Question 1

A movement along the production possibilities frontier will result from

Accepted Answer

A)  technological change.
B)  change in the stock of capital.
C)  change in the labour force.
D)  all of the above.
E)  none of the above.

Question 2

Use the information below to answer the following questions.
Fact 2.4.2
Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour.
-Any two individuals will gain from exchange

Accepted Answer

A)  unless one has an absolute advantage in producing all goods.
B)  if each specializes in the production of the good for which he has the higher opportunity cost.
C)  unless they have the same opportunity costs for producing all goods.
D)  unless they have different opportunity costs for producing all goods.
E)  unless they have the same absolute advantage in producing all goods.

Question 3

Use the table below to answer the following questions.
Table 2.1.1
The following table gives points on the production possibilities frontier for goods X and Y.
 
-From the data in Table 2.1.1 we can infer that

Accepted Answer

A)  the economy illustrated has a comparative advantage in the production of Y.
B)  the economy illustrated has a comparative advantage in the production of X.
C)  the opportunity cost of producing an additional unit of Y increases as the production of Y increases.
D)  the opportunity cost of producing an additional unit of Y decreases as the production of Y increases.
E)  none of the above.

Question 4

Jane produces only corn and cloth.If her preferences for corn and cloth change,then ________.

Accepted Answer

A)  her PPF becomes steeper
B)  her PPF becomes flatter
C)  her PPF becomes straighter
D)  the world PPF shifts outward
E)  her PPF does not change

Question 5

Use the figure below to answer the following questions.
  
Figure 2.2.1
-In Figure 2.2.1,when 2,000 bicycles are produced each month

Accepted Answer

A)  the marginal benefit from another bicycle is greater than the marginal cost of another bicycle.
B)  more bicycles must be produced to reach the efficient level of output.
C)  fewer bicycles must be produced to reach the efficient level of output.
D)  the economy is efficient at this level of production of bicycles.
E)  both A and B.

Question 6

The most anyone is willing to pay for another purse is $30.Currently the price of a purse is $40,and the cost of producing another purse is $50.The marginal benefit from a purse is ________.

Accepted Answer

A)  $40
B)  $50
C)  $10
D)  $20
E)  $30

Question 7

The opportunity cost of pushing the production possibilities frontier outward is

Accepted Answer

A)  capital accumulation.
B)  technological change.
C)  reduced current consumption.
D)  the gain in future consumption.
E)  all of the above.

Question 8

A medical clinic has 10 workers.Each worker can produce a maximum of either 2 units of medical services or 5 units of secretarial services a day.One day,the firm decides it would like to produce 16 units of medical services and 5 units of secretarial services.This output level is

Accepted Answer

A)   efficient.
B)  unattainable.
C)  inefficient.
D)  costless.
E)  attainable and efficient.

Question 9

The development of new goods and better ways of producing goods and services is

Accepted Answer

A)  capital accumulation.
B)  technological change.
C)  the big tradeoff.
D)  allocative efficiency.
E)  none of the above.

Question 10

Use the figure below to answer the following questions.
Table 2.4.1
The planets of Vulcan and Romulus each produce goods X and Y.
The following table gives points on their production possibilities frontiers.
 
-Refer to Table 2.4.1.For Vulcan,the opportunity cost of producing an additional unit of Y is

Accepted Answer

A)  2/3 units of X.
B)  1/2 units of X.
C)  2 units of X.
D)  3 units of X.
E)  4 units of X.

Question 11

Use the figure below to answer the following questions.
Table 2.4.1
The planets of Vulcan and Romulus each produce goods X and Y.
The following table gives points on their production possibilities frontiers.
 
-Refer to Table 2.4.1.Which one of the following is true?

Accepted Answer

A)  Romulus has both an absolute advantage and a comparative advantage in the production of Y.
B)  Romulus has both an absolute advantage and a comparative advantage in the production of X.
C)  Vulcan has a comparative advantage in the production of X.
D)  Romulus has a comparative advantage in the production of X.
E)  Vulcan should specialize in the production of X.

Question 12

A tradeoff exists when

Accepted Answer

A)  we move from a point within the production possibilities frontier (PPF) to a point on the PPF.
B)  we move from a point on the PPF to a point within the PPF.
C)  the PPF shifts outward.
D)  we move along the PPF.
E)  the PPF shifts towards the origin.

Question 13

Use the information below to answer the following questions.
Fact 2.4.1
In an eight-hour day, Andy can produce either 24 loaves of bread or 8 kilograms of butter. In an eight-hour day, Rolfe can produce either 8 loaves of bread or 8 kilograms of butter.
-Consider Fact 2.4.1.After specialization,total consumption will

Accepted Answer

A)  depend on the preferences of Andy and Rolfe.
B)  be 8 loaves of bread and 24 kilograms of butter.
C)  be 32 loaves of bread and 16 kilograms of butter.
D)  be 8 loaves of bread and 8 kilograms of butter.
E)  be 24 loaves of bread and 8 kilograms of butter.

Question 14

Use the figure below to answer the following questions.
  
Figure 2.1.2
-Consider the production possibilities frontier in Figure 2.1.2,and assume that everything that is produced is also consumed.Which of the following statements is false?

Accepted Answer

A)  Resources are not equally useful in all activities.
B)  Points inside the frontier indicate unused or misallocated resources.
C)  Starting at point A, an increase in the production of Y will shift the frontier outward.
D)  The opportunity cost of producing Y increases as production of Y increases.
E)  The opportunity cost of producing X increases as production of X increases.

Question 15

The depletion of fish stocks in Eastern Canada,with its accompanying unemployment,will lead to a

Accepted Answer

A)  movement from the existing production possibilities frontier to a point inside the production possibilities frontier.
B)  shift inward of the existing production possibilities frontier and production at a point on the new PPF.
C)  shift outward of the existing production possibilities frontier.
D)  movement along the existing production possibilities frontier to a point of less fish production.
E)  shift inward of the existing production possibilities frontier plus a movement to a point inside the new production possibilities frontier.

Question 16

Use the information below to answer the following questions.
Fact 2.4.1
In an eight-hour day, Andy can produce either 24 loaves of bread or 8 kilograms of butter. In an eight-hour day, Rolfe can produce either 8 loaves of bread or 8 kilograms of butter.
-Refer to Fact 2.4.1.The opportunity cost of producing 1 kilogram of butter is

Accepted Answer

A)  20 minutes (1/3 hour) for Andy and 1 hour for Rolfe.
B)  1 hour for Andy and 1 hour for Rolfe.
C)  3 loaves of bread for Andy and 1/3 loaf of bread for Rolfe.
D)  3 loaves of bread for Andy and 1 loaf of bread for Rolfe.
E)  8 loaves of bread for Rolfe and 24 loaves of bread for Andy.

Question 17

In Portugal,the opportunity cost of a bale of wool is 3 bottles of wine.In England,the opportunity cost of 1 bottle of wine is 3 bales of wool.Given this information,

Accepted Answer

A)  England has an absolute advantage in wine production.
B)  Portugal has an absolute advantage in wool production.
C)  Portugal has a comparative advantage in wine production.
D)  Portugal has a comparative advantage in wool production.
E)  no trade will occur.

Question 18

The growth of capital resources,including human capital is

Accepted Answer

A)  technological change.
B)  capital accumulation.
C)  depreciation.
D)  opportunity cost.
E)  none of the above.

Question 19

Use the figure below to answer the following questions.
  
Figure 2.1.2
-Refer to the production possibilities frontier in Figure 2.1.2.If 6 units of X are currently being produced,then

Accepted Answer

A)  40 units of Y cannot be produced unless production of X is decreased.
B)  40 units of Y cannot be produced unless production of X is increased.
C)  60 units of Y can be produced with some resources not fully used.
D)  50 units of Y must be produced, regardless of resource utilization.
E)  50 units of Y can be produced if all resources are used and assigned to the task for which they are the best match.

Question 20

It pays for people to specialize and trade with each other because

Accepted Answer

A)  otherwise they would not survive.
B)  they can take advantage of the fact they have an absolute advantage in the production of something.
C)  this way they can consume outside their production possibilities frontier.
D)  this way the strong can exploit the weak.
E)  all of the above.

Exam 2: The Economic Problem

In Portugal,the opportunity cost of a bale of wool is 3 bottles of wine.In England,the opportunity cost of 1 bottle of wine is 3 bales of wool.Given this information,

Correct Answer
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Jane produces only corn and cloth.If her preferences for corn and cloth change,then ________.

Correct Answer
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Use the figure below to answer the following questions. Figure 2.1.2 -Consider the production possibilities frontier in Figure 2.1.2,and assume that everything that is produced is also consumed.Which of the following statements is false?

Correct Answer
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A tradeoff exists when

Correct Answer
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Use the figure below to answer the following questions. Figure 2.2.1 -In Figure 2.2.1,when 2,000 bicycles are produced each month

Correct Answer
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Use the table below to answer the following questions. Table 2.1.1 The following table gives points on the production possibilities frontier for goods X and Y. -From the data in Table 2.1.1 we can infer that

Correct Answer
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It pays for people to specialize and trade with each other because

Correct Answer
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Use the figure below to answer the following questions. Figure 2.1.2 -Refer to the production possibilities frontier in Figure 2.1.2.If 6 units of X are currently being produced,then

Correct Answer
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A movement along the production possibilities frontier will result from

Correct Answer
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A medical clinic has 10 workers.Each worker can produce a maximum of either 2 units of medical services or 5 units of secretarial services a day.One day,the firm decides it would like to produce 16 units of medical services and 5 units of secretarial services.This output level is

Correct Answer
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The most anyone is willing to pay for another purse is $30.Currently the price of a purse is $40,and the cost of producing another purse is $50.The marginal benefit from a purse is ________.

Correct Answer
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The depletion of fish stocks in Eastern Canada,with its accompanying unemployment,will lead to a

Correct Answer
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The opportunity cost of pushing the production possibilities frontier outward is

Correct Answer
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Use the information below to answer the following questions. Fact 2.4.2 Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. -Any two individuals will gain from exchange

Correct Answer
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Use the figure below to answer the following questions. Table 2.4.1 The planets of Vulcan and Romulus each produce goods X and Y. The following table gives points on their production possibilities frontiers. -Refer to Table 2.4.1.Which one of the following is true?

Correct Answer
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The growth of capital resources,including human capital is

Correct Answer
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The development of new goods and better ways of producing goods and services is

Correct Answer
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Exam 2: The Economic Problem

In Portugal,the opportunity cost of a bale of wool is 3 bottles of wine.In England,the opportunity cost of 1 bottle of wine is 3 bales of wool.Given this information,

Correct AnswerverifiedShow Answer

Jane produces only corn and cloth.If her preferences for corn and cloth change,then ________.

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Use the figure below to answer the following questions. Figure 2.1.2 -Consider the production possibilities frontier in Figure 2.1.2,and assume that everything that is produced is also consumed.Which of the following statements is false?

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A tradeoff exists when

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Use the figure below to answer the following questions. Figure 2.2.1 -In Figure 2.2.1,when 2,000 bicycles are produced each month

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Use the table below to answer the following questions. Table 2.1.1 The following table gives points on the production possibilities frontier for goods X and Y. -From the data in Table 2.1.1 we can infer that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

It pays for people to specialize and trade with each other because

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Use the figure below to answer the following questions. Figure 2.1.2 -Refer to the production possibilities frontier in Figure 2.1.2.If 6 units of X are currently being produced,then

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A movement along the production possibilities frontier will result from

Correct AnswerverifiedShow Answer

A medical clinic has 10 workers.Each worker can produce a maximum of either 2 units of medical services or 5 units of secretarial services a day.One day,the firm decides it would like to produce 16 units of medical services and 5 units of secretarial services.This output level is

Correct AnswerverifiedShow Answer

The most anyone is willing to pay for another purse is $30.Currently the price of a purse is $40,and the cost of producing another purse is $50.The marginal benefit from a purse is ________.

Correct AnswerverifiedShow Answer

The depletion of fish stocks in Eastern Canada,with its accompanying unemployment,will lead to a

Correct AnswerverifiedShow Answer

The opportunity cost of pushing the production possibilities frontier outward is

Correct AnswerverifiedShow Answer

Use the information below to answer the following questions. Fact 2.4.2 Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. -Any two individuals will gain from exchange

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Use the figure below to answer the following questions. Table 2.4.1 The planets of Vulcan and Romulus each produce goods X and Y. The following table gives points on their production possibilities frontiers. -Refer to Table 2.4.1.Which one of the following is true?

Correct AnswerverifiedShow Answer

The growth of capital resources,including human capital is

Correct AnswerverifiedShow Answer

The development of new goods and better ways of producing goods and services is

Correct AnswerverifiedShow Answer

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