Question 1

Describe the differences between tradeoffs and free lunches in terms of a PPF.

Accepted Answer

A tradeoff is a constraint or limit that forces giving up one thing in exchange for something else.When resources are fully employed,a country operates on its PPF.Any movement from one point to another point along the PPF requires the country to make a tradeoff between the two goods because one good is given up to get some other good.A free lunch occurs when some resources are not being used or not being used in their most productive way.When a country operates inside its PPF and moves toward its PPF choosing a different combination of goods,the country enjoys a free lunch.It does not face a tradeoff.

Question 2

A bowed out production possibilities frontier shows

Accepted Answer

A)  that resources are equally productive in all uses. 
B)  increasing opportunity cost. 
C)  that resources are not equally productive in all uses. 
D)  Both answers B and C are correct. 
E)  Both answers A and B are correct. 
A)  that resources are equally productive in all uses. 
B)  increasing opportunity cost. 
C)  that resources are not equally productive in all uses. 
D)  Both answers B and C are correct. 
E)  Both answers A and B are correct. D

Question 3

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

Accepted Answer

A)  1/4 of a pound of fish 
B)  1/2 of a pound of fish 
C)  1 pound of fish 
D)  200 pounds of fish 
E)  2 pounds of fish 
A)  1/4 of a pound of fish 
B)  1/2 of a pound of fish 
C)  1 pound of fish 
D)  200 pounds of fish 
E)  2 pounds of fish C

Question 4

-The figure above shows a production possibilities frontier.In the figure,which of the following combinations of the two goods are efficient?

Accepted Answer

A)  2 million cell phones and 13 million DVDs 
B)  5 million cell phones and 15 million DVDs 
C)  No cell phones and 15 million DVDs 
D)  4 million cell phones and 4 million DVDs 
E)  None of these combinations is efficient. 
A)  2 million cell phones and 13 million DVDs 
B)  5 million cell phones and 15 million DVDs 
C)  No cell phones and 15 million DVDs 
D)  4 million cell phones and 4 million DVDs 
E)  None of these combinations is efficient.

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 chose the point on this year's PPF that is above 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. 
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.

Question 7

The United States produced approximately ________ worth of goods and services in 2011.

Accepted Answer

A)  $15 trillion 
B)  $15 billion 
C)  $150 trillion 
D)  $150 billion 
E)  $1,500 trillion 
A)  $15 trillion 
B)  $15 billion 
C)  $150 trillion 
D)  $150 billion 
E)  $1,500 trillion

Question 8

Consider a production possibility frontier with books and tables.A combination of 1000 books and 500 tables is on the frontier.Which of the following are true?
i.Production of 700 books and 400 tables is attainable but inefficient.
ii.Production of 1000 books and 600 tables is unattainable.
iii.Production of 500 books and 1000 tables is inside the frontier.

Accepted Answer

A)  i and ii 
B)  i, ii and iii 
C)  i and iii 
D)  ii and iii 
E)  i only 
A)  i and ii 
B)  i, ii and iii 
C)  i and iii 
D)  ii and iii 
E)  i only

Question 9

-In the table above,Jack's comparative advantage is producing ________ and Jill's comparative advantage is producing ________.

Accepted Answer

A)  clothing; food 
B)  clothing and food; nothing 
C)  nothing; clothing and food 
D)  food; clothing 
E)  clothing; clothing 
A)  clothing; food 
B)  clothing and food; nothing 
C)  nothing; clothing and food 
D)  food; clothing 
E)  clothing; clothing

Question 10

Which of the following is correct about comparative advantage?

Accepted Answer

A)  Some countries will have a comparative advantage in everything. 
B)  Having a comparative advantage without an absolute advantage is impossible. 
C)  A comparative advantage in a good means that the country can produce more of the good than any other country. 
D)  A country has a comparative advantage in the production of a good if it can produce the good at lower opportunity cost than any other country. 
E)  None of the above answers is correct. 
A)  Some countries will have a comparative advantage in everything. 
B)  Having a comparative advantage without an absolute advantage is impossible. 
C)  A comparative advantage in a good means that the country can produce more of the good than any other country. 
D)  A country has a comparative advantage in the production of a good if it can produce the good at lower opportunity cost than any other country. 
E)  None of the above answers is correct.

Question 11

-The table above gives the production possibilities frontier for two countries,Anaconda and Bear.The opportunity cost of moving from production point B to production point C for Anaconda equals ________ and for Bear equals ________.

Accepted Answer

A)  1 ton of corn; 1 ton of corn 
B)  650 pairs of shoes; 900 pairs of shoes 
C)  550 pairs of shoes; 700 pairs of shoes 
D)  100 pairs of shoes; 200 pairs of shoes 
E)  50 pairs of shoes; 100 pairs of shoes 
A)  1 ton of corn; 1 ton of corn 
B)  650 pairs of shoes; 900 pairs of shoes 
C)  550 pairs of shoes; 700 pairs of shoes 
D)  100 pairs of shoes; 200 pairs of shoes 
E)  50 pairs of shoes; 100 pairs of shoes

Question 12

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 13

The figure above shows 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 14

-In the above figure,Jill's opportunity cost of producing 1 gallon of bottled water is ________ of soda.

Accepted Answer

A)  2 gallons 
B)  1/2 of a gallon 
C)  4 gallons 
D)  1 gallon 
E)  1/4 of a gallon 
A)  2 gallons 
B)  1/2 of a gallon 
C)  4 gallons 
D)  1 gallon 
E)  1/4 of a gallon

Question 15

-The above figure shows the production possibility frontier for a country.What is the opportunity cost per ton of rice to move from point B to point D?

Accepted Answer

A)  1000 bottles of wine 
B)  500 bottles of wine 
C)  2 bottles of wine 
D)  1/2 of a bottle of wine 
E)  None of the above answers is correct. 
A)  1000 bottles of wine 
B)  500 bottles of wine 
C)  2 bottles of wine 
D)  1/2 of a bottle of wine 
E)  None of the above answers is correct.

Question 16

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point A.What would be the opportunity cost to increase the production of rice to 12 tons?

Accepted Answer

A)  6 thousand bottles of wine 
B)  15 thousand bottles of wine 
C)  9 thousand bottles of wine 
D)  6 tons of rice 
E)  Nothing, it is a free lunch. 
A)  6 thousand bottles of wine 
B)  15 thousand bottles of wine 
C)  9 thousand bottles of wine 
D)  6 tons of rice 
E)  Nothing, it is a free lunch.

Question 17

Suppose a country operates on its production possibility frontier when it produces 1000 books and 1000 tables.The combination of ________ reflects ________.

Accepted Answer

A)  500 books and 1000 tables; an inefficient but attainable point. 
B)  1000 books and 500 tables; an efficient point. 
C)  1000 books and 1000 tables; a free lunch. 
D)  500 books and 500 tables; an attainable and efficient point. 
E)  1000 books and 1500 tables; a free lunch. 
A)  500 books and 1000 tables; an inefficient but attainable point. 
B)  1000 books and 500 tables; an efficient point. 
C)  1000 books and 1000 tables; a free lunch. 
D)  500 books and 500 tables; an attainable and efficient point. 
E)  1000 books and 1500 tables; a free lunch.

Question 18

Moving between two points on a PPF,a country gains 6 automobiles and forgoes 3 trucks.The opportunity cost of 1 automobile is

Accepted Answer

A)  3 trucks. 
B)  6 automobiles - 3 trucks. 
C)  2 trucks. 
D)  1/2 of a truck. 
E)  1 automobile. 
A)  3 trucks. 
B)  6 automobiles - 3 trucks. 
C)  2 trucks. 
D)  1/2 of a truck. 
E)  1 automobile.

Question 19

-The table above gives the production possibilities frontier for a nation that produces wheat and soybeans.Use the information in that table to complete the table below,which has in it the opportunity costs of moving from one production point to another.Do not forget to note the units of the opportunity costs.

Accepted Answer

@#IMG-DLM& The table above gives the opp

Question 20

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point A.What is the opportunity cost of increasing the production of rice to 12 tons?

Accepted Answer

A)  15 thousand bottles of wine 
B)  6 thousand bottles of wine 
C)  9 thousand bottles of wine 
D)  12 tons of rice 
E)  Nothing, it is a free lunch. 
A)  15 thousand bottles of wine 
B)  6 thousand bottles of wine 
C)  9 thousand bottles of wine 
D)  12 tons of rice 
E)  Nothing, it is a free lunch.

Describe the differences between tradeoffs and free lunches in terms of a PPF.

A bowed out production possibilities frontier shows

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

-The figure above shows a production possibilities frontier.In the figure,which of the following combinations of the two goods are efficient?

-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 above point K,the next year's PPF would

The United States produced approximately ________ worth of goods and services in 2011.

-In the table above,Jack's comparative advantage is producing and Jill's comparative advantage is producing .

Which of the following is correct about comparative advantage?

-The table above gives the production possibilities frontier for two countries,Anaconda and Bear.The opportunity cost of moving from production point B to production point C for Anaconda equals and for Bear equals .

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

-In the above figure,Jill's opportunity cost of producing 1 gallon of bottled water is ________ of soda.

-The above figure shows the production possibility frontier for a country.What is the opportunity cost per ton of rice to move from point B to point D?

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point A.What would be the opportunity cost to increase the production of rice to 12 tons?

Suppose a country operates on its production possibility frontier when it produces 1000 books and 1000 tables.The combination of reflects .

Moving between two points on a PPF,a country gains 6 automobiles and forgoes 3 trucks.The opportunity cost of 1 automobile is

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point A.What is the opportunity cost of increasing the production of rice to 12 tons?

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

Describe the differences between tradeoffs and free lunches in terms of a PPF.

A bowed out production possibilities frontier shows

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

-The figure above shows a production possibilities frontier.In the figure,which of the following combinations of the two goods are efficient?

-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 above point K,the next year's PPF would

The United States produced approximately ________ worth of goods and services in 2011.

-In the table above,Jack's comparative advantage is producing ________ and Jill's comparative advantage is producing ________.

Which of the following is correct about comparative advantage?

-The table above gives the production possibilities frontier for two countries,Anaconda and Bear.The opportunity cost of moving from production point B to production point C for Anaconda equals ________ and for Bear equals ________.

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

-In the above figure,Jill's opportunity cost of producing 1 gallon of bottled water is ________ of soda.

-The above figure shows the production possibility frontier for a country.What is the opportunity cost per ton of rice to move from point B to point D?

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point A.What would be the opportunity cost to increase the production of rice to 12 tons?

Suppose a country operates on its production possibility frontier when it produces 1000 books and 1000 tables.The combination of ________ reflects ________.

Moving between two points on a PPF,a country gains 6 automobiles and forgoes 3 trucks.The opportunity cost of 1 automobile is

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point A.What is the opportunity cost of increasing the production of rice to 12 tons?

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

-In the table above,Jack's comparative advantage is producing and Jill's comparative advantage is producing .

-The table above gives the production possibilities frontier for two countries,Anaconda and Bear.The opportunity cost of moving from production point B to production point C for Anaconda equals and for Bear equals .

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

Suppose a country operates on its production possibility frontier when it produces 1000 books and 1000 tables.The combination of reflects .