Question 1

The principal reason that production possibilities have grown more rapidly in Hong Kong than in Canada over the last 50 years is because
A)of cheap Hong Kong labour.
B)of foreign aid to Hong Kong.
C)Hong Kong has fewer workers.
D)Hong Kong has more natural resources.
E)Hong Kong has devoted a larger proportion of its resources to capital accumulation.

Accepted Answer

Hong Kong's rapid economic growth can be attributed to its focus on capital accumulation, or investment in physical and human capital. This has led to increased productivity and efficiency, enabling Hong Kong to produce more with its limited resources. In contrast, Canada has not prioritized capital accumulation to the same extent, leading to slower growth in production possibilities. Cheap labour and foreign aid have played a smaller role in Hong Kong's economic success. The number of workers and natural resources are also not decisive factors in determining production possibilities.

Question 2

In general,the higher the proportion of resources devoted to technological research in an economy,the
A)greater will be current consumption.
B)faster the production possibilities frontier will shift outward.
C)faster the production possibilities frontier will shift inward.
D)closer it will come to having a comparative advantage in the production of all goods.
E)more bowed out will be the shape of the production possibilities frontier.

Accepted Answer

Technological research can lead to new and improved processes, machinery, and products, which can increase the efficiency and productivity of an economy. This leads to a faster shift outward of the production possibilities frontier, as more goods and services can be produced with the same amount of resources. However, it does not necessarily affect current consumption, comparative advantage, or the shape of the production possibilities frontier.

Question 3

Which one of the following would cause a production possibilities frontier to shift outward?
A)an increase in the stock of capital
B)an increase in the production of consumption goods
C)bad weather
D)a decision to fully utilize unemployed resources
E)a decrease in the population

Accepted Answer

An increase in the stock of capital would increase the economy's productive capacity, allowing it to produce more of both goods. This would cause a shift outward of the production possibilities frontier.

Question 4

In 1960,the production possibilities per person in Canada were ________ than those in Hong Kong.Canada devoted ________ of its resources to accumulating capital and the remainder to consumption.Hong Kong devoted ________ of its resources to accumulating capital and the remainder to consumption.Because Hong Kong devoted a ________ fraction of its resources to accumulating capital,its production possibilities have ________.
A)smaller;one-fifth;one-third;greater;expanded more quickly
B)smaller;one-third;one-fifth;smaller;not expanded as quickly
C)greater;one-third;one-fifth;smaller;not expanded as quickly
D)greater;one-fifth;one-third;greater;expanded more quickly
E)greater;one-half;one-quarter;smaller;not expanded as quickly

Accepted Answer

The question states that in 1960, Canada had higher production possibilities per person and devoted one-third of its resources to accumulating capital. Meanwhile, Hong Kong devoted one-fifth of its resources to accumulating capital. Since Hong Kong devoted a smaller fraction of its resources to capital accumulation, its production possibilities have expanded more quickly. Therefore, the best choice is D.

Question 5

A movement along the production possibilities frontier will result from
A)technological change.
B)change in the stock of capital.
C)change in the labour force.
D)all of the above.
E)none of the above.

Accepted Answer

The answer of A movement along the production possibilities frontier...

Question 6

The growth of capital resources,including human capital is
A)technological change.
B)capital accumulation.
C)depreciation.
D)opportunity cost.
E)none of the above.

Accepted Answer

Capital accumulation refers to the growth of capital resources, which includes human capital. This can come from investments in physical capital such as buildings and equipment as well as investments in education and training for workers to improve their skills and productivity. Technological change refers specifically to advances in technology that improve production processes, while depreciation refers to the decrease in value of physical capital over time. Opportunity cost is the cost of choosing one option over another and does not directly relate to the growth of capital resources. Therefore, the best choice is B.

Question 7

A technological improvement is represented by
A)an outward shift of the production possibilities frontier.
B)a movement along the production possibilities frontier.
C)a point inside the production possibilities frontier.
D)a point outside the production possibilities frontier.
E)a movement from a point inside the production possibilities frontier to a point on the production possibilities frontier.

Accepted Answer

A technological improvement allows for an increase in the efficiency of production, leading to an outward shift of the production possibilities frontier. This means that more output can be produced with the same amount of resources, increasing the overall potential of the economy.

Question 8

The opportunity cost of pushing the production possibilities frontier outward is
A)capital accumulation.
B)technological change.
C)reduced current consumption.
D)the gain in future consumption.
E)all of the above.

Accepted Answer

In order to push the production possibilities frontier outward, resources must be diverted away from current consumption and invested in capital accumulation or technological change. This means that the opportunity cost of pushing the production possibilities frontier outward is reduced current consumption. While capital accumulation and technological change are also necessary for pushing the frontier outward, they are not explicitly the opportunity cost. Therefore, the best choice is C.

Question 9

Suppose a hurricane causes extensive devastation,destroying houses,roads,schools and factories.What would be the effect of this hurricane on a production possibilities frontier consisting of consumption goods and capital goods?
A)It would shift outward at all points.
B)It would shift inward at all points.
C)There would be a movement along the existing production possibilities frontier towards a less capital-intensive point.
D)There would be a movement along the existing production possibilities frontier towards a more capital-intensive point.
E)There would be a movement from the existing production possibilities frontier inwards towards a point with unused or misallocated resources.

Accepted Answer

The answer of Suppose a hurricane causes extensive devastation,destroying houses,roads,schools...

Question 10

The depletion of fish stocks in Eastern Canada,with its accompanying unemployment,will lead to a
A)movement from the existing production possibilities frontier to a point inside the production possibilities frontier.
B)shift inward of the existing production possibilities frontier and production at a point on the new PPF.
C)shift outward of the existing production possibilities frontier.
D)movement along the existing production possibilities frontier to a point of less fish production.
E)shift inward of the existing production possibilities frontier plus a movement to a point inside the new production possibilities frontier.

Accepted Answer

The answer of The depletion of fish stocks in Eastern...

Question 11

Economic growth ________ overcome scarcity because ________.
A)does;with economic growth the PPF rotates outward and eventually becomes a horizontal line
B)does;we will eventually reach the point where we have too much
C)does not;we can produce more goods and services but it is still impossible to satisfy all our wants
D)does not;economic growth requires capital accumulation and technological change
E)does;with economic growth the PPF rotates outward and eventually becomes a vertical line

Accepted Answer

Economic growth does not overcome scarcity because even with increased production and consumption, there are still limited resources and unlimited wants. Economic growth enables us to produce more goods and services, but it does not eliminate the fundamental problem of scarcity.

Question 12

A production possibilities frontier will shift outward FOR ALL OF THE FOLLOWING REASONS EXCEPT
A)a technological improvement.
B)an increase in the stock of capital.
C)an increase in the labour force.
D)opportunity cost is increasing.
E)none of the above.

Accepted Answer

If the opportunity cost is increasing, it means that in order to produce more of one good, you have to give up more of the other good. This would result in a movement along the production possibilities frontier and not a shift outward. Therefore, all options except D would shift the production possibilities frontier outward.

Question 13

In general,if country A is accumulating capital at a faster rate than country B,then country A
A)will soon have a comparative advantage in the production of most goods.
B)is using a larger proportion of resources to produce consumption goods.
C)will have a production possibilities frontier that is shifting out faster than country B's.
D)will have a higher rate of inflation than country B.
E)will have more unemployment than country B.

Accepted Answer

Accumulating capital at a faster rate means that country A is investing more in physical and human capital, leading to an increase in productivity and an outward shift of the production possibilities frontier. This indicates that country A will be able to produce more goods and services with the same amount of resources or the same amount of goods and services with fewer resources compared to country B, giving it a comparative advantage in the production of most goods. The other options are not necessarily true or related to the accumulation of capital.

Question 14

Which one of the following would likely shift a production possibilities frontier inward?
A)technological change.
B)a drought.
C)a decrease in the price of natural resources.
D)all of the above
E)None of the above,because production possibilities frontiers do not shift inward.

Accepted Answer

A production possibilities frontier shows the maximum possible combinations of two goods that can be produced in a given economy with its existing resources and technology. A drought would decrease the availability of resources, thereby limiting the production capacity of the economy and causing the production possibilities frontier to shift inward. Technological change and a decrease in the price of natural resources would increase the production capacity and shift the production possibilities frontier outward. Therefore, the only option that would shift the production possibilities frontier inward is B, a drought.

Question 15

Consider a production possibilities frontier with corn production measured on the vertical axis and car production measured on the horizontal axis.Unusually good weather for growing corn shifts ________.
A)the horizontal intercept of the PPF rightward and the vertical intercept of the PPF upward
B)the horizontal intercept of the PPF rightward but does not shift the vertical intercept of the PPF
C)the vertical intercept of the PPF upward but does not shift the horizontal intercept of the PPF
D)neither the horizontal intercept nor the vertical intercept of the PPF
E)the vertical intercept of the PPF downward and the horizontal intercept of the PPF leftward

Accepted Answer

Unusually good weather for growing corn would increase the efficiency of corn production, allowing for more corn to be produced with the same amount of resources. This would shift the production possibilities frontier outward (to the right), increasing the maximum amount of corn and cars that can be produced. However, since the good weather only affects corn production and not car production, it would not shift the horizontal intercept of the PPF. The vertical intercept of the PPF would be shifted upward due to the increased efficiency of corn production. Therefore, choice C is the best choice.

Question 16

The production possibilities frontier shifts outward when ________.
A)tastes and preferences change
B)the quantity of money in the economy grows
C)prices rise
D)human capital accumulates
E)the political party in power changes

Accepted Answer

The accumulation of human capital, which refers to the knowledge, skills, and abilities of individuals, leads to an increase in productivity and efficiency in creating goods and services. This, in turn, shifts the production possibilities frontier outward, as more can be produced with the same resources.

Question 17

Consider a country that has two industries.In the north,they grow wild rice,which requires a lot of rainfall.In the south,they grow wheat,which requires just a moderate amount of rainfall (too much rainfall is bad for wheat production).One year,there is a record rainfall.This will result in
A)a parallel shift inward of the production possibilities frontier.
B)a parallel shift outward of the production possibilities frontier.
C)the production possibilities frontier swiveling,with the wild rice intercept increasing,and the wheat intercept decreasing.
D)the production possibilities frontier swiveling,with the wild rice intercept decreasing,and the wheat intercept increasing.
E)none of the above.

Accepted Answer

The answer of Consider a country that has two industries.In...

Question 18

Which of the following quotations illustrates economic growth?
A)"The firm should lower the price it charges for widgets and gadgets."
B)"The firm should sell more gadgets,even if it means less widget sales."
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 production next year."
E)"The firm has been able to lower costs due to its extensive experience in building widgets."

Accepted Answer

Economic growth refers to an increase in the production and consumption of goods and services over time. Option D suggests that the firm can expand production next year by investing more in capital equipment, which is a sign of increasing production and economic growth. The other options do not necessarily demonstrate economic growth. Option A suggests a price reduction, which may increase demand for widgets and gadgets but does not guarantee an increase in production. Option B suggests selling more gadgets but may not increase the production of widgets. Option C suggests a decrease in widget production, which is an indication of economic shrinkage. Option E suggests cost reduction but does not necessarily imply an increase in production.

Question 19

The development of new goods and better ways of producing goods and services is
A)capital accumulation.
B)technological change.
C)the big tradeoff.
D)allocative efficiency.
E)none of the above.

Accepted Answer

Technological change refers to the development of new goods and better ways of producing goods and services. Capital accumulation refers to the increase in the amount of money or physical assets used in production. The big tradeoff refers to the idea that there is a tradeoff between efficiency and equity in the economy. Allocative efficiency refers to the efficient allocation of resources in the economy.

Question 20

Use the figure below to answer the following questions.
  Figure 2.3.1
-Refer to the production possibilities frontier in Figure 2.3.1.The production possibilities frontier will shift rightward most rapidly if current production is at
A)A.
B)B.
C)C.
D)D.
E)E.

Accepted Answer

The answer of Use the figure below to answer the...

Quiz 2: The Economic Problem

The principal reason that production possibilities have grown more rapidly in Hong Kong than in Canada over the last 50 years is because

In general,the higher the proportion of resources devoted to technological research in an economy,the

Which one of the following would cause a production possibilities frontier to shift outward?

A movement along the production possibilities frontier will result from

The growth of capital resources,including human capital is

A technological improvement is represented by

The opportunity cost of pushing the production possibilities frontier outward is

Suppose a hurricane causes extensive devastation,destroying houses,roads,schools and factories.What would be the effect of this hurricane on a production possibilities frontier consisting of consumption goods and capital goods?

The depletion of fish stocks in Eastern Canada,with its accompanying unemployment,will lead to a

Economic growth overcome scarcity because .

A production possibilities frontier will shift outward FOR ALL OF THE FOLLOWING REASONS EXCEPT

In general,if country A is accumulating capital at a faster rate than country B,then country A

Which one of the following would likely shift a production possibilities frontier inward?

Consider a production possibilities frontier with corn production measured on the vertical axis and car production measured on the horizontal axis.Unusually good weather for growing corn shifts ________.

The production possibilities frontier shifts outward when ________.

Consider a country that has two industries.In the north,they grow wild rice,which requires a lot of rainfall.In the south,they grow wheat,which requires just a moderate amount of rainfall (too much rainfall is bad for wheat production) .One year,there is a record rainfall.This will result in

Which of the following quotations illustrates economic growth?

The development of new goods and better ways of producing goods and services is

Use the figure below to answer the following questions. Figure 2.3.1 -Refer to the production possibilities frontier in Figure 2.3.1.The production possibilities frontier will shift rightward most rapidly if current production is at