Question 1

At full employment,a society produces:

Accepted Answer

A)  somewhere within its production possibilities frontier (PPF). 
B)  somewhere outside its PPF. 
C)  at the origin on its PPF graph. 
D)  on its PPF. 
E)  only one good.

Question 2

Economic growth is represented on a production possibilities frontier (PPF) by the PPF:

Accepted Answer

A)  getting steeper. 
B)  getting flatter. 
C)  shifting inward. 
D)  shifting outward. 
E)  rotating downward.

Question 3

You are planning to add new mulch to all the landscaping beds around your house. You have determined the quantity of mulch you will need and have identified these two options for getting the mulch to your house:
1.You can have all the mulch delivered to your yard in one dump truck for $450.
2.You can make four trips to the garden center with your pickup truck and haul it yourself. It will cost you $75 per load for the mulch, plus $25 in fuel and truck wear per load. You estimate it will take about five hours to haul and unload all four loads.
What is the full cost of each method? Which method is cheaper? How is opportunity cost relevant?

Accepted Answer

The answer of You are planning to add new mulch...

Question 4

Economists use the scientific method and the tools of economics to study:

Accepted Answer

A)  only the decisions of individuals. 
B)  only the decisions of business firms. 
C)  only economic growth and gross domestic product (GDP). 
D)  only the production possibilities curve. 
E)  anything around them; the world is the economist's laboratory.

Question 5

The ability of one producer to create more of a good than another producer using the same quantity of resources is called:

Accepted Answer

A)  comparative advantage. 
B)  absolute advantage. 
C)  a positive-sum game. 
D)  gains from trade. 
E)  the law of increasing relative cost.

Question 6

Suppose that,during an afternoon at your favorite ski resort,you could either make additional runs down the slopes or produce and sip hot chocolate by the fire in the lodge.Draw a production possibilities frontier (PPF) that describes your production trade-offs between runs skied (by riding the chairlift to the top and skiing down the slope) versus cups of hot chocolate produced and sipped.Your production of each of these goods is subject to constant marginal opportunity costs in production,so be sure that in your graph,the opportunity cost of one activity in terms of the other is the same at any point on the PPF.
Now suppose that a new superfast ski lift reduces the time it takes to get to the top of the mountain.Show,on the same graph,how this changes the PPF.

Accepted Answer

The answer of Suppose that,during an afternoon at your favorite...

Question 7

Refer to the following table to answer the next two questions.
 
-Given the same quantity of resources,what is Jay-Z's opportunity cost of producing a New York pizza?

Accepted Answer

A)  5/2 Philly cheesesteaks 
B)  1/3 Philly cheesesteak 
C)  3 Philly cheesesteaks 
D)  120/125 New York pizza 
E)  4/5 New York pizza

Question 8

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between making pizzas and making stromboli. Refer to these figures to answer the next three questions.
 
-What is Jim's opportunity cost of making 1 pizza?

Accepted Answer

A)  50 stromboli 
B)  20 stromboli 
C)  2.5 stromboli 
D)  2 stromboli 
E)  1.5 stromboli

Question 9

Refer to the following figure to answer the next four questions.
 
-Which point in the corresponding figure represents a combination of smoothies and milk shakes that society cannot currently produce?

Accepted Answer

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

Question 10

Refer to the following figures to answer the next two questions.
 
-How will a reduction in the national unemployment rate affect a nation's production possibilities frontier (PPF)?

Accepted Answer

The answer of Refer to the following figures to answer...

Question 11

Car companies build wind tunnels to test the aerodynamics and the handling capabilities of their car designs.The many variables that can be precisely controlled inside the wind tunnel are considered:

Accepted Answer

A)  normative factors. 
B)  positive factors. 
C)  comparative factors. 
D)  endogenous factors. 
E)  exogenous factors.

Question 12

Refer to the following figure for the next two questions.
 
-According to the figure,a new technology that makes it easier to peel,core,and prepare apples will cause:

Accepted Answer

A)  the entire production possibilities frontier (PPF) to shift outward. 
B)  the entire PPF to shift inward. 
C)  the PPF to rotate outward to a larger maximum quantity of apple pies with no change in maximum blueberry pies. 
D)  the PPF to rotate outward to a larger maximum quantity of blueberry pies with no change in maximum apple pies. 
E)  the PPF to stay exactly the same because there is no change in resources.

Question 13

Refer to the following figures to answer the next two questions.
 
-Which allocation point in the short-run production possibilities frontier (PPF) will lead to NO GROWTH in the long-run PPF?

Accepted Answer

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

Question 14

The process of examining a change in one variable in a model while assuming that all the other variables remain constant is called:

Accepted Answer

A)  exogenous factors. 
B)  ceteris paribus. 
C)  normative analysis. 
D)  positive analysis. 
E)  faulty assumptions.

Question 15

Refer to the graph below.This society could reach point F when there is a(n):

Accepted Answer

A)  increase in the monetary price of apple pie. 
B)  credible new study that shows blueberries reduce the risk of heart attack. 
C)  increase in technology that makes pie bakers more efficient. 
D)  new regulation that makes pie baking more costly. 
E)  increase in the monetary price of blueberry pie.

Question 16

Refer to the following figure to answer the next four questions.
 
-In the figure,point E is:

Accepted Answer

A)  an efficient point. 
B)  unattainable with current resources. 
C)  an inefficient point. 
D)  the equilibrium. 
E)  evidence that trade does not enrich society.

Question 17

Ceteris paribus means:

Accepted Answer

A)  in sets of two. 
B)  constant opportunity cost. 
C)  other things being equal. 
D)  buyer beware. 
E)  there is no reason to argue about people's tastes.

Question 18

Consider the production possibilities frontier (PPF) shown in the figure below to answer the next three questions.
 
-Given current resources and technology,the attainable 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: points inside the PPF and points on the PPF. 
E)  Area O: points outside the PPF and points on the PPF.

Question 19

How will a reduction in the national unemployment rate affect a nation's production possibilities frontier (PPF)?

Accepted Answer

A)  It will cause the PPF to shift inward. 
B)  It will cause the PPF to shift outward. 
C)  It will move society to a point farther inside the PPF. 
D)  It will move society outward to a point closer to or on the PPF. 
E)  It will push society to a point outside its PPF.

Question 20

Refer to the following figure for the next three questions.
 
-The opportunity cost of increasing production of apple pies from 14 to 16 pies is:

Accepted Answer

A)  2 blueberry pies. 
B)  14 apple pies. 
C)  7 blueberry pies. 
D)  4 blueberry pies. 
E)  16 blueberry pies.

Exam 2: Model Building and Gains From Trade

At full employment,a society produces:

Economic growth is represented on a production possibilities frontier (PPF) by the PPF:

Economists use the scientific method and the tools of economics to study:

The ability of one producer to create more of a good than another producer using the same quantity of resources is called:

Refer to the following table to answer the next two questions. -Given the same quantity of resources,what is Jay-Z's opportunity cost of producing a New York pizza?

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between making pizzas and making stromboli. Refer to these figures to answer the next three questions. -What is Jim's opportunity cost of making 1 pizza?

Refer to the following figure to answer the next four questions. -Which point in the corresponding figure represents a combination of smoothies and milk shakes that society cannot currently produce?

Refer to the following figures to answer the next two questions. -How will a reduction in the national unemployment rate affect a nation's production possibilities frontier (PPF)?

Car companies build wind tunnels to test the aerodynamics and the handling capabilities of their car designs.The many variables that can be precisely controlled inside the wind tunnel are considered:

Refer to the following figure for the next two questions. -According to the figure,a new technology that makes it easier to peel,core,and prepare apples will cause:

Refer to the following figures to answer the next two questions. -Which allocation point in the short-run production possibilities frontier (PPF) will lead to NO GROWTH in the long-run PPF?

The process of examining a change in one variable in a model while assuming that all the other variables remain constant is called:

Refer to the graph below.This society could reach point F when there is a(n) :

Refer to the following figure to answer the next four questions. -In the figure,point E is:

Ceteris paribus means:

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

How will a reduction in the national unemployment rate affect a nation's production possibilities frontier (PPF) ?

Refer to the following figure for the next three questions. -The opportunity cost of increasing production of apple pies from 14 to 16 pies is: