Question 1

Following is the production possibilities schedule for an economy producing two goods Good A and Good B.
Table 2.1
   Production Possibilities Schedule  Good A  Good B  Choice 1 1000 Choice 2 9020 Choice 3 7040 Choice 4 4060 Choice 5 080\begin{array}{ccc}	ext { Production Possibilities Schedule } \\begin{array}{ccc}&	ext { Good A }&	ext { Good B }\	ext { Choice 1 } & 100 & 0 \	ext { Choice 2 } & 90 & 20 \	ext { Choice 3 } & 70 & 40 \	ext { Choice 4 } & 40 & 60 \	ext { Choice 5 } & 0 & 80\end{array}\end{array} Production Possibilities Schedule  Choice 1  Choice 2  Choice 3  Choice 4  Choice 5 ​ Good A 1009070400​ Good B 020406080​​ 
-Refer to Table 2.1. According to the production possibilities schedule in the table above, which of the following statements is true?

Accepted Answer

A)   Moving from choice 2 to choice 3, the opportunity cost of 20 more B is 20 units of A.
B)   There are increasing opportunity costs associated with getting more B.
C)   Moving from choice 3 to choice 4, the opportunity cost of 20 more B is 30 units of A.
D)   Moving from choice 1 to choice 2, the opportunity cost of 20 more B is 10 units of A.
E)   All of these statements are true.

Question 2

Jane wins $100,000 in the lottery and immediately uses her winnings to open up a donut shop. Her direct costs are $50,000, and she puts the remaining money in a savings account earning 10 percent annual interest. Alternatively, Jane could have placed all her lottery winnings in the 10 percent savings account. Jane's total cost is:

Accepted Answer

A)   $60,000.
B)   $50,000.
C)   $160,000.
D)   $45,000.
E)   $55,000.

Question 3

The table given below represents butter and ham production by two countries Norway and Sweden.
Table 2.5
   Tirne Spent  Making Eutter  Namay  Sweden 100% Butter 51000% Ham 10100\begin{array} { | c | c | c | c | } \hline \begin{array} { c } 	ext { Tirne Spent } \	ext { Making Eutter }\end{array} & & 	ext { Namay } & 	ext { Sweden } \\hline 100 \% & 	ext { Butter } & 5 & 100 \\hline 0 \% & 	ext { Ham } & 10 & 100 \\hline\end{array} Tirne Spent  Making Eutter ​100%0%​ Butter  Ham ​ Namay 510​ Sweden 100100​​ 
-According to Table 2.5, Norway has a comparative advantage in _____ and an absolute advantage in _____.

Accepted Answer

A)   butter and ham; butter
B)   ham; butter
C)   nothing; butter
D)   ham; nothing
E)   butter; ham

Question 4

One of the reasons for China's real per capita GDP being far lower than that of Taiwan in 2000 was the lack of private property rights in the former nation.

Accepted Answer

A) True 
 B)False

Question 5

Archie can paint 5 backyard fences or repair 2 cars in 8 hours, while Austin can paint 4 backyard fences or repair 2 cars in 8 hours. Identify the correct statement.

Accepted Answer

A)   Archie is relatively better in repairing cars.
B)   Archie is relatively better in painting fences.
C)   Austin is relatively better in painting fences.
D)   Archie and Austin are equally good in painting fences.
E)   Neither Archie not Austin are good in repairing cars.

Question 6

Which of the following ideas is illustrated by the production possibilities curve [PPC]?

Accepted Answer

A)   There are no limits on the total feasible production attainable in an economy.
B)   An economy need not decrease the production of one commodity to increase the production of another.
C)   It is possible to satisfy unlimited wants in an economy through proper investment in research and development.
D)   When an economy chooses to produce a combination of goods and services, other combinations of goods and services are sacrificed.
E)   An economy can specialize in the production of only one good.

Question 7

An economy's PPC illustrates the extent to which the economy consumes what it produces.

Accepted Answer

A) True 
 B)False

Question 8

The tradeoffs facing a society can be illustrated in a graph known as the:

Accepted Answer

A)   production operations curve.
B)   production cost curve.
C)   production cost model.
D)   production cost forecast curve.
E)   production possibilities curve.

Question 9

The difference between what can be produced and consumed without specialization and trade and with specialization and trade is called:

Accepted Answer

A)   comparative advantage.
B)   a tradeoff.
C)   marginal cost.
D)   opportunity cost.
E)   gains from trade.

Question 10

The figure given below represents the production possibilities curves [PPC] of a country producing wine and cars.
Figure 2.1
 
-Refer to Figure 2.1. If the country has curve I as its PPC, _____ would most likely cause the curve to shift to curve II.

Accepted Answer

A)   more farmland
B)   an increase in the work force
C)   the discovery of new metal resources
D)   a labor movement
E)   a consumer boycott

Question 11

In economics, the concept of opportunity cost is:

Accepted Answer

A)   negated by ensuring that the government has a role in a capitalist society.
B)   defined to be the highest-valued alternative that must be forgone when a choice is made.
C)   best illustrated by knowing why consumers choose one good over another.
D)   quantifiable only if you know the real dollar prices of the goods and services you are giving up to consume something.
E)   the methodology that government economists use to determine the total amount of the national debt.

Question 12

Gains from trade can be realized if each country specializes in its comparative advantage good.

Accepted Answer

A) True 
 B)False

Question 13

Bob and Bill can make 16 toys each if they devote 8 working hours in a day. Further, Bob can repair 4 cars and Bill can repair 2 cars, if they devote 8 working hours in a day. What is the opportunity cost of repairing one car to Bob?

Accepted Answer

A)   10 toys
B)   8 toys
C)   16 toys
D)   12 toys
E)   4 toys

Question 14

People (and all resources) :

Accepted Answer

A)   tend to specialize in those activities in which their opportunity costs are minimized.
B)   tend to specialize in those activities in which their opportunity costs are maximized.
C)   never consider opportunity costs before specializing in a particular activity.
D)   consider only direct costs while choosing to specialize in a particular activity.
E)   do not act in their own self-interest but specialize in those activities which benefit others.

Question 15

A nation's production possibilities curve [PPC] will shift outward if its workers receive better training.

Accepted Answer

A) True 
 B)False

Question 16

The table given below represents the output per hour of cookies and chilies in Ohio and Iowa.
Table 2.4
   Output per Hour  Iowa  Cookies  Chilies  Ohid 624 Iowa 1296\begin{array}{|ccc|}\hline &	ext { Output per Hour }\	ext { Iowa } &	ext { Cookies } & 	ext { Chilies } \\hline  	ext { Ohid } & 6 & 24 \\hline 	ext { Iowa } & 12 & 96\\hline \end{array} Iowa  Ohid  Iowa ​ Output per Hour  Cookies 612​ Chilies 2496​​ 
-Refer to Table 2.4. If trade were to occur, what would be the least amount Ohio would be willing to accept for 1 cookie?

Accepted Answer

A)   8 chilies
B)   1/4 of a chili 1 / 4 	ext { of a chili }1/4 of a chili  
C)    1/8 of a chili 1 / 8 	ext { of a chili }1/8 of a chili  
D)   4 chilies
E)   12 chilies

Question 17

Consider the production possibilities curve for an economy producing only two commodities wheat (represented on the X axis)  and wine (represented on the Y axis) . A movement up along the production possibilities curve [PPC] will imply:

Accepted Answer

A)   an increase in wheat production.
B)   an increase in both wheat and wine production.
C)   a decline in both wheat and wine production.
D)   an increase in wine production.
E)   no change in either wheat or wine production.

Question 18

Consider a PPC with automobiles on the vertical axis and cotton on the horizontal axis. The discovery of a new fertilizer that improves crop yield will shift:

Accepted Answer

A)   the vertical intercept up but will not shift the horizontal intercept.
B)   the horizontal intercept to the right but will not shift the vertical intercept.
C)   the horizontal intercept to the left and the vertical intercept upward.
D)   the vertical intercept downward and the horizontal intercept to the right.
E)   neither the horizontal intercept nor the vertical intercept.

Exam 2: Choice, Opportunity Costs, and Specialization

One of the reasons for China's real per capita GDP being far lower than that of Taiwan in 2000 was the lack of private property rights in the former nation.

Correct Answer
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The figure given below represents the production possibilities curves [PPC] of a country producing wine and cars. Figure 2.1 -Refer to Figure 2.1. If the country has curve I as its PPC, _____ would most likely cause the curve to shift to curve II.

Correct Answer
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A nation's production possibilities curve [PPC] will shift outward if its workers receive better training.

Correct Answer
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The difference between what can be produced and consumed without specialization and trade and with specialization and trade is called:

Correct Answer
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Archie can paint 5 backyard fences or repair 2 cars in 8 hours, while Austin can paint 4 backyard fences or repair 2 cars in 8 hours. Identify the correct statement.

Correct Answer
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An economy's PPC illustrates the extent to which the economy consumes what it produces.

Correct Answer
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In economics, the concept of opportunity cost is:

Correct Answer
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Correct Answer
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Bob and Bill can make 16 toys each if they devote 8 working hours in a day. Further, Bob can repair 4 cars and Bill can repair 2 cars, if they devote 8 working hours in a day. What is the opportunity cost of repairing one car to Bob?

Correct Answer
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Consider a PPC with automobiles on the vertical axis and cotton on the horizontal axis. The discovery of a new fertilizer that improves crop yield will shift:

Correct Answer
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Which of the following ideas is illustrated by the production possibilities curve [PPC]?

Correct Answer
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The tradeoffs facing a society can be illustrated in a graph known as the:

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Gains from trade can be realized if each country specializes in its comparative advantage good.

Correct Answer
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People (and all resources) :

Correct Answer
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Consider the production possibilities curve for an economy producing only two commodities wheat (represented on the X axis) and wine (represented on the Y axis) . A movement up along the production possibilities curve [PPC] will imply:

Correct Answer
verified

Exam 2: Choice, Opportunity Costs, and Specialization

One of the reasons for China's real per capita GDP being far lower than that of Taiwan in 2000 was the lack of private property rights in the former nation.

Correct AnswerverifiedShow Answer

The figure given below represents the production possibilities curves [PPC] of a country producing wine and cars. Figure 2.1 -Refer to Figure 2.1. If the country has curve I as its PPC, _____ would most likely cause the curve to shift to curve II.

Correct AnswerverifiedShow Answer

A nation's production possibilities curve [PPC] will shift outward if its workers receive better training.

Correct AnswerverifiedShow Answer

The difference between what can be produced and consumed without specialization and trade and with specialization and trade is called:

Correct AnswerverifiedShow Answer

Archie can paint 5 backyard fences or repair 2 cars in 8 hours, while Austin can paint 4 backyard fences or repair 2 cars in 8 hours. Identify the correct statement.

Correct AnswerverifiedShow Answer

An economy's PPC illustrates the extent to which the economy consumes what it produces.

Correct AnswerverifiedShow Answer

In economics, the concept of opportunity cost is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Bob and Bill can make 16 toys each if they devote 8 working hours in a day. Further, Bob can repair 4 cars and Bill can repair 2 cars, if they devote 8 working hours in a day. What is the opportunity cost of repairing one car to Bob?

Correct AnswerverifiedShow Answer

Consider a PPC with automobiles on the vertical axis and cotton on the horizontal axis. The discovery of a new fertilizer that improves crop yield will shift:

Correct AnswerverifiedShow Answer

Which of the following ideas is illustrated by the production possibilities curve [PPC]?

Correct AnswerverifiedShow Answer

The tradeoffs facing a society can be illustrated in a graph known as the:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Gains from trade can be realized if each country specializes in its comparative advantage good.

Correct AnswerverifiedShow Answer

People (and all resources) :

Correct AnswerverifiedShow Answer

Consider the production possibilities curve for an economy producing only two commodities wheat (represented on the X axis) and wine (represented on the Y axis) . A movement up along the production possibilities curve [PPC] will imply:

Correct AnswerverifiedShow Answer

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