparative advantage. 
E)  scarcity. 
A)  current consumption (consumer goods). 
B)  future consumption (capital goods today). 
C)  absolute advantage. 
D)  comparative advantage. 
E)  scarcity.

Question 18

Suppose Jim is a brilliant attorney who can draft especially persuasive legal briefs.He also happens to possess some excellent administrative skills such as typing,filing,assembling binders and notes,and making reservations.Which best describes whether Jim should hire an administrative assistant to help him?

Accepted Answer

A)  Jim should not hire an administrative assistant because he has an absolute advantage in performing administrative functions. 
B)  Jim should not hire an administrative assistant because he likely has a comparative advantage in performing administrative functions. 
C)  Jim should hire an administrative assistant because the assistant would likely have an absolute advantage in writing legal briefs. 
D)  Jim should hire an administrative assistant because the assistant would likely have a comparative advantage in performing administrative functions. 
E)  Jim should hire an administrative assistant because the assistant would likely have a comparative advantage in writing legal briefs. 
A)  Jim should not hire an administrative assistant because he has an absolute advantage in performing administrative functions. 
B)  Jim should not hire an administrative assistant because he likely has a comparative advantage in performing administrative functions. 
C)  Jim should hire an administrative assistant because the assistant would likely have an absolute advantage in writing legal briefs. 
D)  Jim should hire an administrative assistant because the assistant would likely have a comparative advantage in performing administrative functions. 
E)  Jim should hire an administrative assistant because the assistant would likely have a comparative advantage in writing legal briefs.

Question 19

On a production possibilities frontier (PPF) that shows the trade-off between consumer goods and capital goods given a fixed amount of labor,unemployment is illustrated by:

Accepted Answer

A)  movement from a point within the frontier to a point on the frontier. 
B)  a point outside the frontier. 
C)  a point within the frontier. 
D)  movement from a point on the frontier to another point on the frontier. 
E)  a point on the frontier. 
A)  movement from a point within the frontier to a point on the frontier. 
B)  a point outside the frontier. 
C)  a point within the frontier. 
D)  movement from a point on the frontier to another point on the frontier. 
E)  a point on the frontier.

Question 20

Suppose that Sheldon and Leonard can either run errands or wash dishes.Their maximum output per hour is listed in the following table.Given the same quantity of resources,at what terms of trade (relative price ratio) could they specialize and trade so that both consume outside their own production possibilities frontier (PPF)?

Accepted Answer

A)  1 errand run per 75 dishes washed 
B)  1 errand run per 30 dishes washed 
C)  1 errand run per 12 dishes washed 
D)  1 errand run per 10 dishes washed 
E)  1 errand run per 6 dishes washed 
A)  1 errand run per 75 dishes washed 
B)  1 errand run per 30 dishes washed 
C)  1 errand run per 12 dishes washed 
D)  1 errand run per 10 dishes washed 
E)  1 errand run per 6 dishes washed

The ability of one producer to produce a good at a lower opportunity cost than another producer is called:

Consider the production possibilities frontier (PPF) shown in the figure below to answer the next three questions. -The set of efficient points is best described as:

Which of the following is NOT an assumption that economists make when developing a production possibilities frontier (PPF)?

Draw a production possibilities frontier (PPF) that shows a pizza shop's production trade-offs between producing pizzas and stromboli.Suppose the pizza shop upgrades to a larger,more-automated oven.On the same graph,show how the PPF changes.(The oven is used to bake both pizzas and stromboli.)

Which of the following would NOT lead to an outward shift of a future production possibilities frontier (PPF)?

The scientific method and the tools of economics are useful in examining:

As you move from one efficient point on the production possibilities frontier (PPF) to another efficient point on the PPF,you experience:

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the next three questions. -What is DiNozzo's opportunity cost of making a wooden boat?

Which of the following is a positive statement?

An increase in the labor force would be reflected in a society's production possibilities frontier (PPF) by an:

Consumer goods:

Variables that are controlled for in a model are called:

Refer to the following figure to answer the next four questions. -The _________ states that the opportunity cost of producing a good always rises as you produce more of it.

Refer to the following table to answer the next three questions. -Given an eight-hour workday,and to experience gains from trade,

The opportunity cost of every investment in capital goods is:

On a production possibilities frontier (PPF) that shows the trade-off between consumer goods and capital goods given a fixed amount of labor,unemployment is illustrated by:

The Five Foundations of Economics

The Market at Work: Supply and Demand

Price Controls

The Efficiency of Markets and the Costs of Taxation

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings, interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Aggregate Demandaggregate Supply Model

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

Filters

Exam 2: Model Building and Gains From Trade

The ability of one producer to produce a good at a lower opportunity cost than another producer is called:

Consider the production possibilities frontier (PPF) shown in the figure below to answer the next three questions. -The set of efficient points is best described as:

Which of the following is NOT an assumption that economists make when developing a production possibilities frontier (PPF)?

Draw a production possibilities frontier (PPF) that shows a pizza shop's production trade-offs between producing pizzas and stromboli.Suppose the pizza shop upgrades to a larger,more-automated oven.On the same graph,show how the PPF changes.(The oven is used to bake both pizzas and stromboli.)

Which of the following would NOT lead to an outward shift of a future production possibilities frontier (PPF)?

The scientific method and the tools of economics are useful in examining:

As you move from one efficient point on the production possibilities frontier (PPF) to another efficient point on the PPF,you experience:

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the next three questions. -What is DiNozzo's opportunity cost of making a wooden boat?

Which of the following is a positive statement?

An increase in the labor force would be reflected in a society's production possibilities frontier (PPF) by an:

Consumer goods:

Variables that are controlled for in a model are called:

Refer to the following figure to answer the next four questions. -The _________ states that the opportunity cost of producing a good always rises as you produce more of it.

Refer to the following table to answer the next three questions. -Given an eight-hour workday,and to experience gains from trade,

The opportunity cost of every investment in capital goods is:

On a production possibilities frontier (PPF) that shows the trade-off between consumer goods and capital goods given a fixed amount of labor,unemployment is illustrated by:

The Five Foundations of Economics

The Market at Work: Supply and Demand

Price Controls

The Efficiency of Markets and the Costs of Taxation

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings, interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Aggregate Demandaggregate Supply Model

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

Filters