48) The table above presents the production possibilities frontier for a nation. Using the
information in the table, moving from possibility C to B means that
A) 4 units of capital goods are given up to get 55 units of consumption goods.
B) 2 units of capital goods are given up to get 55 additional units of consumption goods.
C) 4 units of capital goods are given up to get 10 additional units of consumption goods.
D) 4 units of capital goods are given up to get 45 units of consumption goods.
E) 2 units of capital goods are given up to get 10 additional units of consumption goods.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
49) The table above presents the production possibilities frontier for a nation. Using the
information in the table, when moving from possibility C to D, the cost of 1 unit of a capital
good in terms of the consumption goods forgone is ________ consumption goods per capital
good.
A) 25
B) 15
C) 20
D) 10
E) an undeined amount of
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
41
50) The table above presents the production possibilities frontier for a nation. Using the
information in the table, when moving from possibility A to B to C to ultimately E, the cost
of a unit of capital goods in terms of consumption goods
A) increases.
B) decreases.
C) remains the same.
D) decreases from possibility A to C, and then increases from possibility C to D.
E) cannot be calculated.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
51) The igure above illustrates a small country’s production possibilities frontier. Based on
the igure, we can tell that the nation’s resources are
A) equally productive in all tasks because the slope is negative.
B) equally productive in all tasks because the production possibilities frontier is bowed out.
C) not equally productive in all tasks because the slope is negative.
D) not equally productive in all tasks because the production possibilities frontier is bowed
out.
E) unlimited because the slope is negative and the PPF is bowed out.
Skill: Level 4: Applying models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
42
52) The igure above illustrates a small country’s production possibilities frontier. Moving
from point A to point B, the per unit opportunity cost of a tablet is ________ per tablet.
A) 2 computers
B) 4/3 of a computer
C) 100 computers
D) 1/2 of a computer
E) 1 tablet
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
53) The igure above illustrates a small country’s production possibilities frontier. Moving
from point C to point B, the per unit opportunity cost of computers is ________ per
computer.
A) 4 tablets
B) 5/4 of a tablet
C) 4/5 of a tablet
D) 1/4 of a tablet
E) 1 computer
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
43
54) The igure above shows the production possibilities frontier for a country. In order for it
to move from producing at point A to producing at point B, the country would need to
A) decrease SUV production by 1 million.
B) decrease SUV production by 3 million.
C) decrease SUV production by 4 million.
D) decrease compact car production by 3 million.
E) acquire more resources and/or more advanced technology.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
55) The igure above shows the production possibilities frontier for a country. In order for it
to move from producing at point A to producing at point B, the country would need to incur
an opportunity cost of
A) 1 million SUVs.
B) 3 million SUVs.
C) 4 million SUVs.
D) 3 million compact cars.
E) 0 because the gain in compact cars exceeds the loss in SUVs.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
56) The igure above shows the production possibilities frontier for a country. How does the
opportunity cost of compact cars forgone per SUV gained moving from point C to point B
compare with the movement from point B to point A?
A) The opportunity cost of moving from point C to point B is greater than the movement
from point B to point A.
44
B) The opportunity cost of moving from point C to point B is the same as the movement
from point B to point A.
C) The opportunity cost of moving from point C to point B is less than the movement from
point B to point A.
D) The opportunity costs cannot be compared because the units of moving from point C to
point B difer from the units of moving from point B to point A.
E) More information is needed to determine how the two opportunity costs compare.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
57) Once you ind the opportunity cost of producing one unit of a good, to ind the
opportunity cost of producing the other good, you must
A) take the inverse.
B) multiply by the total amount produced of the second good.
C) divide by the total amount produced of the second good.
D) do nothing because the opportunity cost for the irst good is the same as the opportunity
cost for the second good.
E) None of the answers is correct.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
58) While moving on the production possibilities frontier, if the opportunity cost of
producing one good is 1/2, the opportunity cost of producing the other good (in the same
range) is
A) 1/2.
B) 1/4.
C) 2.
D) 4.
E) an amount that cannot be calculated without more information.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
59) The opportunity cost of producing more of one good on a production possibilities
frontier is
A) a dollar amount.
B) a ratio of quantities.
C) a ratio of prices.
D) equal to the area inside the production possibilities frontier.
E) a theoretical concept which cannot be measured.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.2
Status: Old
45
AACSB: Analytical thinking
60) The opportunity cost of one more slice of pizza in terms of sodas is the
A) number of pizza slices we have to give up in order to get one extra soda.
B) number of sodas we have to give up in order to get one extra pizza slice.
C) total number of sodas that we have divided by the total number of pizza slices that we
have.
D) total number of pizza slices that we have divided by the total number of sodas that we
have.
E) price of a pizza slice minus the price of a soda.
Skill: Level 1: Deinition
Section: Checkpoint 3.2
Status: Old
AACSB: Relective thinking
61) Moving between two points on a PPF, a country gains 6 automobiles and forgoes 3
trucks. The opportunity cost of 1 automobile is
A) 3 trucks.
B) 6 automobiles – 3 trucks.
C) 2 trucks.
D) 1/2 of a truck.
E) 1 automobile.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
46
62) Moving between two points on a PPF, a country gains 8 desktop computers and forgoes
4 laptop computers. The opportunity cost of 1 desktop computer is
A) 4 laptops.
B) 8 desktops.
C) 1 desktop.
D) 2 laptops.
E) 1/2 of a laptop.
Skill: Level 3: Using models
Section: Checkpoint 3.2
Status: Old
AACSB: Analytical thinking
63) A country produces only cans of soup and ink pens. If the country produces on its
bowed outward PPF and increases the production of cans of soup, the opportunity cost of
additional
A) cans of soup is increasing.
B) cans of soup is decreasing.
C) cans of soup remains unchanged.
D) ink pens is increasing.
E) More information is needed to determine what happens to the opportunity cost.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.2
Status: Old
AACSB: Relective thinking
64) Moving along a country’s PPF, a reason opportunity costs increase is that
A) unemployment decreases as a country produces more and more of one good.
B) unemployment increases as a country produces more and more of one good.
C) technology declines as a country produces more and more of one good.
D) some resources are better suited for producing one good rather than the other.
E) technology must advance in order to produce more and more of one good.
Skill: Level 2: Using deinitions
Section: Checkpoint 3.2
Status: Old
AACSB: Relective thinking
47
65) Increasing opportunity cost exists
A) in the real world.
B) as long as there is high unemployment.
C) only in theory but not in real life.
D) for a country but not for an individual.
E) inside the PPF but not on the PPF.
Skill: Level 1: Deinition
Section: Checkpoint 3.2
Status: Old
AACSB: Relective thinking
3.3 Economic Growth
1) Which of the following is the best deinition of economic growth?
A) the investment in capital and consumption goods by an economy
B) the opportunity cost of capital
C) the opportunity cost of consumption
D) increased development of land and entrepreneurship
E) the sustained expansion of production possibilities
Skill: Level 1: Deinition
Section: Checkpoint 3.3
Status: Old
AACSB: Relective thinking
2) The sustained expansion of production possibilities is called
A) economic investment.
B) production expansion.
C) opportunity cost of growth.
D) economic growth.
E) production possibilities.
Skill: Level 1: Deinition
Section: Checkpoint 3.3
Status: Old
AACSB: Relective thinking
48
3) Which of the following would most likely cause a country’s production possibilities set to
shift outward at every point along the frontier?
A) a decrease in idle capital
B) a decrease in unemployment
C) a technological advance in only one sector of the economy
D) a general technological advance that afects all sectors of the economy
E) none of the above
Skill: Level 3: Using models
Section: Checkpoint 3.3
Status: New
AACSB: Analytical thinking
4) Consider a PPF with consumption goods on the horizontal axis and capital goods on the
vertical axis. If the country operates on its PPF near its ________ axis, this country ________.
A) vertical; will experience greater economic growth
B) vertical; will not face opportunity costs
C) horizontal; will have a larger chance at economic growth
D) horizontal; faces larger tradeofs
E) vertical; is operating at an ineicient point
Skill: Level 3: Using models
Section: Checkpoint 3.3
Status: Old
AACSB: Analytical thinking
5) Economic growth depends upon which of the following?
i. Increasing the quantity of labor
ii. Lowering the prices of goods and services
iii. Advancing technology
A) i only
B) ii only
C) iii only
D) i and iii
E) i, ii, and iii
Skill: Level 1: Deinition
Section: Checkpoint 3.3
Status: Old
AACSB: Relective thinking
49
6) Economic growth depends upon which of the following?
i. Improving the quality of labor
ii. Technological advancement
iii. Increasing the amount of capital
A) i only
B) ii only
C) iii only
D) i and iii
E) i, ii, and iii
Skill: Level 1: Deinition
Section: Checkpoint 3.3
Status: Old
AACSB: Relective thinking
7) As an economy grows,
A) its PPF shifts outward.
B) it can eliminate scarcity.
C) the opportunity cost of production will approach 0.
D) the opportunity cost of production will increase.
E) its PPF does not shift; instead, the production point moves from inside the PPF to be
closer to the PPF.
Skill: Level 1: Deinition
Section: Checkpoint 3.3
Status: Old
AACSB: Relective thinking
8) The opportunity cost of economic growth is
A) 0, because it means an expansion of production possibilities.
B) the decrease in the current production of productive factors.
C) a slower accumulation of human capital.
D) the decrease in the current production of consumption goods.
E) the increase in the nation’s capital stock and/or its technology.
Skill: Level 1: Deinition
Section: Checkpoint 3.3
Status: Old
AACSB: Relective thinking
50