Question 1

When economists state that the opportunity cost of a product increases as more of it is produced, what do they mean? What is the opportunity cost?

Accepted Answer

In general, the opportunity cost of incr...

Question 2

Some time ago the government of China required many highly skilled technicians and scientists to engage in unskilled agricultural labor in order to develop "proper social attitudes." This policy probably caused China to produce

Accepted Answer

A)   at an inappropriate point along its production possibilities frontier.
B)   outside its production possibilities frontier with respect to food, but inside with respect to high-technology goods.
C)   inside its production possibilities frontier with respect to food, but outside with respect to high-technology goods.
D)   inside its production possibilities frontier.E) B) and C)
F) B) and D)

Question 3

-Anna and Maria produce shirts and ties. The figure above shows Anna's PPF and Maria's PPF. Anna and Maria can achieve the gains from trade if Anna produces ________ and Maria produces ________.

Accepted Answer

A)   ties; shirts
B)   shirts and ties; only ties
C)   only ties; shirts and ties
D)   shirts; tiesE) A) and C)
F) A) and D)

Question 4

In the movie Cast Away, Tom Hanks plays a FedEx efficiency expert stranded on a deserted island. While on the island, he divides his time between catching fish, gathering coconuts, painting, and building a raft. Suppose that these were Mr. Hanks' only activities. Did he face an opportunity cost from pursuing any of these activities? Why or why not?

Accepted Answer

Yes, Mr. Hanks faces an opportunity cost...

Question 5

Harry produces 2 balloon rides and 4 boat rides an hour. Harry could produce more balloon rides but to do so he must produce fewer boat rides. Harry is ________ his production possibilities frontier.

Accepted Answer

A)   producing inside
B)   producing on
C)   producing outside
D)   producing either inside or onE) A) and B)
F) C) and D)

Question 6

When the production possibilities frontier is bowed outwards, the opportunity cost of producing more of one good

Accepted Answer

A)   increases in terms of the amount foregone of the other good.
B)   decreases in terms of the amount foregone of the other good.
C)   remains constant.
D)   cannot be determined.E) A) and C)
F) A) and B)

Question 7

A person has a comparative advantage in an activity if that person can

Accepted Answer

A)   produce more goods in a given amount of time than another person.
B)   produce fewer goods in a given amount of time than another person.
C)   perform the activity at a lower opportunity cost than anyone else.
D)   perform that activity at a higher opportunity cost than anyone else.E) B) and C)
F) B) and D)

Question 8

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. Which of the following statements is TRUE?

Accepted Answer

A)   Producing 0 chocolate bars and 100 cans of cola is both attainable and efficient.
B)   Producing 20 chocolate bars and 80 cans of cola is attainable, but inefficient.
C)   Producing 30 chocolate bars and 38 cans of cola is only attainable with an increase in technology.
D)   Producing 40 chocolate bars and 0 cans of cola is unattainable and inefficient.E) A) and C)
F) All of the above

Question 9

One point on a PPF shows production levels at 50 tons of coffee and 100 tons of bananas. Remaining on the PPF, an increase of banana production to 140 tons shows coffee production at 30 tons. Still remaining on the PPF, coffee production at 10 tons allows banana production at 160 tons. The opportunity cost of a ton of bananas is

Accepted Answer

A)   constant because coffee production decreased by the same amount each time.
B)   decreasing, since the increase in banana production is less at each point considered.
C)   16 to 1, that is every 1 ton of coffee given up will result in 16 more tons of bananas.
D)   increasing from 1/2 ton of coffee per ton of bananas to 1 ton of coffee per ton of bananas.E) None of the above
F) B) and C)

Question 10

Japan can use all of its resources to produce 100 videos or 400 shoes. China can use all of its resources to produce 25 videos or 200 shoes. Which nation has the comparative advantage in shoes and which nation has the comparative advantage in videos?

Accepted Answer

In Japan, the opportunity cost of produc...

Question 11

A society that is producing on its production possibilities frontier is

Accepted Answer

A)   not utilizing all of its resources.
B)   not being technologically efficient.
C)   producing too much output.
D)   fully utilizing all of its productive resources.E) All of the above
F) C) and D)

Question 12

-In the production possibilities frontier depicted in the figure above, which of the following combinations of hats and bananas is unattainable?

Accepted Answer

A)   4 million pounds of bananas and 4 million hats
B)   2 million pounds of bananas and 5 million hats
C)   0 pounds of bananas and 6 million hats
D)   1 million pounds of bananas and 3 million hatsE) A) and B)
F) A) and C)

Question 13

-The above table shows the number of pencils or pens that could be produced by Don and Bob in an hour. This schedule shows that

Accepted Answer

A)   Don has an absolute advantage in the production of pencils, and Bob has an absolute advantage in the production of pens.
B)   Bob has an absolute advantage in the production of pencils, and Don has an absolute advantage in the production of pens.
C)   Don has a comparative advantage in the production of both pencils and pens.
D)   Bob has a comparative advantage in the production of pencils.E) A) and B)
F) A) and C)

Question 14

China's State Council has encouraged more spending to "improve transportation links and other infrastructure...." It will also "step up its spending on vocational training and other educational programs for adults." www.nytimes.com, Keith Bradsher, October 19, 2008
Suppose that capital goods are on the vertical axis while consumption goods are on the horizontal axis of China's PPF. As a result of enacting the policies, China's PPF will

Accepted Answer

A)   shift outward.
B)   shift inward.
C)   rotate outward.
D)   become flatter.E) A) and B)
F) C) and D)

Question 15

Why does the marginal benefit curve have a negative slope?

Accepted Answer

Each successive increase in the consumpt...

Question 16

-The figure above shows the production possibilities frontiers for four nations that have identical production possibilities frontiers in the present. The one that will grow most rapidly in the future is most likely to be producing at point

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.E) C) and D)
F) A) and B)

Question 17

Susan likes to drink sodas. The ________ soda Susan drinks, the ________ of the last soda.

Accepted Answer

A)   more; higher the marginal benefit
B)   less; higher the opportunity cost
C)   less; lower the marginal benefit
D)   more; lower the marginal benefitE) C) and D)
F) A) and B)

Question 18

If two countries specialize in the production of goods in which they have a comparative advantage, they can experience gains from trade.

Accepted Answer

A) True 
 B)False

Question 19

-In the figure above, moving from point B to point D

Accepted Answer

A)   has an opportunity cost of one ton of butter per month.
B)   has an opportunity cost of one ton of guns per month.
C)   requires an increase in technology.
D)   is impossible.E) All of the above
F) A) and B)

Question 20

The nation's production possibilities frontier is bowed outward. Suppose that the government decides to increase the production of armaments by $20 billion, and that as a result the output of consumer goods falls by $20 billion. If a further $20 billion increase beyond the initial $20 billion increase in armaments output is sought, we can expect that the output of consumer goods and services will fall further by

Accepted Answer

A)   less than $20 billion.
B)   $20 billion.
C)   more than $20 billion.
D)   There is not enough information to determine the answer.E) B) and C)
F) A) and D)

Exam 2: The Economic Problem

Correct Answer
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Yes, Mr. Hanks faces an opportunity cost...
View Answer

A society that is producing on its production possibilities frontier is

Correct Answer
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Susan likes to drink sodas. The soda Susan drinks, the of the last soda.

Correct Answer
verified

Why does the marginal benefit curve have a negative slope?

Correct Answer
verified
Each successive increase in the consumpt...
View Answer

Some time ago the government of China required many highly skilled technicians and scientists to engage in unskilled agricultural labor in order to develop "proper social attitudes." This policy probably caused China to produce

Correct Answer
verified

Japan can use all of its resources to produce 100 videos or 400 shoes. China can use all of its resources to produce 25 videos or 200 shoes. Which nation has the comparative advantage in shoes and which nation has the comparative advantage in videos?

Correct Answer
verified
In Japan, the opportunity cost of produc...
View Answer

A person has a comparative advantage in an activity if that person can

Correct Answer
verified

-In the production possibilities frontier depicted in the figure above, which of the following combinations of hats and bananas is unattainable?

Correct Answer
verified

Correct Answer
verified

When economists state that the opportunity cost of a product increases as more of it is produced, what do they mean? What is the opportunity cost?

Correct Answer
verified
In general, the opportunity cost of incr...
View Answer

When the production possibilities frontier is bowed outwards, the opportunity cost of producing more of one good

Correct Answer
verified

Correct Answer
verified

Harry produces 2 balloon rides and 4 boat rides an hour. Harry could produce more balloon rides but to do so he must produce fewer boat rides. Harry is ________ his production possibilities frontier.

Correct Answer
verified

-Anna and Maria produce shirts and ties. The figure above shows Anna's PPF and Maria's PPF. Anna and Maria can achieve the gains from trade if Anna produces and Maria produces .

Correct Answer
verified

Correct Answer
verified

-In the figure above, moving from point B to point D

Correct Answer
verified

If two countries specialize in the production of goods in which they have a comparative advantage, they can experience gains from trade.

Correct Answer
verified

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. Which of the following statements is TRUE?

Correct Answer
verified

-The above table shows the number of pencils or pens that could be produced by Don and Bob in an hour. This schedule shows that

Correct Answer
verified

-The figure above shows the production possibilities frontiers for four nations that have identical production possibilities frontiers in the present. The one that will grow most rapidly in the future is most likely to be producing at point

Correct Answer
verified

Exam 2: The Economic Problem

Correct AnswerverifiedYes, Mr. Hanks faces an opportunity cost...View AnswerShow Answer

A society that is producing on its production possibilities frontier is

Correct AnswerverifiedShow Answer

Susan likes to drink sodas. The ________ soda Susan drinks, the ________ of the last soda.

Correct AnswerverifiedShow Answer

Why does the marginal benefit curve have a negative slope?

Correct AnswerverifiedEach successive increase in the consumpt...View AnswerShow Answer

Some time ago the government of China required many highly skilled technicians and scientists to engage in unskilled agricultural labor in order to develop "proper social attitudes." This policy probably caused China to produce

Correct AnswerverifiedShow Answer

Japan can use all of its resources to produce 100 videos or 400 shoes. China can use all of its resources to produce 25 videos or 200 shoes. Which nation has the comparative advantage in shoes and which nation has the comparative advantage in videos?

Correct AnswerverifiedIn Japan, the opportunity cost of produc...View AnswerShow Answer

A person has a comparative advantage in an activity if that person can

Correct AnswerverifiedShow Answer

-In the production possibilities frontier depicted in the figure above, which of the following combinations of hats and bananas is unattainable?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When economists state that the opportunity cost of a product increases as more of it is produced, what do they mean? What is the opportunity cost?

Correct AnswerverifiedIn general, the opportunity cost of incr...View AnswerShow Answer

When the production possibilities frontier is bowed outwards, the opportunity cost of producing more of one good

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Harry produces 2 balloon rides and 4 boat rides an hour. Harry could produce more balloon rides but to do so he must produce fewer boat rides. Harry is ________ his production possibilities frontier.

Correct AnswerverifiedShow Answer

-Anna and Maria produce shirts and ties. The figure above shows Anna's PPF and Maria's PPF. Anna and Maria can achieve the gains from trade if Anna produces ________ and Maria produces ________.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

-In the figure above, moving from point B to point D

Correct AnswerverifiedShow Answer

If two countries specialize in the production of goods in which they have a comparative advantage, they can experience gains from trade.

Correct AnswerverifiedShow Answer

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. Which of the following statements is TRUE?

Correct AnswerverifiedShow Answer

-The above table shows the number of pencils or pens that could be produced by Don and Bob in an hour. This schedule shows that

Correct AnswerverifiedShow Answer

-The figure above shows the production possibilities frontiers for four nations that have identical production possibilities frontiers in the present. The one that will grow most rapidly in the future is most likely to be producing at point

Correct AnswerverifiedShow Answer

Correct Answer
verified
Yes, Mr. Hanks faces an opportunity cost...
View Answer

Correct Answer
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Susan likes to drink sodas. The soda Susan drinks, the of the last soda.

Correct Answer
verified

Correct Answer
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Each successive increase in the consumpt...
View Answer

Correct Answer
verified

Correct Answer
verified
In Japan, the opportunity cost of produc...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
In general, the opportunity cost of incr...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

-Anna and Maria produce shirts and ties. The figure above shows Anna's PPF and Maria's PPF. Anna and Maria can achieve the gains from trade if Anna produces and Maria produces .

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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