Question 1

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 for Dag is 5 bushels of corn (25 bushels/5 tons), and for Claire, it is 2.5 bushels of corn (40 bushels/16 tons).

Question 2

Marginal cost

Accepted Answer

Marginal cost refers to the cost of producing one additional unit of a good or service. As more units are produced, it may require additional resources that come at a higher cost, such as increased labor or materials. Therefore, the marginal cost usually increases as more is produced.

Question 3

-In the figure above, the marginal cost of producing a computer

Accepted Answer

The marginal cost typically increases as more units are produced due to factors like resource limitations and increased complexity in production.

Question 4

-Victor currently produces nuts and bolts at point a in the figure. Victorʹs marginal cost of producing an additional nut is ________.

Accepted Answer

The answer of 
-Victor currently produces nuts and bolts at...

Question 5

A marginal cost curve

Accepted Answer

A marginal cost curve is upward sloping because as more of a good is produced, opportunity costs of producing another unit increase. This means that the cost of producing additional units increases as production increases. Therefore, both answers A and B are correct. Answer C is incorrect because a negatively sloped marginal cost curve would indicate decreasing costs as production increases, which is not typically the case in real-world scenarios.

Question 6

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

Moving along a bowed-out PPF implies that as more milk is produced, resources that are better suited for cotton production are being used to produce milk, leading to an increase in marginal cost for milk production. Therefore, the answer is (B) rises.

Question 7

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 8

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. This means that as more and more of one good is produced, greater and greater amounts of the other good must be given up. This results in a curve that bows outward, indicating that the opportunity cost of producing one good increases as more of that good is produced.

Question 9

Moving along a PPF, marginal cost is

Accepted Answer

Marginal cost is the added cost of producing one more unit of a good or service. It is equal to the opportunity cost of producing one more unit, which is the value of the next best alternative foregone. This is true when moving along a PPF, where resources are limited and the production of one good can only be increased by reducing the production of the other good. Marginal cost takes into account the diminishing marginal returns and increasing opportunity cost of production. Therefore, option B is the best choice.

Question 10

-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 that is produced, 1 gallon of ice cream must be given up.

Question 11

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

Accepted Answer

Marginal cost is the opportunity cost of producing one more unit of a good, and it typically increases as production increases due to factors like resource limitations and increased complexity.

Question 12

Marginal cost is the opportunity cost

Accepted Answer

Marginal cost is the additional cost of producing one more unit of a good or service, which is essentially the opportunity cost of using resources to produce that one extra unit instead of using them for something else.

Question 13

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

Accepted Answer

The tradeoff between two goods along the PPF implies that producing more of one good requires giving up some amount of the other good. A negative slope on the PPF illustrates this tradeoff, as the opportunity cost of producing more of one good increases as we move along the PPF. Therefore, the correct choice is C, negatively sloped.

Question 14

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

The opportunity cost of fish is higher for Abe than for Zeb because Abe has to give up more fruit to catch the same amount of fish. The opportunity cost of fruit is lower for Abe than for Zeb because Abe can pick the same amount of fruit in the same amount of time as Zeb, but Abe also has the option to catch fish instead. Therefore, Abe has a lower opportunity cost for fruit.

Question 15

$$\begin{array} { | l | l | } 
\hline \begin{array} { l } 
\text { Quantity of } \
\text { beans } \
\text { (bushels) }
\end{array} & \begin{array} { l } 
\text { Quantity of } \
\text { carrots } \
\text { (bushels) }
\end{array} \
\hline 5 & 0 \
\hline 4 & 5 \
\hline 8 & 9 \
\hline 2 & 12 \
\hline 1 & 14 \
\hline 0 & 15 \
\hline
\end{array}$$
-The table above represents different points along a production possibilities curve. What is the marginal cost of moving from 2 bushels to 3 bushels of beans?

Accepted Answer

The marginal cost of moving from 2 bushels to 3 bushels of beans is the loss in carrots, which is 3 bushels (from 12 to 9), per additional bushel of beans.

Question 16

-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 attainable because it is on the boundary of the feasible region.

Question 17

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 Abeʹs opportunity cost of a pound of fruit.

Accepted Answer

Abe's opportunity cost of fruits is the amount of fish he could have caught during those 5 hours, divided by the pounds of fruit he picked.

The amount of fish he could have caught in 5 hours is 15 pounds/hour x 5 hours = 75 pounds.

Therefore, the opportunity cost of a pound of fruit is 75 pounds of fish / 30 pounds of fruit = 2.5 pounds of fish per pound of fruit.

Rounded to the nearest half pound, his opportunity cost of a pound of fruit is 2 pounds of fish (since he can't physically catch half a pound of fish). Thus, the answer is D, 0.5 pounds of fish.

Question 18

When the opportunity cost of producing more of a good is increasing, the marginal cost of producing more of the good is

Accepted Answer

When the opportunity cost of producing more of a good is increasing, it means that more and more resources have to be diverted from other uses, resulting in a higher marginal cost of producing an additional unit. Therefore, the marginal cost of producing more of the good is increasing.

Question 19

A nation can produce at a point outside its PPF

Accepted Answer

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

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 toward the right along the PPF, the opportunity cost of producing shoes (in terms of shirts foregone) increases, which means the marginal cost of shoes increases. Therefore, the correct answer is D.

Quiz 2: The Economic Problem