Question 1

Scarcity is represented on a production possibilities frontier figure by

Accepted Answer

The production possibilities frontier (PPF) illustrates scarcity by showing both attainable and unattainable points, indicating that not all desires can be satisfied with limited resources, hence demonstrating the concept of scarcity.

Question 2

Production possibilities
 
-In the above table, the production of 3 pizzas and 35 cases of cola is

Accepted Answer

The production of 3 pizzas and 35 cases of cola is feasible but would involve unemployed or misallocated resources, indicating that the economy is not operating at full efficiency.

Question 3

Suppose that a typical German factory can produce 20 cameras or one computer in an hour, and that a typical American factory can produce 10 cameras or one computer in an hour. Germany wishes to purchase computers from the United States in exchange for cameras. What is the maximum number of cameras per computer that Germany would be willing to pay the United States?

Accepted Answer

Germany can produce 20 cameras or 1 computer in an hour, so the opportunity cost of producing 1 computer is 20 cameras. Therefore, Germany would be willing to pay up to 20 cameras per computer.

Question 4

-Anna and Maria produce shirts and ties. The figure above shows Anna's PPF and Maria's PPF. Anna and Maria can achieve the gains from trade if Anna produces _______ and Maria produces _______

Accepted Answer

The answer of 
-Anna and Maria produce shirts and ties....

Question 5

-In 2006, Country X and Country Y had the same production possibilities, illustrated in the figure above. Country X chose to produce at point A, while country Y chose to produce at point B. In 2012, most likely, Country X will be at a point such as _ while Country Y will be at a point such as .

Accepted Answer

Country X, by producing at point A, likely focused on capital goods, leading to economic growth and a shift to a higher production possibility in 2012, such as point Q. Country Y, by producing at point B, likely focused on consumer goods, resulting in less growth and remaining at a point like N.

Question 6

While producing on the production possibilities frontier, if additional units of a good could be produced at a constant opportunity cost, the production possibilities frontier would be

Accepted Answer

A production possibilities frontier (PPF) that shows constant opportunity cost for producing additional units of a good is represented by a straight line. This indicates that the rate at which one good can be substituted for another is constant.

Question 7

Which of the following is true regarding markets?
I. Economists define a market as a geographic location where trade occurs.
II. A market enables buyers and sellers to get information about each other and to buy and sell from each other.
III. Markets coordinate decisions through prices.

Accepted Answer

II and III are correct. Markets are not strictly defined by geographic location but by the interaction between buyers and sellers, including the exchange of information and transactions. Prices in markets serve as signals that help coordinate decisions among market participants.

Question 8

An increase in the production of capital goods

Accepted Answer

An increase in the production of capital goods leads to an increase in a country's productive capacity over time, which shifts the production possibilities frontier (PPF) outward in the future. This is because capital goods, such as machinery and equipment, enhance the efficiency and volume of production, enabling the economy to produce more goods and services in the future.

Question 9

-In the figure above, suppose that Mac and Izzie specialise and trade to reach point c. Mac sends Izzie

Accepted Answer

The answer of 
-In the figure above, suppose that Mac...

Question 10

-Refer to the production possibilities frontier in the figure above. Suppose a country is producing at point a. A movement to point means that the country .

Accepted Answer

The answer of 
-Refer to the production possibilities frontier in...

Question 11

-In the figure above, the marginal cost of the second computer is

Accepted Answer

The marginal cost of the second computer is the opportunity cost of producing one more computer, which is the number of television sets that must be given up. According to the figure, producing the second computer requires sacrificing 3 television sets.

Question 12

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. Both individuals will be better off if

Accepted Answer

Jerry has a comparative advantage in making sandwiches because he can make them more quickly than Tom. Tom has a comparative advantage in cooking eggs because the difference in time it takes him compared to Jerry is smaller. Therefore, both will benefit if Jerry trades sandwiches for Tom's eggs.

Question 13

A marginal cost curve

Accepted Answer

A marginal cost curve is upward sloping because as more of a good is produced, the opportunity costs of producing another unit increase. This is because resources are not infinitely available and as more resources are allocated towards producing a good, the opportunity cost of using those resources for other things increases. Therefore, both answer A and B are correct. A marginal cost curve is not bowed inward and its slope cannot become negative.

Question 14

-The above figure illustrates that if this country wishes to move from its current production point (labelled "Current") and have 10 more tonnes of food, it can do this by producing

Accepted Answer

To produce 10 more tonnes of food, the country must reallocate resources, which typically involves producing fewer of another good, in this case, clothing. The figure suggests a trade-off of 5 fewer tonnes of clothing for 10 more tonnes of food.

Question 15

Some time ago the government of China required many highly skilled technicians and scientists to engage in unskilled agricultural labour in order to develop "proper social attitudes." This policy probably caused China to produce

Accepted Answer

The policy caused China to produce inside its production possibilities frontier because it diverted highly skilled technicians and scientists from high-technology industries to unskilled agricultural labor.

Question 16

If an economy is operating at a point inside the production possibilities frontier, then

Accepted Answer

When an economy is operating inside the production possibilities frontier (PPF), it means that not all resources are being used efficiently or to their full potential. The PPF represents the maximum possible output combinations of two goods or services an economy can achieve when all resources are fully and efficiently utilized. Operating inside the PPF indicates underutilization of resources, hence inefficiency.

Question 17

-In the figure above, if 4 million computers are produced per year then the should be produced to achieve the allocatively efficient use of resources.

Accepted Answer

The answer of 
-In the figure above, if 4 million...

Question 18

A computer software program is most strongly an example of

Accepted Answer

A computer software program is considered intellectual property, as it is a creation of the mind and can be protected by copyright or patents. It is not real property (which refers to physical assets such as land or buildings), vicarious property (which is not a recognized legal term), or fiat property (which refers to items that are given value by government decree, such as currency).

Question 19

-The opportunity cost of producing a unit of consumption goods at point b in the figure _ point a.

Accepted Answer

At point B, more resources are allocated to the production of capital goods, which means that the opportunity cost of producing a unit of consumption goods is higher than at point A.

Question 20

-In the above figure, which of the following is true regarding the movements from point A to B and from point C to D?
I. The movement from point A to B shows that the economy has chosen to produce 100 more jets.
II. The movement from point C to D shows that the economy has chosen to produce 100 more jets.
III. The movements from point A to B and from point C to D have the same opportunity cost.

Accepted Answer

The movement from point A to B and from point C to D both indicate an increase in jet production by 100 units.

Quiz 2: The Economic Problem