Question 1

Teddy's production possibilities curve for goods M and N is described by the following equation: M = 21 - 3N,where M is the quantity of good M produced and N is the quantity of good N produced.The slope of Teddy's production possibilities curve,when M is on the vertical axis,is

Accepted Answer

The slope of the production possibilities curve is the rate at which one good can be exchanged for the other. In this case, the slope can be found by taking the derivative of the equation M = 21 - 3N with respect to N. This gives us dM/dN = -3, which is the slope of the curve. Since M is on the vertical axis, the slope is negative, and the correct choice is A) -3.

Question 2

Joan can produce a maximum of 14 units of good Y and a maximum of 21 units of good X.If Y is on the vertical axis,the equation for her production possibilities curve is

Accepted Answer

The slope of the production possibilities curve is the opportunity cost of one good in terms of the other. In this case, to produce one unit of Y, Joan must give up 0.67 units of X (14/21 = 0.67). Therefore, the equation for the production possibilities curve is Y = 14 - 0.67X.

Question 3

If a given production combination is efficient,then it must be

Accepted Answer

An efficient production combination is one that is producing goods at the maximum possible level given the available resources and technology. Therefore, it must be on the production possibilities curve (PPC) which represents all the possible combinations of two goods that can be produced with the given resources and technology. If it were beyond the PPC, it would not be possible to produce it with the given resources and technology. If it were possible to expand production of one good without reducing the production of the other, then the current combination would not be fully efficient as it would be possible to produce more of a good without any sacrifice. An efficient combination may not necessarily be the best or optimal combination as it depends on individual preferences and needs.

Question 4

Suppose that Penn's opportunity cost of producing an extra Pepsi is 3 cheeseburgers while Teller's opportunity cost is 0.14 cheeseburgers.One could predict that

Accepted Answer

The fact that Penn's opportunity cost of producing an extra Pepsi is higher than Teller's opportunity cost indicates that Penn has a comparative advantage in producing cheeseburgers while Teller has a comparative advantage in producing Pepsis. Therefore, they have potentially much to gain by specializing in the production of the good in which they have a comparative advantage and coordinating their production. This will lead to a more efficient use of resources and increased total output.

Question 5

The production possibilities curve is

Accepted Answer

The production possibilities curve represents the maximum output of goods and services that a society can produce using its available resources and technology. It illustrates the trade-offs between producing different goods and services. The curve is a boundary that divides all production combinations into attainable ones (on or inside the curve) and unattainable ones (outside the curve). Thus, choice C is the best answer.

Question 6

Teddy's production possibilities curve for goods M and N is described by the following equation: M = 21 - 3N,where M is the quantity of good M produced and N is the quantity of good N produced.The maximum quantity of N that Teddy can produce is

Accepted Answer

The answer of Teddy's production possibilities curve for goods M...

Question 7

-Bobby Jo's opportunity cost of an extra bale of hemp is __________ and Mary Lou's is __________.

Accepted Answer

The answer of 
-Bobby Jo's opportunity cost of an extra...

Question 8

-Because Bobby Jo and Mary Lou have __________ opportunity costs,they can experience __________ from specialization.

Accepted Answer

The answer of 
-Because Bobby Jo and Mary Lou have...

Question 9

Jerry's production possibilities curve for goods W and Z is W = 20 - 2Z,where W is the quantity of good W produced and Z is the quantity of good Z produced.The combination of W and Z (11,5)is a(n)__________ point.

Accepted Answer

The answer of Jerry's production possibilities curve for goods W...

Question 10

In one hour,Juan can produce 8 chairs or 2 tables.If chairs are on the vertical axis,the slope of his production possibilities curve is

Accepted Answer

The slope of the production possibilities curve represents the opportunity cost of producing one good in terms of the other. Therefore, the slope can be calculated as the change in the quantity of chairs produced divided by the change in the quantity of tables foregone (or vice versa).

From the information given, Juan can produce either 8/1=8 chairs in 1 hour or 2/1=2 tables in 1 hour. Alternatively, he can produce 1/8=0.125 chairs in 1/8 of an hour (7.5 minutes) or 1/2=0.5 tables in 1/2 of an hour (30 minutes).

Using this information, we can calculate the slope of the PPF as follows:

slope = (change in chairs) / (change in tables)

slope = [(8 chairs - 0 chairs) / (60 minutes)] / [(0 tables - 2 tables) / (60 minutes)]

slope = (-8/60) / (-2/60)

slope = 8/2

slope = 4

Therefore, the slope of Juan's PPF is 4, indicating that the opportunity cost of producing one table is 4 chairs foregone (or the opportunity cost of producing one chair is 1/4 table foregone).

The best choice is D.

Question 11

In a two-person,two-good economy,the benefits of labour specialization will be larger when

Accepted Answer

The benefits of labour specialization are greatest when the difference in opportunity costs between the two individuals is large. This means that one person can produce one good at a lower opportunity cost than the other person, and vice versa. By specializing in the good in which they have a comparative advantage, each person can produce more of that good at a lower opportunity cost than the other person, increasing overall production and efficiency in the economy.

Question 12

In one 8-hour workday,Hector can produce 25 court appeals or 5 new lawsuits.If appeals are on the vertical axis,the slope of his production possibilities curve is

Accepted Answer

The answer of In one 8-hour workday,Hector can produce 25...

Question 13

If a given production combination is known to be attainable,then it must be

Accepted Answer

The answer of If a given production combination is known...

Question 14

Joe has an absolute advantage in producing goods X and Y compared to Ted.Moreover,they have the same opportunity costs.One can predict that the gains from coordinating production and specialization is

Accepted Answer

Since Joe has an absolute advantage in both goods and they have the same opportunity costs, there are no gains from specialization or trade, resulting in zero gains from coordination.

Question 15

Maria can produce 100 pounds of tomatoes or 25 pounds of squash in her garden each summer,while Tonya can produce 50 pounds of tomatoes or 25 pounds of squash.If the production possibilities curves are drawn with tomatoes on the vertical axis and squash on the horizontal axis,then the absolute values of the slope of Maria's and Tonya's production possibilities curves,respectively,are

Accepted Answer

The answer of Maria can produce 100 pounds of tomatoes...

Question 16

A point on Joseph's production possibilities curve represents 6 music CDs and 2 videos produced in a week.A combination of 4 music CDs and 2 videos is an

Accepted Answer

A combination of 4 music CDs and 2 videos is less than what Joseph is capable of producing at his efficient point (6 music CDs and 2 videos), so it is an attainable but inefficient point on his production possibilities curve.

Question 17

Teddy's production possibilities curve for goods M and N is described by the following equation: M = 21 - 3N,where M is the quantity of good M produced and N is the quantity of good N produced.The maximum quantity of M that Teddy can produce is

Accepted Answer

To find the maximum quantity of M that Teddy can produce, we need to find the point on the curve where M is at its highest value. This occurs at the point where the slope of the curve is zero. To find this point, we can take the derivative of the production function:

dM/dN = -3

Setting this equal to zero, we find:

-3 = 0

This equation has no solution, which means that the slope of the curve is never zero. Therefore, there is no maximum quantity of M that Teddy can produce. However, we can see from the equation of the curve that M = 21 when N = 0. This means that Teddy can produce a maximum of 21 units of M when he produces 0 units of N. So the correct answer is B.

Question 18

Joe's opportunity cost of producing body piercings is 3 tattoos,while Sam's is 0.75 tattoos.The Principle of Increasing Opportunity Cost would indicate that,to produce more and more body piercings,

Accepted Answer

The Principle of Increasing Opportunity Cost states that as production of one good increases, the opportunity cost of each additional unit increases. In this case, as more and more body piercings are produced, Joe's opportunity cost increases from 3 tattoos to 4, 5, and so on. Sam's opportunity cost also increases, but at a slower rate, from 0.75 tattoos to 1, 1.5, and so on. Therefore, it is more efficient to start with Sam, whose opportunity cost is lower, and then switch to Joe as the production of body piercings increases and his opportunity cost becomes relatively lower. Hence, option C is the best choice.

Question 19

Jerry's production possibilities curve for goods W and Z is W = 20 - 2Z,where W is the quantity of good W produced and Z is the quantity of good Z produced.The combination of W and Z (14,3)is a(n)__________ point.

Accepted Answer

The answer of Jerry's production possibilities curve for goods W...

Question 20

Production possibilities curves are downward sloping,reflecting the principle of

Accepted Answer

The answer of Production possibilities curves are downward sloping,reflecting the...

Quiz 2: Comparative Advantage: the Basis for Exchange