Question 1

To increase its economic growth, a nation should
A)increase current consumption.
B)encourage spending on goods and services.
C)eliminate expenditure on capital goods.
D)encourage education because that increases the quality of labor.
E)limit the number of people in college because they produce nothing.

Accepted Answer

Encouraging education improves the quality of labor, leading to higher productivity and economic growth.

Question 2

Economic growth depends upon which of the following?
i. Increasing the quantity of labor
ii. Lowering the prices of goods and services 
iii. Advancing technology
A)iii only
B)ii only
C)i and iii
D)i only
E)i, ii, and iii

Accepted Answer

Economic growth is driven by increasing the quantity of labor and advancing technology, which enhance productivity and output. Lowering prices alone does not directly contribute to economic growth.

Question 3

With no international trade, a country_{--------------------} consume at a point outside of its PPF; with international trade, a country _{--------------------}consume at a point outside of its PPF. A)can; cannot B)cannot; cannot C)cannot; can D)can; can E)None of the above answers is correct because the presence or absence of international trade has nothing to do with where a country consumes in comparison to its PPF.

Accepted Answer

Without international trade, a country is limited to consuming within its Production Possibility Frontier (PPF). With international trade, a country can consume beyond its PPF by specializing in the production of goods where it has a comparative advantage and trading for other goods.

Question 4

Mac can bake more cookies than Monica per hour. It must be true that
A)Monica has an absolute advantage in cookie baking.
B)Mac has an absolute advantage in baking cookies.
C)Mac cannot benefit by trade between the two of them.
D)Mac has a comparative advantage in baking cookies.
E)Monica has a comparative advantage in baking cookies.

Accepted Answer

Mac has an absolute advantage in baking cookies because he can produce more cookies per hour than Monica.

Question 5

If there is increasing opportunity cost, then when moving downward on a production possibilities frontier, the opportunity cost of the good on the horizontal axis _{--------------------}as more of the good is produced. A)increases and the PPF gets steeper B)does not change and the PPF gets steeper C)increases and the PPF gets flatter D)decreases and the PPF gets flatter E)decreases and the PPF gets steeper

Accepted Answer

In the case of increasing opportunity cost, as more of a good is produced, the opportunity cost of producing additional units increases, making the PPF steeper.

Question 6

As an economy produces more of one of the goods on a bowed out production possibilities frontier, What happens to the opportunity cost of producing the good?
A)It increases.
B)It decreases.
C)It remains constant.
D)It might increase, decrease, or remain constant depending on how much people value the additional units of the good.
E)None of these depict what happens to opportunity cost.

Accepted Answer

As more of a good is produced on a bowed out production possibilities frontier, the opportunity cost of producing additional units increases due to the law of increasing opportunity costs. This is because resources are not equally efficient in producing all goods, so reallocating resources to produce more of one good results in higher opportunity costs.

Question 7

The production possibilities frontier is a graph showing the
A)minimum combinations of goods and services that can be produced.
B)resources available for the economy's production use.
C)maximum combinations of goods and services that can be produced.
D)tradeoff between free lunches.
E)exact point of greatest efficiency for producing goods and services.

Accepted Answer

The production possibilities frontier (PPF) illustrates the maximum combinations of two goods or services that can be produced with available resources and technology, showing the trade-offs and opportunity costs.

Question 8

As an economy grows,
A)it can eliminate scarcity.
B)the opportunity cost of production will increase.
C)the opportunity cost of production will approach 0.
D)its PPF shifts outward.
E)its PPF does not shift; instead, the production point moves from inside the PPF to be closer to the PPF.

Accepted Answer

As an economy grows, its production possibilities frontier (PPF) shifts outward, indicating that the economy can produce more goods and services than before due to factors like increased resources, better technology, or improved efficiency.

Question 9

Relative to Al, Joe has_{-------------}if Joe can produce a good at a lower opportunity cost than Al. A)more production efficiency B)a comparative benefit C)a marginal benefit D)a free lunch E)a comparative advantage

Accepted Answer

Joe has a comparative advantage if he can produce a good at a lower opportunity cost than Al.

Question 10

Which of the following statements is correct?
i. As the economy grows, the opportunity costs of economic growth decrease.
ii. Economic growth has no opportunity cost.
iii. The opportunity cost of economic growth is current consumption forgone.
A)ii only
B)i and iii
C)iii only
D)i and ii
E)i only

Accepted Answer

The opportunity cost of economic growth is the current consumption that is forgone in order to invest in capital goods, which can lead to future economic growth.

Question 11

Consider a production possibility frontier with jeans on the vertical axis and shoes on the Horizontal axis. As a country moves along the frontier closer to the vertical axis,
A)inefficient production occurs.
B)the opportunity cost of producing jeans increases.
C)there are fewer tradeoffs.
D)the opportunity cost of producing shoes increases.
E)the opportunity cost of producing jeans decreases.

Accepted Answer

As a country moves along the frontier closer to the vertical axis, the opportunity cost of producing jeans increases because more shoes must be given up to produce each additional pair of jeans.

Question 12

$\text { Jack's production possibilities }$$\quad\quad\quad\quad\quad\quad\quad\quad\text { Jill's production possibilities }$ $\begin{array}{ccccccc} \hline\text { Production } & \text { Food } && \text { Clothing } & \text {Production } & \text { Food } && \text { Clothing }\ \text { point } & \text { (pounds) } && \text { (pounds) } & \text { point } & \text { (pounds) }&& \text { (pounds) }\ \hline\text { A } & 24 & \text { and } & 0 & A & 45 & \text { and } & 0 \ \text { B } & 16 & \text { and } & 4 & B & 30 & \text { and } & 5 \ \text { C } & 8 & \text { and } & 8 & C & 15 & \text { and } & 10 \ \text { D } & 0 & \text { and } & 12 & D & 0 & \text { and } & 15 \ \hline \end{array}$ - In the table above, Jack's opportunity cost for 1 pound of food is _{--------------------}and his opportunity cost for 1 pound of clothing is _{--------------------}. A)1 pound of clothing; 4 pounds of food B)2 pounds of clothing; 2 pounds of food C)1/2 of a pound of clothing; 2 pounds of food D)1/3 of a pound of clothing; 3 pounds of food E)1 pound of food; 1 pound of clothing

Accepted Answer

Jack's opportunity cost for 1 pound of food is 1/2 of a pound of clothing (moving from point B to A, he gives up 4 pounds of clothing to gain 8 pounds of food). His opportunity cost for 1 pound of clothing is 2 pounds of food (moving from point A to B, he gives up 8 pounds of food to gain 4 pounds of clothing).

Question 13

The figure above shows a nation's production possibilities frontier. In the figure, point A shows
A)an attainable point with unemployed resources.
B)an unattainable point.
C)the minimum quantity of pizza that the society must produce.
D)the maximum quantity of pizza that can be produced.
E)More information is needed to determine which of the above answers is correct.

Accepted Answer

The answer of

The figure above shows a nation's production...

Question 14

- The figure above show Liz's and Joe's production possibilities for Salads and Smoothies. Given the information in the figure above, Liz_{--------------------} benefit from trade with Joe because_{--------------------} . A)cannot; she has an absolute advantage in both goods B)can; Joe is more productive in producing one of the goods C)can; each of them has an absolute advantage in one of the goods D)can; each of them has a comparative advantage in one of the goods E)cannot; she has a comparative advantage in both goods

Accepted Answer

Liz can benefit from trade with Joe because each of them has a comparative advantage in one of the goods.

Question 15

- The figure above shows a production possibilities frontier. In the figure, the economy faces a tradeoff when _{-------------}cell phones and _{-------------}DVDs. are produced. A)4.5 million; no B)3 million; 9 million C)5 million; 15 million D)3 million; 8 million E)2 million; 9 million

Accepted Answer

The production possibilities frontier (PPF) illustrates the tradeoff between two goods. At 3 million cell phones and 9 million DVDs, the economy is on the PPF, indicating a tradeoff between the two goods.

Question 16

In the production possibilities model, the vertical axis measures _{--------------------}and the horizontal axis measures_{--------------------}. A)people's wants; the quantity of a good or service B)the quantity of a good or service; the quantity of another good or service C)the price of a good or service; the price of another good or service D)the quantity of a good or service; time E)the price of a good or service; the quantity of the good or service

Accepted Answer

The vertical axis measures the quantity of a good or service, and the horizontal axis measures the quantity of another good or service.

Question 17

In a production possibilities frontier graph, the cost of producing more units of a good is measured by the
A)dollar value of the additional output.
B)area in the arc between the PPF and a straight line drawn between the starting point and the ending point.
C)dollar value of the resources used to produce the good.
D)amount of the other good or service that must be forgone.
E)None of the above answers is correct.

Accepted Answer

The cost of producing more units of a good on a production possibilities frontier is measured by the opportunity cost, which is the amount of the other good or service that must be forgone.

Question 18

-
The figure above shows the production possibilities frontiers for the United Kingdom and France. What is the opportunity cost of one bushel of wheat for the United Kingdom?
A)1/2 of a pound of fish
B)1 pound of fish
C)200 pounds of fish
D)1/4 of a pound of fish
E)2 pounds of fish

Accepted Answer

The answer of 
-
The figure above shows the production possibilities...

Question 19

When drawing a production possibilities frontier, which of the following is held constant?
A)the amount of money in the economy
B)the prices of goods and services
C)the quantity of the goods and services that are produced
D)the available factors of production and the state of technology
E)None of the above because nothing is held constant when drawing the production possibilities frontier.

Accepted Answer

The production possibilities frontier assumes that the available factors of production and the state of technology are constant, allowing us to focus on the trade-offs between different goods.

Question 20

Rika's opportunity cost of producing 100 t-shirts is 50 jackets. Jeff's opportunity cost of producing 75 t-shirts is 25 jackets. Who should specialize in jackets?
A)Jeff
B)Rika
C)neither
D)both
E)More information is needed about their production possibilities frontiers to determine who should specialize in jackets.

Accepted Answer

The answer of Rika's opportunity cost of producing 100 t-shirts...

Quiz 3: The Economic Problem

To increase its economic growth, a nation should

Economic growth depends upon which of the following? i. Increasing the quantity of labor ii. Lowering the prices of goods and services iii. Advancing technology

With no international trade, a country-------------------- consume at a point outside of its PPF; with international trade, a country --------------------consume at a point outside of its PPF.

Mac can bake more cookies than Monica per hour. It must be true that

If there is increasing opportunity cost, then when moving downward on a production possibilities frontier, the opportunity cost of the good on the horizontal axis --------------------as more of the good is produced.

As an economy produces more of one of the goods on a bowed out production possibilities frontier, What happens to the opportunity cost of producing the good?

The production possibilities frontier is a graph showing the

As an economy grows,

Relative to Al, Joe has-------------if Joe can produce a good at a lower opportunity cost than Al.

Which of the following statements is correct? i. As the economy grows, the opportunity costs of economic growth decrease. ii. Economic growth has no opportunity cost. iii. The opportunity cost of economic growth is current consumption forgone.

Consider a production possibility frontier with jeans on the vertical axis and shoes on the Horizontal axis. As a country moves along the frontier closer to the vertical axis,

The figure above shows a nation's production possibilities frontier. In the figure, point A shows

- The figure above show Liz's and Joe's production possibilities for Salads and Smoothies. Given the information in the figure above, Liz-------------------- benefit from trade with Joe because-------------------- .

- The figure above shows a production possibilities frontier. In the figure, the economy faces a tradeoff when -------------cell phones and -------------DVDs. are produced.

In the production possibilities model, the vertical axis measures --------------------and the horizontal axis measures--------------------.

In a production possibilities frontier graph, the cost of producing more units of a good is measured by the

- The figure above shows the production possibilities frontiers for the United Kingdom and France. What is the opportunity cost of one bushel of wheat for the United Kingdom?

When drawing a production possibilities frontier, which of the following is held constant?

Rika's opportunity cost of producing 100 t-shirts is 50 jackets. Jeff's opportunity cost of producing 75 t-shirts is 25 jackets. Who should specialize in jackets?

With no international trade, a country_{--------------------} consume at a point outside of its PPF; with international trade, a country _{--------------------}consume at a point outside of its PPF.

If there is increasing opportunity cost, then when moving downward on a production possibilities frontier, the opportunity cost of the good on the horizontal axis _{--------------------}as more of the good is produced.

Relative to Al, Joe has_{-------------}if Joe can produce a good at a lower opportunity cost than Al.

- The figure above show Liz's and Joe's production possibilities for Salads and Smoothies. Given the information in the figure above, Liz_{--------------------} benefit from trade with Joe because_{--------------------} .

- The figure above shows a production possibilities frontier. In the figure, the economy faces a tradeoff when _{-------------}cell phones and _{-------------}DVDs. are produced.

In the production possibilities model, the vertical axis measures _{--------------------}and the horizontal axis measures_{--------------------}.