Deck 2: Production Possibilities Opportunity Cost and Economic Growth

Question 1

Which fundamental economic question requires society to decide the mix and quantity of goods and services it will produce?

A) The What to Produce question.
B) The Why to Produce question.
C) The How to Produce question.
D) The For Whom to Produce question.

Answer 1

A

Question 2

Three basic decisions must be made by all economies. What are they?

A) How much will be produced, when it will be produced, and how much it will cost.
B) What the price of each good will be, who will produce each good, and who will consume each good.
C) What will be produced, how goods will be produced, and for whom goods will be produced.
D) How the opportunity cost principle will be applied, if and how the law of comparative advantage will be utilized, and whether the production possibilities constraint will apply.

Answer 2

C

Question 3

Discuss the three fundamental economic questions that all nations must address.

Answer 3

The three fundamental economic questions are the "What," "How," and "For Whom" questions which must be addressed by all societies. The "What" question pertains to what should the nation produce. What combination of goods would be best? How should that combination of goods be produced is the "How" question. We want to produce goods in the most efficient manner in order to maximize production. The "For Whom" question addresses for whom should these goods be produced. Who will get them?

Question 4

The question "Should children receive free lunch at school?" is an example of which fundamental economic question?

A) The What to Produce question.
B) The Why to Produce question.
C) The How to Produce question.
D) The For Whom to Produce question.

Question 5

The question "Should more capital goods be produced instead of consumer goods?" is an example of which fundamental economic question?

A) The What to Produce question.
B) The Why to Produce question.
C) The How to Produce question.
D) The For Whom to Produce question.

Question 6

The agricultural nation of Luckidom is attempting to answer the three fundamental economic questions. Develop the three questions as they relate to this nation.

A) 1. Should we produce more wheat and fewer soybeans? 2. Should we farm with equipment or by hand? 3. Do the farmers or the governors receive a higher salary?
B) 1. Should we farm with equipment or by hand? 2. Do the farmers or the governors receive a higher salary? 3. Should we grow near the riverbed or by the coast?
C) 1. Should we use fertilizer? 2. Should we grow near the riverbed or by the coast? 3. Should we produce more wheat and fewer soybeans?
D) 1. Should we grow near the riverbed or by the coast? 2. Should we produce more wheat and fewer soybeans? 3. Should we farm with equipment or by hand?

Question 7

Bill has $10 to spend on a Superman, Batman, or an X-Men T-shirt. Bill buys the Superman T-shirt and the Batman shirt was a close second choice. What is the opportunity cost?

A) The amount he spent, $10.
B) Nothing, since he got his preferred choice.
C) The Batman T-shirt.
D) The X-Men T-shirt.

Question 8

Which fundamental economic question is most closely related to the issues of income distribution and poverty?

A) The What to Produce question.
B) The Why to Produce question.
C) The How to Produce question.
D) The For Whom to Produce question.

Question 9

Which of the following sayings best reflects the concept of opportunity cost?

A) "You can't teach an old dog new tricks."
B) "There is no such thing as a free lunch."
C) "I have a baker's dozen."
D) "There's no business like show business."

Question 10

Because of the problem of scarcity, the choice to produce:

A) more of one good requires producing less of another good.
B) some of any good requires producing none of any other good.
C) more of every good is feasible.
D) less of one good requires producing more of every other good.

Question 11

Why must every nation answer the three fundamental economic questions?

A) because of differences in the distribution of resources
B) because some nations have better production technology
C) because some nations are wealthy and others are poor
D) because of the problem of scarcity

Question 12

The opportunity cost of an action is:

A) the monetary payment the action required.
B) the total time spent by all parties in carrying out the action.
C) the value of the best opportunity that must be sacrificed in order to take the action.
D) the cost of all alternative actions that could have been taken, added together.

Question 13

The opportunity cost to a city for using local tax revenues to construct a new park is the:

A) best alternative foregone by building the park.
B) dollar cost of constructing the new park.
C) dollar cost of the old park.
D) increased taxes necessary to pay for maintenance of the new park.

Question 14

The highest valued alternative that must be given up in order to choose an option is called the:

A) opportunity cost.
B) utility cost.
C) scarcity expense.
D) accounting cost.

Question 15

Three of the four following questions are indicative of the three fundamental economic questions. Leaving out the irrelevant question, rearrange the three relevant questions in the order an economy must answer them.   - How should hybrid cars be produced? 
 - Should corn be produced in the North or in the South?
 - Who drives hybrid cars ?
 - Should more hybrid cars and fewer SUVs be produced?

A) 1. Should more hybrid cars and fewer SUVs be produced? 2. Should corn be produced in the North or in the South? 3.  How should hybrid cars be produced?
B) 1. Who drives hybrid cars? 2. Should more hybrid cars and fewer SUVs be produced? 3. Should corn be produced in the North or in the South?
C) 1. S hould more hybrid cars and fewer SUVs be produced? 2. How should hybrid cars be produced/ 3. Who drives hybrid cars
D) 1.  How should hybrid cars be produced 2. Should more hybrid cars and fewer SUVs be produced? 3. Should corn be produced in the North or in the South?

Question 16

Which fundamental economic question requires society to choose the technological and resource mix used to produce goods?

A) The What to Produce question.
B) The Why to Produce question.
C) The How to Produce question.
D) The For Whom to Produce question.

Question 17

Answering the For Whom to Produce question means that:

A) society is determining the size of the economic pie,
B) scarcity no longer restricts production.
C) society must have a method to decide who will be rich and who will be poor.
D) an economy is selecting among its resources for production.

Question 18

Which of the following is not one of the three fundamental economic questions?

A) Where to produce?
B) For whom to produce?
C) How to produce?
D) What to produce?

Question 19

The opportunity cost of watching television is:

A) all of the alternative programs that appear on other stations.
B) zero because there is no money expenditure involved.
C) the alternative use of the time foregone by watching the program.
D) zero if it benefits you.

Question 20

The question "Should bank withdrawals be conducted by tellers or ATMs?" is an example of which fundamental economic question?

A) The What to Produce question.
B) The Why to Produce question.
C) The How to Produce question.
D) The For Whom to Produce question.

Question 21

While waiting in line to buy one cheeseburger for $1.50 and a medium drink for $1.00, Sally notices that she could get a value meal that contains both the cheeseburger and medium drink and also a medium order of fries for $2.75. She thinks to herself, "Is it worth the extra 25 cents to get the medium fries?" To an economist, Sally's decision is an example of:

A) marginal analysis.
B) basing decisions on total, rather than marginal, value.
C) an unintended consequence.
D) the fallacy of composition.

Question 22

A local restaurant offers an "all you can eat" Sunday brunch for $12. Susan eats four servings, but leaves half of a fifth helping uneaten. Why?

A) Her marginal value of a serving of brunch has fallen below $12.
B) Her marginal value of a serving has fallen below $2.36 ($12 divided by 5 servings).
C) Her marginal value of food has fallen to zero.
D) The total value she places on brunch today exactly equals $12.

Question 23

The opportunity cost of an activity means the:

A) amount of money the activity costs.
B) expected gains minus the expected costs of engaging in the activity.
C) expected gains by engaging in the activity.
D) the value of the best alternative that must be sacrificed in order to engage in the activity .

Question 24

Which of the following is an example of an organization using marginal analysis?

A) A hotel manager calculating the average cost per guest for the past year.
B)  A farmer hoping for rain.
C) A government official considering what effect an increase in military goods production will have on the production of consumer goods.
D) A business calculating economic profits.

Question 25

While waiting in line to buy a cheeseburger for $2 and a drink for 75 cents, Aaron notices that the restaurant has a value meal containing a cheeseburger, drink, and French fries for $3. For Aaron, the marginal cost of purchasing the French fries:

A) would be zero.
B) would be 25 cents.
C) would be 50 cents.
D) cannot be determined because the information about the price of the French fries is not provided.

Question 26

A rational decision maker always chooses the option for which marginal benefit is:

A) less than marginal cost.
B) equal to marginal cost.
C) unrelated to marginal cost.
D) more than marginal cost.

Question 27

Why does the opportunity cost of your college education include money you could have earned working instead of going to college?

A) Because most people who don't go to college do not work .
B) Because the best alternative use of your time is working.
C) Because people should be productive members of society.
D) Because working a full time job takes as much time as going to college.

Question 28

In economics, the term marginal refers to:

A) the change or difference from a current situation.
B) man-made resources as opposed to natural resources.
C) the satisfaction a consumer receives from a good.
D) holding everything else constant in the analysis.

Question 29

When deciding whether to buy a second car, marginal analysis indicates that the purchaser should compare the:

A) benefits expected from two cars with the cost of both.
B) additional benefits expected from a second car with the cost of the two cars.
C) dollar cost of the two cars with the potential income that the cars will generate.
D) additional benefits of the second car with the additional cost of the second car.

Question 30

Exhibit 2-2 Production possibilities curve
In Exhibit 2-2, the opportunity cost of coffee when moving from A to B is:

A) the same as moving from A to C.
B) the same as moving from A to D.
C) the same as moving from B to D.
D) the same as moving from B to C.

Question 31

A farmer is deciding whether or not to add fertilizer to his or her crops. If the farmer adds 1 pound of fertilizer per acre, the value of the resulting crops rises from $80 to $100 per acre. According to marginal analysis, the farmer should add fertilizer if it costs less than:

A) $12.50 per pound.
B) $20 per pound.
C) $80 per pound.
D) $100 per pound.

Question 32

Exhibit 2-1 Production possibilities curve data $$\begin{array} { | c | c | } \hline \begin{array} { c } \text { Consumption } \\\text { Goods }\end{array} & \begin{array} { c } \text { Capital } \\\text { Goods }\end{array} \\\hline 10 & 0 \\9 & 1 \\7 & 2 \\4 & 3 \\0 & 4 \\\hline\end{array}$$ In Exhibit 2-1, according to the information, the opportunity cost of producing the 3^rd unit  of capital is :

A) 3 units of consumption goods.
B) 4 units of consumption goods.
C) 6 units of consumption goods.
D) 7 units of consumption goods.

Question 33

According to marginal analysis, you should choose to do something if the extra benefit:

A) is positive.
B) outweighs the extra cost.
C) exceeds the benefits of the previous time spent on the activity.
D) will change the outcome.

Question 34

Exhibit 2-15 Production possibilities curve
In Exhibit 2-15, if the economy moves from point L to point M, the opportunity cost of producing 10 more capital goods is:

A) 40 fewer consumption goods because at point L, 20 capital goods and 40 consumption goods are produced.
B) 25 fewer consumption goods because at point M 30 capital goods and 25 consumption goods are produced.
C) 15 fewer consumption goods because to go from 20 capital goods to 30 capital goods, the economy must go from 40 consumption goods to 25 consumption goods.
D) 15 more consumption goods because to go from 30 capital goods to 20 capital goods, the economy must go from 25 consumption goods to 40 consumption goods.

Question 35

Exhibit 2-2 Production possibilities curve
In Exhibit 2-2, the opportunity cost of coffee when moving from A to B is:

A) 2 million bushels of corn.
B) 6 million bushels of corn.
C) 8 million bushels of corn.
D) 14 million bushels of corn.

Question 36

While waiting in line to buy two tacos at 80 cents each and a medium drink for 90 cents, Jordan notices that the restaurant has a value meal containing three tacos and a medium drink all for $3. Jordan should purchase the value meal if

A) his marginal cost exceeds his marginal benefit.
B) his marginal benefit of the third taco is greater than 50 cents.
C) his value of the third taco is less than 50 cents.
D) he has $3 in his wallet.

Question 37

Why are all costs really "opportunity costs"? What is an opportunity cost of attending class?

Question 38

The amount of a good that must be given up to produce another good is the concept of:

A) scarcity.
B) specialization.
C) opportunity cost.
D) efficiency.

Question 39

Exhibit 2-1 Production possibilities curve data $$\begin{array} { | c | c | } \hline \begin{array} { c } \text { Consumption } \\\text { Goods }\end{array} & \begin{array} { c } \text { Capital } \\\text { Goods }\end{array} \\\hline 10 & 0 \\9 & 1 \\7 & 2 \\4 & 3 \\0 & 4 \\\hline\end{array}$$ In Exhibit 2-1, why is the opportunity cost of producing the fourth unit of capital 4 units of consumption goods but the opportunity cost of producing 4 units of capital is 10 units of consumption goods?

A) It isn't. The opportunity cost of the fourth unit and the opportunity cost of four units is the same.
B) Because consumption goods are more valuable than capital goods.
C) Because the opportunity cost of capital goods is constant while the opportunity cost of consumption goods is decreasing as this economy moves from more consumption goods to more capital goods.
D) Because the opportunity cost of the fourth unit of capital is the consumption goods that must be given up for this economy to move from three units of capital to four units of capital, but the opportunity cots of four units of capital is the amount of consumption goods that must be given up to go from zero units of capital to four units of capital.

Question 40

Mikki decides to work five hours the night before her economics exam. She earns an extra $75, but her exam score is 10 points lower than it would have been had she stayed home and studied. Her opportunity cost is the:

A) five hours she worked.
B) $75 she earned.
C) 10 points she lost on her exam.
D) time she could have spent watching television.

Question 41

Exhibit 2-3 Production possibilities curve data $$\begin{array} { | l | r | r | r | r | r | } \hline & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } \\\hline \text { Capital goods } & 0 & 1 & 2 & 3 & 4 \\\text { Consumer goods } & 20 & 18 & 14 & 8 & 0 \\\hline\end{array}$$ According to the data given in Exhibit 2-3, the production of 1 unit of capital goods and 20 units of consumer goods:

A) is possible but would be inefficient.
B) may be a result of unemployment.
C) may be a result of unused natural resources.
D) is not feasible with current resources and technology.

Question 42

A production possibilities curve has "good X" on the horizontal axis and "good Y" on the vertical axis. On this diagram, the opportunity cost of good X, in terms of good Y, is represented by the:

A) distance to the curve from the horizontal axis.
B) distance to the curve from the vertical axis.
C) distance from the origin to the curve.
D) change in Y for each change in X along the curve.

Question 43

Which of the following would be most likely to cause the production possibilities curve for computers and education to shift outward?

A) A choice of more computers and less education.
B) A choice of more education and less computers.
C) A reduction in the labor force.
D) An increase in the quantity of resources.

Question 44

In Europe during the 14th century, the Black Plague killed 24 million people or close to 37 percent of the population. How would this affect the production possibilities curves for the countries of Europe at that time?

A) The production possibilities curves for these countries would have shifted outward.
B) The production possibilities curves for these countries would have shifted inward.
C) The production possibilities curves for these countries would have been unaffected.
D) This would have been illustrated by a movement along the production possibilities curves for these countries, but it would not have shifted them.

Question 45

The production possibilities curve shows that:

A) some of one good must be given up to get more of another good in an economy that is operating efficiently.
B) no output combination is impossible.
C) an economy that is operating efficiently can have more of one good without giving up some of another good.
D) scarcity can be eliminated.

Question 46

Exhibit 2-9 Production possibilities curve
If the economy represented in Exhibit 2-9 is operating at Point W:

A) no tractor product must be forgone to produce more food in the current period.
B) resources are not fully used.
C) some tractor production must be forgone to produce more food in the current period.
D) increased food production would be impossible.

Question 47

Along a production possibilities curve showing capital and consumption goods production, which of the following pairs are being held fixed?

A) Unemployment and capital goods production.
B) Number of resources and technology.
C) Composition of the economy's output and number of resources.
D) Capital and consumption goods production.

Question 48

Suppose a 50-seat bus is about to depart from Boston to New York with five empty seats. The total cost to the bus company of the trip is $1,000 regardless of how many people are on the bus and no services, food, or beverages are provided to passengers. Use marginal analysis to develop conditions under which the bus company would be willing to sell tickets for the five remaining seats .

A) The bus company would be willing to sell the five remaining tickets at a price of at least $20 each to cover the cost per seat of those passengers.
B) The bus company would be willing to sell the five remaining tickets at any price over $0 because there is no additional cost of five more passengers.
C) The bus company would not be willing to sell the five remaining tickets because it already covered the cost of the trip with the revenue from the 45 passengers on board.
D) The bus company would be willing to sell the five remaining tickets at a price of at least $25 each because they need to make a profit on each passenger.

Question 49

When an economy's resources are not fully employed, then it must be true that the:

A) production point is located outside and to the right of the production possibilities curve.
B) production point is located along the production possibilities curve.
C) production point is located inside and to the left of the production possibilities curve.
D) production possibilities curve shifts to the left.

Question 50

A point outside the production possibilities curve represents a combination of goods that is:

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

Question 51

A production possibility graph slopes down because of:

A) the law of increasing costs.
B) scarcity.
C) inefficiency.
D) unemployment.

Question 52

Which of the following most accurately summarizes the implications of an economy's production possibilities curve?

A) If all the resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced.
B) If all the resources of an economy are being used efficiently, it is generally possible to produce more of one good without having to sacrifice the production of other goods.
C) Over time, it is generally impossible for a country to expand its production of goods.
D) An economy will automatically move toward a point that lies outside of the production possibilities constraint unless proper government policy constrains production.

Question 53

A production possibilities curve shows the:

A) dollar costs of producing two different goods.
B) amounts of labor and capital needed to produce one good.
C) various combinations of goods that can be produced.
D) prices of different goods that are produced in an economy.

Question 54

Exhibit 2-7 Production possibilities curve
For the economy shown in Exhibit 2-7 to operate at point C, it must:

A) be willing to lower the price of grain.
B) use its given resources more efficiently than it would at point A.
C) experience resource unemployment.
D) experience an increase in its resources and/or an improvement in its technology.

Question 55

If an economy is producing at full employment, it means that:

A) there are idle resources in this economy.
B) the economy is producing along its production possibilities curve.
C) the economy is producing at a point that is to the left of the production possibilities curve.
D) the economy is producing at a point that is to the right of the production possibilities curve.

Question 56

When the production possibilities curve is bowed out, resources are:

A) equally well-suited to production of both goods.
B) not being used efficiently.
C) not equally suited to the production of both types of goods.
D) increasing as more of one good is produced.

Question 57

After the terrorist attacks on September 11, 2001, the United States began devoting substantial resources toward the War on Terrorism, homeland security, and relief efforts. As long as our resources were being used efficiently, the production possibilities curve would suggest that:

A) we will have to give up the production of other goods that could have been produced with these resources.
B) we will be able to produce the same amount of other goods as before.
C) the military spending will result in an outward shift in the production possibilities curve but that the relief effort will result in an offsetting inward shift.
D) we will be unable to devote the resources necessary toward these efforts unless there is an improvement in technology.

Question 58

If an economy is operating at a point inside the production possibilities curve,

A) its resources are not being used efficiently.
B) opportunity costs are decreasing as more of one good is traded for the other good.
C) technology has improved.
D) there is full employment of all resources.

Question 59

Using a production possibilities curve, a technological advance that increases the amount of output that can be produced of either good represented on the graph when the amount of inputs remains the same would be illustrated as a(n):

A) flattening of the curve.
B) movement from one point to another point along the curve.
C) outward shift of the curve.
D) movement from a point on the curve to a point inside the curve.

Question 60

Exhibit 2-4 Production possibilities curve data $$\begin{array} { | l | r | r | r | c | c | } \hline & { \text { A } } &{ \text { B } } & \text { C } & \text { D } & \text { E } \\\hline \text { Capital goods } & 0 & 10 & 20 & 30 & 40 \\\text { Consumer goods } & 200 & 180 & 140 & 80 & 0 \\\hline\end{array}$$ According to the data in Exhibit 2-4, a total output of 140 units of consumer goods and 10 units of capital goods would:

A) be unobtainable in this economy.
B) be an efficient way of using the economy's scarce resources.
C) result in the maximum use of the economy's labor force.
D) result in a less than maximum rate of growth for this economy.

Question 61

If an economy could produce 0 capital goods and 200 consumption goods, or 10 capital goods and 180 consumption goods with full employment, construct two additional full employment production options that would exhibit the law of increasing opportunity costs.

A) 20 capital goods and 160 consumption goods; 30 capital goods and 140 consumption goods
B) 0 capital goods and 220 consumption goods; 10 capital goods and 210 consumption goods
C) 20 capital goods and 140 consumption goods; 30 capital goods and 80 consumption goods
D) 40 capital goods and 140 consumption goods; 50 capital goods and 120 consumption goods

Question 62

As production of a good increases, opportunity costs rise because:

A) there will be more inefficiency.
B) people always prefer having more goods.
C) of inflationary pressures.
D) workers are not equally suited to all tasks.

Question 63

Exhibit 2-15 Production possibilities curve
In Exhibit 2-15, the shape of the production possibilities curve demonstrates:

A) changing prices.
B) economic growth.
C) decreases in resources.
D) the law of increasing opportunity costs.

Question 64

Exhibit 2-8 Production possibilities curve data $$\begin{array} { | l | r | r | r | r | r | r | } \hline & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } & \text { F } \\\hline \text { Capital goods } & 15 & 14 & 12 & 9 & 5 & 0 \\\text { Consumer goods } & 0 & 2 & 4 & 6 & 8 & 10 \\\hline\end{array}$$ As shown in Exhibit 2-8, the concept of increasing opportunity costs is reflected in the fact that:

A) the quantity of consumer goods produced can never be zero.
B) the labor force in the economy is homogeneous.
C) greater amounts of capital goods must be sacrificed to produce each additional 2 units of consumer goods.
D) a graph of the production data is a downward-sloping straight line.

Question 65

Exhibit 2-12 Production possibilities curve
In Exhibit 2-12, suppose an economy with the given production possibilities curve is currently located at point A in the figure. Which of the following statements is false ?

A) This economy could produce more of both capital and consumption goods.
B) This economy is experiencing full employment.
C) This economy could produce more capital goods while holding fixed the number of consumption goods produced.
D) This economy could produce more consumption goods while holding fixed the number of capital goods produced.

Question 66

The law of increasing opportunity costs causes the production possibilities curve to:

A) be a straight line.
B) slope upwards.
C) have a bowed-out shape.
D) shift inward.

Question 67

Exhibit 2-2 Production possibilities curve
In Exhibit 2-2, the slope of the production possibilities curve indicates that the opportunity cost of:

A) coffee is constant.
B) coffee is increasing.
C) coffee is decreasing.
D) corn is increasing.

Question 68

Draw a graph of a production possibilities curve with consumption goods and capital goods that displays the law of increasing opportunity costs. What do points on, inside and outside the curve represent? What does a rightward shift of the curve represent? How is economic growth expressed in terms of the production possibilities model?

Question 69

Exhibit 2-16 Production possibilities curve
From the information in Exhibit 2-16, which of the following points on the production possibilities curve are attainable with the resources and technology currently available?

A) A, B, C, E
B) A, B, C, D, W
C) E, U, W
D) A, B, C, D, U

Question 70

Exhibit 2-10 Production possibilities curve data $$\begin{array} { | l | r | r | r | r | r | } \hline & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } \\\hline \text { Capital goods } & 0 & 1 & 2 & 3 & 4 \\\text { Consumption goods } & 25 & 23 & 19 & 13 & 0 \\\hline\end{array}$$ Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10. As additional units of capital goods are being produced, the number of consumption goods produced must:

A) increase because the production possibility table shows only the maximum efficiency points.
B) increase because of the law of increasing costs.
C) decrease because of the law of increasing costs.
D) decrease because of the finite nature of the resource base.

Question 71

When the opportunity cost of producing carrots increases as more carrots are produced, then:

A) no more carrots will be produced.
B) resources are equally suited to the production of carrots and to other goods.
C) the production possibilities curve is a straight line.
D) the law of increasing opportunity costs is present

Question 72

Exhibit 2-13 Production possibilities curve
In Exhibit 2-13, point H is:

A) achievable with today's resource base.
B) not achievable today because the economy has not achieved full employment.
C) not achievable today because the economy is not at its maximum point of efficiency.
D) not achievable today because of inadequate production capacity.

Question 73

Exhibit 2-11 Production possibilities curves
In Exhibit 2-11, which of the following could have caused the production possibilities curve to shift from the one labeled B to the one labeled A?

A) A major natural disaster.
B) An increase in resources.
C) An advance in technology.
D) A decrease in unemployment.

Question 74

Exhibit 2-6 Production possibilities curve data $$\begin{array} { | l | r | r | r | c | c | r | } \hline & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } &{ \text { F } } \\\hline \text { Capital goods } & 150 & 140 & 120 & 90 & 50 & 0 \\\text { Consumer goods } & 0 & 20 & 40 & 60 & 80 & 100 \\\hline\end{array}$$ In Exhibit 2-6, the concept of increasing opportunity costs is represented by the fact that:

A) the quantity of capital goods produced must be less than 150.
B) the quantity of consumer goods is constant for each change in the quantity of capital goods produced.
C) greater amounts of capital goods must be sacrificed to produce each additional unit of consumer goods.
D) the amount of consumer goods produced must be greater than zero.

Question 75

Exhibit 2-15 Production possibilities curve
In Exhibit 2-15, evidence of the law of increasing opportunity costs is:

A) to get the first 10 capital goods, economy has to give up 2 consumption goods but to get the next 10 capital goods, the economy has to give up 8 consumption goods.
B) the downward slope of the production possibilities curve.
C) the amount of capital goods increases by 10 units as the economy moves from point J to point K to point L to point M to point N.
D) the amount of capital goods increases by 10 units as the economy moves from point L to point G.

Question 76

Exhibit 2-9 Production possibilities curve
Which of the following moves from one point to another in Exhibit 2-9 would represent an increase in economic efficiency?

A) Z to W.
B) W to Y.
C) W to X.
D) X to Y.

Question 77

Exhibit 2-14 Production possibilities curve
In Exhibit 2-14, which of the following explains this economy's movement from point E to point F?

A) The rate of unemployment in this economy would have increased.
B) Consumption goods production has increased, but capital goods production has decreased.
C) The economy has decreased unemployment, but some degree of unemployment still exists
D) The economy has achieved full employment.

Question 78

Exhibit 2-13 Production possibilities curve
In Exhibit 2-13, in terms of efficiency:

A) point A is preferred to point B.
B) point A is preferred to point E.
C) point A is preferred to point D.
D) point B is preferred to point A.

Question 79

The law of increasing costs indicates that the opportunity cost of producing a good:

A) is proportional to the production of the good.
B) is constant to the production of the good.
C) increases as more of the good is produced.
D) decreases as more of the good is produced.

Question 80

The production possibility curve is bowed outward from the origin because of:

A) the law of increasing opportunity costs.
B) the finite nature of the resource base.
C) inefficiency.
D) unemployment.