Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
54) The production possibilities frontier is a graph showing the
A) exact point of greatest eiciency for producing goods and services.
B) tradeof between free lunches.
C) maximum combinations of goods and services that can be produced.
D) minimum combinations of goods and services that can be produced.
E) resources available for the economy's production use.
Skill: Level 1: Deinition
Section: Checkpoint 3.1
Status: Old
AACSB: Relective thinking
55) The production possibilities frontier is a boundary that separates
A) the combinations of goods that can be produced from the combinations of services.
B) attainable combinations of goods and services that can be produced from unattainable
ones.
C) equitable combinations of goods and services that can be produced from inequitable
ones.
D) fair combinations of goods and services that can be consumed from unfair ones.
E) afordable production points from unafordable points.
Skill: Level 1: Deinition
Section: Checkpoint 3.1
Status: Old
AACSB: Relective thinking
56) Points inside the PPF are all
A) unattainable and have fully employed resources.
B) attainable and have fully employed resources.
C) unattainable and have some unemployed resources.
D) attainable and have some unemployed resources.
E) unafordable.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.1
Status: Old
AACSB: Relective thinking
21
57) During a time of high unemployment, a country can increase the production of one
good or service
A) without decreasing the production of something else.
B) but must decrease the production of something else.
C) and must increase the production of something else.
D) by using resources in the production process twice.
E) but the opportunity cost is ininite.
Skill: Level 1: Deinition
Section: Checkpoint 3.1
Status: Old
AACSB: Relective thinking
58) Moving along the production possibilities frontier itself illustrates
A) the existence of tradeofs.
B) the existence of unemployment of some factors of production.
C) the beneits of free lunches.
D) how free lunches can be exploited through trade.
E) how tradeofs need not occur if the economy is eicient.
Skill: Level 1: Deinition
Section: Checkpoint 3.1
Status: Old
AACSB: Relective thinking
59) The production possibilities frontier illustrates which of the following economic ideas?
A) eiciency
B) tradeofs
C) opportunity cost
D) all of the above
E) none of the above
Skill: Level 3: Using models
Section: Checkpoint 3.1
Status: New
AACSB: Relective thinking
22
60) Points on the PPF are all
A) unattainable and have fully employed resources.
B) free lunches.
C) ineicient.
D) attainable and have some unemployed resources.
E) production eicient.
Skill: Level 1: Deinition
Section: Checkpoint 3.1
Status: Old
AACSB: Relective thinking
3.2 Opportunity Cost
1) In a production possibilities frontier graph, the cost of producing more units of a good is
measured by the
A) dollar value of the resources used to produce the good.
B) amount of the other good or service that must be forgone.
C) dollar value of the additional output.
D) area in the arc between the PPF and a straight line drawn between the starting point
and the ending point.
E) None of the above answers is correct.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.2
Status: Old
AACSB: Relective thinking
2) The opportunity cost of producing one more unit of a good is calculated by dividing the
A) increase in the quantity of that good by the decrease in the quantity of other good.
B) total quantity of that good by the total quantity of other good.
C) decrease in the quantity of the other good by the increase in the quantity of the good
whose opportunity cost we're calculating.
D) total quantity of the other good by the total quantity of the good whose opportunity cost
we're calculating.
E) price of the good whose opportunity cost we are calculating by the number of units of
the other good that are forgone.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
23
3) To ind the opportunity cost of producing one more unit of any product while on the
production possibilities frontier requires
A) setting the amounts of the two products equal to each other.
B) setting the change in one product equal to the change in the other product.
C) dividing the amount of the product forgone by the amount of the product gained.
D) subtracting the change in the product whose production increased from the change in
the product whose production decreased.
E) None of these describes how to ind opportunity cost.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
4) To calculate the opportunity cost per unit, you divide the decrease in the quantity of the
forgone item by the
A) decrease in the quantity of the other item.
B) increase in the quantity of the other item obtained.
C) price of the item obtained.
D) price of the item forgone.
E) price of the item obtained and then multiply by the price of the item forgone.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
5) On a production possibilities frontier, 500 pounds of apples and 1,200 pounds of bananas
can be produced while at another point on the same frontier, 300 pounds of apples and
1,300 pounds of bananas can be produced. Between these points, what is the opportunity
cost of producing a pound of bananas?
A) 2 pounds of bananas
B) 200 pounds of apples
C) 2 pounds of apples
D) 0.5 a pound of apples
E) 12/5 = 2.4 pounds of apples
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
24
6) On a production possibilities frontier, 500 pounds of apples and 1,200 pounds of bananas
can be produced while at another point on the same frontier, 300 pounds of apples and
1,300 pounds of bananas can be produced. Between these points, what is the opportunity
cost of producing a pound of apples?
A) 2 pounds of bananas
B) 100 pounds of bananas
C) 2 pounds of apples
D) 0.5 of a pound of bananas
E) 5/12 of a pound of bananas
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
7) A country produces only apples and bananas. Moving from point A to point B along its
production possibilities frontier, 5 apples are forgone and 4 bananas are gained. What is
the opportunity cost of a banana?
A) 4 apples
B) 5/4 of an apple
C) 4/5 of an apple
D) 1 banana
E) None of the above answers is correct.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
8) A country produces only apples and bananas. Moving from point A to point B along its
production possibilities frontier, 5 apples are gained and 4 bananas are forgone. What is
the opportunity cost of an apple?
A) 4 bananas
B) 5/4 of a bananas
C) 4/5 of a banana
D) 1 apple
E) None of the above answers is correct.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
9) Robinson Crusoe divides his time between catching ish and gathering fruit. Part of his
production possibilities frontier is given in the above table. If Mr. Crusoe is on his PPF and
he increases the amount of fruit he gathers from 56 to 90 pounds, the opportunity cost is
25
A) 37 pounds of ish.
B) 31 pounds of ish.
C) 17 pounds of ish.
D) 34 pounds of fruit.
E) 90 pounds of fruit.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
10) Robinson Crusoe divides his time between catching ish and gathering fruit. Part of his
production possibilities frontier is given in the above table. Mr. Crusoe, while lonesome, is
eicient and always stays on his PPF. Mr. Crusoe is consuming 20 pounds of ish. Then he
decides to slowly become a vegetarian and decrease his consumption of ish to 9 pounds.
This decision means that Mr. Crusoe will
A) incur an opportunity cost of 9 pounds of fruit.
B) incur an opportunity cost of 20 pounds of ish.
C) be able to enjoy a gain of 9 pounds of fruit.
D) incur an opportunity cost of 99 pounds of fruit.
E) incur an opportunity cost of 9 pounds of ish.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
26
11) The table above shows a nation's production possibilities frontier. If the nation wants to
produce 4 robots and 34 pizzas,
A) it will shift the production possibilities frontier.
B) the opportunity cost is 9 pizzas.
C) the nation will be producing ineiciently.
D) it will be unable to do so because the production point is unattainable.
E) the nation will then be producing at a production eicient point.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
12) The table above shows a nation's production possibilities frontier. If the nation chooses
to increase the production of robots from 2 to 3 and it is on its PPF, it will have to forgo
________ pizzas.
A) 37
B) 34
C) 3
D) 35.5
E) None of the above answers is correct.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
27
13) The table above shows a nation's production possibilities frontier. The opportunity cost
of a robot between combination D and E is
A) 4 pizzas.
B) 34 pizzas.
C) 30 pizzas.
D) 1/4 of a pizza.
E) undeined because neither point is production eicient.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
14) The igure above shows the production possibilities frontier for a country. The
opportunity cost of a gallon of milk between combination point A and B is
A) 4 gallons of ice cream for a gallon of milk.
B) 3 gallons of ice cream for a gallon of milk.
C) 1 gallon of ice cream for a gallon of milk.
D) 1/3 of a gallon of ice cream for a gallon of milk.
E) zero because at point A, zero milk is being produced.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
28
15) The igure above shows the production possibilities frontier for a country. If the
economy is operating at point B, then the opportunity cost of another million gallons of
milk is
A) 4 gallons of ice cream for a gallon of milk.
B) 3 gallons of ice cream for a gallon of milk.
C) 1 gallon of ice cream for a gallon of milk.
D) 1/3 of a gallon of ice cream for a gallon of milk.
E) zero because after producing another million gallons of milk, then zero gallons of ice
cream are produced.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
16) The above igure shows the production possibility frontier for a country. Suppose the
country is producing at point A. What is the opportunity cost of increasing the production
of rice to 12 tons?
A) 15 thousand bottles of wine
B) 6 thousand bottles of wine
C) 9 thousand bottles of wine
D) 12 tons of rice
E) Nothing, it is a free lunch.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
29
17) The above igure shows the production possibility frontier for a country. Suppose the
country is producing at point D. What is the opportunity cost of increasing the production
of rice to 15 tons?
A) 9 thousand bottles of wine
B) 6 thousand bottles of wine
C) 15 thousand bottles of wine
D) 12 tons of rice
E) Nothing, it is a free lunch.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
18) The above igure shows the production possibility frontier for a country. Suppose the
country is producing at point E. What would be the opportunity cost to increase the
production of wine to 9 thousand bottles?
A) 12 tons of rice
B) 15 thousand bottles of wine
C) 9 thousand bottles of wine
D) 3 tons of rice
E) Nothing, it is a free lunch.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
19) The above igure shows the production possibility frontier for a country. Suppose the
country is producing at point D. What would be the opportunity cost to move to point C?
A) 6 thousand bottles of wine
B) 15 thousand bottles of wine
C) 12 tons of rice
D) Nothing, it is a free lunch.
E) This movement is not possible without economic growth.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
30
