Question 1

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The above figure shows the production possibility frontier for a country. Suppose the country is producing at point A. What is the opportunity cost of increasing the production of rice to 12 tons?
A)15 thousand bottles of wine
B)12 tons of rice
C)9 thousand bottles of wine
D)6 thousand bottles of wine
E)Nothing, it is a free lunch

Accepted Answer

The answer of 
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The above figure shows the production possibility...

Question 2

The figure above shows a production possibilities frontier. In the figure, when the economy moves from point E to point D, what is the opportunity cost of a DVD?
A)zero
B)1 cell phone
C)0.25 cell phones
D)4 cell phones
E)0.5 cell phones

Accepted Answer

The answer of

The figure above shows a production possibilities...

Question 3

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The above figure shows the production possibility frontier for a country. Suppose the country is producing at point D. What would be the opportunity cost to move to point C?
A)6 thousand bottles of wine
B)12 tons of rice
C)15 thousand bottles of wine
D)Nothing, it is a free lunch
E)This movement is not possible without economic growth.

Accepted Answer

The answer of 
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The above figure shows the production possibility...

Question 4

- Suppose India and France have the same PPF, shown in the figure above. Based on their current production points, India's most likely future PPF is _{--------------------}and France's most likely future PPF is_{--------------------} . A)PPF1; PPF1 B)PPF1; PPF2 C)PPF0; PPF0 D)PPF2; PPF2 E)PPF2; PPF1

Accepted Answer

If India's current production point is more focused on capital goods, its future PPF is likely to expand (PPF2). If France's current production point is more focused on consumer goods, its future PPF is likely to remain the same (PPF1).

Question 5

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The figure above shows the production possibilities frontier for a country. In order for it to produce at point E, the
A)production of SUVs would need to decrease.
B)country would need to use its resources more efficiently.
C)production of compact cars would need to decrease.
D)country would need to determine that compact cars and SUVs are equally important to it.
E)country would need to acquire more resources and/or more advanced technology.

Accepted Answer

Point E lies outside the current production possibilities frontier, indicating that the country would need more resources or advanced technology to produce at that level.

Question 6

- The figure above shows the production possibilities frontiers for the United Kingdom and France. If the United Kingdom and France specialize and engage in trade, the United Kingdom will produce_{--------------------} And France will produce_{--------------------} . A)fish; fish B)both wheat and fish; both wheat and fish C)wheat; wheat D)wheat; fish E)fish; wheat

Accepted Answer

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

Question 7

The United States can use all its resources to produce 250 DVDs or 500 shoes. China can use all of its resources to produce 30 DVDs or 300 shoes. The opportunity cost of producing a DVD in the United States is
A)500 shoes.
B)1 DVD.
C)2 shoes.
D)20 shoes.
E)1/2 of a shoe.

Accepted Answer

The opportunity cost of producing a DVD in the United States is 2 shoes because the U.S. can produce 500 shoes or 250 DVDs. Therefore, for each DVD produced, the U.S. gives up the production of 2 shoes (500 shoes / 250 DVDs = 2 shoes per DVD).

Question 8

The above figure shows the PPF for a country that produces computers and computer factories. The nation's production possibilities frontier is PPF0 . At which of the following production points would the economy grow most rapidly?
A)Point A
B)Point B
C)Point C
D)It makes no difference among the three points because they are all production efficient.
E)More information is needed to answer the question.

Accepted Answer

The answer of

The above figure shows the PPF for...

Question 9

$\begin{array} { c c c } 
\hline \text { Possibility } & \begin{array} { c } 
\text { Bread } \
\text { (number) }
\end{array} & \begin{array} { c } 
\text { Books } \
\text { (number) }
\end{array} \
\hline \text { A } & 0 & 1,000 \
\text { B } & 100 & 900 \
\text { C } & 200 & 700 \
\text { D } & 300 & 400 \
\text { E } & 400 & 0 \
\hline
\end{array}$

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The table above shows a production possibilities frontier for an economy. Which of the following combinations is unattainable?
A)0 loaves of bread and 800 books
B)100 loaves of bread and 800 books
C)300 loaves of bread and 200 books
D)200 loaves of bread and 800 books
E)0 loaves of bread and 0 books

Accepted Answer

The answer of \(\begin{array} { c c c } 
\hline...

Question 10

$\begin{array} { c c c } \hline \text { Possibility } & \begin{array} { c } \text { Bread } \ \text { (number) } \end{array} & \begin{array} { c } \text { Books } \ \text { (number) } \end{array} \ \hline \text { A } & 0 & 1,000 \ \text { B } & 100 & 900 \ \text { C } & 200 & 700 \ \text { D } & 300 & 400 \ \text { E } & 400 & 0 \ \hline \end{array}$ - The table above shows the production possibilities for an economy. The opportunity cost of a loaf of bread is _{--------------------}when moving from possibility B to possibility C. A)100 loaves of bread B)1/2 of a book C)200 books D)1 loaf of bread E)2 books

Accepted Answer

The opportunity cost of moving from possibility B to C is the number of books forgone to produce additional bread. From B to C, 200 more loaves of bread are produced, and 200 fewer books are produced, so the opportunity cost per loaf of bread is 200 books / 200 loaves = 1 book per loaf. However, since the question asks for the opportunity cost of a single loaf, the correct answer is 2 books per 100 loaves, which simplifies to 1/2 book per loaf.

Question 11

- In the above figure, Jill's opportunity cost of producing 1 gallon of bottled water is _{--------------------}of soda. A)4 gallons B)1/2 of a gallon C)1/4 of a gallon D)2 gallons E)1 gallon

Accepted Answer

The answer of 
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In the above figure, Jill's opportunity cost...

Question 12

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The figure above shows a production possibilities frontier. In the figure, when the economy moves from point C to point B, what is the opportunity cost of a DVD?
A)2 million cell phones
B)2 cell phones
C)0.5 cell phones
D)zero
E)0.5 million cell phones

Accepted Answer

The answer of 
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The figure above shows a production possibilities...

Question 13

Suppose that Germany, France, Estonia, and India all have the same production possibilities, illustrated in the figure above. Based on the production points in the figure, which country is most likely to expand its PPF to PPF1?
A)Germany
B)France
C)France and Germany equally.
D)Estonia
E)India

Accepted Answer

India is most likely to expand its PPF to PPF1 because it has a large and growing population, which can lead to increased labor force and potential for economic growth.

Question 14

$\begin{array} { l | c c c } 
& \begin{array} { l } 
\text { Potatoes } \
\text { (pounds) }
\end{array} && \begin{array} { c } 
\text { Tomatoes } \
\text { (pounds) }
\end{array} \
\hline \text { Huey } & 12 & \text { or } & 8 \
\text { Steve } & 6 & \text { or } & 2
\end{array}$
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Huey and Steve can grow potatoes or tomatoes. The table above shows the pounds of potatoes and tomatoes Huey and Steve can grow in a week. Based on the table, which of the following statements is correct?
A)Steve has a comparative advantage in both potatoes and tomatoes.
B)Huey has an absolute advantage in potatoes only.
C)Huey has an absolute advantage in both potatoes and tomatoes.
D)Steve has an absolute advantage in both potatoes and tomatoes.
E)Steve has an absolute advantage in potatoes only.

Accepted Answer

Huey can grow more potatoes and tomatoes than Steve, so Huey has an absolute advantage in both potatoes and tomatoes.

Question 15

Which of the following best describes comparative advantage?
A)being able to produce more output than any other country
B)using the fewest number of resources to produce a given amount of output
C)forgoing the fewest units of one product to produce a unit of another product
D)having the largest number of resources compared to other countries
E)It is the same as absolute advantage.

Accepted Answer

Comparative advantage refers to the ability of a country to produce a good at a lower opportunity cost than another country, meaning it forgoes fewer units of one product to produce a unit of another product.

Question 16

Why does a nation experience increasing opportunity cost?
A)When the amount of resources increases, the opportunity cost of all goods and services increases.
B)Resources are not equally productive in producing different kinds of goods and services.
C)Because the nation cannot produce at the unattainable production points that lie beyond the PPF.
D)As the nation moves from a production point within the PPF to another point also within the PPF, opportunity costs increase.
E)As the nation moves from a production point within the PPF to one on the PPF, opportunity costs increase.

Accepted Answer

Resources are not equally productive in producing different kinds of goods and services, leading to increasing opportunity costs as more of one good is produced.

Question 17

Suppose India and France have the same PPF, shown in the figure above. Based on their current production points, which is France's most likely future PPF?
A)PPF0.
B)PPF1.
C)PPF2.
D)Either PPF0 or PPF1.
E)None of the above because economic growth will not happen in India.

Accepted Answer

The answer of

Suppose India and France have the same...

Question 18

In one hour John can produce 20 loaves of bread or 8 cakes. In one hour Phyllis can produce 30 loaves of bread or 15 cakes. Which of the following statements is true?
A)Phyllis has an absolute advantage in both goods.
B)Phyllis has a comparative advantage in producing bread.
C)Phyllis has a comparative advantage in producing both cakes and bread.
D)John has a comparative advantage in producing cakes.
E)John has an absolute advantage in both goods.

Accepted Answer

The answer of In one hour John can produce 20...

Question 19

A bowed out PPF reflects which of the following ideas?
i. increasing opportunity cost
ii. resources are not equally productive in all activities
 iii. prices of goods increase over time
A)i, ii, and iii
B)i and iii
C)i and ii
D)i only
E)ii and iii

Accepted Answer

A bowed out PPF (Production Possibility Frontier) indicates increasing opportunity costs and that resources are not equally productive in all activities. As more of one good is produced, increasingly larger amounts of the other good must be given up, reflecting these concepts.

Question 20

Suppose that in a PPF graph, wheat is on the vertical axis and jets are on the horizontal axis. moving down along the PPF, the
A)number of jets increases and the opportunity cost of jets decreases.
B)opportunity cost of jets and wheat both increase.
C)amount of wheat increases and the opportunity cost of wheat increases.
D)number of jets increases and the opportunity cost of jets increases.
E)amount of wheat increases and opportunity cost of wheat decreases.

Accepted Answer

As you move down along the PPF, producing more jets, the opportunity cost of jets increases because you have to give up more wheat to produce additional jets.

Quiz 3: The Economic Problem

- The above figure shows the production possibility frontier for a country. Suppose the country is producing at point A. What is the opportunity cost of increasing the production of rice to 12 tons?

The figure above shows a production possibilities frontier. In the figure, when the economy moves from point E to point D, what is the opportunity cost of a DVD?

- The above figure shows the production possibility frontier for a country. Suppose the country is producing at point D. What would be the opportunity cost to move to point C?

- Suppose India and France have the same PPF, shown in the figure above. Based on their current production points, India's most likely future PPF is --------------------and France's most likely future PPF is-------------------- .

- The figure above shows the production possibilities frontier for a country. In order for it to produce at point E, the

- The figure above shows the production possibilities frontiers for the United Kingdom and France. If the United Kingdom and France specialize and engage in trade, the United Kingdom will produce-------------------- And France will produce-------------------- .

The United States can use all its resources to produce 250 DVDs or 500 shoes. China can use all of its resources to produce 30 DVDs or 300 shoes. The opportunity cost of producing a DVD in the United States is

The above figure shows the PPF for a country that produces computers and computer factories. The nation's production possibilities frontier is PPF0 . At which of the following production points would the economy grow most rapidly?

- In the above figure, Jill's opportunity cost of producing 1 gallon of bottled water is --------------------of soda.

- The figure above shows a production possibilities frontier. In the figure, when the economy moves from point C to point B, what is the opportunity cost of a DVD?

Suppose that Germany, France, Estonia, and India all have the same production possibilities, illustrated in the figure above. Based on the production points in the figure, which country is most likely to expand its PPF to PPF1?

Which of the following best describes comparative advantage?

Why does a nation experience increasing opportunity cost?

Suppose India and France have the same PPF, shown in the figure above. Based on their current production points, which is France's most likely future PPF?

In one hour John can produce 20 loaves of bread or 8 cakes. In one hour Phyllis can produce 30 loaves of bread or 15 cakes. Which of the following statements is true?

A bowed out PPF reflects which of the following ideas? i. increasing opportunity cost ii. resources are not equally productive in all activities iii. prices of goods increase over time

Suppose that in a PPF graph, wheat is on the vertical axis and jets are on the horizontal axis. moving down along the PPF, the

- Suppose India and France have the same PPF, shown in the figure above. Based on their current production points, India's most likely future PPF is _{--------------------}and France's most likely future PPF is_{--------------------} .

- The figure above shows the production possibilities frontiers for the United Kingdom and France. If the United Kingdom and France specialize and engage in trade, the United Kingdom will produce_{--------------------} And France will produce_{--------------------} .

- In the above figure, Jill's opportunity cost of producing 1 gallon of bottled water is _{--------------------}of soda.