Question 1

According to the Principle of Increasing Opportunity Cost, in expanding the production of any good, we should start by utilizing the resources that:

Accepted Answer

A) we have the most of. 
B) we have the least of. 
C) have the highest opportunity cost. 
D) have the lowest opportunity cost. 
A) we have the most of. 
B) we have the least of. 
C) have the highest opportunity cost. 
D) have the lowest opportunity cost.

Question 2

Refer to the accompanying figure. For Chris, the opportunity cost of removing one bag of trash is planting:

Accepted Answer

A) 25 bulbs. 
B) 1/25 of a bulb. 
C) 3 bulbs. 
D) 1/3 of a bulb. 
A) 25 bulbs. 
B) 1/25 of a bulb. 
C) 3 bulbs. 
D) 1/3 of a bulb.

Question 3

Earth Movers & Shakers operates 3 iron ore mines. The accompanying table shows each mine's total daily production and the current number of miners at each mine. All miners work for the same wage, and each miner in any given mine produces the same number of tons per day as every other miner in that mine. $$\begin{array} { | l | r | r | } 
\hline & \text { Total Tans Per Day } & \text { Number of Miners } \
\hline \text { Mother Iuode } & 100 & 25 \
\hline \text { Bcrapirng Bottorn } & 30 & 75 \
\hline \text { Middle Drift } & 75 & 15 \
\hline
\end{array}$$  
The opportunity cost of moving one miner from Mother Lode to another mine is:

Accepted Answer

A) 2 tons per day. 
B) 3 tons per day. 
C) 4 tons per day. 
D) 1 ton per day. 
A) 2 tons per day. 
B) 3 tons per day. 
C) 4 tons per day. 
D) 1 ton per day.

Question 4

Refer to the accompanying figure. The opportunity cost of producing one bushel of corn is:

Accepted Answer

A) 2 bushels of wheat. 
B) ½ of a bushel of wheat. 
C) 500 bushels of wheat. 
D) 250 bushels of wheat. 
A) 2 bushels of wheat. 
B) ½ of a bushel of wheat. 
C) 500 bushels of wheat. 
D) 250 bushels of wheat.

Question 5

Production possibilities curves for large economies are generally bow-shaped because:

Accepted Answer

A) specialization gives some producers a comparative advantage. 
B) opportunity costs tend to decrease with increases in production. 
C) opportunity costs tend to increase with increases in production. 
D) as more resources are used to produce a good, those resources become less expensive. 
A) specialization gives some producers a comparative advantage. 
B) opportunity costs tend to decrease with increases in production. 
C) opportunity costs tend to increase with increases in production. 
D) as more resources are used to produce a good, those resources become less expensive.

Question 6

An increase in an economy's productive resources will lead the production possibilities curve to:

Accepted Answer

A) shift inward. 
B) shift outward. 
C) become flatter. 
D) stay the same. 
A) shift inward. 
B) shift outward. 
C) become flatter. 
D) stay the same.

Question 7

Smith and Jones comprise a two-person economy. Their hourly rates of production are shown in the accompanying table. $$\begin{array} { | l | r | r | } 
\hline & \text { Calculatars Per Haur } & \text { Camputers Per Haur } \
\hline \text { Brith } & 100 & 10 \
\hline \text { Jones } & 120 & 6\
\hline
\end{array}$$  
If Smith and Jones devote all of their resources to producing computers, then the maximum number of computers they can produce in an hour is:

Accepted Answer

A) 120. 
B) 6. 
C) 16. 
D) 10. 
A) 120. 
B) 6. 
C) 16. 
D) 10.

Question 8

Points that lie beneath the production possibilities curve are:

Accepted Answer

A) unattainable and inefficient. 
B) unattainable but efficient. 
C) attainable but inefficient. 
D) attainable and efficient. 
A) unattainable and inefficient. 
B) unattainable but efficient. 
C) attainable but inefficient. 
D) attainable and efficient.

Question 9

Assume point A on a linear production possibilities curve represents the combination of 12 coffees and 3 cappuccinos, and point B represents 3 coffees and 6 cappuccinos. Suppose coffees are on the vertical axis and cappuccinos are on the horizontal axis. The opportunity cost of a cup of coffee is:

Accepted Answer

A) 3 cappuccinos. 
B) 9 cappuccinos. 
C) 1/3 of a cappuccino. 
D) 6 cappuccinos. 
A) 3 cappuccinos. 
B) 9 cappuccinos. 
C) 1/3 of a cappuccino. 
D) 6 cappuccinos.

Question 10

Suppose it takes Dan 5 minutes to make a sandwich and 15 minutes to make a smoothie, and it takes Tracy 6 minutes to make a sandwich and 12 minutes to make a smoothie. What is the opportunity cost to Dan of making a sandwich?

Accepted Answer

A) 1/3 of a smoothie 
B) 3 smoothies 
C) 15 smoothies 
D) 5 smoothies 
A) 1/3 of a smoothie 
B) 3 smoothies 
C) 15 smoothies 
D) 5 smoothies

Question 11

Refer to the accompanying figure. Relative to point B, at point C this restaurant is:

Accepted Answer

A) making more pizzas and more salads. 
B) making more pizzas and fewer salads. 
C) making fewer pizzas and more salads. 
D) operating more efficiently. 
A) making more pizzas and more salads. 
B) making more pizzas and fewer salads. 
C) making fewer pizzas and more salads. 
D) operating more efficiently.

Question 12

Smith and Jones comprise a two-person economy. Their hourly rates of production are shown in the accompanying table. $$\begin{array} { | l | r | r | } 
\hline & \text { Calculatars Per Haur } & \text { Camputers Per Haur } \
\hline \text { Brith } & 100 & 10 \
\hline \text { Jones } & 120 & 6 \
\hline
\end{array}$$  
The opportunity cost of making a calculator for Smith is ________ and for Jones it is ________.

Accepted Answer

A) 0.10 computers; 0.05 computers 
B) 10 computers; 20 computers 
C) 1 computer; 0.5 computers 
D) 0.6 computers; 1.2 computers 
A) 0.10 computers; 0.05 computers 
B) 10 computers; 20 computers 
C) 1 computer; 0.5 computers 
D) 0.6 computers; 1.2 computers

Question 13

You are the Minister of Trade for a small island country with the following annual PPC:   You are negotiating a trade agreement with a neighboring island with the following annual PPC:
  What's the minimum number of fish you would be willing to accept in exchange for a coconut?

Accepted Answer

A) 5 
B) 4 
C) 3 
D) 2 
A) 5 
B) 4 
C) 3 
D) 2

Question 14

Suppose it takes Paul 3 hours to bake a cake and 2 hours to mow the lawn, and suppose it takes Tom 2 hours to bake a cake and 1 hour to mow the lawn. Which of the following statements is correct?

Accepted Answer

A) Paul has the absolute advantage in baking cakes. 
B) Paul has the comparative advantage in mowing the lawn. 
C) Paul has the comparative advantage in baking cakes. 
D) Paul has the absolute advantage in mowing the lawn. 
A) Paul has the absolute advantage in baking cakes. 
B) Paul has the comparative advantage in mowing the lawn. 
C) Paul has the comparative advantage in baking cakes. 
D) Paul has the absolute advantage in mowing the lawn.

Question 15

The accompanying figure shows Becky's daily production possibilities curve for dresses and skirts.    
Of the labeled points, only ________ are attainable.

Accepted Answer

A) T and U 
B) X, Y, and Z 
C) W, X, Y, Z, and V 
D) W, X, Y, Z, V, and T 
A) T and U 
B) X, Y, and Z 
C) W, X, Y, Z, and V 
D) W, X, Y, Z, V, and T

Question 16

Moe divides his time between studying Physics and studying Economics. His production possibilities curve for his final grade in each class is shown in the accompanying figure.   Which of the following is true?

Accepted Answer

A) Moe has a comparative advantage in physics. 
B) Moe's opportunity cost of studying for each subject is increasing. 
C) Moe has a comparative advantage in economics. 
D) Moe has an absolute advantage in economics. 
A) Moe has a comparative advantage in physics. 
B) Moe's opportunity cost of studying for each subject is increasing. 
C) Moe has a comparative advantage in economics. 
D) Moe has an absolute advantage in economics.

Question 17

The accompanying figure shows Becky's daily production possibilities curve for dresses and skirts.   The maximum number of skirts that Becky can make in a day is represented by point:

Accepted Answer

A) U 
B) T 
C) V 
D) Z 
A) U 
B) T 
C) V 
D) Z

Question 18

Moe divides his time between studying Physics and studying Economics. His production possibilities curve for his final grade in each class is shown in the accompanying figure.   According to Moe's PPC, moving from a 70 to an 80 in economics:

Accepted Answer

A) is inefficient. 
B) has a lower opportunity cost than moving from an 80 to a 90. 
C) is unattainable. 
D) has a higher opportunity cost than moving from an 80 to a 90. 
A) is inefficient. 
B) has a lower opportunity cost than moving from an 80 to a 90. 
C) is unattainable. 
D) has a higher opportunity cost than moving from an 80 to a 90.

Question 19

The Principle of Increasing Opportunity Costs states that:

Accepted Answer

A) productive people do the hardest tasks first. 
B) when increasing production, resources with the lowest opportunity costs should be used first. 
C) when increasing production, resources with the lowest opportunity costs should be used last. 
D) opportunity costs increase when too little is produced. 
A) productive people do the hardest tasks first. 
B) when increasing production, resources with the lowest opportunity costs should be used first. 
C) when increasing production, resources with the lowest opportunity costs should be used last. 
D) opportunity costs increase when too little is produced.

Question 20

Earth Movers & Shakers operates 3 iron ore mines. The accompanying table shows each mine's total daily production and the current number of miners at each mine. All miners work for the same wage, and each miner in any given mine produces the same number of tons per day as every other miner in that mine. $$\begin{array} { | l | r | r | } 
\hline & \text { Total Tans Per Day } & \text { Number of Miners } \
\hline \text { Mother Iuode } & 100 & 25 \
\hline \text { Bcrapirng Bottorn } & 30 & 10 \
\hline \text { Middle Drift } & 75 & 15 \
\hline
\end{array}$$  
The opportunity cost of moving one miner from Scraping Bottom to another mine is:

Accepted Answer

A) 0 tons per day. 
B) 3 tons per day. 
C) 4 tons per day. 
D) 5 tons per day. 
A) 0 tons per day. 
B) 3 tons per day. 
C) 4 tons per day. 
D) 5 tons per day.

Exam 2: Comparative Advantage

According to the Principle of Increasing Opportunity Cost, in expanding the production of any good, we should start by utilizing the resources that:

Refer to the accompanying figure. For Chris, the opportunity cost of removing one bag of trash is planting:

Refer to the accompanying figure. The opportunity cost of producing one bushel of corn is:

Production possibilities curves for large economies are generally bow-shaped because:

An increase in an economy's productive resources will lead the production possibilities curve to:

Points that lie beneath the production possibilities curve are:

Assume point A on a linear production possibilities curve represents the combination of 12 coffees and 3 cappuccinos, and point B represents 3 coffees and 6 cappuccinos. Suppose coffees are on the vertical axis and cappuccinos are on the horizontal axis. The opportunity cost of a cup of coffee is:

Suppose it takes Dan 5 minutes to make a sandwich and 15 minutes to make a smoothie, and it takes Tracy 6 minutes to make a sandwich and 12 minutes to make a smoothie. What is the opportunity cost to Dan of making a sandwich?

Refer to the accompanying figure. Relative to point B, at point C this restaurant is:

Smith and Jones comprise a two-person economy. Their hourly rates of production are shown in the accompanying table. Calculatars Per Haur Camputers Per Haur Brith 100 10 Jones 120 6 The opportunity cost of making a calculator for Smith is ________ and for Jones it is ________.

You are the Minister of Trade for a small island country with the following annual PPC: You are negotiating a trade agreement with a neighboring island with the following annual PPC: What's the minimum number of fish you would be willing to accept in exchange for a coconut?

Suppose it takes Paul 3 hours to bake a cake and 2 hours to mow the lawn, and suppose it takes Tom 2 hours to bake a cake and 1 hour to mow the lawn. Which of the following statements is correct?

The accompanying figure shows Becky's daily production possibilities curve for dresses and skirts. Of the labeled points, only ________ are attainable.

Moe divides his time between studying Physics and studying Economics. His production possibilities curve for his final grade in each class is shown in the accompanying figure. Which of the following is true?

The accompanying figure shows Becky's daily production possibilities curve for dresses and skirts. The maximum number of skirts that Becky can make in a day is represented by point:

Moe divides his time between studying Physics and studying Economics. His production possibilities curve for his final grade in each class is shown in the accompanying figure. According to Moe's PPC, moving from a 70 to an 80 in economics:

The Principle of Increasing Opportunity Costs states that:

Thinking Like an Economist

Supply and Demand

Elasticity

Demand

Perfectly Competitive Supply

Efficiency, Exchange, and the Invisible Hand in Action

Monopoly, Oligopoly, and Monopolistic Competition

Games and Strategic Behavior

An Introduction to Behavioral Economics

Externalities, Property Rights, and the Environment

The Economics of Information

Labor Markets, Poverty, and Income Distribution

Public Goods and Tax Policy

International Trade and Trade Policy

Macroeconomics: The Birds Eye View of the Economy

Measuring Economic Activity: GDP and Unemployment

Measuring the Price Level and Inflation

Economic Growth, Productivity, and Living Standards

The Labor Market: Workers, Wages, and Unemployment

Saving and Capital Formation

Money Prices and the Federal Reserve

Financial Markets and International Capital Flows

Short-Term Economic Fluctuations: An Introduction

Spending and Output in the Short Run

Stabilizing the Economy: The Role of the Fed

Aggregate Demand, Aggregate Supply, and Inflation

Exchange Rates and the Open Economy

Filters

Smith and Jones comprise a two-person economy. Their hourly rates of production are shown in the accompanying table. Calculatars Per Haur Camputers Per Haur Brith 100 10 Jones 120 6 The opportunity cost of making a calculator for Smith is and for Jones it is .