2) Why is the production possibilities frontier bowed out?
Skill: Level 2: Using deinitions
Section: Checkpoint 3.2
Status: Old
AACSB: Written and oral communication
3) Why does the production possibilities frontier have a bowed out shape rather than being
a straight line?
Skill: Level 4: Applying models
Section: Checkpoint 3.2
Status: Old
AACSB: Written and oral communication
4) When economists state that the opportunity cost of a product increases as more of it is
produced, what do they mean? For instance, what is the opportunity cost? And, where in a
PPF diagram does this statement apply and where does it not apply?
Skill: Level 2: Using deinitions
Section: Checkpoint 3.2
Status: Old
AACSB: Written and oral communication
101
5) What is the relationship between the bowed out shape of the production possibilities
frontier and the increasing opportunity cost of a good as more of it is produced?
Skill: Level 2: Using deinitions
Section: Checkpoint 3.2
Status: Old
AACSB: Written and oral communication
102
6) A (very, very small) country produces milk and shirts and its production possibilities
frontier is in the table above.
a. The nation is currently producing at point B. What is the opportunity cost of two
additional gallons of milk? At point C? At point D? What do your results show?
b. Suppose the nation is initially producing 4 gallons of milk and 40 shirts. What is the
opportunity cost of 2 additional gallons of milk? Explain your answer.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
103
7) Jean can either type her term paper or create Web pages during the limited time she has
available. The table above shows her PPF.
a. Can Jean type 90 pages and create 2 Web pages?
b. Use the above numbers to calculate the opportunity cost of a typed page as she
increases her time typing and decreases time creating a Web page.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
104
8) The table above gives the production possibilities frontier for a nation that produces
wheat and soybeans. Use the information in that table to complete the table below, which
has in it the opportunity costs of moving from one production point to another. Do not
forget to note the units of the opportunity costs.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
105
9) The igure above represents the production possibilities frontier for a country.
a. The nation is currently producing at point B and wants to move to point C. What is the
opportunity cost of the move?
b. The nation is currently producing at point B and wants to move to point A. What is the
opportunity cost of the move?
c. The nation is currently producing at point D and wants to move to point B. What is the
opportunity cost of the move?
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
106
10) The table above presents the production possibilities of Farmer Brown. Use these data
to calculate Farmer Brown’s opportunity cost of additional beef as Farmer Brown moves
from point A to B to C to D. Also use the data to calculate Farmer Brown’s opportunity cost
of additional wheat as Farmer Brown moves from point D to C to B to A. Based on these
costs, does Farmer Brown use resources that are more productive in one activity than the
other or are they equally productive in both uses? Explain your answer.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
3.9 Essay: Economic Growth
1) How is economic growth shown in a production possibilities frontier graph?
Skill: Level 2: Using deinitions
Section: Checkpoint 3.3
Status: Old
AACSB: Relective thinking
3.10 Essay: Specialization and Trade
1) What is comparative advantage? Give an example.
Skill: Level 1: Deinition
Section: Checkpoint 3.4
Status: Old
AACSB: Written and oral communication
2) “When a person has an absolute advantage in producing a good, the person necessarily
has a lower opportunity cost of producing it.” Is this assertion true or false?
opportunity costs, so a person has a comparative advantage in producing a good if the
person can produce the good at a lower opportunity cost.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.4
Status: Old
AACSB: Written and oral communication
3) “When a person is more productive in producing a good or service than another person,
the irst person has the comparative advantage in producing the good.” Is this assertion
correct or incorrect? Explain your answer.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.4
Status: Old
AACSB: Written and oral communication
4) Why is it likely that the United States has an absolute advantage in goods and yet it still
ends up importing them from other countries?
Skill: Level 3: Using models
Section: Checkpoint 3.4
Status: Old
AACSB: Written and oral communication
108