Question 1

Within the production possibilities frontier (PPF)  framework, choice is depicted by the

Accepted Answer

A)  PPF itself.
B)  PPF being bowed outward.
C)  need to select among the points making up the PPF.
D)  straight-line PPF.E) A) and B)
F) A) and C)

Question 2

Exhibit 2-4
 
-Refer to Exhibit 2-4. As more fax machines are produced, the opportunity cost of producing them

Accepted Answer

A)  increases.
B)  decreases.
C)  remains constant.
D)  first decreases and then increases.E) C) and D)
F) All of the above

Question 3

Suppose the economy goes from a point on its production possibilities frontier (PPF)  to a point directly to the left of it. Assuming that the PPF has not shifted, this could be due to

Accepted Answer

A)  a gain of resources.
B)  a loss of resources.
C)  technological improvement in the production of both goods.
D)  the implementation of a new law that interferes with productive efficiency.E) All of the above
F) C) and D)

Question 4

Which of the following statements is true?

Accepted Answer

A)  In a world of efficiently used scarce resources, more of one good necessarily means less of some other good.
B)  The law of increasing opportunity costs assumes that all people have the same ability to produce goods.
C)  Efficiency implies that it is impossible to get more of one good without getting less of another.
D)  Even if a country has unemployed resources, it can still be operating on its production possibilities frontier (PPF) .
E)  a and cF) B) and E)
G) C) and D)

Question 5

If there is always a 4-for-1 tradeoff between producing good X and good Y, it follows that the opportunity cost of X (in terms of Y)  ____________________ and the PPF for these two goods is ______________________.

Accepted Answer

A)  decreases at low levels of X; a straight line
B)  rises at high levels of Y; bowed-outward
C)  decreases at high levels of X; bowed-outward
D)  is always the same; a straight lineE) B) and D)
F) B) and C)

Question 6

Productive efficiency implies that

Accepted Answer

A)  it is impossible to obtain gains in one area without losses in another.
B)  it is possible to obtain gains in one area without losses in another.
C)  there are too many resources available.
D)  there are too few resources available.E) B) and C)
F) A) and B)

Question 7

Michael can produce the following combinations of X and Y: 10X and 10Y, 5X and 15Y, and 0X and 20Y. Vernon can produce the following combinations of X and Y: 100X and 20Y, 50X and 30Y, or 0X and 40Y. It follows that

Accepted Answer

A)  Michael has the comparative advantage in producing X and Vernon has the comparative advantage in producing Y.
B)  Michael has the comparative advantage in producing Y and Vernon has the comparative advantage in producing X.
C)  Neither Michael nor Vernon has a comparative advantage in producing X.
D)  Neither Michael nor Vernon has a comparative advantage in producing Y.
E)  There is not enough information to answer the question.F) B) and E)
G) A) and D)

Question 8

The law of increasing opportunity cost results from the varying ability of resources to adapt to the production of different goods and it helps to explain why production possibilities curves are typically bowed outward.

Accepted Answer

A) True 
 B)False

Question 9

An advance in technology commonly refers to the ability to produce

Accepted Answer

A)  the same output with a smaller quantity of resources.
B)  more output with a fixed quantity of resources.
C)  more output with a greater quantity of resources.
D)  both a and b
E)  both b and cF) B) and D)
G) A) and E)

Question 10

Exhibit 2-4
 
-Refer to Exhibit 2-4. This economy is productive

Accepted Answer

A)  efficient, if it operates at point B or C.
B)  efficient, if it operates at point A or D.
C)  inefficient, if it operates at point A or D.
D)  inefficient regardless of the particular point.
E)  both a and bF) C) and D)
G) A) and B)

Question 11

Exhibit 2-1
 
-Refer to Exhibit 2-1. Scarcity exists

Accepted Answer

A)  at point C but not at point A.
B)  neither at point C nor at point A.
C)  at both point C and at point A.
D)  at point A but not at point C.E) None of the above
F) A) and D)

Question 12

Which of the following statements is true?

Accepted Answer

A)  The concept of opportunity costs cannot be illustrated within a PPF framework.
B)  If scarcity did not exist, neither would a PPF.
C)  All PPFs are downward-sloping straight lines.
D)  There are more attainable points than unattainable points in every PPF diagram.E) A) and B)
F) B) and C)

Question 13

Productive inefficiency implies that

Accepted Answer

A)  it is possible to obtain gains in one area without losses in another.
B)  it is impossible to obtain gains in one area without losses in another.
C)  there are too many resources.
D)  there are too few resources.
E)  none of the aboveF) A) and D)
G) A) and E)

Question 14

When opportunity costs are constant, the PPF will be a straight line.

Accepted Answer

A) True 
 B)False

Question 15

If the economy is currently producing at a point on its production possibilities frontier (PPF) , the economy is

Accepted Answer

A)  productive inefficient.
B)  operating with no unemployed resources.
C)  productive efficient.
D)  b and c
E)  none of the aboveF) B) and D)
G) B) and E)

Question 16

Suppose an economy can produce a maximum of 10 units of good X and the opportunity cost of 1X is always 2Y. What is the maximum number of units of good Y the economy can produce?

Accepted Answer

A)  10
B)  200
C)  20
D)  500
E)  none of the aboveF) A) and B)
G) A) and C)

Question 17

Exhibit 2-2
 2 is the relevant production possibilities frontier, a significant loss of the quantity of resources available could A) move this society from point D to point G on PPF   . B) shift this society to PPF   . C) shift this society to PPF   . D) not affect this society." class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 2-2. If PPF2 is the relevant production possibilities frontier, a significant loss of the quantity of resources available could

Accepted Answer

A)  move this society from point D to point G on PPF 2 is the relevant production possibilities frontier, a significant loss of the quantity of resources available could 
A)  move this society from point D to point G on PPF   . 
B)  shift this society to PPF   . 
C)  shift this society to PPF   . 
D)  not affect this society." class="answers-bank-image d-inline" rel="preload" > .
B)  shift this society to PPF 2 is the relevant production possibilities frontier, a significant loss of the quantity of resources available could 
A)  move this society from point D to point G on PPF   . 
B)  shift this society to PPF   . 
C)  shift this society to PPF   . 
D)  not affect this society." class="answers-bank-image d-inline" rel="preload" > .
C)  shift this society to PPF 2 is the relevant production possibilities frontier, a significant loss of the quantity of resources available could 
A)  move this society from point D to point G on PPF   . 
B)  shift this society to PPF   . 
C)  shift this society to PPF   . 
D)  not affect this society." class="answers-bank-image d-inline" rel="preload" > .
D)  not affect this society.E) None of the above
F) A) and B)

Question 18

Exhibit 2-8
 
-Refer to Exhibit 2-8. For Maya, the opportunity cost of producing one unit of good X is ___________ unit(s)  of good Y.

Accepted Answer

A)  2.00
B)  1.00
C)  10.00
D)  0.50E) A) and D)
F) A) and B)

Question 19

Points that lie inside (or below)  the PPF are

Accepted Answer

A)  unattainable.
B)  attainable and productive efficient.
C)  attainable and productive inefficient.
D)  attainable and neither productive efficient nor productive inefficient.E) None of the above
F) A) and B)

Question 20

Keisha can produce the following combinations of X and Y: 100X and 20Y, 50X and 30Y, or 0X and 40Y. The opportunity cost of one unit of Y for Keisha is

Accepted Answer

A)  5 units of X.
B)  0.2 units of X.
C)  3 units of X.
D)  1/2 unit of X.
E)  none of the aboveF) C) and E)
G) A) and D)

Exam 2: Production Possibilities Frontier Framework

Productive efficiency implies that

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Suppose the economy goes from a point on its production possibilities frontier (PPF) to a point directly to the left of it. Assuming that the PPF has not shifted, this could be due to

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Exhibit 2-2 -Refer to Exhibit 2-2. If PPF2 is the relevant production possibilities frontier, a significant loss of the quantity of resources available could

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The law of increasing opportunity cost results from the varying ability of resources to adapt to the production of different goods and it helps to explain why production possibilities curves are typically bowed outward.

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Exhibit 2-4 -Refer to Exhibit 2-4. This economy is productive

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Suppose an economy can produce a maximum of 10 units of good X and the opportunity cost of 1X is always 2Y. What is the maximum number of units of good Y the economy can produce?

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Exhibit 2-4 -Refer to Exhibit 2-4. As more fax machines are produced, the opportunity cost of producing them

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Within the production possibilities frontier (PPF) framework, choice is depicted by the

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Which of the following statements is true?

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Exhibit 2-8 -Refer to Exhibit 2-8. For Maya, the opportunity cost of producing one unit of good X is ___________ unit(s) of good Y.

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Productive inefficiency implies that

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Which of the following statements is true?

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Keisha can produce the following combinations of X and Y: 100X and 20Y, 50X and 30Y, or 0X and 40Y. The opportunity cost of one unit of Y for Keisha is

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If the economy is currently producing at a point on its production possibilities frontier (PPF) , the economy is

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An advance in technology commonly refers to the ability to produce

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When opportunity costs are constant, the PPF will be a straight line.

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Exhibit 2-1 -Refer to Exhibit 2-1. Scarcity exists

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Points that lie inside (or below) the PPF are

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Michael can produce the following combinations of X and Y: 10X and 10Y, 5X and 15Y, and 0X and 20Y. Vernon can produce the following combinations of X and Y: 100X and 20Y, 50X and 30Y, or 0X and 40Y. It follows that

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If there is always a 4-for-1 tradeoff between producing good X and good Y, it follows that the opportunity cost of X (in terms of Y) ____________________ and the PPF for these two goods is ______________________.

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Exhibit 2-2 -Refer to Exhibit 2-2. If PPF₂ is the relevant production possibilities frontier, a significant loss of the quantity of resources available could

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If there is always a 4-for-1 tradeoff between producing good X and good Y, it follows that the opportunity cost of X (in terms of Y) and the PPF for these two goods is __.

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