Question 1

Which of the following statements regarding the production possibilities frontier is TRUE?

Accepted Answer

A)   Points outside the frontier are attainable.
B)   Points inside the frontier are attainable.
C)   Points on the frontier are less efficient than points inside the frontier.
D)   None of the above because all of the above statements are false.E) A) and B)
F) A) and C)

Question 2

In one day, Brandon can either plow 10 acres or plant 20 acres. In one day, Christopher can either plow 14 acres or plant 14 acres. Which of the following statements about comparative advantage is CORRECT?

Accepted Answer

A)   Brandon has a comparative advantage in both plowing and planting.
B)   Brandon has a comparative advantage only in plowing.
C)   Brandon has a comparative advantage only in planting.
D)   Christopher has a comparative advantage in both plowing and planting.E) B) and D)
F) B) and C)

Question 3

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. What is the opportunity cost of one chocolate bar if Sweet-tooth Land moves from point C to point D?

Accepted Answer

A)   30 cans of cola per chocolate bar
B)   10 cans of cola per chocolate bar
C)   3 cans of cola per chocolate bar
D)   1/3 can of cola per chocolate barE) B) and D)
F) All of the above

Question 4

As long as the marginal benefit from a good is greater than its marginal cost, an economy is operating efficiently.

Accepted Answer

A) True 
 B)False

Question 5

-In the above figure, which point represents an unattainable production combination of the two goods?

Accepted Answer

A)   point C
B)   point L
C)   point D
D)   point NE) A) and C)
F) A) and B)

Question 6

-In the figure above, what can be said about point B?

Accepted Answer

A)   It can be reached only after economic growth occurs.
B)   It can be attained only if some resources are left unused.
C)   It represents all resources being devoted to the production of apples.
D)   It represents all resources being devoted to the production of oranges.E) All of the above
F) A) and B)

Question 7

-The figure above shows Freda's PPF. Freda currently produces 10 packets of fudge and no cookies. If Freda decides to produce 1 packet of cookies, her opportunity cost of the packet of cookies is ________ of fudge.

Accepted Answer

A)   1 packet
B)   1/2 packet
C)   2 packets
D)   0 packetsE) All of the above
F) A) and B)

Question 8

Suppose that a typical German factory can produce 20 cameras or 1 computer in an hour, and that a typical American factory can produce 10 cameras or 1 computer in an hour. The opportunity cost of 20 cameras in terms of computers in Germany is

Accepted Answer

A)   10 computers per camera.
B)   2 computers per camera.
C)   1 computer per camera.
D)   1/20 of a computer per camera.E) A) and B)
F) A) and D)

Question 9

In order to societies to reap the gains from trade, it is necessary to

Accepted Answer

A)   define and enforce property rights.
B)   foster economic growth.
C)   distribute resources equally.
D)   achieve productive efficiency.E) B) and C)
F) B) and D)

Question 10

The principle of decreasing marginal benefit implies that the

Accepted Answer

A)   additional benefit from obtaining one more of a good or service decreases as more is consumed.
B)   additional benefit from obtaining one more of a good or service increases as more is consumed.
C)   total benefit from obtaining more of a good or service decreases as more is consumed.
D)   total benefit from obtaining more of a good or service remains the same as more is consumed.E) A) and D)
F) A) and C)

Question 11

On the vertical axis, the production possibilities frontier shows ________; on the horizontal axis, the production possibilities frontier shows ________.

Accepted Answer

A)   the quantity of a good; the number of workers employed to produce the good
B)   the quantity of a good; the price of the good
C)   the quantity of a good; a weighted average of resources used to produce the good
D)   the quantity of one good; the quantity of another goodE) B) and D)
F) B) and C)

Question 12

The production possibilities frontier separates

Accepted Answer

A)   the goods and services that people want from those that they do not want.
B)   the types of goods that can be attained from those that can't be attained.
C)   the quantities of goods and services that can be produced from those that cannot be produced.
D)   the combinations of goods that people value and those that they don't.E) B) and C)
F) All of the above

Question 13

The idea of comparative advantage implies that people or countries

Accepted Answer

A)   should specialize in the production of goods.
B)   can gain from trading.
C)   can consume at a point outside their production possibilities frontier.
D)   all of the above.E) A) and B)
F) A) and C)

Question 14

When resources are assigned to inappropriate tasks, that is, tasks for which they are not the best match, the result will be producing at a point

Accepted Answer

A)   where the slope of the PPF is positive.
B)   where the slope of the PPF is zero.
C)   inside the PPF.
D)   outside the PPF.E) A) and D)
F) None of the above

Question 15

When an economy produces at its allocatively efficient production point

Accepted Answer

A)   scarcity is not a problem.
B)   resources are not limited.
C)   a society can increase the production of all goods.
D)   a society can increase the production of one good only by decreasing the production of some other good that is valued more highly.E) A) and D)
F) A) and C)

Question 16

-A PPF, such as the one above, that bows outward illustrates

Accepted Answer

A)   decreasing opportunity cost.
B)   increasing opportunity cost.
C)   that technology is improving.
D)   that productivity is falling.E) A) and D)
F) All of the above

Question 17

Moving along a PPF, marginal cost is

Accepted Answer

A)   the cost of producing the first unit of a good or service.
B)   the total cost, less the production of the other good or service.
C)   greater than the opportunity cost.
D)   equal to the opportunity cost of producing one more unit of a good or service.E) B) and D)
F) B) and C)

Question 18

-Refer to the table above, which gives five points on a nation's PPF. The production of 7 units of X and 28 units of Y is

Accepted Answer

A)   impossible given the available resources.
B)   possible but leaves some resources less than fully used or misallocated.
C)   on the production possibilities frontier between points c and d.
D)   on the production possibilities frontier between points b and c.E) A) and B)
F) B) and C)

Question 19

-Refer to the production possibilities frontier in the figure above. If the country moves from point a to point c, the opportunity cost of the move is

Accepted Answer

A)   30 million capital goods.
B)   20 million capital goods.
C)   10 million capital goods.
D)   10 million consumption goods.E) B) and C)
F) A) and D)

Question 20

The principle of increasing opportunity cost leads to

Accepted Answer

A)   a production possibilities frontier (PPF)  that is bowed inward from the origin.
B)   a production possibilities frontier (PPF)  that is bowed outward from the origin.
C)   an inward shift of the production possibilities frontier (PPF) .
D)   an outward shift of the production possibilities frontier (PPF) .E) C) and D)
F) All of the above

Exam 2: The Economic Problem

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. What is the opportunity cost of one chocolate bar if Sweet-tooth Land moves from point C to point D?

Correct AnswerverifiedShow Answer

As long as the marginal benefit from a good is greater than its marginal cost, an economy is operating efficiently.

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The production possibilities frontier separates

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On the vertical axis, the production possibilities frontier shows ________; on the horizontal axis, the production possibilities frontier shows ________.

Correct AnswerverifiedShow Answer

-A PPF, such as the one above, that bows outward illustrates

Correct AnswerverifiedShow Answer

In order to societies to reap the gains from trade, it is necessary to

Correct AnswerverifiedShow Answer

-In the above figure, which point represents an unattainable production combination of the two goods?

Correct AnswerverifiedShow Answer

-The figure above shows Freda's PPF. Freda currently produces 10 packets of fudge and no cookies. If Freda decides to produce 1 packet of cookies, her opportunity cost of the packet of cookies is ________ of fudge.

Correct AnswerverifiedShow Answer

-Refer to the production possibilities frontier in the figure above. If the country moves from point a to point c, the opportunity cost of the move is

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-Refer to the table above, which gives five points on a nation's PPF. The production of 7 units of X and 28 units of Y is

Correct AnswerverifiedShow Answer

-In the figure above, what can be said about point B?

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When resources are assigned to inappropriate tasks, that is, tasks for which they are not the best match, the result will be producing at a point

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In one day, Brandon can either plow 10 acres or plant 20 acres. In one day, Christopher can either plow 14 acres or plant 14 acres. Which of the following statements about comparative advantage is CORRECT?

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Which of the following statements regarding the production possibilities frontier is TRUE?

Correct AnswerverifiedShow Answer

The principle of increasing opportunity cost leads to

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When an economy produces at its allocatively efficient production point

Correct AnswerverifiedShow Answer

The idea of comparative advantage implies that people or countries

Correct AnswerverifiedShow Answer

Moving along a PPF, marginal cost is

Correct AnswerverifiedShow Answer

Suppose that a typical German factory can produce 20 cameras or 1 computer in an hour, and that a typical American factory can produce 10 cameras or 1 computer in an hour. The opportunity cost of 20 cameras in terms of computers in Germany is

Correct AnswerverifiedShow Answer

The principle of decreasing marginal benefit implies that the

Correct AnswerverifiedShow Answer

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On the vertical axis, the production possibilities frontier shows ; on the horizontal axis, the production possibilities frontier shows .

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