Question 1

If Wendy can produce more of all goods than Tommy in an hour, then

Accepted Answer

A)  Wendy has an absolute advantage in all goods.
B)  Wendy does not need to trade with Tommy in order to achieve the gains from trade.
C)  Wendy has a comparative advantage in all goods.
D)  Tommy has an absolute advantage in all goods.
E)  Only Tommy but not Wendy can benefit from trade between the two of them.F) A) and D)
G) None of the above

Question 2

-The figure above shows the production possibilities frontiers for the United Kingdom and France. If the United Kingdom and France specialize and engage in trade, the United Kingdom will export ________ and France will export ________.

Accepted Answer

A)  wheat; wheat
B)  wheat; fish
C)  fish; wheat
D)  fish; fish
E)  nothing; nothingF) B) and D)
G) A) and D)

Question 3

The opportunity cost of economic growth is ________ and the benefit of economic growth is ________.

Accepted Answer

A)  increased current consumption; increased future consumption
B)  increased current consumption; decreased future consumption
C)  decreased current consumption; increased future consumption
D)  decreased current consumption; decreased future consumption
E)  nothing; increased future consumptionF) None of the above
G) All of the above

Question 4

-The figure above shows the production possibilities frontiers for the United Kingdom and France. If the United Kingdom and France specialize and engage in trade, the United Kingdom will produce ________ and France will produce ________.

Accepted Answer

A)  wheat; wheat
B)  wheat; fish
C)  fish; wheat
D)  fish; fish
E)  both wheat and fish; both wheat and fishF) A) and B)
G) B) and E)

Question 5

-In the above table, for Mary the opportunity cost of producing a dress is ________ and the opportunity cost for Mark of producing a dress is ________.

Accepted Answer

A)  1 1/2 jackets; 2/3 of a jacket
B)  1 1/2 jackets; 2 1/2 jackets
C)  1 1/4 jackets; 1/2 of a jacket
D)  1 jacket; 1 jacket
E)  1 dress; 1 dressF) C) and E)
G) C) and D)

Question 6

As we move along the production possibilities frontier,

Accepted Answer

A)  the production of one good increases as the production of the other good decreases.
B)  the possibilities of tradeoffs diminish.
C)  a tradeoff is not possible because nations need all goods.
D)  more of both goods can be produced.
E)  less of both goods can be produced.F) A) and D)
G) B) and D)

Question 7

The production possibilities frontier is a graph showing the

Accepted Answer

A)  exact point of greatest efficiency for producing goods and services.
B)  tradeoff between free lunches.
C)  maximum combinations of goods and services that can be produced.
D)  minimum combinations of goods and services that can be produced.
E)  resources available for the economy's production use.F) C) and D)
G) All of the above

Question 8

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 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)  the opportunity cost of producing jeans increases.
B)  the opportunity cost of producing shoes increases.
C)  there are fewer tradeoffs.
D)  inefficient production occurs.
E)  the opportunity cost of producing jeans decreases.F) None of the above
G) A) and E)

Question 10

-The figure above shows the production possibilities frontier for a country. A combination of 4 million gallons of milk and 4 million gallons of ice cream is

Accepted Answer

A)  unattainable.
B)  attainable and production efficient.
C)  attainable and production inefficient.
D)  unattainable and production efficient.
E)  More information is needed to determine if the point is attainable or not.F) None of the above
G) D) and E)

Question 11

If John can produce 10 chairs or 20 lamps during a week while Mary can produce 12 chairs or 22 lamps in the same time, who has the absolute advantage in producing each good?

Accepted Answer

A)  Mary in producing both goods
B)  John in producing both goods
C)  Mary in producing chairs, John in producing lamps
D)  John in producing chairs, Mary in producing lamps
E)  Both Mary and John in both goodsF) A) and B)
G) A) and E)

Question 12

What is gained when people engage in specialization and trade?

Accepted Answer

A)  Specialization and trade allow people to consume outside their individual production possibilities frontiers.
B)  Specialization and trade allow people to consume inside their production possibilities frontiers.
C)  Specialization and trade allow people to consume at a point on their production possibilities frontiers.
D)  Specialization and trade allow people to produce outside their individual production possibilities frontiers.
E)  There are no gains from specialization and trade.F) A) and B)
G) B) and C)

Question 13

The production possibilities frontier illustrates the

Accepted Answer

A)  maximum combinations of goods and services that can be produced.
B)  resources the economy possess, but not its level of technology.
C)  goods and services that people want.
D)  limits to people's wants.
E)  amount of each good that people want to buy.F) A) and C)
G) A) and B)

Question 14

The United States produced approximately ________ worth of goods and services in 2011.

Accepted Answer

A)  $15 trillion
B)  $15 billion
C)  $150 trillion
D)  $150 billion
E)  $1,500 trillionF) None of the above
G) A) and B)

Question 15

When a production possibilities frontier is bowed outward, as more of one good is produced, its opportunity cost

Accepted Answer

A)  increases.
B)  decreases.
C)  remains constant.
D)  might increase, decrease, or remain constant depending on how much people value the additional units of the good.
E)  cannot be predicted.F) None of the above
G) C) and D)

Question 16

If a nation has an absolute advantage in producing a good, then it

Accepted Answer

A)  will have a comparative advantage in producing that good.
B)  will have no need to trade with other nations.
C)  will always specialize in that good.
D)  might or might not have a comparative advantage in producing that good.
E)  will not have a comparative advantage in producing that good.F) C) and E)
G) A) and E)

Question 17

Why does the production possibilities frontier have a bowed out shape rather than being a straight line?

Accepted Answer

The fact that as the production of one g...

Question 18

In the production possibilities frontier model, an unattainable point lies

Accepted Answer

A)  only on the production possibilities frontier itself.
B)  only inside the production possibilities frontier.
C)  only outside the production possibilities frontier.
D)  both on and outside the production possibilities frontier.
E)  There are no unattainable points in the production possibilities model.F) B) and E)
G) B) and D)

Question 19

Relative to Al, Joe has ________ if Joe can produce a good at a lower opportunity cost than Al.

Accepted Answer

A)  a comparative advantage
B)  more production efficiency
C)  a comparative benefit
D)  a marginal benefit
E)  a free lunchF) D) and E)
G) None of the above

Question 20

-Gabriel operates a ranch in Idaho where he raises cattle and grows potatoes. The figure above illustrates his production possibilities frontier. What is Gabriel's opportunity cost of raising another 100 cows?

Accepted Answer

A)  1.25 tons of potatoes
B)  5.0 tons of potatoes
C)  3.0 tons of potatoes
D)  1.0 ton of potatoes
E)  100 cowsF) A) and B)
G) None of the above

Exam 3: The Economic Problem

The opportunity cost of economic growth is ________ and the benefit of economic growth is ________.

Correct AnswerverifiedShow Answer

-In the above table, for Mary the opportunity cost of producing a dress is ________ and the opportunity cost for Mark of producing a dress is ________.

Correct AnswerverifiedShow Answer

-The figure above shows the production possibilities frontier for a country. A combination of 4 million gallons of milk and 4 million gallons of ice cream is

Correct AnswerverifiedShow Answer

When a production possibilities frontier is bowed outward, as more of one good is produced, its opportunity cost

Correct AnswerverifiedShow Answer

Why does the production possibilities frontier have a bowed out shape rather than being a straight line?

Correct AnswerverifiedThe fact that as the production of one g...View AnswerShow 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

As we move along the production possibilities frontier,

Correct AnswerverifiedShow Answer

If a nation has an absolute advantage in producing a good, then it

Correct AnswerverifiedShow Answer

If John can produce 10 chairs or 20 lamps during a week while Mary can produce 12 chairs or 22 lamps in the same time, who has the absolute advantage in producing each good?

Correct AnswerverifiedShow Answer

-The figure above shows the production possibilities frontiers for the United Kingdom and France. If the United Kingdom and France specialize and engage in trade, the United Kingdom will produce ________ and France will produce ________.

Correct AnswerverifiedShow Answer

The production possibilities frontier illustrates the

Correct AnswerverifiedShow Answer

The United States produced approximately ________ worth of goods and services in 2011.

Correct AnswerverifiedShow Answer

What is gained when people engage in specialization and trade?

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 figure above shows the production possibilities frontiers for the United Kingdom and France. If the United Kingdom and France specialize and engage in trade, the United Kingdom will export ________ and France will export ________.

Correct AnswerverifiedShow Answer

The production possibilities frontier is a graph showing the

Correct AnswerverifiedShow Answer

Relative to Al, Joe has ________ if Joe can produce a good at a lower opportunity cost than Al.

Correct AnswerverifiedShow Answer

If Wendy can produce more of all goods than Tommy in an hour, then

Correct AnswerverifiedShow Answer

-Gabriel operates a ranch in Idaho where he raises cattle and grows potatoes. The figure above illustrates his production possibilities frontier. What is Gabriel's opportunity cost of raising another 100 cows?

Correct AnswerverifiedShow Answer

In the production possibilities frontier model, an unattainable point lies

Correct AnswerverifiedShow Answer

The opportunity cost of economic growth is and the benefit of economic growth is .

Correct Answer
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-In the above table, for Mary the opportunity cost of producing a dress is and the opportunity cost for Mark of producing a dress is .

Correct Answer
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The fact that as the production of one g...
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In Japan, the opportunity cost of produc...
View Answer

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-The figure above shows the production possibilities frontiers for the United Kingdom and France. If the United Kingdom and France specialize and engage in trade, the United Kingdom will produce and France will produce .

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-The figure above shows the production possibilities frontiers for the United Kingdom and France. If the United Kingdom and France specialize and engage in trade, the United Kingdom will export and France will export .

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