Question 1

The depletion of fish stocks in Eastern Canada, with its accompanying unemployment, will lead to a

Accepted Answer

The answer of The depletion of fish stocks in Eastern...

Question 2

Which of the following quotations illustrates economic growth?

Accepted Answer

Economic growth is demonstrated by increasing production and expansion. Investing more in capital equipment is a sign that the firm is preparing to increase production capacity and expand in the future, resulting in economic growth.

Question 3

The production possibilities frontier shifts outward when

Accepted Answer

The production possibilities frontier (PPF) is a graph that shows the maximum combinations of two goods that an economy can produce given its resources and technology. When human capital accumulates, the resources available to the economy increase, thus shifting the PPF outward. This means that the economy can produce more of both goods or more of one good and the same amount of the other. Therefore, the correct choice in this case is D.

Question 4

Consider Toyota's PPF, which measures cars on the x-axis and new skills and new technology on the y-axis. Toyota's opportunity cost of upgrading workers' skills and creating new technology is

Accepted Answer

According to the definition of opportunity cost, it is the cost of the next best alternative forgone. In this case, if Toyota chooses to upgrade worker skills and create new technology, the opportunity cost would be the number of cars that could have been produced in the current year if they had not invested in these activities. Therefore, the best answer is D - fewer cars produced in the current year.

Question 5

Economic growth ________ overcome scarcity because ________.

Accepted Answer

Economic growth can increase the production of goods and services, but it cannot completely overcome scarcity because wants are unlimited while resources are limited. Economic growth can only expand the production possibilities, but it cannot eliminate the scarcity constraint.

Question 6

Use the information below to answer the following questions.
Fact 2.4.1
In an eight-hour day, Andy can produce either 24 loaves of bread or 8 kilograms of butter. In an eight-hour day, Rolfe can produce either 8 loaves of bread or 8 kilograms of butter.
-From Fact 2.4.1, we know that

Accepted Answer

Opportunity cost is the value of the next-best alternative forgone. In this case, Andy can produce 24 loaves of bread or 8 kilograms of butter in 8 hours, which means that the opportunity cost of producing one loaf of bread is 1/3 of a kilogram of butter. Rolfe can produce 8 loaves of bread or 8 kilograms of butter in 8 hours, which means that the opportunity cost of producing one loaf of bread is 1 kilogram of butter. Therefore, Andy has the lower opportunity cost of producing bread, while Rolfe has the lower opportunity cost of producing butter.

Question 7

Individuals A and B can both produce good X. We say that A has a comparative advantage in the production of good X if

Accepted Answer

Comparative advantage is based on the opportunity cost of producing a good. If A has a lower opportunity cost of producing X, it means that A gives up less of other goods to produce X compared to B. Therefore, A has a comparative advantage in the production of good X.

Question 8

In general, the higher the proportion of resources devoted to technological research in an economy, the

Accepted Answer

Technological research leads to innovations and improvements in production efficiency, which causes an outward shift in the production possibilities frontier. Therefore, the higher the proportion of resources devoted to technological research in an economy, the faster the production possibilities frontier will shift outward.

Question 9

Use the information below to answer the following questions.
Fact 2.4.1
In an eight-hour day, Andy can produce either 24 loaves of bread or 8 kilograms of butter. In an eight-hour day, Rolfe can produce either 8 loaves of bread or 8 kilograms of butter.
-Given Fact 2.4.1, Andy and Rolfe

Accepted Answer

The answer of Use the information below to answer the...

Question 10

Use the information below to answer the following questions.
Fact 2.4.1
In an eight-hour day, Andy can produce either 24 loaves of bread or 8 kilograms of butter. In an eight-hour day, Rolfe can produce either 8 loaves of bread or 8 kilograms of butter.
-Refer to Fact 2.4.1. Which one of the following statements is true?

Accepted Answer

Andy can produce more bread than Rolfe in an eight-hour day, so Andy has a comparative advantage in bread production.

Question 11

Use the information below to answer the following questions.
Fact 2.4.1
In an eight-hour day, Andy can produce either 24 loaves of bread or 8 kilograms of butter. In an eight-hour day, Rolfe can produce either 8 loaves of bread or 8 kilograms of butter.
-Refer to Fact 2.4.1. The opportunity cost of producing 1 kilogram of butter is

Accepted Answer

The opportunity cost of producing 1 kilogram of butter for Andy is 3 loaves of bread (since he can produce 24 loaves in 8 hours, or 3 loaves per hour, and 8 kilograms of butter in 8 hours, or 1 kilogram per hour). For Rolfe, the opportunity cost is 1 loaf of bread (since he can produce 8 loaves in 8 hours, or 1 loaf per hour, and 8 kilograms of butter in 8 hours, or 1 kilogram per hour).

Question 12

Individuals A and B can both produce goods X and Y. Individual A has a comparative advantage in the production of X if

Accepted Answer

Comparative advantage refers to the ability of an individual, firm or country to produce a particular good or service at a lower opportunity cost than another. In this case, if A has a lower opportunity cost of producing X than B, then A has a comparative advantage in the production of X. The opportunity cost is the amount of Y that must be given up to produce one additional unit of X. Therefore, if A has to give up less Y than B to produce an additional unit of X, then A has a comparative advantage in the production of X. Thus, option B is the correct answer.

Question 13

Consider a production possibilities frontier with corn production measured on the vertical axis and car production measured on the horizontal axis. Unusually good weather for growing corn shifts

Accepted Answer

Unusually good weather for growing corn would increase the productivity of corn production, therefore shifting the PPF outward along the corn axis (vertical axis). This means the vertical intercept of the PPF would shift upward, as more corn can be produced with the same amount of resources. However, car production is unaffected by the weather, so the horizontal intercept of the PPF does not shift. Therefore, the correct answer is C.

Question 14

In 1963, the production possibilities per person in Canada were ________ than those in Hong Kong. Between 1963 and 2013, Hong Kong's production possibilities have ________ Canada's production possibilities.

Accepted Answer

In 1963, Canada had greater production possibilities per person than Hong Kong. However, between 1963 and 2013, Hong Kong's production possibilities expanded more quickly than Canada's.

Question 15

Consider a country that has two industries. In the north, they grow wild rice, which requires a lot of rainfall. In the south, they grow wheat, which requires just a moderate amount of rainfall (too much rainfall is bad for wheat production). One year, there is a record rainfall. This will result in

Accepted Answer

The record rainfall benefits wild rice production in the north but harms wheat production in the south, causing the production possibilities frontier to rotate, increasing the wild rice intercept and decreasing the wheat intercept.

Question 16

Debra has an absolute advantage in producing a good when she

Accepted Answer

Absolute advantage refers to the ability of an individual, firm, or country to produce more of a good or service than competitors, using the same amount of resources. Choice C directly describes this concept by stating that Debra can produce more of the good than anyone else with the same quantity of inputs.

Question 17

Use the information below to answer the following questions.
Fact 2.4.1
In an eight-hour day, Andy can produce either 24 loaves of bread or 8 kilograms of butter. In an eight-hour day, Rolfe can produce either 8 loaves of bread or 8 kilograms of butter.
-Given Fact 2.4.1, the opportunity cost of producing 1 loaf of bread is

Accepted Answer

The opportunity cost of producing 1 loaf of bread is the amount of butter that could have been produced instead. Therefore, for Andy, it is 1/3 kilogram of butter (since he can produce 8 kilograms of butter or 24 loaves of bread in 8 hours) and for Rolfe, it is 1 kilogram of butter (since he can produce 8 kilograms of butter or 8 loaves of bread in 8 hours).

Question 18

Suppose a hurricane causes extensive devastation, destroying houses, roads, schools and factories. What would be the effect of this hurricane on a production possibilities frontier consisting of consumption goods and capital goods?

Accepted Answer

The destruction caused by the hurricane reduces the economy's capacity to produce both consumption and capital goods, shifting the production possibilities frontier inward.

Question 19

A factory produces vacuum cleaners and floor polishers. The factory adopts a new technology that allows it to use fewer resources to build floor polishers. With this new technology, the opportunity cost of producing a vacuum cleaner ________ and the factory is ________ efficient.

Accepted Answer

The answer of A factory produces vacuum cleaners and floor...

Question 20

A person who has an absolute advantage in the production of all goods will

Accepted Answer

The answer of A person who has an absolute advantage...

Quiz 2: The Economic Problem

The depletion of fish stocks in Eastern Canada, with its accompanying unemployment, will lead to a

Which of the following quotations illustrates economic growth?

The production possibilities frontier shifts outward when

Consider Toyota's PPF, which measures cars on the x-axis and new skills and new technology on the y-axis. Toyota's opportunity cost of upgrading workers' skills and creating new technology is

Economic growth overcome scarcity because .

Use the information below to answer the following questions. Fact 2.4.1 In an eight-hour day, Andy can produce either 24 loaves of bread or 8 kilograms of butter. In an eight-hour day, Rolfe can produce either 8 loaves of bread or 8 kilograms of butter. -From Fact 2.4.1, we know that