Question 1

Figure 2-14  Figure 2-14 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts.
-Refer to Figure 2-14. What is the opportunity cost of producing 1 ton of pineapples in Guatemala?

Accepted Answer

A)  1/2 of a ton of coconuts 
B)  1 1/3 tons of coconuts 
C)  2 tons of coconuts 
D)  180 tons of coconuts

Question 2

Table 2-3
Production Choices for Dina's Diner
 
-Refer to Table 2-3. Assume Dina's Diner only produces sliders and hot wings. A combination of 80 sliders and 100 hot wings would appear

Accepted Answer

A)  along Dina's production possibilities frontier. 
B)  inside Dina's production possibilities frontier. 
C)  outside Dina's production possibilities frontier. 
D)  at the vertical intercept of Dina's production possibilities frontier.

Question 3

Figure 2-13  Figure 2-13 shows the production possibilities frontiers for Tahiti and Bora Bora. Each country produces two goods, milk and honey.
-Refer to Figure 2-13. What is the opportunity cost of producing one gallon of milk in Tahiti?

Accepted Answer

A)  1/2 gallon of honey 
B)  5/6 gallon of honey 
C)  1.2 gallons of honey 
D)  1.5 gallons of honey

Question 4

If additional units of a good could be produced at a constant opportunity cost, the production possibility frontier would be linear.

Accepted Answer

A) True 
 B)False

Question 5

Table 2-17
  Table 2-17 shows the output per week of two people, James and Lucy. They can either devote their time to making wagons or making tricycles.
-Refer to Table 2-17. What is James's opportunity cost of making a tricycle?

Accepted Answer

A)  2 tricycles 
B)  1/2 of a wagon 
C)  1/2 of a tricycle 
D)  3/4 of a wagon

Question 6

Table 2-4
Production Choices for Dina's Diner
 
-Refer to Table 2-4. Assume Dina's Diner only produces sliders and hot wings. A combination of 40 sliders and 25 hot wings would appear

Accepted Answer

A)  along Dina's production possibilities frontier. 
B)  inside Dina's production possibilities frontier. 
C)  outside Dina's production possibilities frontier. 
D)  at the vertical intercept of Dina's production possibilities frontier.

Question 7

Figure 2-14  Figure 2-14 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts.
-Individuals who have never been the best at doing anything

Accepted Answer

A)  cannot have a comparative advantage in producing any product. 
B)  can still have a comparative advantage in producing some product. 
C)  perform all tasks at a higher opportunity cost than others. 
D)  must have an absolute advantage in at least ones task.

Question 8

Table 2-13
  Table 2-13 shows the output per day of two pet groomers, Tammi and Horace. They can either devote their time to grooming dogs or bathing cats.
-Refer to Table 2-13. What is Tammi's opportunity cost of grooming a dog?

Accepted Answer

A)  half a bathed cat 
B)  two bathed cats 
C)  two-thirds of a bathed cat 
D)  one and a half bathed cats

Question 9

The ________ production points on a production possibility curve are the points along and inside the production possibility frontier.

Accepted Answer

A)  attainable 
B)  unattainable 
C)  productively efficient 
D)  allocatively efficient

Question 10

Figure 2-10 
-Refer to Figure 2-10. If the economy is currently producing at point D, what is the opportunity cost of moving to point B?

Accepted Answer

A)  16 thousand spoons 
B)  46 thousand forks 
C)  60 thousand spoons 
D)  0 forks

Question 11

Table 2-3
Production Choices for Dina's Diner
 
-Refer to Table 2-3. Assume Dina's Diner only produces sliders and hot wings. A combination of 80 sliders and 50 hot wings would appear

Accepted Answer

A)  along Dina's production possibilities frontier. 
B)  inside Dina's production possibilities frontier. 
C)  outside Dina's production possibilities frontier. 
D)  at the vertical intercept of Dina's production possibilities frontier.

Question 12

All of the following are examples of spending on goods and services in the circular flow model except

Accepted Answer

A)  Amanda purchases a new electric guitar to pursue her hobby seriously. 
B)  Chaitanya buys a new spa pedicure chair for her expanding nail salon business. 
C)  Hernan buys a pizza at Papa C's. 
D)  Lenny buys a new digital camera to take pictures at his son's graduation.

Question 13

Increasing marginal opportunity cost implies

Accepted Answer

A)  that the more resources already devoted to any activity, the payoff from allocating yet more resources to that activity increases by progressively smaller amounts. 
B)  that the more resources already devoted to any activity, the benefits from allocating yet more resources to that activity decreases by progressively larger amounts. 
C)  that rising opportunity costs makes it inefficient to produce beyond a certain quantity. 
D)  the law of scarcity.

Question 14

Table 2-14
  Table 2-14 shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland.
-Refer to Table 2-14. Scotland has a comparative advantage in the production of

Accepted Answer

A)  both products. 
B)  guitars. 
C)  motorcycles. 
D)  neither product.

Question 15

In the circular flow model, households supply resources such as labor services in the product market.

Accepted Answer

A) True 
 B)False

Question 16

Suppose in the Germany, the opportunity cost of producing a gallon of beer is 5 gallons of wine. In Italy, the opportunity cost of producing a gallon of beer is 3 gallons of wine.
a. What is the opportunity cost of producing a gallon of wine for Germany?
b. What is the opportunity cost of producing a gallon of wine for Italy?
c. Which country has a comparative advantage in the production of beer?
d. Which country has a comparative advantage in the production of wine?

Accepted Answer

The answer of Suppose in the Germany, the opportunity cost...

Question 17

Households ________ final goods and services in the ________ market.

Accepted Answer

A)  purchase; factor 
B)  purchase; product 
C)  sell; factor 
D)  sell; product

Question 18

Table 2-13
  Table 2-13 shows the output per day of two pet groomers, Tammi and Horace. They can either devote their time to grooming dogs or bathing cats.
-For each surfboard that Australia produces, it gives up the opportunity to make 25 boomerangs. New Zealand can produce 1 surfboard for every 15 boomerangs it produces. Which of the following is true about the comparative advantage between the two countries?

Accepted Answer

A)  Australia has the comparative advantage in surfboards. 
B)  Australia has the comparative advantage in boomerangs. 
C)  New Zealand has the comparative advantage in surfboards and boomerangs. 
D)  New Zealand has the comparative advantage in boomerangs.

Question 19

Adam Smith's ________ refers to the process by which individuals acting in their own self-interest bring about a market outcome that benefits society as a whole.

Accepted Answer

A)  Utopian society 
B)  comparative advantage model 
C)  invisible hand 
D)  survival of the fittest theory

Question 20

Table 2-19
  Table 2-19 shows the output per month of two people, Wilma and Betty. They can either devote their time to making marble statues or making marble benches.
-Refer to Table 2-19. Which of the following statements is true?

Accepted Answer

A)  Wilma has a comparative advantage in making both products. 
B)  Betty has a comparative advantage in making both products. 
C)  Betty has a comparative advantage in making statues and Wilma in making benches. 
D)  Betty has a comparative advantage in making benches and Fred in making statues.

Exam 2: Trade-Offs, Comparative Advantage, and the Market System

Figure 2-14 Figure 2-14 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts. -Refer to Figure 2-14. What is the opportunity cost of producing 1 ton of pineapples in Guatemala?

Table 2-3 Production Choices for Dina's Diner -Refer to Table 2-3. Assume Dina's Diner only produces sliders and hot wings. A combination of 80 sliders and 100 hot wings would appear

Figure 2-13 Figure 2-13 shows the production possibilities frontiers for Tahiti and Bora Bora. Each country produces two goods, milk and honey. -Refer to Figure 2-13. What is the opportunity cost of producing one gallon of milk in Tahiti?

If additional units of a good could be produced at a constant opportunity cost, the production possibility frontier would be linear.

Table 2-17 Table 2-17 shows the output per week of two people, James and Lucy. They can either devote their time to making wagons or making tricycles. -Refer to Table 2-17. What is James's opportunity cost of making a tricycle?

Table 2-4 Production Choices for Dina's Diner -Refer to Table 2-4. Assume Dina's Diner only produces sliders and hot wings. A combination of 40 sliders and 25 hot wings would appear

Figure 2-14 Figure 2-14 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts. -Individuals who have never been the best at doing anything

Table 2-13 Table 2-13 shows the output per day of two pet groomers, Tammi and Horace. They can either devote their time to grooming dogs or bathing cats. -Refer to Table 2-13. What is Tammi's opportunity cost of grooming a dog?

The ________ production points on a production possibility curve are the points along and inside the production possibility frontier.

Figure 2-10 -Refer to Figure 2-10. If the economy is currently producing at point D, what is the opportunity cost of moving to point B?

Table 2-3 Production Choices for Dina's Diner -Refer to Table 2-3. Assume Dina's Diner only produces sliders and hot wings. A combination of 80 sliders and 50 hot wings would appear

All of the following are examples of spending on goods and services in the circular flow model except

Increasing marginal opportunity cost implies

Table 2-14 Table 2-14 shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland. -Refer to Table 2-14. Scotland has a comparative advantage in the production of

In the circular flow model, households supply resources such as labor services in the product market.

Households final goods and services in the market.

Adam Smith's ________ refers to the process by which individuals acting in their own self-interest bring about a market outcome that benefits society as a whole.

Table 2-19 Table 2-19 shows the output per month of two people, Wilma and Betty. They can either devote their time to making marble statues or making marble benches. -Refer to Table 2-19. Which of the following statements is true?