Deck 2: The Economic Problem

Question 1

If Harold can increase production of good X without decreasing production of any other good, then Harold

A)is producing on his production possibilities frontier.
B)is producing outside his production possibilities frontier.
C)is producing inside his production possibilities frontier.
D)must have a linear production possibilities frontier.
E)must prefer good X to any other good.

Answer 1

C

Question 2

Production efficiency is achieved when

A)the production possibilities frontier shifts outward at an even pace.
B)there are no more tradeoffs.
C)all resources are equally productive in all activities.
D)resources are not equally productive in all activities.
E)we produce goods and services at the lowest possible cost.

Answer 2

E

Question 3

Use the figure below to answer the following questions.

Figure 2.1.1
Refer to the production possibilities frontier in Figure 2.1.1.Which one of the following is true about point A?

A)It is unattainable.
B)While no more of good Y can be produced, more of good X can be produced.
C)It is preferred to point B.
D)Resources are either unused or misallocated or both.
E)It is attainable only if the amount of capital goods is increased.

Answer 3

D

Question 4

The production possibilities frontier

A)is the boundary between attainable and unattainable levels of production.
B)is the boundary between what we want to consume and what we want to produce.
C)shows how production increases as prices rise.
D)shows prices at which production is possible and impossible.
E)illustrates why there need not be any scarcity in the world.

Question 5

A situation in which resources are either unused or misallocated or both is represented in a production possibilities frontier diagram by

A)any point on either the horizontal or the vertical axis.
B)a point above or to the right of the production possibilities frontier.
C)a point outside the production possibilities frontier.
D)a point inside the production possibilities frontier.
E)a point on or inside the production possibilities frontier.

Question 6

A tradeoff exists when

A)we move from a point within the production possibilities frontier (PPF)to a point on the PPF.
B)we move from a point on the PPF to a point within the PPF.
C)the PPF shifts outward.
D)we move along the PPF.
E)the PPF shifts towards the origin.

Question 7

A point inside a production possibilities frontier

A)indicates some unused or misallocated resources.
B)is unattainable.
C)is preferred to a point on the production possibilities frontier.
D)indicates a point of production efficiency.
E)illustrates the idea of opportunity cost.

Question 8

If Sam is producing at a point on his production possibilities frontier, then he

A)cannot produce any more of either good.
B)is unaffected by costs and technology.
C)can produce more of both goods.
D)is not subject to scarcity.
E)can increase the production of one good only by decreasing the production of the other.

Question 9

Use the figure below to answer the following questions.

Figure 2.1.1
Complete the following sentence.In Figure 2.1.1,

A)movement from A to B would require a technological advance.
B)point B is a point of production efficiency.
C)some resources must be unused at point C.
D)the concept of decreasing opportunity cost is illustrated.
E)movement from C to B would require a technological improvement.

Question 10

Which of the following quotations best illustrates a tradeoff?

A)"If the firm reorganized its production process, it could produce more widgets and more gadgets."
B)"The firm should sell more gadgets, even if it means less widget sales."
C)"The more and more gadgets the firm produces, the bigger the fall in widget production."
D)"If the firm invests more in capital equipment, it can expand sales next year."
E)"The firm has been able to lower costs due to its extensive experience in building widgets."

Question 11

The concept of opportunity cost

A)cannot be explained by using a production possibilities frontier.
B)explains that goods are swapped for other goods.
C)implies that when a person is more efficient in the production of one good, he should produce that good and exchange it for some good that he is relatively less efficient at producing.
D)implies that a double coincidence of wants must be present for exchange to take place.
E)implies that because productive resources are scarce, we must give up some of one good to acquire more of another.

Question 12

If Harold must decrease production of some other good to increase production of good X, then Harold

A)is producing on his production possibilities frontier.
B)is producing outside his production possibilities frontier.
C)is producing inside his production possibilities frontier.
D)must prefer good X to any other good.
E)has too few capital goods.

Question 13

If Sam is producing at a point inside his production possibilities frontier, then he

A)can increase production of both goods with zero opportunity cost.
B)is fully using all his resources and allocating his resources to their best use.
C)must be doing the best he can with limited resources.
D)is unaffected by costs and technology.
E)has a high opportunity cost of moving from this point.

Question 14

Opportunity cost of an action is

A)the best choice that can be made.
B)the highest-valued alternative forgone.
C)the money cost.
D)the comparative cost.
E)the absolute cost.

Question 15

A production possibilities frontier is negatively sloped because

A)more goods are purchased as price falls.
B)of opportunity cost.
C)some resources are unused.
D)there is not enough capital in the economy.
E)of increasing consumption.

Question 16

On a graph of a production possibilities frontier, opportunity cost is represented by

A)a point on the horizontal axis.
B)a point on the vertical axis.
C)a ray through the origin.
D)the slope of the production possibilities frontier.
E)the x-axis intercept.

Question 17

Which one of the following concepts is illustrated by a production possibilities frontier?

A)profit
B)consumption
C)investment
D)monetary exchange
E)the tradeoff between producing one good versus another

Question 18

Ted chooses to study for his economics exam instead of going to the concert.The concert he will miss is Ted's ________ of studying for the exam.

A)monetary cost
B)absolute cost
C)opportunity cost
D)discretionary cost
E)comparative cost

Question 19

Use the figure below to answer the following questions.

Figure 2.1.1
Refer to the production possibilities frontier in Figure 2.1.1.Which one of the following is true about point C?

A)It is attainable only if we consume more of good X.
B)It is unattainable.
C)It is attainable only if we consume less of good Y.
D)It is attainable only if we consume less of good X.
E)It is attainable only if we consume more of good Y.

Question 20

Which one of the following concepts is not illustrated by a production possibilities frontier?

A)scarcity
B)monetary exchange
C)opportunity cost
D)attainable and unattainable points
E)the tradeoff between producing one good versus another

Question 21

A medical clinic has 10 workers.Each worker can produce a maximum of either 2 units of medical services or 5 units of secretarial services a day.One day, the firm decides it would like to produce 16 units of medical services and 5 units of secretarial services.This output level is

A) efficient.
B)unattainable.
C)inefficient.
D)costless.
E)attainable and efficient.

Question 22

The fact that resources are not equally productive in all activities

A)implies that a production possibilities frontier will be bowed outward.
B)implies that gains from specialization and trade are unlikely.
C)follows from the law of demand.
D)implies a linear production possibilities frontier.
E)implies that an economy should not produce certain goods.

Question 23

If opportunity costs are increasing, then the production possibilities frontier

A)will be bowed out and have a positive slope.
B)will be positively sloped.
C)will be linear and have a negative slope.
D)will be bowed out and have a negative slope.
E)reflects the fact that available resources are equally useful in all production activities.

Question 24

Use the figure below to answer the following questions.

Figure 2.1.2
Refer to the production possibilities frontier in Figure 2.1.2.At point A, the opportunity cost of producing 3 more units of X

A)is 30 units of Y.
B)is 3 units of X.
C)is 20 units of Y.
D)is 10 units of Y.
E)cannot be determined from the diagram.

Question 25

If additional units of any good could be produced at a constant opportunity cost, the production possibilities frontier would be

A)bowed inward.
B)bowed outward.
C)positively sloped.
D)horizontal.
E)linear and negatively sloped.

Question 26

A medical clinic has 10 workers.Each worker can produce a maximum of either 2 units of medical services or 5 units of secretarial services a day.The production possibilities frontier of this firm would show

A)increasing opportunity cost.
B)decreasing opportunity cost.
C)constant opportunity cost.
D)zero opportunity cost.
E)infinite opportunity cost.

Question 27

Use the figure below to answer the following questions.

Figure 2.1.3
Figure 2.1.3 illustrates Mary's production possibilities frontier.If Mary wants to move from point D to point C,

A)it will be necessary to improve technology.
B)it will be necessary to increase the accumulation of capital.
C)it will be necessary to give up some of good X to obtain more of good Y.
D)it will be necessary to give up some of good Y to obtain more of good X.
E)she can accomplish this without any opportunity cost.

Question 28

Use the figure below to answer the following questions.

Figure 2.1.2
Refer to the production possibilities frontier in Figure 2.1.2.At point A, the opportunity cost of increasing production of Y to 80 units is

A)10 units of Y.
B)80 units of Y.
C)2 units of X.
D)3 units of X.
E)1 unit of X.

Question 29

Use the figure below to answer the following questions.

Figure 2.1.3
Figure 2.1.3 illustrates Mary's production possibilities frontier.If Mary wants to move from point B to point C,

A)it will be necessary to improve technology.
B)it will be necessary to increase the accumulation of capital.
C)it will be necessary to give up some of good X to obtain more of good Y.
D)it will be necessary to give up some of good Y to obtain more of good X.
E)she can accomplish this without any opportunity cost.

Question 30

The bowed-out (concave)shape of a production possibilities frontier

A)is due to the equal usefulness of resources in all activities.
B)is due to capital accumulation.
C)is due to technological change.
D)reflects the existence of increasing opportunity cost.
E)reflects the existence of decreasing opportunity cost.

Question 31

Use the figure below to answer the following questions.

Figure 2.1.2
Refer to the production possibilities frontier in Figure 2.1.2.At point C, the opportunity cost of producing one more unit of X is

A)1 unit of Y.
B)1 unit of X.
C)8 units of X.
D)20 units of X.
E)20 units of Y.

Question 32

Use the figure below to answer the following questions.

Figure 2.1.2
Refer to the production possibilities frontier in Figure 2.1.2.If 6 units of X are currently being produced, then

A)40 units of Y cannot be produced unless production of X is decreased.
B)40 units of Y cannot be produced unless production of X is increased.
C)60 units of Y can be produced with some resources not fully used.
D)50 units of Y must be produced, regardless of resource utilization.
E)50 units of Y can be produced if all resources are used and assigned to the task for which they are the best match.

Question 33

A medical clinic has 10 workers.Each worker can produce a maximum of either 2 units of medical services or 5 units of secretarial services a day.One day, the firm decides it would like to produce 10 units of medical services and 30 units of secretarial services.This output level is

A) efficient.
B)unattainable.
C)inefficient.
D)costless.
E)attainable if the firm reduces the number of its workers.

Question 34

As we increase the production of X, we find we must give up larger and larger amounts of Y per unit of X.Select the best statement.

A)This illustrates increasing opportunity cost.
B)As a result, we should not specialize in the production of X.
C)The production possibilities frontier for X and Y is a straight line.
D)Good Y will be more highly regarded by consumers than good X.
E)We must be producing inside the production possibilities frontier.

Question 35

Use the figure below to answer the following questions.

Figure 2.1.3
Refer to the production possibilities frontier in Figure 2.1.3.The opportunity cost of moving from C to B will be

A)greater than moving from D to C but less than moving from B to A.
B)less than moving from D to C but greater than moving from B to A.
C)the same as moving from D to C or moving from B to A.
D)greater than moving either from D to C or from B to A.
E)less than moving from E to D.

Question 36

Use the figure below to answer the following questions.

Figure 2.1.2
Refer to the production possibilities frontier in Figure 2.1.2.Suppose that 50 units of Y are currently being produced.Then

A)7 units of X are being produced.
B)6 units of X can be produced if all resources are used and assigned to the task for which they are the best match.
C)9 units of X can be produced if all resources are used and assigned to the task for which they are the best match.
D)resources are not being fully utilized.
E)6 units of X are being produced.

Question 37

Use the figure below to answer the following questions.

Figure 2.1.2
Refer to the production possibilities frontier in Figure 2.1.2.At point C, what is the opportunity cost of increasing the production of Y from 20 to 50 units?

A)6 units of X
B)2 units of X
C)8 units of X
D)20 units of Y
E)30 units of Y

Question 38

The existence of increasing opportunity cost

A)explains why specialization is frequently useful.
B)explains why resources are scarce.
C)explains the bowed-out shape of the production possibilities frontier.
D)follows from the existence of property rights.
E)explains why some societies produce inside their production possibilities frontier.

Question 39

A medical clinic has 10 workers.Each worker can produce a maximum of either 2 units of medical services or 5 units of secretarial services a day.The opportunity cost of one more unit of medical services is

A)2 units of secretarial services.
B)5 units of secretarial services.
C)0.4 units of secretarial services.
D)2.5 units of secretarial services.
E)dependent on the level of services.

Question 40

Consider the production possibilities frontier in Figure 2.1.2.Which of the following statements is false?

A)Resources are not equally useful in all activities.
B)Points inside the production possibilities frontier indicate unused or misallocated resources.
C)Starting at point A, an increase in the production of Y will shift the production possibilities frontier outward.
D)The opportunity cost of producing Y increases as production of Y increases.
E)The opportunity cost of producing X increases as production of X increases.

Question 41

Use the figure below to answer the following questions.

Figure 2.1.6
Figure 2.1.6 shows the production possibilities frontier for a firm that produces pet food.Point A is ________ and point B is ________.

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

Question 42

As we move down the bowed-out production possibilities frontier, opportunity cost

A)increases.
B)decreases.
C)remains constant.
D)initially decreases, then increases.
E)decreases but at an increasing rate.

Question 43

Use the table below to answer the following questions.
Table 2.1.2
Production Possibilities

Refer to Table 2.1.2.According to this production possibilities frontier,

A)a combination of 6 kilograms of butter and 1 gun leaves some resources unused.
B)a combination of 0 butter and 4 guns is attainable.
C)resources are equally useful in all activities.
D)the opportunity cost of producing guns increases as more guns are produced.
E)the opportunity cost of producing guns decreases as more guns are produced.

Question 44

From the data in Table 2.1.1, the production of 7 units of X and 28 units of Y is

A)unattainable.
B)attainable but leaves some resources unused or misallocated or both.
C)on the PPF between points C and D.
D)on the PPF between points B and C.
E)outside the PPF.

Question 45

Use the table below to answer the following questions.
Table 2.1.1
The following table gives points on the production possibilities frontier for goods X and Y.

Refer to Table 2.1.1.The opportunity cost of increasing the production of X from 8 to 12 units is

A)4 units of X.
B)4 units of Y.
C)8 units of Y.
D)12 units of Y.
E)16 units of Y.

Question 46

Use the table below to answer the following question.
Table 2.1.3
Production possibilities for a society that produces only two
goods - hockey sticks and maple leaves

Refer to Table 2.1.3.In moving from combination C to combination B, the opportunity cost of producing one additional hockey stick is

A)2 maple leaves.
B)1/2 maple leaves.
C)6 maple leaves.
D)1/6 maple leaves.
E)3 maple leaves.

Question 47

Use the table below to answer the following questions.
Table 2.1.1
The following table gives points on the production possibilities frontier for goods X and Y.

Refer to Table 2.1.1. What does point C mean?

A)If 8 units of X are produced, then at least 28 units of Y can be produced.
B)If 8 units of X are produced, then at most 28 units of Y can be produced.
C)If 28 units of Y are produced, then more than 8 units of X can be produced.
D)If 8 units of X are produced, then only 36 units of Y can be produced.
E)There is unemployment at this point.

Question 48

Use the figure below to answer the following questions.

Figure 2.1.3
Refer to the production possibilities frontier in Figure 2.1.3.The fact that less of X must be given up when moving from D to C than when moving from B to A indicates

A)decreasing opportunity cost.
B)increasing opportunity cost.
C)comparative advantage in the production of X.
D)the consequences of technological improvement.
E)unemployed resources at D.

Question 49

Refer to Table 2.1.1.As we increase the production of X,

A)the amount of Y that is given up for each additional unit of X decreases.
B)the output of Y increases.
C)the opportunity cost of each additional unit of X increases.
D)unemployment increases.
E)the amount of X increases at an increasing rate.

Question 50

From the data in Table 2.1.1, the production of 10 units of X and 28 units of Y is

A)unattainable.
B)attainable but leaves some resources misallocated.
C)on the production possibilities frontier between points C and D.
D)inside the PPF.
E)possible if we reduce the amount of capital goods.

Question 51

The economy illustrated by the data in Table 2.1.1 exhibits

A)decreasing opportunity cost.
B)constant opportunity cost in the production of X.
C)constant opportunity cost in the production of Y.
D)increasing opportunity cost.
E)initially increasing, then decreasing opportunity cost.

Question 52

Use the figure below to answer the following question.

Figure 2.1.5
The graph in Figure 2.1.5 shows Sunland's PPF for food and sunscreen.Sunland faces ________ opportunity cost of food and ________ opportunity of sunscreen.

A)an increasing; a decreasing
B)a constant; a constant
C)a decreasing; an increasing
D)an increasing; an increasing
E)a decreasing; a decreasing

Question 53

Use the figure below to answer the following questions.

Figure 2.1.6
Figure 2.1.6 shows the production possibilities frontier for a firm that produces pet food.This PPF ________ illustrate scarcity because ________.

A)does; the firm cannot produce points outside the frontier, and as the firm moves along the PPF, it cannot produce more dog biscuits without producing less cat food
B)does not; the firm can produce any quantity it wants if it is willing to pay a high enough price
C)does not; the PPF is downward sloping
D)does; as more is produced, consumer must pay a higher price
E)does not; scarcity does not occur in the market for pet food

Question 54

Use the table below to answer the following questions.
Table 2.1.1
The following table gives points on the production possibilities frontier for goods X and Y.

Refer to Table 2.1.1.The opportunity cost of increasing the production of Y from 16 to 36 units is

A)4 units of X.
B)8 units of X.
C)12 units of X.
D)16 units of X.
E)20 units of Y.

Question 55

The diagram of the production possibilities frontier corresponding to the data in Table 2.1.1 would be

A)negatively sloped and linear.
B)negatively sloped and bowed inward.
C)negatively sloped and bowed outward.
D)positively sloped for X and negatively sloped for Y.
E)a horizontal line.

Question 56

Use the table below to answer the following questions.
Table 2.1.2
Production Possibilities

Refer to Table 2.1.2.In moving from combination B to combination C, the opportunity cost of producing one additional unit of guns is

A)2 kilograms of butter.
B)1/2 kilogram of butter.
C)6 kilograms of butter.
D)1/6 kilogram of butter.
E)3 kilograms of butter.

Question 57

From the data in Table 2.1.1 we can infer that

A)the economy illustrated has a comparative advantage in the production of Y.
B)the economy illustrated has a comparative advantage in the production of X.
C)the opportunity cost of producing an additional unit of Y increases as the production of Y increases.
D)the opportunity cost of producing an additional unit of Y decreases as the production of Y increases.
E)none of the above.

Question 58

Use the table below to answer the following question.
Table 2.1.4
Consider the following production possibilities for a student for the typical week:

Refer to Table 2.1.4.Complete the following sentence.The production possibilities frontier in the table shows

A)increasing opportunity cost.
B)learning-by-doing.
C)constant opportunity cost.
D)under-utilization of resources.
E)decreasing opportunity cost.

Question 59

Use the figure below to answer the following question.

Figure 2.1.4
Refer to the production possibilities frontier in Figure 2.1.4.Which point is unattainable?

A)A
B)B
C)C
D)D
E)E

Question 60

The slope of the production possibilities frontier curve indicates

A)opportunity cost.
B)comparative advantage.
C)absolute advantage.
D)marginal benefit.
E)preferences.

Question 61

The quantity of shoes produced is measured along the x-axis of a bowed-outward production possibilities frontier and the quantity of shirts produced is measured along the y-axis.As you move down towards the right along the production possibilities frontier, the marginal cost of

A)a pair of shoes decreases.
B)a pair of shoes increases.
C)a shirt remains constant.
D)a shirt increases or decreases but we don't know for sure.
E)a pair of shoes and a shirt is equal at the midpoint between the x-axis and the y-axis.

Question 62

The production possibilities frontier is

A)upward sloping and illustrates a tradeoff in production of the good measured on the x-axis and the good measured on the y-axis.
B)downward sloping and illustrates a tradeoff in production of the good measured on the x-axis and the good measured on the y-axis.
C)upward sloping and a movement along the PPF illustrates a free lunch.
D)downward sloping and a movement along the PPF illustrates a free lunch.
E)downward sloping and illustrates the marginal benefit from increasing production of the good measured on the x-axis.

Question 63

Which of the following is true regarding marginal benefit? I. The marginal benefit curve shows the benefit firms receive by producing another unit of a good.
II. Marginal benefit increases as more and more of a good is consumed.
III. Marginal benefit is the maximum amount a person is willing to pay to obtain one more unit of a good.

A)I only
B)I and II
C)I and III
D)III only
E)I, II, and III

Question 64

The Government of Canada promises to produce more defence goods without any decrease in the production of other goods.This promise is valid

A)if Canada is producing at a point outside its PPF.
B)if Canada is producing at a point on its PPF.
C)if Canada is producing at a point inside its PPF.
D)only if the PPF shifts rightward.
E)only if technology advances or capital increases.

Question 65

A marginal benefit curve measures

A)comparative advantage.
B)willingness to pay.
C)absolute advantage.
D)opportunity cost.
E)expenditure.

Question 66

To describe preferences, economists use the concept of

A)opportunity cost.
B)scarcity.
C)marginal benefit.
D)marginal cost.
E)price.

Question 67

The marginal benefit curve from a good

A)shows the benefit a firm receives from producing one more unit of that good.
B)shows the most a consumer is willing to pay for one more unit of that good.
C)is upward-sloping.
D)is bowed outward.
E)is vertical.

Question 68

Allocative efficiency refers to a situation where

A)opportunity costs are equal.
B)we cannot produce more of any one good without giving up some other good.
C)goods and services are produced at the lowest possible cost and in the quantities that provide the greatest possible benefit.
D)opportunity cost is zero.
E)marginal benefit is maximized.

Question 69

Complete the following sentence.Marginal cost

A)is the opportunity cost of producing one more unit of a good or service.
B)is unrelated to the production possibilities frontier.
C)always equals marginal benefit.
D)remains constant.
E)is always greater then marginal benefit.

Question 70

Use the figure below to answer the following questions.

Figure 2.2.1
In Figure 2.2.1, the curve labeled B shows

A)the bottles of pop that people are willing to forgo to get another bicycle.
B)the bicycles that people are willing to forgo to get another bottle of pop.
C)the bottles of pop that people must forgo to get another bicycle.
D)that the benefits from producing more bicycles is greater than the benefits from producing more pop.
E)that the benefits from producing more pop is greater than the benefits from producing more bicycles.

Question 71

The production possibilities frontier shows

A)the maximum possible rate of growth of output in an economy.
B)the maximum quantity of resources available at any given time.
C)the maximum level of production that can be attained.
D)combinations of goods and services that do not fully use available resources.
E)the effect of advancing technology on production possibilities.

Question 72

Choose the correct statements. 1. Opportunity cost of a good is the increase in the quantity produced of one good divided by the decrease in the quantity produced of another good as we move along the PPF.
2. The opportunity cost of an action is the highest-valued alternative forgone.
3. Opportunity cost is a ratio.
4. There is no relationship between the opportunity cost of producing an additional good measured on the x-axis and the opportunity cost of producing an additional good measured on the y-axis.

A)Statements 1 and 3 are correct.
B)Statements 1 and 2 are correct.
C)Statements 2 and 3 are correct.
D)Statements 2 and 4 are correct.
E)Statements 3 and 4 are correct.

Question 73

Consider a PPF that measures the production of quilts on the y-axis and the production of pillows on the x-axis.As the firm moves along this PPF, the quantities of

A)all goods other than pillows and quilts are decreasing.
B)all goods other than pillows and quilts remain constant.
C)all goods other than pillows and quilts are increasing.
D)pillows and quilts produced increase together.
E)pillows and quilts produced decrease together.

Question 74

Use the figure below to answer the following questions.

Figure 2.2.1
In Figure 2.2.1, when 4,000 bicycles are produced each month,

A)the marginal benefit from another bicycle is greater than the marginal cost of another bicycle.
B)more bicycles must be produced to reach the efficient level of output.
C)fewer bicycles must be produced to reach the efficient level of output.
D)the economy is efficient at this level of production of bicycles.
E)both A and B.

Question 75

Use the figure below to answer the following questions.

Figure 2.2.1
In Figure 2.2.1, when 2,000 bicycles are produced each month,

A)the marginal benefit from another bicycle is greater than the marginal cost of another bicycle.
B)more bicycles must be produced to reach the efficient level of output.
C)fewer bicycles must be produced to reach the efficient level of output.
D)the economy is efficient at this level of production of bicycles.
E)both A and B.

Question 76

When producing at a point of production efficiency,

A)our choice of goods to produce can be either on or inside the production possibilities frontier.
B)we can satisfy all our wants.
C)the opportunity cost of producing goods other than those measured on the axes of the production possibilities frontier is zero.
D)we face a tradeoff and incur an opportunity cost.
E)resources are either unused or misallocated.

Question 77

Use the figure below to answer the following questions.

Figure 2.2.1
In Figure 2.2.1, the curve labelled A is the ________ curve and the curve labelled B is the ________ curve.

A)marginal cost; marginal benefit
B)marginal cost; trade
C)marginal benefit; trade
D)production possibilities; trade
E)marginal benefit; marginal cost

Question 78

Complete the following sentence.As you consume more and more of a good,

A)marginal benefit increases.
B)marginal benefit decreases.
C)marginal benefit always equals marginal cost.
D)marginal benefit increases or decreases depending on where you are on the production possibilities frontier.
E)the price of the good falls.

Question 79

Jane produces only corn and cloth.If her preferences for corn and cloth change, then

A)her PPF becomes steeper.
B)her PPF becomes flatter.
C)her PPF becomes straighter.
D)the world PPF shifts outward.
E)her PPF does not change.

Question 80

Microsoft's marginal cost of the 100th copy of Microsoft Windows 8 is

A)the maximum amount that someone is willing to pay for the 100th copy of Windows 8.
B)equal to the marginal benefit of the 100th copy of Windows 8.
C)the opportunity cost of producing the 100th copy of Windows 8.
D)the maximum amount that someone is willing to pay Microsoft to obtain the code that supports Windows 8.
E)greater than the marginal benefit from the 100th copy of Windows 8.