Question 1

Consider a PPF with consumption goods on the horizontal axis and capital goods on the vertical axis.If the country operates on its PPF near its ________ axis,this country ________.
A)vertical;will experience greater economic growth
B)vertical;will not face opportunity costs
C)horizontal;will have a larger chance at economic growth
D)horizontal;faces larger trade offs
E)vertical;is operating at an inefficient point

Accepted Answer

Operating near the vertical axis, where capital goods are plotted, indicates that the country is investing more in capital goods. This investment in capital goods (like machinery, tools, and infrastructure) is crucial for enhancing productivity and, consequently, can lead to greater economic growth.

Question 2

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 3

Moving between two points on a PPF,a country gains 8 desktop computers and forgoes 4 laptop computers.The opportunity cost of 1 desktop computer is
A)4 laptops.
B)8 desktops.
C)1 desktop.
D)2 laptops.
E)1/2 of a laptop.

Accepted Answer

The answer of Moving between two points on a PPF,a...

Question 4

Economic growth depends upon which of the following?
I.Improving the quality of labor
Ii.Technological advancement
Iii.Increasing the amount of capital
A)i only
B)ii only
C)iii only
D)i and iii
E)i,ii,and iii

Accepted Answer

Economic growth depends on all three factors - improving the quality of labor, technological advancement, and increasing the amount of capital. Improving the quality of labor leads to increased productivity and efficiency, technological advancement leads to improved production processes and product innovation, and increasing the amount of capital allows for investment in new technologies, physical infrastructure, and human capital development. All three factors work together to drive economic growth.

Question 5

-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)PPF2;PPF2
C)PPF0;PPF0
D)PPF2;PPF1
E)PPF1;PPF2

Accepted Answer

India is currently producing more food and less clothing than France. This suggests that India has a comparative advantage in food production, and France has a comparative advantage in clothing production. In the future, it is likely that India will specialize in food production and export food to France, while France will specialize in clothing production and export clothing to India. This will lead to a shift in the PPFs of both countries, with India's PPF shifting outward in the food direction and France's PPF shifting outward in the clothing direction.

Question 6

-Suppose Puerto Rico and Hawaii currently have the same production possibilities so that the above figure is the PPF for hotels and consumption goods in the two areas.Hotels are a capital good that,once built,will help produce still more consumption goods.If Puerto Rico produces more hotels than Hawaii,
A)Hawaii's PPF will shift outward further than Puerto Rico's PPF.
B)Hawaii's PPF will shift inward.
C)Puerto Rico's PPF will not shift.
D)Puerto Rico's and Hawaii's PPF will shift outward by the same amount.
E)Puerto Rico's PPF will shift outward further than Hawaii's PPF.

Accepted Answer

By producing more hotels, which are capital goods, Puerto Rico is investing in its future production capabilities. This investment increases its ability to produce more in the future, leading to an outward shift in its PPF further than Hawaii's, assuming Hawaii invests less in capital goods.

Question 7

A country produces only cans of soup and ink pens.If the country produces on its bowed outward PPF and increases the production of cans of soup,the opportunity cost of additional
A)cans of soup is increasing.
B)cans of soup is decreasing.
C)cans of soup remains unchanged.
D)ink pens is increasing.
E)More information is needed to determine what happens to the opportunity cost.

Accepted Answer

When the country increases the production of cans of soup, it has to give up producing ink pens. This means that the opportunity cost of producing additional cans of soup is increasing, as more and more ink pens have to be foregone for every unit of additional cans of soup.

Question 8

Which of the following is the best definition of economic growth?
A)The investment in capital and consumption goods by an economy
B)The opportunity cost of capital
C)The opportunity cost of consumption
D)Increased development of land and entrepreneurship
E)The sustained expansion of production possibilities

Accepted Answer

Economic growth refers to the sustained expansion of production possibilities, which is an increase in the ability of an economy to produce goods and services over time. This can come from various factors including technological advancements, increases in capital and labor inputs, and improvements in infrastructure. The other choices listed are not comprehensive or accurate definitions of economic growth.

Question 9

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

Accepted Answer

If India is currently producing more capital goods than France, it is likely to experience more economic growth in the future, shifting its PPF outward to PPF2.

Question 10

The sustained expansion of production possibilities is called
A)economic investment.
B)production expansion.
C)opportunity cost of growth.
D)economic growth.
E)production possibilities.

Accepted Answer

The sustained expansion of production possibilities refers to an increase in the potential for producing goods and services over time, which is commonly referred to as economic growth.

Question 11

-Suppose Puerto Rico and Hawaii currently have the same production possibilities so that the above figure is the PPF for hotels and consumption goods in the two areas.Hotels are a capital good that,once built,will help produce still more consumption goods..According to the figure,which island will have more rapid economic growth?
A)Hawaii
B)Both Hawaii and Puerto Rico will grow at the same speed.
C)Puerto Rico
D)Neither Hawaii nor Puerto Rico will grow.
E)More than one of the above answers is correct.

Accepted Answer

Puerto Rico will have more rapid economic growth if it invests in hotels, which are capital goods. Capital goods, once built, can help produce more consumption goods, leading to faster economic growth.

Question 12

Increasing opportunity cost exists
A)in the real world.
B)as long as there is high unemployment.
C)only in theory but not in real life.
D)for a country but not for an individual.
E)inside the PPF but not on the PPF.

Accepted Answer

Increasing opportunity cost is a fundamental concept of economics that exists in the real world. It occurs when the production of one good requires giving up the production of another good. As more of a good is produced, the opportunity cost of producing additional units of that good increases because resources become less suitable to producing it and more expensive to produce it. This concept is observed in all economies and is a key factor in decision-making.

Question 13

Moving along a country's PPF,a reason opportunity costs increase is that
A)unemployment decreases as a country produces more and more of one good.
B)unemployment increases as a country produces more and more of one good.
C)technology declines as a country produces more and more of one good.
D)some resources are better suited for producing one good rather than the other.
E)technology must advance in order to produce more and more of one good.

Accepted Answer

As a country moves along its PPF, which shows the maximum amount of goods that can be produced with the available resources and technology, it will face increasing opportunity costs. This is because some resources are better suited for producing one good rather than the other. As a country produces more and more of one good, it must divert increasingly scarce resources away from other uses, which increases the opportunity cost of producing more of that good. This is known as the law of increasing opportunity cost. The other choices do not provide a valid explanation for why opportunity costs increase as a country moves along its PPF.

Question 14

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)i only
B)ii only
C)iii only
D)i and iii
E)i,ii,and iii

Accepted Answer

Economic growth depends upon increasing the quantity of labor as it means more production and availability of goods and services. Advancing technology also plays a major role in economic growth as it leads to increased productivity and efficiency. Therefore, options I and III are correct. However, lowering the prices of goods and services does not necessarily lead to economic growth. It can temporarily increase demand, but if it leads to lower profits for businesses, it can actually hinder long-term economic growth. Therefore, option II is incorrect. Hence, the correct answer is option D.

Question 15

The opportunity cost of economic growth is
A)0,because it means an expansion of production possibilities.
B)the decrease in the current production of productive factors.
C)a slower accumulation of human capital.
D)the decrease in the current production of consumption goods.
E)the increase in the nation's capital stock and/or its technology.

Accepted Answer

Economic growth requires resources to be diverted away from producing consumption goods and towards producing investment goods. Therefore, the opportunity cost of economic growth is the decrease in the current production of consumption goods.

Question 16

-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)PPF2
B)PPF1
C)PPF0
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 17

What is the opportunity cost of economic growth?
A)current period consumption goods
B)current period capital goods
C)land
D)both current period consumption and capital goods
E)both current period capital goods and land

Accepted Answer

The answer of What is the opportunity cost of economic...

Question 18

Which of the following would most likely cause a country's production possibilities set to shift outward at every point along the frontier?
A)a decrease in idle capital
B)a decrease in unemployment
C)a technological advance in only one sector of the economy
D)a general technological advance that affects all sectors of the economy
E)none of the above

Accepted Answer

A general technological advance that affects all sectors of the economy would increase the productivity and efficiency of all sectors, leading to an outward shift in the production possibilities set at every point along the frontier. The other options would not necessarily have the same impact on all sectors of the economy.

Question 19

Moving between two points on a PPF,a country gains 6 automobiles and forgoes 3 trucks.The opportunity cost of 1 automobile is
A)3 trucks.
B)6 automobiles - 3 trucks.
C)2 trucks.
D)1/2 of a truck.
E)1 automobile.

Accepted Answer

The answer of Moving between two points on a PPF,a...

Question 20

As an economy grows,
A)its PPF shifts outward.
B)it can eliminate scarcity.
C)the opportunity cost of production will approach 0.
D)the opportunity cost of production will increase.
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, it becomes more efficient in its use of resources and is able to produce more goods and services with the same amount of inputs. This leads to an outward shift in the production possibility frontier (PPF), as the economy is now capable of producing more than before. The other options are incorrect, as scarcity is a fundamental concept in economics and cannot be completely eliminated, and the opportunity cost of production will not approach 0, but instead will increase as the economy produces more of a particular good or service. Finally, the production point also does not simply move closer to the PPF, but instead moves along the PPF as the economy produces more efficiently.

Quiz 3: The Economic Problem

Consider a PPF with consumption goods on the horizontal axis and capital goods on the vertical axis.If the country operates on its PPF near its axis,this country .

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?

Moving between two points on a PPF,a country gains 8 desktop computers and forgoes 4 laptop computers.The opportunity cost of 1 desktop computer is

Economic growth depends upon which of the following? I.Improving the quality of labor Ii.Technological advancement Iii.Increasing the amount of capital

-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 country produces only cans of soup and ink pens.If the country produces on its bowed outward PPF and increases the production of cans of soup,the opportunity cost of additional

Which of the following is the best definition of economic growth?

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

The sustained expansion of production possibilities is called

Increasing opportunity cost exists

Moving along a country's PPF,a reason opportunity costs increase is that

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

The opportunity cost of economic growth is

-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?

What is the opportunity cost of economic growth?

Which of the following would most likely cause a country's production possibilities set to shift outward at every point along the frontier?

Moving between two points on a PPF,a country gains 6 automobiles and forgoes 3 trucks.The opportunity cost of 1 automobile is

As an economy grows,