20) The above igure shows the production possibility frontier for a country. Suppose the
country is producing at point A. What would be the opportunity cost to increase the
production of rice to 12 tons?
A) 6 thousand bottles of wine
B) 15 thousand bottles of wine
C) 9 thousand bottles of wine
D) 6 tons of rice
E) Nothing, it is a free lunch.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
21) The above igure shows the production possibility frontier for a country. What is the
opportunity cost per ton of rice to move from point B to point D?
A) 1000 bottles of wine
B) 500 bottles of wine
C) 2 bottles of wine
D) 1/2 of a bottle of wine
E) None of the above answers is correct.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
22) The above igure shows the production possibility frontier for a country. What is the
opportunity cost per ton of rice to move from point D to E?
A) 3000 bottles of wine
B) 333 bottles of wine
C) 3 bottles of wine
D) 1/3 of a bottle of wine
E) None of the above answers is correct.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
31
23) The above igure shows the production possibility frontier for a country. What is the
opportunity cost to move from point D to point E?
A) 6 thousand bottles of wine
B) 15 thousand bottles of wine
C) 6 tons of rice
D) 9 thousand bottles of wine
E) Nothing, it is a free lunch.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
24) The above igure shows the production possibility frontier for a country. What is the
opportunity cost to move from point D to point B?
A) 12 tons of rice
B) 15 thousand bottles of wine
C) 6 thousand bottles of wine
D) 9 thousand bottles of wine
E) Nothing, it is a free lunch.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
25) Moving from a point inside the production possibilities frontier to a point on the
production possibilities frontier, the opportunity cost of producing more of the good on the
horizontal axis
A) increases.
B) decreases.
C) is constant.
D) is 0.
E) is ininite.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
32
26) Consider a production possibility frontier with jeans on the vertical axis and shoes on
the horizontal axis. As a country moves along the frontier closer to the vertical axis,
A) the opportunity cost of producing jeans increases.
B) the opportunity cost of producing shoes increases.
C) there are fewer tradeofs.
D) ineicient production occurs.
E) the opportunity cost of producing jeans decreases.
Skill: Level 4: Applying models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
27) Suppose that in a PPF graph, wheat is on the vertical axis and jets are on the horizontal
axis. Moving down along the PPF, the
A) number of jets increases and the opportunity cost of jets increases.
B) amount of wheat increases and the opportunity cost of wheat increases.
C) number of jets increases and the opportunity cost of jets decreases.
D) amount of wheat increases and opportunity cost of wheat decreases.
E) opportunity cost of jets and wheat both increase.
Skill: Level 4: Applying models
Section: Checkpoint 3.2
Status: Old
AACSB: Relective thinking
28) Why is a production possibilities frontier bowed out (concave)?
A) The bowed shape relects constant opportunity cost.
B) The bowed shape relects decreasing opportunity cost.
C) The bowed shape indicates that opportunity cost at irst decreases at a decreasing rate,
and then begins to decrease at an increasing rate.
D) The bowed shape indicates that opportunity cost at irst increases at a decreasing rate,
and then begins to increase at an increasing rate.
E) The bowed shape relects increasing opportunity cost.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.2
Status: Old
AACSB: Relective thinking
33
29) The bowed out (concave) shape of the production possibilities curve implies that as
production of one good
A) increases, society must forgo increasing amounts of another good.
B) increases, society must forgo decreasing amounts of another good.
C) decreases, production of other goods decreases as well.
D) increases, production of other goods increases as well.
E) increases, society can obtain a free lunch.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.2
Status: Old
AACSB: Relective thinking
30) The idea of increasing opportunity cost is relected in the
A) bowed out shape of the production possibilities frontier.
B) bowed in shape of the production possibilities frontier.
C) linear shape of the production possibilities frontier.
D) positive slope of the production possibilities frontier.
E) fact that the PPF shows there are unattainable production points.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.2
Status: Old
AACSB: Relective thinking
31) A bowed out production possibilities frontier shows
A) that resources are equally productive in all uses.
B) increasing opportunity cost.
C) that resources are not equally productive in all uses.
D) Both answers B and C are correct.
E) Both answers A and B are correct.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.2
Status: Old
AACSB: Relective thinking
34
32) The opportunity cost of a good increases as more of it is produced because
A) there is no such thing as a free lunch.
B) resources are not equally productive in all activities.
C) producing more of a good requires additional resources.
D) the number of forgone alternatives also increases.
E) people want the good less as more is produced.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.2
Status: Old
AACSB: Relective thinking
33) As an economy increasingly specializes in producing one good, the opportunity cost of
that good increases. The opportunity cost increases because
A) resources are not equally productive in all activities.
B) what must be paid to resources increases.
C) human wants are virtually unlimited.
D) not all goods are equally valuable.
E) as more of a good is produced, the proit from its production must rise.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.2
Status: Old
AACSB: Relective thinking
34) As an economy produces more of one of the goods on a bowed out production
possibilities frontier, what happens to the opportunity cost of producing the good?
A) It remains constant.
B) It decreases.
C) It increases.
D) It might increase, decrease, or remain constant depending on how much people value
the additional units of the good.
E) None of these depicts what happens to opportunity cost.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Relective thinking
35
35) When a production possibilities frontier is bowed outward, as more of one good is
produced, its opportunity cost
A) increases.
B) decreases.
C) remains constant.
D) might increase, decrease, or remain constant depending on how much people value the
additional units of the good.
E) cannot be predicted.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Relective thinking
36) A bowed out PPF relects which of the following ideas?
i. Increasing opportunity cost
ii. Resources are not equally productive in all activities.
iii. Prices of goods increase over time.
A) i only
B) i and ii
C) i and iii
D) ii and iii
E) i, ii, and iii
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Relective thinking
37) If there is increasing opportunity cost, then when moving downward on a production
possibilities frontier, the opportunity cost of the good on the horizontal axis ________ as
more of the good is produced.
A) increases and the PPF gets steeper
B) increases and the PPF gets latter
C) decreases and the PPF gets steeper
D) decreases and the PPF gets latter
E) does not change and the PPF gets steeper
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
36
38) A bowed out production possibility frontier shows that the
A) opportunity cost of a good is constant as more of the good is produced.
B) opportunity cost of a good decreases as more of the good is produced.
C) opportunity cost of a good increases as more of the good is produced.
D) opportunity cost relationship is linear.
E) opportunity cost of producing another good is negative.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.2
Status: Old
AACSB: Relective thinking
39) Why does a nation experience increasing opportunity cost?
A) As the nation moves from a production point within the PPF to one on the PPF,
opportunity costs increase.
B) As the nation moves from a production point within the PPF to another point also within
the PPF, opportunity costs increase.
C) When the amount of resources increases, the opportunity cost of all goods and services
increases.
D) Resources are not equally productive in producing diferent kinds of goods and services.
E) Because the nation cannot produce at the unattainable production points that lie beyond
the PPF.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.2
Status: Old
AACSB: Relective thinking
40) The fact of increasing opportunity cost when moving on the PPF means that
A) to increase the production of one product requires larger and larger sacriices of the
other good.
B) to decrease the production of one product requires smaller and smaller sacriices of the
other good.
C) to increase the production of one product requires smaller and smaller sacriices of the
other good.
D) when the government forces a movement from one point on the PPF to another point, no
production is lost.
E) the PPF will be a negatively sloped straight line.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Relective thinking
37
41) Production possibilities frontiers usually curve out and away from the origin. The
implication of this curvature is that
A) as resources are used to produce one good, fewer resources are available to produce
another good.
B) the opportunity cost of producing a good goes down as more of that good is produced.
C) technological change is present.
D) the opportunity cost of producing a good stays the same regardless of how much of that
good is produced.
E) some resources are better at producing one good while other resources are better at
producing alternative goods.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: New
AACSB: Relective thinking
42) If the production possibilities frontier between two goods were a straight line, then the
opportunity cost of one good in terms of another would be
A) constant.
B) increasing.
C) decreasing.
D) zero.
E) either constant, increasing, or decreasing but more information is needed to determine
which.
Skill: Level 4: Applying models
Section: Checkpoint 3.2
Status: Old
AACSB: Relective thinking
43) If the production possibilities frontier between two goods is a straight line, then the
A) opportunity cost is not a ratio.
B) resources are equally productive in both goods.
C) line does not qualify as a production possibilities frontier because the unattainable
production points are too close to the ineicient production points.
D) Both answers A and C are correct.
E) Both answers A and B are correct.
Skill: Level 4: Applying models
Section: Checkpoint 3.2
Status: Old
AACSB: Relective thinking
38
44) As an economy moves down along a straight line production possibilities frontier, what
happens to the opportunity cost of producing the good on the horizontal axis?
A) It remains constant.
B) It decreases.
C) It increases.
D) Above the midpoint it decreases until it equals 1 at the midpoint, and then it increases.
E) None of these depict what happens to opportunity cost.
Skill: Level 4: Applying models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
45) If the production possibilities frontier between bottled water and water in a jug is a
straight line, which of the following statements would be correct?
A) A large amount of unemployment must exist.
B) Resources are equally productive at producing either product.
C) There is no tradeof between the two goods.
D) There is no decrease in the production of one good when the production of the other is
increased.
E) Producing more of one good gives the economy a free lunch.
Skill: Level 4: Applying models
Section: Checkpoint 3.2
Status: Old
AACSB: Relective thinking
39
46) The table above shows the production possibilities for an economy. Drawing a PPF with
books on the vertical axis and bread on the horizontal axis, a movement from possibility B
to possibility C to possibility D shows the opportunity cost of ________ moving down along
the PPF.
A) books is decreasing
B) bread is decreasing
C) bread is increasing
D) books is constant
E) books and bread are both increasing
Skill: Level 4: Applying models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
47) The table above shows the production possibilities for an economy. The opportunity
cost of a loaf of bread is ________ when moving from possibility B to possibility C.
A) 1/2 of a book
B) 2 books
C) 200 books
D) 100 loaves of bread
E) 1 loaf of bread
Skill: Level 4: Applying models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
40