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Copyright © 2017 Pearson Education, Inc.
37) Refer to Figure 2.2. If Microland’s economy is at Point A, it could produce more consumer goods
A) without sacrificing any capital goods.
B) by sacrificing some capital goods.
C) only with technological improvements.
D) only with additional resources.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–20
38) Refer to Figure 2.2. If Microland’s economy is at Point A, it could produce more capital goods
A) without sacrificing any consumer goods.
B) by sacrificing some consumer goods.
C) only with technological improvements.
D) only with additional resources.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–20
39) Refer to Figure 2.2. Full resource employment and production efficiency is represented by a point
A) inside the production possibility frontier.
B) along the production possibility frontier.
C) outside the production possibility frontier.
D) either inside or along the production possibility frontier.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–19
40) Refer to Figure 2.2. You correctly deduce that all resources are fully employed and there are no
production inefficiencies if this economy is currently operating at a point
A) inside the production possibility frontier.
B) along the production possibility frontier.
C) outside the production possibility frontier.
D) either inside or along the production possibility frontier.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–19
12
41) The production possibility frontier is a graph that shows
A) all the combinations of goods and services that are consumed over time if all of society’s resources are
used efficiently.
B) the amount of goods and services consumed at various average price levels.
C) the rate at which an economy’s output will grow over time if all resources are used efficiently.
D) all the combinations of goods and services that can be produced if all of society’s resources are used
efficiently.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Definition
Learning Outcome: Micro–19
42) Production inefficiency occurs
A) only when an economy produces underneath its production possibility frontier.
B) only when an economy produces at the wrong point on the production possibility frontier.
C) either when an economy produces underneath the production possibility frontier or when the
economy is producing the wrong combination of goods on the production possibility frontier.
D) only when the economy produces outside the production possibility frontier.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–19
43) An economy that is producing on the production possibility frontier at some point other than the
output of efficient allocation is
A) efficient, as it is on the production possibility frontier.
B) inefficient, as the combination of goods and services produced is not what people want.
C) efficient, as the economy is producing goods at the lowest possible cost.
D) inefficient, as that combination of goods could be produced at a lower cost if more efficient technology
were employed.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–19
13
44) If resources are combined efficiently in production, then the society
A) is producing at the most–desirable point on the production possibility frontier.
B) is producing at a point on the production possibility frontier but not necessarily at the most–desirable
point.
C) is producing at a point outside the production possibility frontier.
D) is experiencing economic growth.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–19
45) If an economy begins to use its resources more efficiently, it will move
A) closer to its ppf.
B) farther away from its ppf.
C) from a point along its ppf to a point outside its ppf.
D) from one point to another point along its ppf.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–19
46) The value of the slope of a society‘s production possibility frontier is called its
A) marginal rate of substitution.
B) inflation rate.
C) unemployment rate.
D) marginal rate of transformation.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Definition
Learning Outcome: Micro–19
47) The marginal rate of transformation is the
A) slope of the production possibility frontier.
B) dollar value of the best forgone alternative.
C) process of using resources to produce new capital.
D) transformation of resources into a form that is useful to people.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Definition
Learning Outcome: Micro–19
14
Refer to the information provided in Figure 2.3 below to answer the question(s) that follow.
Figure 2.3
48) Refer to Figure 2.3. Assume that in this society the marginal rate of transformation of sailboats for
surfboards is constant and equal to –10. A graph of this society’s production possibility frontier will be
represented by Panel
A) A.
B) B.
C) C.
D) D.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–19
15
49) Refer to Figure 2.3. Assume that in this society the opportunity cost of sailboats in terms of surfboards
is increasing. A graph of this society’s production possibility frontier will be represented by Panel
A) A.
B) B.
C) C.
D) D.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–20
50) Refer to Figure 2.3. The law of ________ opportunity costs is best depicted by the production
possibilities frontier in Panel A.
A) increasing
B) constant
C) decreasing
D) zero
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–20
51) Refer to Figure 2.3. Assume that this society’s production possibility frontier is represented by Panel
C. The marginal rate of transformation of sailboats for surfboards is
A) 1/10.
B) –1/10.
C) 10.
D) –10.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–19
52) Refer to Figure 2.3. Assume that this society’s production possibility frontier is represented by Panel
C. The opportunity cost of sailboats in terms of surfboards is
A) constant.
B) increasing.
C) decreasing.
D) infinite.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–20
16
53) Refer to Figure 2.3. Increasing opportunity costs are best depicted by the production possibility
frontier in Panel
A) A.
B) B.
C) C.
D) D.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–20
54) A society can produce two goods: donuts and beer. The society’s production possibility frontier is
negatively sloped and “bowed outward” from the origin. As this society moves up its production
possibility frontier, producing more and more units of donuts, the opportunity cost of producing beer
A) decreases.
B) remains constant.
C) increases.
D) could decrease or increase depending on the technology.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro–20
17
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4
55) According to Figure 2.4, the point where only motorcycles are produced is
A) A.
B) B.
C) C.
D) E.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–20
56) According to Figure 2.4, the optimal point for the economy is
A) A.
B) B.
C) F.
D) indeterminate from the information given.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–20
18
57) According to Figure 2.4, which point cannot be produced with the current state of technology?
A) A
B) B
C) C
D) F
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–20
58) According to Figure 2.4, the point where only hybrid cars are produced is
A) A.
B) B.
C) C.
D) D.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–20
59) According to Figure 2.4, a decrease in unemployment may be represented by the movement from
A) B to A.
B) B to D.
C) C to D.
D) A to C.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–20
60) According to Figure 2.4, as the economy moves from Point A to Point E, the opportunity cost of
motorcycles, measured in terms of hybrid cars,
A) decreases.
B) increases.
C) remains constant.
D) initially increases, then decreases.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–20
19
61) According to Figure 2.4, as the economy moves from Point E to Point A, the opportunity cost of
hybrid cars, measured in terms of motorcycles,
A) increases.
B) decreases.
C) remains constant.
D) initially increases, then decreases.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–20
62) Refer to Figure 2.4. The economy moves from Point A to Point D. This could be explained by
A) a reduction in unemployment.
B) an improvement in technology.
C) an increase in economic growth.
D) a change in society’s preferences for motorcycles versus hybrid cars.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–10
63) According to Figure 2.4, Point A necessarily represents
A) an unattainable production point.
B) only hybrid cars being produced.
C) the economy’s optimal production point.
D) what society wants.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–20
64) According to Figure 2.4, Point F
A) is efficient and attainable.
B) represents underallocation of resources.
C) represents what the people want.
D) cannot be produced with the current state of technology.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–20
20
65) According to Figure 2.4, Point E necessarily represents
A) an impossible production point.
B) technological advancement.
C) overallocation of resources.
D) only motorcycles being produced.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–20
66) According to Figure 2.4, an increase in unemployment may be represented by the movement from
A) B to A.
B) B to D.
C) C to D.
D) A to C.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–20
67) According to Figure 2.4, as the economy moves from Point B to Point D, the opportunity cost of
motorcycles, measured in terms of hybrid cars
A) remains constant.
B) decreases.
C) increases
D) initially increases, then decreases.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–20
68) According to Figure 2.4, as the economy moves from Point D to Point B, the opportunity cost of
hybrid cars, measured in terms of motorcycles
A) remains constant.
B) decreases.
C) increases.
D) initially increases, then decreases.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro–20