Question 1

Use these production possibilities frontier (PPF)curves,which compare the ancient production of agricultural products to art and literature,to answer the questions that follow.

-Suppose a great plague wipes out half of the society's population.Which of the following graphs best depicts how this would affect the PPF?

Accepted Answer

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

Question 2

Which of the following is a positive statement?

Accepted Answer

A) An economist should test every theory at least twice. 
B) Increases in the minimum wage cause unemployment. 
C) We ought to deregulate the mortgage market. 
D) The government must provide unlimited health care to citizens. 
E) We should forgo some current consumption in order to invest in the future.

Question 3

Refer to the following table to answer the questions that follow.
 
-Given the same quantity of resources,what is Alicia Keys's opportunity cost of producing a New York pizza?

Accepted Answer

A) 5/2 Philly cheesesteaks 
B) 2/5 Philly cheesesteak 
C) 3 Philly cheesesteaks 
D) 1/3 New York pizza 
E) 4/5 New York pizza

Question 4

When one producer has a comparative advantage in production,she:

Accepted Answer

A) can produce more output than someone else using the same quantity of resources. 
B) can produce a good at a lower opportunity cost than someone else. 
C) does not benefit from trade with other producers. 
D) is unable to reach her production possibilities frontier (PPF). 
E) trades only with others who have the same comparative advantage.

Question 5

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

Accepted Answer

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

Question 6

Variables that are controlled for in a model are called:

Accepted Answer

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

Question 7

Refer to the accompanying figure to answer the questions that follow.
 
-How is opportunity cost illustrated?

Accepted Answer

A) a move from point A to point B 
B) a move from point A to point C 
C) a move from point C to point D 
D) a move from point B to point C 
E) a move from point D to point E

Question 8

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

Accepted Answer

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

Question 9

Michael and Angelo are both artists who can create sculptures or paintings each day.The following table describes their maximum outputs per day.Use this table to answer the questions that follow.
 
-What is Angelo's opportunity cost of a painting?

Accepted Answer

A) 1/3 painting 
B) 1/3 sculpture 
C) 2/5 sculpture 
D) 3 paintings 
E) 3 sculptures

Question 10

You have a comparative advantage in producing a good whenever:

Accepted Answer

A) you enjoy producing that good. 
B) you can produce more of the good than someone else can using the same resources. 
C) your opportunity cost is constant. 
D) your opportunity cost of producing that good is lower than that of other producers. 
E) you have specific training in the production of that good.

Question 11

Use these production possibilities frontier (PPF)curves,which compare the ancient production of agricultural products to art and literature,to answer the questions that follow.

-Suppose a new generation of baby boomers is entering the workforce.Which graph best depicts how this would affect the PPF?

Accepted Answer

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

Question 12

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

Accepted Answer

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

Question 13

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

Accepted Answer

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

Question 14

When testing a model rocket on your campus quad,which of the following would be an endogenous factor?

Accepted Answer

A) the current wind speed across the quad 
B) the quad's elevation and air pressure 
C) the extent of precipitation 
D) the gravitational pull of the earth 
E) the size of the rocket engine

Question 15

Which of the following is a normative statement?

Accepted Answer

A) You should wear a helmet when cycling. 
B) The sky is blue. 
C) A bicycle has two wheels. 
D) A unicycle has five wheels. 
E) Electricity follows the path of least resistance.

Question 16

Greater investment in capital goods today leads to:

Accepted Answer

A) greater growth in the production possibilities frontier (PPF)in the future. 
B) greater consumption today. 
C) the end of scarcity. 
D) less opportunity cost. 
E) scarcity.

Question 17

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

Accepted Answer

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

Question 18

Consider the production possibilities frontier (PPF)shown in the figure below to answer the questions that follow.
 
-Given current resources and technology,the unattainable range is best described as:

Accepted Answer

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

Question 19

Suppose that,on a particular Saturday,Mark Zuckerberg and Bill Gates can either plant trees or spread mulch in their gardens.Their maximum output per day is listed in the following table,along with spaces where you can calculate the opportunity cost.Who has an absolute advantage in spreading mulch?

Accepted Answer

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

Question 20

Michael and Angelo are both artists who can create sculptures or paintings each day.The following table describes their maximum outputs per day.Use this table to answer the questions that follow.
 
-What is Michael's opportunity cost of a sculpture?

Accepted Answer

A) 2 paintings 
B) 1/2 painting 
C) 3 paintings 
D) 1/3 sculpture 
E) 1/2 sculpture

Exam 2: Model Building and Gains From Trade

Which of the following is a positive statement?

Refer to the following table to answer the questions that follow. -Given the same quantity of resources,what is Alicia Keys's opportunity cost of producing a New York pizza?

When one producer has a comparative advantage in production,she:

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

Variables that are controlled for in a model are called:

Refer to the accompanying figure to answer the questions that follow. -How is opportunity cost illustrated?

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

Michael and Angelo are both artists who can create sculptures or paintings each day.The following table describes their maximum outputs per day.Use this table to answer the questions that follow. -What is Angelo's opportunity cost of a painting?

You have a comparative advantage in producing a good whenever:

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

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

When testing a model rocket on your campus quad,which of the following would be an endogenous factor?

Which of the following is a normative statement?

Greater investment in capital goods today leads to:

Consider the production possibilities frontier (PPF) shown in the figure below to answer the questions that follow. -Given current resources and technology,the unattainable range is best described as:

Suppose that,on a particular Saturday,Mark Zuckerberg and Bill Gates can either plant trees or spread mulch in their gardens.Their maximum output per day is listed in the following table,along with spaces where you can calculate the opportunity cost.Who has an absolute advantage in spreading mulch?

Michael and Angelo are both artists who can create sculptures or paintings each day.The following table describes their maximum outputs per day.Use this table to answer the questions that follow. -What is Michael's opportunity cost of a sculpture?