Question 1

Opportunity cost is illustrated in a production possibilities frontier (PPF) by a movement
A) from the region within the PPF to a point on the PPF.
B) from the region within the PPF to the region outside of the PPF.
C) from the region outside of the PPF to a point on the PPF.
D) along the PPF where to gain more of one good it is necessary to give some of another good.

Accepted Answer

Opportunity cost is the cost of giving up one option in order to pursue another. This is illustrated in a PPF by the trade-off between producing one good and producing another. Therefore, movement along the PPF where to gain more of one good it is necessary to give some of another good, shows the opportunity cost of producing more of one good.

Question 2

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. Which of the following statements is TRUE?
A) Producing 0 chocolate bars and 100 cans of cola is both attainable and efficient.
B) Producing 20 chocolate bars and 80 cans of cola is attainable, but inefficient.
C) Producing 30 chocolate bars and 38 cans of cola is only attainable with an increase in technology.
D) Producing 40 chocolate bars and 0 cans of cola is unattainable and inefficient.

Accepted Answer

The answer of 
-The above table shows production points on...

Question 3

Opportunity cost is represented on the production possibilities frontier by
A) attainable and unattainable points.
B) efficient and inefficient points.
C) the amount of good Y forgone when more of good X is produced.
D) technological progress.

Accepted Answer

Opportunity cost is the forgone alternative or the cost of the next best alternative. On the production possibilities frontier, the opportunity cost is represented by the amount of one good that must be given up to produce one more unit of the other good. Therefore, the correct choice is C - the amount of good Y forgone when more of good X is produced.

Question 4

At one point along a PPF, 10 pizzas and 7 sandwiches can be produced. At another point along the same PPF, 9 pizzas and 10 sandwiches can be produced. The opportunity cost of a pizza between these points is ________ per pizza.
A) 7/10 of a sandwich
B) 10/7 of a sandwich
C) 1/3 of a sandwich
D) 3 sandwiches

Accepted Answer

The answer of At one point along a PPF, 10...

Question 5

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
A) bowed outward.
B) bowed inward.
C) positively sloped.
D) a straight line.

Accepted Answer

A constant opportunity cost means that the trade-off between producing one unit of a good for another remains the same, therefore the production possibilities frontier would be a straight line.

Question 6

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. What is the opportunity cost of one chocolate bar if Sweet-tooth Land moves from point C to point D?
A) 30 cans of cola per chocolate bar
B) 10 cans of cola per chocolate bar
C) 3 cans of cola per chocolate bar
D) 1/3 can of cola per chocolate bar

Accepted Answer

Moving from point C to point D, Sweet-Tooth Land increases its chocolate bar production by 10 bars (from 40 to 50) and decreases its cola production by 30 cans (from 90 to 60). Therefore, the opportunity cost of producing one additional chocolate bar is 30 cans of cola divided by 10 chocolate bars, which equals 3 cans of cola per chocolate bar.

Question 7

-The table above lists six points on the production possibilities frontier for grain and cars. What is the opportunity cost of producing the 26th car?
A) 2 tons of grain per car
B) 4 tons of grain per car
C) 0.25 tons of grain per car
D) 0.5 tons of grain per car

Accepted Answer

The answer of 
-The table above lists six points on...

Question 8

When moving along the production possibilities frontier, opportunity cost is measured as the
A) increase in the quantity produced of one good divided by the decrease in the quantity produced of another good.
B) decrease in the quantity produced of one good divided by the increase in the quantity produced of another good.
C) quantity produced of one good divided by the quantity produced of another good.
D) quantity produced of one good multiplied by the quantity produced of another good.

Accepted Answer

Opportunity cost is the cost of one opportunity in terms of the next best opportunity that must be given up. When moving along the production possibilities frontier, this means we must give up some quantity of one good in order to produce more of another. The opportunity cost is the ratio of the decrease in the quantity produced of one good divided by the increase in the quantity produced of another good. This is expressed in choice B.

Question 9

In one day, Sue can change the oil on 20 cars or change the tires on 20 cars. In one day, Fred can change the oil on 20 cars or change the tires on 10 cars. Sue's opportunity cost of changing oil is ________ than Fred's and her opportunity cost for changing tires is ________ than Fred's.
A) greater; less
B) less; greater
C) less; less
D) greater; greater

Accepted Answer

Sue has a comparative advantage in both changing oil and changing tires since she can do both tasks more efficiently than Fred. However, her opportunity cost of changing oil is lower since she can do 20 oil changes in one day, while Fred can only do 20 oil changes in two days. Therefore, Sue would have to give up less tire changes to do an oil change compared to Fred, making her opportunity cost of changing oil lower. On the other hand, Sue's opportunity cost of changing tires is higher since she can do 20 tire changes in one day, while Fred can only do 10 tire changes in one day. Therefore, Sue would have to give up more oil changes to do a tire change compared to Fred, making her opportunity cost of changing tires higher.

Question 10

-The table above lists six points on the production possibilities frontier for grain and cars. What is the opportunity cost of producing the 5th ton of grain?
A) 16 cars per ton of grain
B) 6 cars per ton of grain
C) 3 cars per ton of grain
D) 2 cars per ton of grain

Accepted Answer

The answer of 
-The table above lists six points on...

Question 11

When operating on its PPF, a country can produce 2 tons of butter and 200 cars OR 3 tons of butter and 150 cars. The opportunity cost of 1 ton of butter is ________ cars per ton of butter.
A) 300
B) 200
C) 50
D) 0.75

Accepted Answer

The opportunity cost of producing 1 additional ton of butter is the number of cars that must be given up to produce that extra ton. Moving from producing 2 tons of butter and 200 cars to 3 tons of butter and 150 cars, the country gives up 50 cars to produce the additional ton of butter. Therefore, the opportunity cost of 1 ton of butter is 50 cars.

Question 12

At one point along a PPF 40 tons of wheat are produced while 80 tons of rice are produced. At another point along the same PPF, 41 tons of wheat are produced while 70 tons of rice are produced. The opportunity cost of producing a ton of wheat between these points is ________ per ton of wheat.
A) 1/2 ton of rice
B) 10 tons of rice
C) 1/10 ton of rice
D) 4/7 ton of rice

Accepted Answer

The answer of At one point along a PPF 40...

Question 13

As residents of developing countries increase their chocolate consumption, the increased production of cocoa results in
A) increased opportunity cost of cocoa production.
B) decreased opportunity cost of cocoa production.
C) no change in production of other goods and services.
D) increased production of other goods and services.

Accepted Answer

Increased production of cocoa implies that more resources are being allocated to cocoa production, which means there are fewer resources available for the production of other goods and services. This leads to an increased opportunity cost of producing cocoa, as producing more cocoa comes at the expense of producing less of other goods and services.

Question 14

-The above table shows production combinations on a country's production possibilities frontier. Which of the following is an example of a point that is unattainable?
A) 0 units of good X and 40 units of good Y
B) 6 units of good X and 28 units of good Y
C) 10 units of good X and 16 units of good Y
D) 3 units of good X and 35 units of good Y

Accepted Answer

The answer of 
-The above table shows production combinations on...

Question 15

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. What is the opportunity cost of one can of cola if Sweet-tooth Land moves from point C to point B?
A) 20 chocolate bars per can of cola
B) 10 chocolate bars per can of cola
C) 2 chocolate bars per can of cola
D) 1/2 chocolate bars per can of cola

Accepted Answer

The answer of 
-The above table shows production points on...

Question 16

-The table above lists six points on the production possibilities frontier for grain and cars. From this information you can conclude that production is inefficient if this economy produces
A) 6 tons of grain and 18 cars.
B) 4 tons of grain and 26 cars.
C) 2 tons of grain and 27 cars.
D) 8 tons of grain and 10 cars.

Accepted Answer

Production is inefficient if the economy is producing less than it could with the resources available. Choice C represents a point inside the production possibilities frontier, indicating inefficiency, as more of both goods could be produced with the available resources.

Question 17

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. Which of the following is an example of a point that is inefficient?
A) 0 chocolate bars and 100 cans of cola
B) 20 chocolate bars and 80 cans of cola
C) 32 chocolate bars and 40 cans of cola
D) 38 chocolate bars and 0 cans of cola

Accepted Answer

The answer of 
-The above table shows production points on...

Question 18

At one point along a PPF, 50 tons of coffee and 100 tons of bananas are produced. At another point along the same PPF, 30 tons of coffee and 140 tons of bananas are produced. The opportunity cost of a ton of coffee between these points is
A) 7/5 of a ton of bananas per ton of coffee.
B) 1/2 of a ton of bananas per ton of coffee.
C) 5/7 of a ton of bananas per ton of coffee.
D) 2 tons of bananas per ton of coffee.

Accepted Answer

The answer of At one point along a PPF, 50...

Question 19

-The table above lists six points on the production possibilities frontier for grain and cars. Given this information, which of the following combinations is unattainable?
A) 6 tons of grain and 18 cars
B) 4 tons of grain and 26 cars
C) 2 tons of grain and 27 cars
D) 7 tons of grain and 10 cars

Accepted Answer

The answer of 
-The table above lists six points on...

Question 20

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. A movement from ________ represents the greatest opportunity cost of increasing cola production.
A) point E to point D
B) point D to point C
C) point C to point B
D) point B to point A

Accepted Answer

The answer of 
-The above table shows production points on...

Quiz 2: The Economic Problem

Opportunity cost is illustrated in a production possibilities frontier (PPF) by a movement

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. Which of the following statements is TRUE?

Opportunity cost is represented on the production possibilities frontier by

At one point along a PPF, 10 pizzas and 7 sandwiches can be produced. At another point along the same PPF, 9 pizzas and 10 sandwiches can be produced. The opportunity cost of a pizza between these points is ________ per pizza.

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

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. What is the opportunity cost of one chocolate bar if Sweet-tooth Land moves from point C to point D?

-The table above lists six points on the production possibilities frontier for grain and cars. What is the opportunity cost of producing the 26th car?

When moving along the production possibilities frontier, opportunity cost is measured as the

In one day, Sue can change the oil on 20 cars or change the tires on 20 cars. In one day, Fred can change the oil on 20 cars or change the tires on 10 cars. Sue's opportunity cost of changing oil is than Fred's and her opportunity cost for changing tires is than Fred's.

-The table above lists six points on the production possibilities frontier for grain and cars. What is the opportunity cost of producing the 5th ton of grain?

When operating on its PPF, a country can produce 2 tons of butter and 200 cars OR 3 tons of butter and 150 cars. The opportunity cost of 1 ton of butter is ________ cars per ton of butter.

At one point along a PPF 40 tons of wheat are produced while 80 tons of rice are produced. At another point along the same PPF, 41 tons of wheat are produced while 70 tons of rice are produced. The opportunity cost of producing a ton of wheat between these points is ________ per ton of wheat.

As residents of developing countries increase their chocolate consumption, the increased production of cocoa results in

-The above table shows production combinations on a country's production possibilities frontier. Which of the following is an example of a point that is unattainable?

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. What is the opportunity cost of one can of cola if Sweet-tooth Land moves from point C to point B?

-The table above lists six points on the production possibilities frontier for grain and cars. From this information you can conclude that production is inefficient if this economy produces

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. Which of the following is an example of a point that is inefficient?

At one point along a PPF, 50 tons of coffee and 100 tons of bananas are produced. At another point along the same PPF, 30 tons of coffee and 140 tons of bananas are produced. The opportunity cost of a ton of coffee between these points is

-The table above lists six points on the production possibilities frontier for grain and cars. Given this information, which of the following combinations is unattainable?

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. A movement from ________ represents the greatest opportunity cost of increasing cola production.