Question 1

When an economy is not using all of its resources,it is producing at a point below its production possibilities frontier.

Accepted Answer

A) True 
 B)False

Question 2

If the PPF for two goods is a downward-sloping straight line,the resources used to produce those goods are equally well suited to the production of both goods.

Accepted Answer

A) True 
 B)False

Question 3

Points inside (or below) the PPF are

Accepted Answer

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

Question 4

Points outside (or beyond) the PPF are

Accepted Answer

A)   attainable.
B)   unattainable.
C)   efficient.
D)   inefficient.E) B) and D)
F) B) and C)

Question 5

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) A) and C)
F) A) and B)

Question 6

The increased production of lamps comes at constant opportunity costs in terms of bookshelves.This means

Accepted Answer

A)   that it takes more resources to produce a lamp than a bookshelf.
B)   that it takes fewer resources to produce a lamp than a bookshelf.
C)   that for every lamp produced,a constant number of bookshelves is forfeited.
D)   that for every lamp produced,a different number of bookshelves is forfeited.E) C) and D)
F) B) and C)

Question 7

Exhibit 2-9
 
-Refer to Exhibit 2-9.If Alex and Adam each specialize in the good in which he has a comparative advantage and then engage in trade,____________________ can consume a combination of goods that lies beyond his PPF.

Accepted Answer

A)   Alex,but not Adam,
B)   Adam,but not Alex
C)   Alex and Adam
D)   neither Alex nor AdamE) A) and D)
F) B) and C)

Question 8

Exhibit 2-3 1 is the relevant production possibilities frontier,society may move to PPF2 as a result of A)  an increase in resources. B)  a decrease in resources. C)  an increase in technology. D)  both a and c E)  both b and c" class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 2-3.If PPF1 is the relevant production possibilities frontier,society may move to PPF2 as a result of

Accepted Answer

A)   an increase in resources.
B)   a decrease in resources.
C)   an increase in technology.
D)   both a and c
E)   both b and cF) C) and E)
G) A) and E)

Question 9

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) C) and D)
G) B) and E)

Question 10

Exhibit 2-1 
-Refer to Exhibit 2-1.The opportunity cost of moving from point A to B is

Accepted Answer

A)   10,000 units of butter.
B)   20,000 units of butter.
C)   20,000 units of guns.
D)   10,000 units of guns.E) A) and B)
F) A) and C)

Question 11

Productive efficiency implies

Accepted Answer

A)   the possibility of gains in one area without losses in another.
B)   that more output has been produced.
C)   the impossibility of gains in one area without losses in another.
D)   that prices are stable.
E)   c and dF) A) and B)
G) A) and C)

Question 12

In a PPF graph of goods X and Y,points that lie beyond (to the right of)the PPF represent combinations of the two goods that are currently unattainable.

Accepted Answer

A) True 
 B)False

Question 13

If resources are better suited toward the production of one good than toward the other good,then the PPF for those two goods is

Accepted Answer

A)   a straight line.
B)   bowed outward.
C)   upward sloping.
D)   any of the aboveE) C) and D)
F) A) and D)

Question 14

Exhibit 2-5 
-Refer to Exhibit 2-5.The opportunity cost of moving from point D to point C is

Accepted Answer

A)   5,000 televisions.
B)   5,000 fax machines.
C)   10,000 televisions.
D)   10,000 fax machines.E) A) and B)
F) All of the above

Question 15

The economy can produce 15X and 15Y,10X and 20Y,5X and 25Y,or OX and 30Y.It follows that the production possibility frontier (PPF) is

Accepted Answer

A)   a downward-sloping straight line.
B)   an upward-sloping straight line.
C)   a downward-sloping convex curve.
D)   a downward-sloping concave curve.E) A) and B)
F) A) and D)

Question 16

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) B) and C)

Question 17

Both country 1 and country 2 are located on their respective production possibilities frontiers (PPFs) ,but country 1 produces twice the output that country 2 produces.It follows that

Accepted Answer

A)   country 1's PPF lies further to the right than country 2's PPF.
B)   country 1 has a smaller population than country 2.
C)   country 1 has a bigger population than country 2.
D)   country 1 is efficient and country 2 is inefficient.
E)   none of the aboveF) C) and E)
G) B) and E)

Question 18

Suppose the economy goes from a point on its production possibilities frontier (PPF) to a point below that PPF.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)   a new law that interferes with economic efficiency.E) A) and C)
F) B) and C)

Question 19

Suppose Andrea is taking just two courses and is at a point on her PPF of grades for those two courses.Now this PPF shifts inward and Andrea moves to a point on the new PPF.Then it is impossible for

Accepted Answer

A)   both of her grades to fall.
B)   both of her grades to rise.
C)   one of her grades to rise and the other grade to fall.
D)   one of her grades to fall while the other grade stays constant.E) B) and C)
F) A) and B)

Question 20

If the law of increasing opportunity costs is operable,and currently the opportunity cost of producing the 1,000th unit of good X is 0.5Y,then the opportunity cost of producing the 2,001st unit of good is X is most likely to be

Accepted Answer

A)   less than 0.5Y.
B)   more than 0.5Y but less than 2Y.
C)   more than 0.5Y
D)   less than 0.5Y but more than zero.
E)   none of the aboveF) A) and E)
G) All of the above

Exam 2: Production Possibilities Frontier Framework

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

Correct AnswerverifiedShow Answer

Points inside (or below) the PPF are

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When an economy is not using all of its resources,it is producing at a point below its production possibilities frontier.

Correct AnswerverifiedShow Answer

The economy can produce 15X and 15Y,10X and 20Y,5X and 25Y,or OX and 30Y.It follows that the production possibility frontier (PPF) is

Correct AnswerverifiedShow Answer

In a PPF graph of goods X and Y,points that lie beyond (to the right of)the PPF represent combinations of the two goods that are currently unattainable.

Correct AnswerverifiedShow Answer

If the PPF for two goods is a downward-sloping straight line,the resources used to produce those goods are equally well suited to the production of both goods.

Correct AnswerverifiedShow Answer

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

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Exhibit 2-5 -Refer to Exhibit 2-5.The opportunity cost of moving from point D to point C is

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Suppose Andrea is taking just two courses and is at a point on her PPF of grades for those two courses.Now this PPF shifts inward and Andrea moves to a point on the new PPF.Then it is impossible for

Correct AnswerverifiedShow Answer

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

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Points outside (or beyond) the PPF are

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Productive efficiency implies

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

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Exhibit 2-1 -Refer to Exhibit 2-1.The opportunity cost of moving from point A to B is

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Exhibit 2-9 -Refer to Exhibit 2-9.If Alex and Adam each specialize in the good in which he has a comparative advantage and then engage in trade,____________________ can consume a combination of goods that lies beyond his PPF.

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Exhibit 2-3 -Refer to Exhibit 2-3.If PPF1 is the relevant production possibilities frontier,society may move to PPF2 as a result of

Correct AnswerverifiedShow Answer

If the law of increasing opportunity costs is operable,and currently the opportunity cost of producing the 1,000th unit of good X is 0.5Y,then the opportunity cost of producing the 2,001st unit of good is X is most likely to be

Correct AnswerverifiedShow Answer

The increased production of lamps comes at constant opportunity costs in terms of bookshelves.This means

Correct AnswerverifiedShow Answer

If resources are better suited toward the production of one good than toward the other good,then the PPF for those two goods is

Correct AnswerverifiedShow Answer

Both country 1 and country 2 are located on their respective production possibilities frontiers (PPFs) ,but country 1 produces twice the output that country 2 produces.It follows that

Correct AnswerverifiedShow Answer

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Exhibit 2-3 -Refer to Exhibit 2-3.If PPF₁ is the relevant production possibilities frontier,society may move to PPF₂ as a result of

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