Question 1

What is gained when people engage in specialisation and trade?

Accepted Answer

A)  Specialisation and trade allow people to produce outside their individual production possibilities frontiers.
B)  There are no gains from specialisation and trade.
C)  Specialisation and trade allow people to consume inside their production possibilities frontiers.
D)  Specialisation and trade allow people to consume at a point on their production possibilities frontiers.
E)  Specialisation and trade allow people to consume outside their individual production possibilities frontiers.F) None of the above
G) D) and E)

Question 2

As an economy moves down along a straight line production possibilities frontier,what happens to the opportunity cost of producing the good on the horizontal axis?

Accepted Answer

A)  It decreases.
B)  It remains constant.
C)  It increases.
D)  Above the midpoint it decreases until it equals 1 at the midpoint and then it increases.
E)  None of these depicts what happens to opportunity cost.F) C) and D)
G) B) and C)

Question 3

The production possibilities frontier is a boundary that separates

Accepted Answer

A)  the fair combinations of goods and services that can be consumed from unfair ones.
B)  the combinations of goods that can be produced from the combinations of services.
C)  the equitable combinations of goods and services that can be produced from inequitable ones.
D)  the affordable production points from unaffordable points.
E)  the attainable combinations of goods and services that can be produced from unattainable ones.F) A) and E)
G) B) and C)

Question 4

The opportunity cost of one more slice of pizza in terms of cans of soft drink is the

Accepted Answer

A)  total number of cans of soft drink that we have divided by the total number of pizza slices that we have.
B)  price of a pizza slice minus the price of a can of soft drink.
C)  number of cans of soft drink we have to give up in order to get one extra pizza slice.
D)  number of pizza slices we have to give up in order to get one extra can of soft drink.
E)  total number of pizza slices that we have divided by the total number of cans of soft drink that we have.F) A) and B)
G) A) and C)

Question 5

What is the opportunity cost of economic growth?

Accepted Answer

A)  Land
B)  Both current period consumption and capital goods
C)  Both current period capital goods and land
D)  Current period capital goods
E)  Current period consumption goodsF) B) and D)
G) A) and C)

Question 6

Economic growth depends upon which of the following?
i.Increasing the quantity of labour
ii.Lowering the prices of goods and services
iii.Advancing technology

Accepted Answer

A)  i only
B)  ii only
C)  iii only
D)  i and iii
E)  i,ii and iiiF) C) and D)
G) A) and C)

Question 7

If there is increasing opportunity cost,then,when moving downward on a production possibilities frontier,the opportunity cost of the good on the horizontal axis ________ as more of the good is produced.

Accepted Answer

A)  decreases and the PPF gets flatter
B)  does not change and the PPF gets steeper
C)  decreases and the PPF gets steeper
D)  increases and the PPF gets flatter
E)  increases and the PPF gets steeperF) A) and B)
G) A) and C)

Question 8

Consider a production possibility frontier with books and tables.A combination of 1,000 books and 500 tables is on the frontier.Which of the following is (are) true?
i.Production of 700 books and 400 tables is attainable but inefficient.
ii.Production of 1,000 books and 600 tables is unattainable.
iii.Production of 500 books and 1,000 tables is inside the frontier.

Accepted Answer

A)  ii and iii
B)  i,ii and iii
C)  i only
D)  i and ii
E)  i and iiiF) B) and D)
G) A) and B)

Question 9

Consider a production possibility frontier with jeans on the vertical axis and shoes on the horizontal axis.As a country moves along the frontier closer to the vertical axis,

Accepted Answer

A)  inefficient production occurs.
B)  the opportunity cost of producing jeans decreases.
C)  the opportunity cost of producing shoes increases.
D)  there are fewer tradeoffs.
E)  the opportunity cost of producing jeans increases.F) A) and E)
G) A) and B)

Question 10

On a production possibilities frontier,500 kilograms of apples and 1200 kilograms of bananas can be produced while,at another point on the same frontier,300 kilograms of apples and 1300 kilograms of bananas can be produced.Between these points,what is the opportunity cost of producing a kilogram of bananas?

Accepted Answer

A)  200 kilograms of apples
B)  12/5 = 2.4 kilograms of apples
C)  2 kilograms of apples
D)  0.5 a kilogram of apples
E)  2 kilograms of bananasF) B) and C)
G) C) and E)

Question 11

As an economy increasingly specialises in producing one good,the opportunity cost of that good increases.The opportunity cost increases because

Accepted Answer

A)  not all goods are equally valuable.
B)  resources are not equally productive in all activities.
C)  human wants are virtually unlimited.
D)  what must be paid to resources increases.
E)  as more of a good is produced the profit from its production must rise.F) A) and B)
G) D) and E)

Question 12

-Suppose Puerto Rico and Hawaii currently have the same production possibilities so that the above figure is the PPF for hotels and consumption goods in the two areas.Hotels are a capital good that,once built,will help produce still more consumption goods.If Puerto Rico produces more hotels than Hawaii,

Accepted Answer

A)  Puerto Rico's and Hawaii's PPF will shift outward by the same amount.
B)  Puerto Rico's PPF will shift outward further than Hawaii's PPF.
C)  Hawaii's PPF will shift outward further than Puerto Rico's PPF.
D)  Puerto Rico's PPF will not shift.
E)  Hawaii's PPF will shift inward.F) A) and E)
G) A) and D)

Question 13

-The figure above illustrates a small country's production possibilities frontier.Moving from point C to point B,the per unit opportunity cost of computers is ________ per computer.

Accepted Answer

A)  5/4 of a tablet
B)  4/5 of a tablet
C)  4 tablets
D)  1 computer
E)  1/4 of a tabletF) B) and E)
G) B) and D)

Question 14

-The above figure shows the PPF for a country that produces computers and computer factories.The nation's production possibilities frontier is PPF₀.At which of the following production points would the economy grow most rapidly?

Accepted Answer

A)  Point A
B)  Point B
C)  Point C
D)  It makes no difference among the three points because they are all production efficient.
E)  More information is needed to answer the question.F) A) and E)
G) All of the above

Question 15

-Gabriel owns a farm in Victoria where he raises cattle and grows potatoes.The figure above illustrates his production possibilities frontier.What is Gabriel's opportunity cost of growing another tonne of potatoes?

Accepted Answer

A)  1 tonne of potatoes
B)  100 cows
C)  80 cows
D)  400 cows
E)  0 cowsF) A) and B)
G) B) and D)

Question 16

-The above figure shows the production possibility frontier for a country.What is the opportunity cost per tonne of rice to move from point D to E?

Accepted Answer

A)  3,000 bottles of wine
B)  3 bottles of wine
C)  1/3 of a bottle of wine
D)  333 bottles of wine
E)  None of the above answers is correct.F) A) and E)
G) A) and D)

Question 17

-Suppose India and France have the same PPF,shown in the figure above.Based on their current production points,which is France's most likely future PPF?

Accepted Answer

A)  PPF₀
B)  PPF₂
C)  PPF₁
D)  Either PPF₀ or PPF₁
E)  None of the above because economic growth will not happen in India.F) D) and E)
G) B) and D)

Question 18

-Deb and Pete have volunteered to help their favourite charity mail out fundraiser information.The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes.If Deb and Pete specialise and trade,how many packets will be assembled?

Accepted Answer

A)  40
B)  80
C)  More than 40 and less than 80
D)  160
E)  More than 80 and less than 160F) A) and C)
G) C) and E)

Question 19

The sustained expansion of production possibilities is called

Accepted Answer

A)  the opportunity cost of growth.
B)  economic growth.
C)  production expansion.
D)  production possibilities.
E)  economic investment.F) A) and E)
G) B) and D)

Question 20

As an economy produces more of one of the goods on a bowed-out production possibilities frontier,what happens to the opportunity cost of producing the good?

Accepted Answer

A)  It decreases.
B)  It increases.
C)  It remains constant.
D)  It might increase,decrease or remain constant depending on how much people value the additional units of the good.
E)  None of these depicts what happens to opportunity cost.F) B) and E)
G) A) and B)

Exam 3: The Economic Problem

-The figure above illustrates a small country's production possibilities frontier.Moving from point C to point B,the per unit opportunity cost of computers is ________ per computer.

Correct Answer
verified

The sustained expansion of production possibilities is called

Correct Answer
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Economic growth depends upon which of the following? i.Increasing the quantity of labour ii.Lowering the prices of goods and services iii.Advancing technology

Correct Answer
verified

-The above figure shows the PPF for a country that produces computers and computer factories.The nation's production possibilities frontier is PPF₀.At which of the following production points would the economy grow most rapidly?

Correct Answer
verified

Consider a production possibility frontier with jeans on the vertical axis and shoes on the horizontal axis.As a country moves along the frontier closer to the vertical axis,

Correct Answer
verified

-The above figure shows the production possibility frontier for a country.What is the opportunity cost per tonne of rice to move from point D to E?

Correct Answer
verified

As an economy produces more of one of the goods on a bowed-out production possibilities frontier,what happens to the opportunity cost of producing the good?

Correct Answer
verified

Correct Answer
verified

If there is increasing opportunity cost,then,when moving downward on a production possibilities frontier,the opportunity cost of the good on the horizontal axis ________ as more of the good is produced.

Correct Answer
verified

As an economy moves down along a straight line production possibilities frontier,what happens to the opportunity cost of producing the good on the horizontal axis?

Correct Answer
verified

As an economy increasingly specialises in producing one good,the opportunity cost of that good increases.The opportunity cost increases because

Correct Answer
verified

Correct Answer
verified

What is gained when people engage in specialisation and trade?

Correct Answer
verified

What is the opportunity cost of economic growth?

Correct Answer
verified

The production possibilities frontier is a boundary that separates

Correct Answer
verified

-Suppose India and France have the same PPF,shown in the figure above.Based on their current production points,which is France's most likely future PPF?

Correct Answer
verified

-Gabriel owns a farm in Victoria where he raises cattle and grows potatoes.The figure above illustrates his production possibilities frontier.What is Gabriel's opportunity cost of growing another tonne of potatoes?

Correct Answer
verified

The opportunity cost of one more slice of pizza in terms of cans of soft drink is the

Correct Answer
verified

-Deb and Pete have volunteered to help their favourite charity mail out fundraiser information.The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes.If Deb and Pete specialise and trade,how many packets will be assembled?

Correct Answer
verified

Correct Answer
verified

Exam 3: The Economic Problem

-The figure above illustrates a small country's production possibilities frontier.Moving from point C to point B,the per unit opportunity cost of computers is ________ per computer.

Correct AnswerverifiedShow Answer

The sustained expansion of production possibilities is called

Correct AnswerverifiedShow Answer

Economic growth depends upon which of the following? i.Increasing the quantity of labour ii.Lowering the prices of goods and services iii.Advancing technology

Correct AnswerverifiedShow Answer

-The above figure shows the PPF for a country that produces computers and computer factories.The nation's production possibilities frontier is PPF₀.At which of the following production points would the economy grow most rapidly?

Correct AnswerverifiedShow Answer

Consider a production possibility frontier with jeans on the vertical axis and shoes on the horizontal axis.As a country moves along the frontier closer to the vertical axis,

Correct AnswerverifiedShow Answer

-The above figure shows the production possibility frontier for a country.What is the opportunity cost per tonne of rice to move from point D to E?

Correct AnswerverifiedShow Answer

As an economy produces more of one of the goods on a bowed-out production possibilities frontier,what happens to the opportunity cost of producing the good?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If there is increasing opportunity cost,then,when moving downward on a production possibilities frontier,the opportunity cost of the good on the horizontal axis ________ as more of the good is produced.

Correct AnswerverifiedShow Answer

As an economy moves down along a straight line production possibilities frontier,what happens to the opportunity cost of producing the good on the horizontal axis?

Correct AnswerverifiedShow Answer

As an economy increasingly specialises in producing one good,the opportunity cost of that good increases.The opportunity cost increases because

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What is gained when people engage in specialisation and trade?

Correct AnswerverifiedShow Answer

What is the opportunity cost of economic growth?

Correct AnswerverifiedShow Answer

The production possibilities frontier is a boundary that separates

Correct AnswerverifiedShow Answer

-Suppose India and France have the same PPF,shown in the figure above.Based on their current production points,which is France's most likely future PPF?

Correct AnswerverifiedShow Answer

-Gabriel owns a farm in Victoria where he raises cattle and grows potatoes.The figure above illustrates his production possibilities frontier.What is Gabriel's opportunity cost of growing another tonne of potatoes?

Correct AnswerverifiedShow Answer

The opportunity cost of one more slice of pizza in terms of cans of soft drink is the

Correct AnswerverifiedShow Answer

-Deb and Pete have volunteered to help their favourite charity mail out fundraiser information.The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes.If Deb and Pete specialise and trade,how many packets will be assembled?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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