Question 1

Use the following to answer questions 
Figure: Strawberries and Submarines II 
-(Figure: Strawberries and Submarines II) Look at the figure Strawberries and Submarines II. Suppose the economy is operating at point B. Achieving production at point F would require that the economy:

Accepted Answer

Achieving production at point F would require improving technology or increasing resources as it is not possible for an economy to produce at a point outside its production possibilities frontier (PPF) without improving technology or increasing resources.

Question 2

Assume an economy is operating on its production possibility frontier, which shows the production of military and civilian goods. If the output of military goods is increased, the output of civilian goods:

Accepted Answer

If the economy is operating on its production possibility frontier, then it is producing the maximum possible output of both civilian and military goods. If the output of military goods is increased, then the economy must shift resources away from civilian goods production to produce more military goods. This means that the output of civilian goods must decrease. Thus, the correct choice is C, which states that the output of civilian goods must decrease.

Question 3

Technological improvements will:

Accepted Answer

Technological improvements can lead to an increase in productivity and efficiency in production, which can lead to a shift in the production possibility frontier outward, allowing for the production of more goods and services. This is because with the same amount of resources, technology can help produce more output or produce the same output with fewer resources. Therefore, option C is the best choice. Option A is incorrect because technological improvements can change the production possibility frontier. Option B is also incorrect because technological improvements should actually shift the production possibility frontier outward, not inward. Option D is incorrect because technological improvements may increase productivity and create new job opportunities, although some jobs may become obsolete.

Question 4

Use the following to answer questions 
Figure: Bicycles and Radishes I 
-(Figure: Bicycles and Radishes I) Look at the figure Bicycles and Radishes I. It shows production possibility frontiers for two countries that produce only radishes and bicycles. The axes of the two graphs are measured in equivalent units. Country A is operating at point M, and country B is operating at point N. Suppose country A discovers a new technology that greatly increases its ability to produce bicycles but has no effect on its ability to produce radishes. This would:

Accepted Answer

If country A discovers a new technology that greatly increases its ability to produce bicycles, it will shift its production possibility frontier outward along the bicycle axis. This means that country A can now produce more bicycles without sacrificing the production of radishes. As a result, the opportunity cost of producing bicycles decreases, and the opportunity cost of producing radishes increases. Therefore, the answer is B, as this option correctly identifies an increase in the opportunity cost of producing radishes in country A. Option A is incorrect because the discovery of new technology only affects the production of bicycles and not radishes. Option C is incorrect because the opportunity cost of producing radishes remains unchanged. Option D is incorrect because the increase in the opportunity cost of producing radishes only affects country A and not country B.

Question 5

Use the following to answer questions 
Figure: Strawberries and Submarines II 
-(Figure: Strawberries and Submarines II) Look at the figure Strawberries and Submarines II. The downward slope of the production possibility frontier implies that resources:

Accepted Answer

The downward slope of the production possibility frontier implies that resources are scarce, as it shows that in order to produce more of one good, some of the resources used to produce the other good must be given up. This suggests that resources are limited and must be used efficiently and not wasted. The slope does not imply that both goods should be produced in equal amounts.

Question 6

Use the following to answer questions 
Figure: Strawberries and Submarines II 
-(Figure: Strawberries and Submarines II) Look at the figure Strawberries and Submarines II. Point F:

Accepted Answer

The answer of Use the following to answer questions 
Figure:...

Question 7

The process observed when an economy's production possibility frontier shifts outward is:

Accepted Answer

When an economy's production possibility frontier shifts outward, it means that the economy is able to produce more goods and services with its existing resources. This is known as economic growth, which is the result of improvements in technology, increased capital investment, and other factors that increase the productive capacity of the economy.

Question 8

Use the following to answer questions 
Figure: Sugar and Freight Trains 
-(Figure: Sugar and Freight Trains) Look at the figure Sugar and Freight Trains. Suppose the economy is operating at point B. The opportunity cost of producing the third freight train would be _____ tons of sugar.

Accepted Answer

The answer of Use the following to answer questions 
Figure:...

Question 9

Use the following to answer questions 
Figure: Sugar and Freight Trains 
-(Figure: Sugar and Freight Trains) Look at the figure Sugar and Freight Trains. Suppose the economy is operating at point C. The opportunity cost of producing the fourth freight train would be:

Accepted Answer

At point C, the economy can produce 3 freight trains and 60 tons of sugar (point on the PPF). Therefore, to produce the fourth freight train, the economy must sacrifice the production of 80 tons of sugar (point D on the PPF). So the opportunity cost of producing the fourth freight train is 80 tons of sugar. Choice A and B are incorrect as they do not match with the graph, and choice D is incorrect as opportunity cost cannot be described in terms of producing the same product.

Question 10

Use the following to answer question 
Figure: Bicycles and Radishes II 
-(Figure: Bicycles and Radishes II) Look at the figure Bicycles and Radishes II. The country depicted in this figure is operating at point M. It could achieve production at point I only if it:

Accepted Answer

Point I represents a higher level of production and efficiency, which can only be achieved by increasing the available resources (capital, natural resources, or labor) or improving technology. Therefore, the correct answer is D.

Question 11

Use the following to answer questions 
Figure: Consumer and Capital Goods 
-(Figure: Consumer and Capital Goods) Look at the figure Consumer and Capital Goods. The movement from curve 1 to curve 2 indicates:

Accepted Answer

The movement from curve 1 to curve 2 indicates a growing ability of the economy to produce both capital and consumer goods. This is because the curve has shifted outwards, indicating that more of both types of goods can be produced with the available resources.

Question 12

Use the following to answer questions 1 
-(Table: Production Possibilities Schedule II) Look at the table Production Possibilities Schedule II. The production of eight units of consumer goods and two units of capital goods per period would result in:

Accepted Answer

According to the table, producing eight units of consumer goods and two units of capital goods per period is not on the production possibilities curve, which means it is either inefficient or there are unused resources. Therefore, the answer is some unused or inefficiently used resources (option C).

Question 13

Increases in resources or improvements in technology will tend to cause a society's production possibility frontier to:

Accepted Answer

Increases in resources or improvements in technology will enable a society to produce more goods and services with the same amount of resources. This means that the society's production possibility frontier will shift outward, indicating an increase in the quantity of goods and services that can be produced.

Question 14

Use the following to answer questions 
Figure: Strawberries and Submarines II 
-(Figure: Strawberries and Submarines II) Look at the figure Strawberries and Submarines II. Assume that the economy is operating at point A. The opportunity cost of moving to point C is equal to _____ million tons of strawberries:

Accepted Answer

Moving from point A to point C involves a movement of 2 submarines, which corresponds to a loss of 200 million tons of strawberries (point C - point A on the horizontal axis). Therefore, the opportunity cost of moving to point C is 200 million tons of strawberries. Choice B is the correct answer.

Question 15

Use the following to answer questions 
Figure: Consumer and Capital Goods 
-(Figure: Consumer and Capital Goods) Look at the figure Consumer and Capital Goods. If the economy is operating at point Y and its relevant production possibility frontier is curve 1:

Accepted Answer

At point Y, the economy is producing at the maximum capacity represented by curve 1. Therefore, the economy is at full employment and is efficient. Option B is incorrect as the economy is producing at the maximum capacity, and option C is incorrect as the economy is operating on its production possibility frontier. Option D cannot be inferred from the information given in the figure.

Question 16

Use the following to answer questions 
Figure: Consumer and Capital Goods 
-(Figure: Consumer and Capital Goods) Look at the figure Consumer and Capital Goods. Technological improvements will likely:

Accepted Answer

Technological improvements will enable firms to produce more efficiently leading to an increase in productivity hence increasing production for both capital goods and consumer goods. Therefore, it will shift the production possibility frontier outward to curve 2.

Question 17

Use the following to answer questions 
Figure: Bicycles and Radishes I 
-(Figure: Bicycles and Radishes I) Look at The figure Bicycles and Radishes I. It shows the production possibility frontiers for two countries that produce only radishes and bicycles. The axes of the two graphs are measured in equivalent units. Country A is operating at point M, and country B is operating at point N. The opportunity cost of producing an additional ton of radishes would be greater in:

Accepted Answer

Country B is currently producing more bicycles and less radishes compared to country A. This suggests that country B has a comparative advantage in producing bicycles and country A has a comparative advantage in producing radishes. Therefore, the opportunity cost of producing an additional ton of radishes would be greater in country B, as they would have to give up more bicycles to produce it.

Question 18

Efficient production occurs when the economy is:

Accepted Answer

When an economy is operating on its production possibility frontier, it is producing at the maximum capacity with the given resources, which means it is efficient in production. Operating inside or outside the production possibility frontier signifies inefficiency in production. Moving beyond the production possibility frontier is not possible as it represents the maximum limit of production capacity.

Question 19

Use the following to answer questions 
Figure: Strawberries and Submarines II 
-(Figure: Strawberries and Submarines II) Look at the figure Strawberries and Submarines II. Suppose the economy is operating at point A. The first submarine, which is achieved at point B, would have an opportunity cost of _____ million tons of strawberries.

Accepted Answer

The answer of Use the following to answer questions 
Figure:...

Question 20

Abe starts exercising regularly, and after a few months he can do twice as much of everything. In a single day Abe can now make 10 hamburgers or 8 milkshakes rather than the 5 hamburgers and 4 milkshakes he made in the past. We now know that Abe's production possibility frontier has _____, but his opportunity costs of making milkshakes _____.

Accepted Answer

Since Abe is able to produce more of both hamburgers and milkshakes in a single day, his production possibility frontier has shifted to the right. However, his opportunity costs of making milkshakes have not changed, since he is still giving up the ability to produce a certain number of hamburgers for each milkshake he makes. Therefore, the correct answer is A.

Quiz 2: Economic Models- Trade-Offs and Trade

Use the following to answer questions Figure: Strawberries and Submarines II -(Figure: Strawberries and Submarines II) Look at the figure Strawberries and Submarines II. Suppose the economy is operating at point B. Achieving production at point F would require that the economy:

Assume an economy is operating on its production possibility frontier, which shows the production of military and civilian goods. If the output of military goods is increased, the output of civilian goods:

Technological improvements will:

Use the following to answer questions Figure: Strawberries and Submarines II -(Figure: Strawberries and Submarines II) Look at the figure Strawberries and Submarines II. The downward slope of the production possibility frontier implies that resources:

Use the following to answer questions Figure: Strawberries and Submarines II -(Figure: Strawberries and Submarines II) Look at the figure Strawberries and Submarines II. Point F:

The process observed when an economy's production possibility frontier shifts outward is:

Use the following to answer questions Figure: Sugar and Freight Trains -(Figure: Sugar and Freight Trains) Look at the figure Sugar and Freight Trains. Suppose the economy is operating at point B. The opportunity cost of producing the third freight train would be _____ tons of sugar.

Use the following to answer questions Figure: Sugar and Freight Trains -(Figure: Sugar and Freight Trains) Look at the figure Sugar and Freight Trains. Suppose the economy is operating at point C. The opportunity cost of producing the fourth freight train would be:

Use the following to answer question Figure: Bicycles and Radishes II -(Figure: Bicycles and Radishes II) Look at the figure Bicycles and Radishes II. The country depicted in this figure is operating at point M. It could achieve production at point I only if it:

Use the following to answer questions Figure: Consumer and Capital Goods -(Figure: Consumer and Capital Goods) Look at the figure Consumer and Capital Goods. The movement from curve 1 to curve 2 indicates:

Use the following to answer questions 1 -(Table: Production Possibilities Schedule II) Look at the table Production Possibilities Schedule II. The production of eight units of consumer goods and two units of capital goods per period would result in:

Increases in resources or improvements in technology will tend to cause a society's production possibility frontier to:

Use the following to answer questions Figure: Consumer and Capital Goods -(Figure: Consumer and Capital Goods) Look at the figure Consumer and Capital Goods. If the economy is operating at point Y and its relevant production possibility frontier is curve 1:

Use the following to answer questions Figure: Consumer and Capital Goods -(Figure: Consumer and Capital Goods) Look at the figure Consumer and Capital Goods. Technological improvements will likely:

Efficient production occurs when the economy is: