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Exam 2: Production Possibilities Opportunity Cost and Economic Growth

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Question 31

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The production possibilities curve shows that:

A) some of one good must be given up to get more of another good in an economy that is operating efficiently.
B) no output combination is impossible.
C) an economy that is operating efficiently can have more of one good without giving up some of another good.
D) scarcity can be eliminated.

E) None of the above
F) B) and C)

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Question 32

Multiple Choice

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On a production possibilities curve diagram, greater entrepreneurship:

A) causes the curve to shift outward.
B) keeps the economy on the curve.
C) prevents movement along the curve.
D) keeps the economy at the corners of the curve.

E) B) and C)
F) All of the above

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Question 33

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A production possibilities curve shows the:

Compare two economies A and B that start out with identical production possibilities curves. Economy A chooses an efficient point with 6 consumption goods and 3 capital goods, while economy B also chooses an efficient point, but with 4 consumption goods and 5 capital goods. In the future we can predict:

The process through which an economy's production possibilities curve shifts outward is:

While waiting in line to buy a cheeseburger for $2 and a drink for 75 cents, Aaron notices that the restaurant has a value meal containing a cheeseburger, drink, and French fries for $3. For Aaron, the marginal cost of purchasing the French fries:

Exhibit 2-2 Production possibilities curve In Exhibit 2-2, the opportunity cost of coffee when moving from A to B is:

Which of the following is not one of the three fundamental economic questions?

After the terrorist attacks on September 11, 2001, the United States began devoting substantial resources toward the War on Terrorism, homeland security, and relief efforts. As long as our resources were being used efficiently, the production possibilities curve would suggest that:

The opportunity cost of an action is:

The question "Should children receive free lunch at school?" is an example of which fundamental economic question?

The opportunity cost of an activity means the:

The law of increasing costs indicates that the opportunity cost of producing a good:

While waiting in line to buy two tacos at 80 cents each and a medium drink for 90 cents, Jordan notices that the restaurant has a value meal containing three tacos and a medium drink all for $3. Jordan should purchase the value meal if

Exhibit 2-6 Production possibilities curve data $\begin{array} { | l | r | r | r | c | c | r | } \hline & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } &{ \text { F } } \\\hline \text { Capital goods } & 150 & 140 & 120 & 90 & 50 & 0 \\\text { Consumer goods } & 0 & 20 & 40 & 60 & 80 & 100 \\\hline\end{array}$ In Exhibit 2-6, the concept of increasing opportunity costs is represented by the fact that:

Which of the following is an example of an organization using marginal analysis?

When deciding whether to buy a second car, marginal analysis indicates that the purchaser should compare the:

Exhibit 2-9 Production possibilities curve Which of the following moves from one point to another in Exhibit 2-9 would represent an increase in economic efficiency?

The law of increasing opportunity costs causes the production possibilities curve to:

Economic growth may be represented by a(n) :