30) The table above shows a production possibilities frontier for an economy. Which of the
following combinations is unattainable?
A) 0 loaves of bread and 800 books
B) 100 loaves of bread and 800 books
C) 200 loaves of bread and 800 books
D) 300 loaves of bread and 200 books
E) 0 loaves of bread and 0 books
Skill: Level 3: Using models
Section: Checkpoint 3.1
Status: Old
AACSB: Analytical thinking
31) The table above shows a production possibilities frontier for an economy. If the
economy tried to produce a combination of 250 loaves of bread and 800 books,
A) there is some unemployment.
B) there is full employment.
C) the tradeof between bread and books is ineicient.
D) it cannot produce this combination because it lacks enough resources or technology.
E) it is enjoying a free lunch.
Skill: Level 3: Using models
Section: Checkpoint 3.1
Status: Old
AACSB: Analytical thinking
11
32) The igure above shows the production possibilities frontier for a country. A
combination of 4 million gallons of milk and 4 million gallons of ice cream is
A) unattainable.
B) attainable and production eicient.
C) attainable and production ineicient.
D) unattainable and production eicient.
E) More information is needed to determine if the point is attainable or not.
Skill: Level 3: Using models
Section: Checkpoint 3.1
Status: Old
AACSB: Analytical thinking
33) The igure above shows the production possibilities frontier for a country. A
combination of 3 million gallons of milk and 3 million gallons of ice cream is
A) unattainable.
B) attainable and production eicient.
C) attainable and production ineicient.
D) unattainable and production eicient.
E) More information is needed to determine if the point is attainable or not.
Skill: Level 3: Using models
Section: Checkpoint 3.1
Status: Old
AACSB: Analytical thinking
12
34) The igure above shows the production possibilities frontier for a country. A
combination of 2 million gallons of milk and 2 million gallons of ice cream is
A) unattainable.
B) attainable and production eicient.
C) attainable and production ineicient.
D) attainable but more than production eicient.
E) More information is needed to determine if the point is attainable or not.
Skill: Level 3: Using models
Section: Checkpoint 3.1
Status: Old
AACSB: Analytical thinking
35) Point D in the above PPF igure is
A) an attainable production combination with unemployed resources.
B) a tradeof.
C) an unattainable production combination.
D) a production combination that can be attained once resources are fully employed.
E) More information is needed to determine which of the above answers is correct.
Skill: Level 3: Using models
Section: Checkpoint 3.1
Status: Old
AACSB: Analytical thinking
13
36) Which point in the igure above is an attainable combination that would have
unemployed resources?
A) point A
B) point B
C) point C
D) point D
E) point A and point B
Skill: Level 3: Using models
Section: Checkpoint 3.1
Status: Old
AACSB: Analytical thinking
37) The igure above shows a nation‘s production possibilities frontier. In the igure, point
A shows
A) the maximum quantity of pizza that can be produced.
B) the minimum quantity of pizza that the society must produce.
C) an unattainable point.
D) an attainable point with unemployed resources.
E) More information is needed to determine which of the above answers is correct.
Skill: Level 3: Using models
Section: Checkpoint 3.1
Status: Old
AACSB: Analytical thinking
14
38) The igure above shows a nation‘s production possibilities frontier. In the igure, point
B shows
A) an unattainable point.
B) an attainable point.
C) a point with a free lunch.
D) a point with no tradeof.
E) a point at which there are unemployed resources.
Skill: Level 3: Using models
Section: Checkpoint 3.1
Status: Old
AACSB: Analytical thinking
39) The igure above shows the production possibilities frontier for a country. In order for it
to produce at point E, the
A) country would need to acquire more resources and/or more advanced technology.
B) production of compact cars would need to decrease.
C) production of SUVs would need to decrease.
D) country would need to use its resources more eiciently.
E) country would need to determine that compact cars and SUVs are equally important to
it.
Skill: Level 3: Using models
Section: Checkpoint 3.1
Status: Old
AACSB: Analytical thinking
15
40) The igure above shows the production possibilities frontier for a country. If the country
is producing at point D, then the
A) resources are being used eiciently.
B) technology associated with producing SUVs and compact cars is advancing.
C) resources are not being used eiciently and/or are unemployed.
D) production of SUVs and compact cars is maximized.
E) None of the above answers is correct because it is not possible to produce at point D.
Skill: Level 3: Using models
Section: Checkpoint 3.1
Status: Old
AACSB: Analytical thinking
41) The above igure shows the production possibility frontier for an economy. The point or
points that are attainable and production eicient are
A) points B and C.
B) points A, B, and C.
C) point E.
D) points A, B, C, and D.
E) points A and D.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.1
Status: Old
AACSB: Analytical thinking
16
42) The above igure shows the production possibility frontier for an economy. The point or
points that are attainable are
A) points B and C.
B) points A, B, and C.
C) point E.
D) points A, B, C, and D.
E) points A and D.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.1
Status: Old
AACSB: Analytical thinking
43) The above igure shows the production possibility frontier for an economy. The point or
points that are NOT attainable are
A) points B and C.
B) points A, B, and C.
C) point E.
D) points A, B, C, and D.
E) points A and D.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.1
Status: Old
AACSB: Analytical thinking
44) In order for Ireland to grow more potatoes, wool production must decrease. This
situation is an example of
A) producing at a point that lies beyond the PPF.
B) zero opportunity cost.
C) opportunity beneit.
D) a free lunch.
E) a tradeof.
Skill: Level 1: Deinition
Section: Checkpoint 3.1
Status: Old
AACSB: Relective thinking
17
45) As we move along the production possibilities frontier,
A) the production of one good increases as the production of the other good decreases.
B) the possibilities of tradeofs diminish.
C) a tradeof is not possible because nations need all goods.
D) more of both goods can be produced.
E) less of both goods can be produced.
Skill: Level 4: Applying models
Section: Checkpoint 3.1
Status: Old
AACSB: Relective thinking
46) Which of the following statements is correct?
A) If capital is idle, the economy is producing at its full potential.
B) The production possibilities frontier shows that there are no limits to production.
C) A tradeof is a limit that forces an exchange or a substitution of one thing for something
else.
D) Any point on or within the PPF is production eicient.
E) None of the above answers is correct.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.1
Status: Old
AACSB: Relective thinking
47) When a nation is producing on its production possibilities frontier, if more resources
are used to produce one good, then the production of other goods
A) must increase.
B) must decrease.
C) must remain the same.
D) must change, but they might increase or decrease.
E) might increase if the nation can produce more eiciently.
Skill: Level 3: Using models
Section: Checkpoint 3.1
Status: Old
AACSB: Relective thinking
18
48) The negative slope of the production possibilities frontier represents the idea
A) that free lunches are possible.
B) of tradeofs, that in order to produce more of one good, the nation must produce less of
another.
C) of unemployment.
D) of ineicient production.
E) that prices rise as less is produced.
Skill: Level 4: Applying models
Section: Checkpoint 3.1
Status: Old
AACSB: Relective thinking
49) A movement from one point on a production possibilities frontier to another represents
A) a tradeof.
B) a free lunch.
C) full employment of labor but not capital.
D) unemployment.
E) an advance in technology.
Skill: Level 3: Using models
Section: Checkpoint 3.1
Status: Old
AACSB: Relective thinking
50) The saying “There’s no such thing as a free lunch,” applies
A) when there is some unemployment.
B) on the production possibilities frontier.
C) to unattainable combinations of goods and services.
D) when more of one good can be produced without decreasing production of another.
E) at all points inside the PPF.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.1
Status: Old
AACSB: Relective thinking
19
51) A free lunch (the absence of a tradeof) when the production of a good is increased is
possible for the entire economy only if
A) less of some product is produced.
B) prices are decreased.
C) prices are increased.
D) resources are used ineiciently.
E) there is a movement along the PPF.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.1
Status: Old
AACSB: Relective thinking
52) A movement from a point inside the production possibilities frontier to a point on the
production possibilities frontier represents
A) a tradeof.
B) a free lunch.
C) full employment of labor but not capital.
D) unemployment of labor but not capital.
E) an ininite opportunity cost.
Skill: Level 3: Using models
Section: Checkpoint 3.1
Status: Old
AACSB: Relective thinking
53) A reason the production possibilities frontier exists is
A) unlimited resources and technology.
B) scarcity of resources.
C) scarcity of resources and unlimited technology.
D) unemployment.
E) that people’s wants are unlimited.
Skill: Level 1: Deinition
Section: Checkpoint 3.1
Status: Old
AACSB: Relective thinking
20