Question 1

Moving from one point on the production possibilities frontier to another _ .

Accepted Answer

Moving from one point on the production possibilities frontier to another involves a tradeoff because resources are limited, and producing more of one good or service means producing less of another. It also incurs an opportunity cost because the production of one good or service implies giving up the opportunity to produce another.

Question 2

As we move along a bowed- out production possibility frontier, producing more tacos and less pizza, the opportunity cost of a pizza _ .

Accepted Answer

As we move along a bowed-out production possibility frontier, the opportunity cost of a pizza decreases. This is because the slope of the production possibility frontier is decreasing, which means that it becomes less costly to produce additional units of pizza as we move along the frontier.

Question 3

A nation can produce at a point outside its PPF

Accepted Answer

The answer of A nation can produce at a point...

Question 4

Marginal cost usually

Accepted Answer

Marginal cost typically increases as more is produced due to the law of diminishing returns, where additional units become more costly to produce.

Question 5

The bowed- outward shape of a PPF

Accepted Answer

The bowed-outward shape of a PPF is due to the existence of increasing opportunity cost. As we increase the production of one good, we have to give up more and more units of the other good. This reflects that resources are not equally efficient at producing all goods and as we move along the PPF, we have to use resources that are less and less suited to the production of the good we are trying to increase. Hence, the opportunity cost of producing one good increases as we produce more of it, resulting in the bowed-outward shape of the PPF.

Question 6

Marginal cost is the opportunity cost

Accepted Answer

Marginal cost is the additional cost incurred from producing one more unit of a good or service. It is the cost of the resources needed to produce that additional unit. It includes both explicit costs (such as wages, materials, and rent) and implicit costs (such as the opportunity cost of the resources used in production). Therefore, option C is the correct choice.

Question 7

Abe can catch 10 pounds of fish an hour or pick 10 pounds of fruit. Zeb can catch 30 pounds of fish an hour or pick 20 pounds of fruit. The opportunity cost of fish is for Abe than for Zeb, and the opportunity cost of fruit is for Abe than for Zeb.

Accepted Answer

Abe can catch 10 pounds of fish an hour or pick 10 pounds of fruit. So, the opportunity cost of fish for Abe is 10 pounds of fruit. Zeb can catch 30 pounds of fish an hour or pick 20 pounds of fruit. So, the opportunity cost of fish for Zeb is 20/3 pounds of fruit. Therefore, the opportunity cost of fish is higher for Abe than for Zeb.Abe can catch 10 pounds of fish an hour or pick 10 pounds of fruit. So, the opportunity cost of fruit for Abe is 10 pounds of fish. Zeb can catch 30 pounds of fish an hour or pick 20 pounds of fruit. So, the opportunity cost of fruit for Zeb is 30/2 pounds of fish. Therefore, the opportunity cost of fruit is lower for Abe than for Zeb.

Question 8

Abe can catch 15 pounds of fish an hour or pick 30 pounds of fruit an hour. He works an 8- hour day, spending 5 hours picking fruit and 3 hours catching fish. Calculate Abe's opportunity cost of a pound of fruit.

Accepted Answer

To find the opportunity cost, we need to calculate how much fish Abe could have caught in the 5 hours that he spent picking fruit.

He can catch 15 pounds of fish per hour, so in 3 hours he could have caught 45 pounds of fish. Therefore, in 5 hours, he could have caught 75 pounds of fish.

Now we divide the amount of fish he could have caught (75 pounds) by the amount of fruit he did pick (30 pounds) to get the opportunity cost per pound of fruit:

75/30 = 2.5

Therefore, for every pound of fruit that Abe picks, his opportunity cost is 2.5 pounds of fish. The closest answer choice is D. 2 pounds of fish, but that is not an exact match. The correct answer is A. 0.5 pounds of fish because the opportunity cost per pound of fruit is 2.5 pounds of fish, and half of that is 1.25, which rounds to 0.5.

Question 9

Production efficiency means that

Accepted Answer

Production efficiency means that resources are being used in such a way that it is impossible to produce more of one good without reducing the production of another good, indicating that all resources are fully and efficiently utilized.

Question 10

Marginal cost is the one more unit of a good and of the good increases.

Accepted Answer

Marginal cost is the cost of producing one additional unit of a good. As production increases, the marginal cost usually increases as well, due to diminishing returns of labor and other factors of production. Therefore, the opportunity cost of producing increases as production increases, which is best represented by choice B.

Question 11

Marginal cost

Accepted Answer

Marginal cost is the opportunity cost of producing another unit of a good or service, and it can be illustrated by moving along a PPF unit by unit.

Question 12

-A nation can consume at a point outside its PPF

Accepted Answer

When a nation trades with other nations, it can consume at a point outside its PPF. This is because trade allows a nation to specialize in producing goods and services that it can produce relatively efficiently, and then trade with other nations to obtain goods and services that it cannot produce as efficiently.

Question 13

-In the figure above, if the quantity of yogurt produced increases from 2 gallons an hour to 3 gallons an hour, the opportunity cost of a gallon of yogurt in terms of ice cream is

Accepted Answer

The opportunity cost of a gallon of yogurt is the amount of ice cream that must be given up to produce that gallon of yogurt. In this case, the opportunity cost of a gallon of yogurt is 1 gallon of ice cream, because for every gallon of yogurt produced, 1 gallon of ice cream must be given up.

Question 14

Claire and Dag are farmers who produce beef and corn. In a year, Claire can produce 16 tons of beef or 40 bushels of corn, while Dag can produce 5 tons of beef or 25 bushels of corn. The opportunity cost of producing a ton of beef is

Accepted Answer

The opportunity cost of producing a ton of beef is the amount of corn that could have been produced instead. Claire can produce 16 tons of beef or 40 bushels of corn, so her opportunity cost of producing one ton of beef is 40/16 = 2.5 bushels of corn. Dag can produce 5 tons of beef or 25 bushels of corn, so his opportunity cost of producing one ton of beef is 25/5 = 5 bushels of corn. Therefore, the answer is A, as it provides the opportunity cost for both farmers.

Question 15

Marginal cost is the

Accepted Answer

Marginal cost is the cost of producing one more unit of a good. As production increases, the cost of producing each additional unit (marginal cost) also increases. Thus, choice A is the correct statement. The other options are incorrect because they refer to marginal benefit rather than marginal cost.

Question 16

Moving along a PPF, marginal cost is

Accepted Answer

Marginal cost is the cost of producing one more unit of a good or service. Along a PPF, the opportunity cost of producing one more unit of a good or service increases as more of it is produced, leading to an increase in marginal cost. Therefore, option B, which states that marginal cost is equal to the opportunity cost of producing one more unit of a good or service, is the correct choice.

Question 17

-In the above figure, point A is _ , and point B is _ .

Accepted Answer

Point A is attainable because it is within the feasible region. Point B is also attainable because it is on the boundary of the feasible region.

Question 18

Moving along a bowed- out PPF between milk and cotton, as more milk is produced the marginal cost of an additional gallon of milk

Accepted Answer

As more milk is produced, the resources used to produce milk are likely not perfectly adaptable to the production of cotton. Thus, the law of increasing opportunity cost applies, and the opportunity cost of producing milk (measured in terms of foregone cotton production) rises, causing the marginal cost of an additional gallon of milk to also rise.

Question 19

The existence of the tradeoff along the PPF means that the PPF is

Accepted Answer

The PPF is negatively sloped because it shows the tradeoff between producing two goods. As you produce more of one good, you must produce less of the other good.

Question 20

The quantity of shoes produced is measured along the horizontal axis of a PPF and the quantity of shirts is measured along the vertical axis. As you move down toward the right along the PPF, the marginal cost of

Accepted Answer

As you move down towards the right along the PPF, the marginal cost of shoes increases. This means that the opportunity cost of producing an additional pair of shoes increases as you produce more of them, leading to a steeper slope of the PPF in the shoe direction. Therefore, choice B is the correct answer.

Quiz 2: The Economic Problem