Deck 2: The Economic Problem

Question 1

Opportunity cost of an action is

A)the best choice that can be made.
B)the highest-valued alternative forgone.
C)the money cost.
D)the comparative cost.
E)the absolute cost.

Answer 1

the highest-valued alternative forgone.

Question 2

The production possibilities frontier

A)is the boundary between attainable and unattainable levels of production.
B)is the boundary between what we want to consume and what we want to produce.
C)shows how production increases as prices rise.
D)shows prices at which production is possible and impossible.
E)illustrates why there need not be any scarcity in the world.

Answer 2

is the boundary between attainable and unattainable levels of production.

Question 3

A situation in which resources are either wasted or misallocated or both is illustrated by

A)any point on either the horizontal or the vertical axis.
B)a point above or to the right of the production possibilities frontier.
C)a point outside the production possibilities frontier.
D)a point inside the production possibilities frontier.
E)a point on or inside the production possibilities frontier.

Answer 3

a point inside the production possibilities frontier.

Question 4

Which one of the following concepts is not illustrated by a production possibilities frontier?

A)scarcity
B)marginal benefit
C)opportunity cost
D)attainable and unattainable points
E)the tradeoff between producing one good versus another

Question 5

A medical clinic employs 10 workers.Each worker can produce a maximum of either 2 units of medical services or 5 units of administrative services a day.The production possibilities frontier of this firm shows

A)increasing opportunity cost.
B)decreasing opportunity cost.
C)constant opportunity cost.
D)zero opportunity cost.
E)infinite opportunity cost.

Question 6

Use the figure below to answer the following questions. Figure 2.1.1
Refer to the production possibilities frontier in Figure 2.1.1.Which one of the following statements is true about point A?

A)It is unattainable.
B)Although no more of good Y can be produced,more of good X can be produced.
C)It is preferred to point B.
D)Resources are either unused or misallocated or both.
E)Although no more of good X can be produced,more of good Y can be produced.

Question 7

Use the figure below to answer the following questions. Figure 2.1.1
Complete the following sentence.In Figure 2.1.1,

A)movement from A to B would require a technological advance.
B)point B is a point of production efficiency.
C)some resources must be unused at point C.
D)the concept of decreasing opportunity cost is illustrated.
E)movement from C to B would require a technological improvement.

Question 8

If Sam is producing at a point inside his production possibilities frontier,then he

A)can increase production of both goods with zero opportunity cost.
B)is fully using all his resources and allocating his resources to their best use.
C)must be doing the best he can with limited resources.
D)is unaffected by costs and technology.
E)has a high opportunity cost of moving from this point.

Question 9

On a graph of a production possibilities frontier,opportunity cost is represented by

A)a point on the horizontal axis.
B)a point on the vertical axis.
C)a ray through the origin.
D)the slope of the production possibilities frontier.
E)the x-axis intercept.

Question 10

Production efficiency is achieved when

A)the production possibilities frontier shifts outward at a constant pace.
B)there are no tradeoffs.
C)all resources are equally productive in all activities.
D)resources are not equally productive in all activities.
E)we produce goods and services at the lowest possible cost.

Question 11

Use the figure below to answer the following questions. Figure 2.1.1
Refer to the production possibilities frontier in Figure 2.1.1.Which one of the following is true about point C?

A)It is efficient and attainable.
B)It is unattainable.
C)It is attainable and inefficient.
D)It is attainable only if the opportunity cost of producing X increases.
E)It is attainable only if the opportunity cost of producing X decreases.

Question 12

A tradeoff exists when

A)we move from a point inside the 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 inward.

Question 13

A production possibilities frontier is negatively sloped because

A)the quantity of a good purchased decreases as its price falls.
B)opportunity cost of production increases as more of a good is produced.
C)some resources are misallocated.
D)there is too little capital in the economy.
E)opportunity cost of production decreases as more of a good is produced.

Question 14

Which of the following quotations best illustrates a tradeoff?

A)"If the firm reorganized its production process,it could produce more widgets and more gadgets."
B)"The firm should sell more gadgets,even if it means hiring more workers."
C)"The more and more gadgets the firm produces,the bigger the fall in widget production."
D)"If the firm invests more in capital equipment,it can expand sales next year."
E)"The firm has been able to lower costs due to its extensive experience in building widgets."

Question 15

If Harold must decrease production of some other good to increase production of good X,then Harold

A)is producing on his production possibilities frontier.
B)is producing outside his production possibilities frontier.
C)is producing inside his production possibilities frontier.
D)prefers good X to any other good.
E)has a linear production possibilities frontier.

Question 16

If Harold can increase production of good X without decreasing production of any other good,then Harold

A)is producing on his production possibilities frontier.
B)is producing outside his production possibilities frontier.
C)is producing inside his production possibilities frontier.
D)has a linear production possibilities frontier.
E)prefers good X to any other good.

Question 17

A point inside a production possibilities frontier

A)indicates some wasted or misallocated resources.
B)is unattainable.
C)is preferred to a point on the production possibilities frontier.
D)indicates a point of production efficiency.
E)illustrates the idea of opportunity cost.

Question 18

If Sam is producing at a point on his production possibilities frontier,then he

A)cannot produce any more of either good.
B)is unaffected by costs and technology.
C)can produce more of both goods.
D)is not subject to scarcity.
E)can increase the production of one good only by decreasing the production of the other.

Question 19

Ted chooses to study for his economics exam instead of going to the concert.The concert he will miss is Ted's ________ of studying for the exam.

A)monetary cost
B)absolute cost
C)opportunity cost
D)discretionary cost
E)comparative cost

Question 20

Which one of the following concepts is illustrated by a production possibilities frontier?

A)profit
B)consumption
C)investment
D)property rights
E)tradeoff

Question 21

Use the figure below to answer the following questions. Figure 2.1.3
Figure 2.1.3 illustrates Mary's production possibilities frontier.If Mary wants to move from point B to point C,Mary must

A)improve technology.
B)increase capital.
C)give up some of good X to obtain more of good Y.
D)give up some of good Y to obtain more of good X.
E)pay more for her factors of production.

Question 22

The fact that resources are not equally productive in all activities

A)implies that a production possibilities frontier will be bowed outward.
B)implies that gains from specialization and trade are unlikely.
C)follows from the law of demand.
D)implies a linear production possibilities frontier.
E)implies that an economy should not produce certain goods.

Question 23

Use the figure below to answer the following questions. Figure 2.1.2
Refer to the production possibilities frontier in Figure 2.1.2.Suppose that 50 units of Y are produced.Then

A)7 units of X are being produced.
B)6 units of X can be produced if all resources are used and assigned to the task for which they are the best match.
C)9 units of X can be produced if all resources are used and assigned to the task for which they are the best match.
D)resources are not being fully utilized.
E)6 units of X are being produced.

Question 24

Use the figure below to answer the following questions. Figure 2.1.2
Refer to the production possibilities frontier in Figure 2.1.2.At point A,the opportunity cost of producing 3 more units of X is

A)30 units of Y.
B)3 units of X.
C)20 units of Y.
D)10 units of Y.
E)zero units of Y.

Question 25

A medical clinic employs 10 workers.Each worker can produce a maximum of either 2 units of medical services or 5 units of administrative services a day.One day,the clinic decides to produce 16 units of medical services and 5 units of administrative services.This output level is

A)efficient.
B)unattainable.
C)inefficient.
D)on the clinic's PPF.
E)attainable and efficient.

Question 26

A medical clinic employs 10 workers.Each worker can produce a maximum of either 2 units of medical services or 5 units of administrative services a day.The opportunity cost of one more unit of medical services is

A)2 units of administrative services.
B)5 units of administrative services.
C)0.4 units of administrative services.
D)2.5 units of administrative services.
E)1 unit of medical services.

Question 27

Use the figure below to answer the following questions. Figure 2.1.2
Refer to the production possibilities frontier in Figure 2.1.2.At point A,the opportunity cost of increasing production of Y to 80 units is

A)10 units of Y.
B)80 units of Y.
C)2 units of X.
D)3 units of X.
E)1 unit of X.

Question 28

Consider the production possibilities frontier in Figure 2.1.2.Which of the following statements is false?

A)Resources are not equally useful in the production of X and Y.
B)Points inside the production possibilities frontier indicate wasted or misallocated resources.
C)Production at point A shifts the production possibilities 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 29

If additional units of any good can be produced at a constant opportunity cost,the production possibilities frontier is

A)bowed inward and negatively sloped.
B)bowed outward and negatively sloped.
C)positively sloped and linear.
D)horizontal.
E)linear and negatively sloped.

Question 30

Use the figure below to answer the following questions. Figure 2.1.3
Figure 2.1.3 illustrates Mary's production possibilities frontier.If Mary wants to move from point D to point C,Mary must

A)improve technology.
B)increase capital.
C)give up some of good X to obtain more of good Y.
D)give up some of good Y to obtain more of good X.
E)hire more workers.

Question 31

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 produced,then

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 32

The existence of increasing opportunity cost

A)explains why specialization is frequently useful.
B)explains why resources are scarce.
C)explains the bowed-out shape of the production possibilities frontier.
D)follows from the existence of property rights.
E)explains why some societies produce inside their production possibilities frontier.

Question 33

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.
Refer to Table 2.1.1.What is true at point C?

A)If 8 units of X are produced,then at least 28 units of Y can be produced.
B)If 8 units of X are produced,then at most 28 units of Y can be produced.
C)If 28 units of Y are produced,then more than 8 units of X can be produced.
D)If 8 units of X are produced,then only 36 units of Y can be produced.
E)Some resources are unemployed.

Question 34

A medical clinic employs 10 workers.Each worker can produce a maximum of either 2 units of medical services or 5 units of administrative services a day.One day,the clinic decides to produce 10 units of medical services and 30 units of administrative services.This output level is

A)efficient.
B)unattainable.
C)inefficient.
D)on the clinic's PPF.
E)attainable if each worker specializes in one service.

Question 35

Use the figure below to answer the following questions. Figure 2.1.2
Refer to the production possibilities frontier in Figure 2.1.2.At point C,the opportunity cost of producing one more unit of X is

A)1 unit of Y.
B)1 unit of X.
C)8 units of X.
D)20 units of X.
E)20 units of Y.

Question 36

Refer to the production possibilities frontier in Figure 2.1.3.The opportunity cost of moving from C to B will be

A)greater than moving from D to C but less than moving from B to A.
B)less than moving from D to C but greater than moving from B to A.
C)the same as moving from D to C or moving from B to A.
D)greater than moving either from D to C or from B to A.
E)less than moving from E to D.

Question 37

The bowed-out (concave)shape of a production possibilities frontier illustrates

A)the equal usefulness of resources in all activities.
B)capital accumulation.
C)technological change.
D)increasing opportunity cost.
E)decreasing opportunity cost.

Question 38

If opportunity costs are increasing,then the production possibilities frontier is

A)bowed outward with a positive slope.
B)a positively sloped straight line.
C)a negatively sloped straight line.
D)bowed outward with a negative slope.
E)a vertical line.

Question 39

As we increase production of X,we must give up production of larger and larger amounts of Y to produce each additional unit of X.Select the best statement.

A)This illustrates increasing opportunity cost.
B)As a result,we should not specialize in the production of X.
C)The production possibilities frontier for X and Y is a straight line.
D)Good Y will be more highly regarded by consumers than good X.
E)We must be producing inside the production possibilities frontier.

Question 40

Use the figure below to answer the following questions. Figure 2.1.2
Refer to the production possibilities frontier in Figure 2.1.2.At point C,what is the opportunity cost of increasing the production of Y from 20 to 50 units?

A)6 units of X
B)2 units of X
C)8 units of X
D)20 units of Y
E)30 units of Y

Question 41

Use the table below to answer the following questions.
Table 2.1.2
Production Possibilities
Refer to Table 2.1.2.In moving from combination B to combination C,the opportunity cost of producing one additional snowshoe is

A)2 kilograms of butter.
B)1/2 kilogram of butter.
C)6 kilograms of butter.
D)1/6 kilogram of butter.
E)3 kilograms of butter.

Question 42

Use the figure below to answer the following question. Figure 2.1.4
Refer to the production possibilities frontier in Figure 2.1.4.Which point is unattainable?

A)A
B)B
C)C
D)D
E)E

Question 43

The production possibilities frontier corresponding to the data in Table 2.1.1 is

A)negatively sloped and linear.
B)negatively sloped and bowed inward.
C)negatively sloped and bowed outward.
D)positively sloped and linear.
E)positively sloped and bowed outward.

Question 44

Use the figure below to answer the following questions. Figure 2.1.6
Figure 2.1.6 shows the production possibilities frontier for a firm that produces pet food.Point A is ________ and point B is ________.

A)unattainable;attainable.
B)attainable;unattainable.
C)unattainable;unattainable.
D)attainable;attainable.
E)inefficient;efficient

Question 45

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.
Refer to Table 2.1.1.The opportunity cost of increasing the production of X from 8 to 12 units is

A)4 units of X.
B)4 units of Y.
C)8 units of Y.
D)12 units of Y.
E)16 units of Y.

Question 46

Use the table below to answer the following question.
Table 2.1.3
Production possibilities for a society that produces only two
goods - hockey sticks and maple leaves
Refer to Table 2.1.3.In moving from combination C to combination B,the opportunity cost of producing one additional hockey stick is

A)2 maple leaves.
B)1/2 maple leaves.
C)6 maple leaves.
D)1/6 maple leaves.
E)3 maple leaves.

Question 47

Use the table below to answer the following questions.
Table 2.1.2
Production Possibilities
Refer to Table 2.1.2.According to this production possibilities frontier,

A)a combination of 6 kilograms of butter and 1 snowshoe is inefficient.
B)a combination of 0 kilograms of butter and 4 snowshoes is attainable.
C)resources are equally useful in all activities.
D)the opportunity cost of producing snowshoes increases as more snowshoes are produced.
E)the opportunity cost of producing snowshoes decreases as more snowshoes are produced.

Question 48

Use the table below to answer the following question.
Table 2.1.4
Consider the following production possibilities for a student for the typical week:
Refer to Table 2.1.4.Complete the following sentence.The production possibilities frontier in the table shows

A)increasing opportunity cost.
B)learning-by-doing.
C)constant opportunity cost.
D)under-utilization of resources.
E)decreasing opportunity cost.

Question 49

When producing at a point of production efficiency,

A)the quantity of goods produced can be either on or inside the production possibilities frontier.
B)all wants are satisfied.
C)the opportunity cost of producing goods other than those measured on the axes of the production possibilities frontier is zero.
D)a tradeoff occurs.
E)resources are either wasted or misallocated.

Question 50

From the data in Table 2.1.1,the production of 7 units of X and 28 units of Y is

A)unattainable.
B)attainable but leaves some resources wasted or misallocated or both.
C)on the PPF between points C and D.
D)on the PPF between points B and C.
E)outside the PPF.

Question 51

From the data in Table 2.1.1,the production of 10 units of X and 28 units of Y is

A)unattainable.
B)attainable but leaves some resources misallocated.
C)on the production possibilities frontier between points C and D.
D)inside the PPF.
E)attainable but inefficient.

Question 52

Use the figure below to answer the following question. Figure 2.1.5
The graph in Figure 2.1.5 shows Sunland's PPF for food and sunscreen.Sunland faces ________ opportunity cost of food and ________ opportunity of sunscreen.

A)an increasing;a decreasing
B)a constant;a constant
C)a decreasing;an increasing
D)an increasing;an increasing
E)a decreasing;a decreasing

Question 53

The slope of the production possibilities frontier curve measures

A)opportunity cost of producing the good measured on the x-axis.
B)comparative advantage.
C)absolute advantage.
D)marginal benefit from the good measured on the y-axis.
E)preferences for the goods measured on both axes.

Question 54

Use the figure below to answer the following questions. Figure 2.1.6
Figure 2.1.6 shows the production possibilities frontier for a firm that produces pet food.This PPF ________ illustrate scarcity because ________.

A)does;the firm cannot produce points outside the frontier,and as the firm moves along the PPF,it cannot produce more dog biscuits without producing less cat food
B)does not;the firm can produce any quantity it wants if it is willing to charge a high enough price
C)does not;the PPF is downward sloping
D)does;as more is produced,consumers must pay a higher price
E)does not;scarcity does not occur in the market for pet food

Question 55

Refer to Table 2.1.1.As the production of X increases,

A)the opportunity cost of each additional unit of X produced decreases.
B)the production of Y increases.
C)the opportunity cost of each additional unit of X produced increases.
D)unemployment increases.
E)the amount of X produced increases at an increasing rate.

Question 56

The economy illustrated by the data in Table 2.1.1 exhibits

A)decreasing opportunity cost.
B)constant opportunity cost in the production of X.
C)constant opportunity cost in the production of Y.
D)increasing opportunity cost.
E)initially increasing,then decreasing opportunity cost.

Question 57

The production possibilities frontier is

A)upward sloping and illustrates a tradeoff in production of the good measured on the x-axis and the good measured on the y-axis.
B)downward sloping and illustrates a tradeoff in production of the good measured on the x-axis and the good measured on the y-axis.
C)upward sloping and a movement along the PPF illustrates a free lunch.
D)downward sloping and a movement along the PPF illustrates a free lunch.
E)downward sloping and illustrates the marginal benefit from increasing production of the good measured on the x-axis.

Question 58

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

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 59

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.
Refer to Table 2.1.1.The opportunity cost of increasing the production of Y from 16 to 36 units is

A)4 units of X.
B)8 units of X.
C)12 units of X.
D)16 units of X.
E)20 units of Y.

Question 60

The data in Table 2.1.1 illustrate that

A)the producer has a comparative advantage in the production of Y.
B)the producer 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)the opportunity cost of producing an additional unit of Y is constant as the production of X increases.

Question 61

Allocative efficiency refers to a situation where

A)opportunity costs are equal for all goods.
B)we cannot produce more of any one good without giving up some other good.
C)goods and services are produced at the lowest possible cost and in the quantities that provide the greatest possible benefit.
D)opportunity cost is zero for all goods.
E)marginal benefit is maximized.

Question 62

The production possibilities frontier shows

A)the maximum possible growth rate of output in an economy.
B)the maximum quantity of resources available at any given time.
C)the maximum level of production that can be attained.
D)combinations of goods and services that do not fully use available resources.
E)the effect of advancing technology on production possibilities.

Question 63

Which of the following is true regarding marginal benefit? I.The marginal benefit curve shows the benefit firms receive by producing another unit of a good.
II.Marginal benefit increases as more and more of a good is consumed.
III.Marginal benefit is the maximum amount a person is willing to pay to obtain one more unit of a good.

A)I only
B)I and II
C)I and III
D)III only
E)I,II,and III

Question 64

The marginal benefit curve from a good

A)shows the benefit a firm receives from producing one more unit of that good.
B)shows the most a consumer is willing to pay for one more unit of that good.
C)is upward-sloping.
D)is bowed outward.
E)is vertical.

Question 65

Consider a PPF that measures the production of quilts on the y-axis and the production of pillows on the x-axis.As the firm moves along this PPF,the production of

A)all goods other than pillows and quilts is decreasing.
B)all goods other than pillows and quilts remains constant.
C)all goods other than pillows and quilts is increasing.
D)pillows and quilts are both increasing.
E)pillows and quilts are both decreasing.

Question 66

A marginal benefit curve measures

A)comparative advantage.
B)willingness to pay.
C)absolute advantage.
D)opportunity cost.
E)expenditure.

Question 67

Use the figure below to answer the following questions. Figure 2.2.1
In Figure 2.2.1,the curve labelled A is the ________ curve and the curve labelled B is the ________ curve.

A)marginal cost;marginal benefit
B)marginal cost;trade
C)marginal benefit;trade
D)production possibilities;trade
E)marginal benefit;marginal cost

Question 68

When the market achieves allocative efficiency,

A)marginal benefit equals marginal cost.
B)marginal benefit is at its maximum.
C)marginal benefit minus marginal cost is positive.
D)marginal cost minus marginal benefit is positive.
E)marginal cost is at its minimum.

Question 69

Use the figure below to answer the following questions. Figure 2.2.1
In Figure 2.2.1,when 4,000 bicycles are produced each month,

A)the marginal benefit from the 4,000th bicycle is greater than the marginal cost of the 4,000th 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 production of bicycles is efficient.
E)the marginal benefit from the 4,000th bicycle equals the marginal cost of the 4th scooter.

Question 70

The quantity of shoes produced is measured along the x-axis of a bowed-outward production possibilities frontier and the quantity of shirts produced is measured along the y-axis.As you move down towards the right along the production possibilities frontier,the marginal cost of

A)a pair of shoes decreases.
B)a pair of shoes increases.
C)a shirt remains constant.
D)a shirt equals the marginal benefit from a pair of shoes.
E)a pair of shoes and a shirt is equal at the midpoint between the x-axis and the y-axis.

Question 71

To describe preferences,economists use the concept of

A)opportunity cost.
B)scarcity.
C)marginal benefit.
D)marginal cost.
E)price.

Question 72

Use the figure below to answer the following questions. Figure 2.2.1
In Figure 2.2.1,the curve labelled B shows

A)the number of scooters that people are willing to forgo to obtain another bicycle.
B)the number of bicycles that people are willing to forgo to obtain another scooter.
C)the number of scooters that people must forgo to obtain another bicycle.
D)that the benefit from producing more bicycles is greater than the benefit from producing more scooters.
E)that the benefit from producing more scooters is greater than the benefit from producing more bicycles.

Question 73

As consumption of a good increases,

A)marginal benefit increases.
B)marginal benefit decreases.
C)marginal benefit equals price.
D)marginal benefit increases or decreases depending on price.
E)the price of the good falls.

Question 74

Marginal cost

A)is the opportunity cost of producing one more unit of a good or service.
B)is unrelated to the production possibilities frontier.
C)equals marginal benefit.
D)is less than marginal benefit.
E)is greater then marginal benefit.

Question 75

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,

A)the marginal benefit from the 2,000th bicycle is greater than the marginal cost of the 2,000th bicycle.
B)the marginal benefit from the 2,000th bicycle equals the marginal cost of the second scooter.
C)fewer bicycles must be produced to reach the efficient level of output.
D)the production of bicycles is efficient.
E)the marginal benefit from the 2,000th bicycle equals the marginal cost of the 4th scooter.

Question 76

The principle of decreasing marginal benefit implies that the

A)additional benefit from obtaining one more unit of a good or service decreases as more of that good or service is consumed.
B)additional benefit from obtaining one more unit of a good or service increases as more of that good or service is consumed.
C)total benefit from obtaining more of a good or service decreases as more is consumed.
D)total benefit from obtaining more of a good or service remains the same as more is consumed.
E)additional benefit from producing one more unit of a good or service decreases as more of that good or service is produced.

Question 77

Choose the correct statements. 1.Opportunity cost of a good is the increase in the quantity produced of one good divided by the decrease in the quantity produced of another good as we move along the PPF.
2.The opportunity cost of an action is the highest-valued alternative forgone.
3.Opportunity cost is a ratio.
4.There is no relationship between the opportunity cost of producing an additional good measured on the x-axis and the opportunity cost of producing an additional good measured on the y-axis.

A)Statements 1 and 3 are correct.
B)Statements 1 and 2 are correct.
C)Statements 2 and 3 are correct.
D)Statements 2 and 4 are correct.
E)Statements 3 and 4 are correct.

Question 78

Use the table below to answer the following question.
Table 2.2.1

Refer to Table 2.2.1.Marginal benefit from food crops

A)equals the marginal cost of food crops.
B)remains constant as the quantity of food crops increases from 1 tonne a day to 2 tonnes a day.
C)cannot be calculated from the table.
D)increases as the quantity of food crops increases from 1 tonne a day to 2 tonnes a day.
E)equals 70 barrels of ethanol.

Question 79

The Government of Canada promises to produce more defence goods without any decrease in the production of other goods.This promise is valid

A)if Canada is producing at a point outside its PPF.
B)if Canada is producing at a point on its PPF.
C)if Canada is producing at a point inside its PPF.
D)only if the PPF shifts rightward.
E)only if technology advances or capital increases.

Question 80

Marginal benefit from a good or service is the benefit received from consuming ________.It is measured by the most that people are willing to pay for ________.

A)goods that you prefer;an additional unit of it
B)goods that you prefer;more of it
C)one more unit of it;an additional unit of it
D)one more unit of it;more of it
E)as much as is available;the total amount consumed