Question 1

The _______ model lays out the _______ available to the economy.

Accepted Answer

The production possibilities model lays out the alternatives available to the economy in terms of the production of two goods with the resources available. The model shows the maximum possible combinations of the two goods that can be produced with the given resources, which helps in making production decisions. Option A and D are incorrect because they refer to the demand and supply model, which deals with the market for a particular good or service and the price at which it is sold. Option B refers to the production possibilities model but mentions "price alternatives," which is not a concept included in the model.

Question 2

The absolute value of the slope of the production possibilities curve at any point:

Accepted Answer

The absolute value of the slope of the production possibilities curve at any point indicates the opportunity cost, which is the quantity of the good on the vertical axis that must be given up to produce an additional unit of the good on the horizontal axis. This reflects the trade-off between the two goods.

Question 3

Reference: 1707 
-(Exhibit: Production Possibilities Curve)Which of the following statements is false?

Accepted Answer

Point E represents a level of production efficiency where the economy is using all of its resources to produce both drill presses and tractors. It is not related to the amount of money the economy has, so statement C is false. The other statements are true based on the exhibit.

Question 4

If Britain, at the point where it is currently producing, must give up the production of 75 hats to produce 25 additional sweaters, the opportunity cost of producing 4 sweaters is _______ hats.

Accepted Answer

The opportunity cost of producing 25 sweaters is 75 hats, so for 1 sweater, it is 75/25 = 3 hats. Therefore, for 4 sweaters, the opportunity cost is 4 * 3 = 12 hats.

Question 5

If Britain, at the point where it is currently producing, must give up the production of 75 hats to produce 25 additional sweaters, the opportunity cost of producing 3 hats is _______ sweater(s).

Accepted Answer

The opportunity cost of producing 3 hats is calculated by dividing the number of hats by the number of sweaters (75 hats / 25 sweaters = 3 hats per sweater). Therefore, for 3 hats, the opportunity cost is 1 sweater.

Question 6

Reference: 1707 
-(Exhibit: Production Possibilities Curve)The slope of the production possibilities curve between point B and point A is:

Accepted Answer

The slope of a production possibilities curve represents the opportunity cost of producing one good in terms of the other. Moving from point B to point A means producing more capital goods and fewer consumer goods, which means the opportunity cost of producing one more unit of capital goods is one fewer unit of consumer goods. Therefore, the slope is -1.0.

Question 7

The point on the production possibilities curve at which an economy will operate is determined by:

Accepted Answer

The point on the production possibilities curve where an economy operates is determined by the demands of consumers, as it reflects the allocation of resources based on consumer preferences and needs.

Question 8

Which of the following statements is true?

Accepted Answer

There has been a trend towards freer international trade policies over the past few decades, with the creation of organizations such as the World Trade Organization and the signing of numerous free trade agreements between countries. Option B is incorrect as it presents a false generalization. Option C is incorrect as many Eastern European countries have joined the European Union and reduced trade barriers with its members. Option D is incorrect as NAFTA lowered trade barriers between all three countries involved (United States, Mexico, and Canada).

Question 9

Production possibilities curves:

Accepted Answer

Production possibility curves are used to illustrate the different production choices available to an economy. They show the maximum combinations of two goods that can be produced with the given resources and technology. Therefore, option A is the correct choice as it explains the purpose of production possibility curves.

Question 10

Reference: 1707 
-(Exhibit: Production Possibilities Curve)To move from point B to point C, _______ must be ________ to produce _______ .

Accepted Answer

Moving from point B to point C on a production possibilities curve typically involves sacrificing the production of one good to increase the production of another. In this case, option A correctly states that to produce 2,000 additional tractors, 3,000 drill presses must be given up, reflecting the trade-off between the two goods.

Question 11

Different points on a production possibilities curve:

Accepted Answer

Different points on a production possibilities curve represent different combinations of outputs that can be produced with given resources and technology. Therefore, they will yield different values of total output. Choosing A is incorrect because different points on the curve produce different levels of output. Choosing C is incorrect because the slope varies according to the shape of the curve, hence the points will not have the same slopes. And choosing D is also incorrect because producing more of one good comes at the cost of producing less of the other, so achieving all the points on the curve simultaneously is not possible.

Question 12

Reference: 1707 
-(Exhibit: Production Possibilities Curve)Which of the following statements is true?

Accepted Answer

Since points A, B, and C are all on the production possibilities curve, they represent feasible production points. Additionally, all three points are maximum production points, since the curve itself represents the maximum possible combination of the two goods that can be produced with the given resources and technology. Points D and E are both outside of the production possibilities curve, so they are not feasible with the current level of resources and technology. Therefore, option A and D are incorrect. While it is possible that point E could be attained with greater efficiency, the curve itself assumes that resources are being used efficiently, so option B is not correct.

Question 13

Reference: 1707 
-(Exhibit: Production Possibilities Curve)Which of the following statements is true?

Accepted Answer

Moving from point A to C involves a reduction of 5,000 drill presses to gain 4,000 tractors. This means that there is an opportunity cost of 1.25 drill presses for each tractor produced. Therefore, this is not an increase in efficiency, but rather represents a tradeoff between producing more tractors at the cost of fewer drill presses. Points on the curve are efficient, but points inside the curve (such as A, B, and C) represent inefficient use of resources. Point X on the curve represents the most efficient level of output, as it represents the maximum possible output of both goods given the available resources. However, point A is not the most efficient level of output.

Question 14

Reference: 1707 
-(Exhibit: Production Possibilities Curve)If an economy is operating on its production possibilities curve, the law of increasing opportunity costs predicts that:

Accepted Answer

The law of increasing opportunity costs states that as production of one good is increased, the opportunity cost of producing an additional unit of that good increases, which means that more units of the other good must be given up to produce the same amount of the first good. Therefore, as more tractors are produced (moving along the production possibilities curve), more and more drill presses must be given up to produce each additional tractor. This means that the opportunity cost of producing tractors in terms of drill presses increases.

Question 15

Canada, Mexico, and the United States have:

Accepted Answer

Canada, Mexico, and the United States have formed the North American Free Trade Agreement (NAFTA) and eliminated many trade barriers among themselves. This has encouraged increased trade and investment among the three countries.

Question 16

Members of the EU (European Union):

Accepted Answer

The EU has established a single market with free movement of goods, services, capital, and people among its member states, which has virtually eliminated all trade barriers within the community.

Answer: C
 The EU member states that adopted the euro have not increased the transaction costs of exchange because they use the same currency. Instead, they have reduced the costs associated with exchanging currencies and eliminated the risk of exchange rate fluctuations.

Therefore, the correct answer is A.

Question 17

If the United States, at the point where it is currently producing, must give up the production of 500 bicycles (B)to produce 20 additional tractors (T)with the same resources, its opportunity cost may be expressed as:

Accepted Answer

The opportunity cost of producing 20 additional tractors is the 500 bicycles given up. Therefore, the ratio between bicycles and tractors is 500/20 or 25. This means that for every one tractor produced, the opportunity cost is giving up 25 bicycles. Thus, the best answer is B - 1B = 1/25T.

Question 18

Reference: 1707 
-(Exhibit: Production Possibilities Curve)In order to maximize output, this economy must:

Accepted Answer

Operating on the production possibilities curve means the economy is efficiently allocating its resources to produce the maximum possible output of both goods. Any point inside the curve represents an inefficient use of resources, while any point outside the curve is not currently possible with the given resources. Therefore, to maximize output, the economy should operate on the production possibilities curve.

Question 19

Reference: 1707 
-(Exhibit: Production Possibilities Curve)Which of the following statements is true?

Accepted Answer

Every point on the production possibilities curve represents a combination of two goods that can be produced using all available resources efficiently and at full employment. Therefore, option C is the correct statement. Option A is incorrect because point E lies beyond the production possibilities curve and is not achievable with the current factors of production. Option B is incorrect because it assumes that point D is the most efficient point, which may not be the case. Option D is also incorrect because, without any context, we cannot determine which point is more efficient, as it depends on the specific trade-offs between the two goods being produced.

Question 20

If the United States, at the point where it is currently producing, must give up the production of 500 bicycles (B)to produce 20 additional tractors (T)with the same resources, its opportunity cost may be expressed as:

Accepted Answer

The answer of If the United States, at the point...

Quiz 17: International Trade

The _ model lays out the _ available to the economy.

The absolute value of the slope of the production possibilities curve at any point:

Reference: 1707 -(Exhibit: Production Possibilities Curve) Which of the following statements is false?

If Britain, at the point where it is currently producing, must give up the production of 75 hats to produce 25 additional sweaters, the opportunity cost of producing 4 sweaters is _______ hats.

If Britain, at the point where it is currently producing, must give up the production of 75 hats to produce 25 additional sweaters, the opportunity cost of producing 3 hats is _______ sweater(s) .

Reference: 1707 -(Exhibit: Production Possibilities Curve) The slope of the production possibilities curve between point B and point A is:

The point on the production possibilities curve at which an economy will operate is determined by:

Which of the following statements is true?

Production possibilities curves:

Reference: 1707 -(Exhibit: Production Possibilities Curve) To move from point B to point C, _ must be to produce _ .

Different points on a production possibilities curve:

Reference: 1707 -(Exhibit: Production Possibilities Curve) Which of the following statements is true?

Reference: 1707 -(Exhibit: Production Possibilities Curve) Which of the following statements is true?

Reference: 1707 -(Exhibit: Production Possibilities Curve) If an economy is operating on its production possibilities curve, the law of increasing opportunity costs predicts that:

Canada, Mexico, and the United States have:

Members of the EU (European Union) :

If the United States, at the point where it is currently producing, must give up the production of 500 bicycles (B) to produce 20 additional tractors (T) with the same resources, its opportunity cost may be expressed as:

Reference: 1707 -(Exhibit: Production Possibilities Curve) In order to maximize output, this economy must:

Reference: 1707 -(Exhibit: Production Possibilities Curve) Which of the following statements is true?

If the United States, at the point where it is currently producing, must give up the production of 500 bicycles (B) to produce 20 additional tractors (T) with the same resources, its opportunity cost may be expressed as:

Quiz 17: International Trade

The _______ model lays out the _______ available to the economy.

The absolute value of the slope of the production possibilities curve at any point:

Reference: 1707 -(Exhibit: Production Possibilities Curve) Which of the following statements is false?

If Britain, at the point where it is currently producing, must give up the production of 75 hats to produce 25 additional sweaters, the opportunity cost of producing 4 sweaters is _______ hats.

If Britain, at the point where it is currently producing, must give up the production of 75 hats to produce 25 additional sweaters, the opportunity cost of producing 3 hats is _______ sweater(s) .

Reference: 1707 -(Exhibit: Production Possibilities Curve) The slope of the production possibilities curve between point B and point A is:

The point on the production possibilities curve at which an economy will operate is determined by:

Which of the following statements is true?

Production possibilities curves:

Reference: 1707 -(Exhibit: Production Possibilities Curve) To move from point B to point C, _______ must be ________ to produce _______ .

Different points on a production possibilities curve:

Reference: 1707 -(Exhibit: Production Possibilities Curve) Which of the following statements is true?

Reference: 1707 -(Exhibit: Production Possibilities Curve) Which of the following statements is true?

Reference: 1707 -(Exhibit: Production Possibilities Curve) If an economy is operating on its production possibilities curve, the law of increasing opportunity costs predicts that:

Canada, Mexico, and the United States have:

Members of the EU (European Union) :

If the United States, at the point where it is currently producing, must give up the production of 500 bicycles (B) to produce 20 additional tractors (T) with the same resources, its opportunity cost may be expressed as:

Reference: 1707 -(Exhibit: Production Possibilities Curve) In order to maximize output, this economy must:

Reference: 1707 -(Exhibit: Production Possibilities Curve) Which of the following statements is true?

If the United States, at the point where it is currently producing, must give up the production of 500 bicycles (B) to produce 20 additional tractors (T) with the same resources, its opportunity cost may be expressed as:

The _ model lays out the _ available to the economy.

Reference: 1707 -(Exhibit: Production Possibilities Curve) To move from point B to point C, _ must be to produce _ .