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21
69) Refer to Figure 2.4. The economy moves from Point E to Point B. This could be explained by
A) an increase in unemployment.
B) a reduction in unemployment.
C) a change in society's preferences for hybrid cars versus motorcycles.
D) an increase in economic growth.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-10
Refer to the information provided in Figure 2.5 below to answer the question(s) that follow.
Figure 2.5
70) Refer to Figure 2.5. The economy is currently at Point A. The opportunity cost of moving from Point A
to Point B is the
A) 90 LCD televisions that must be forgone to produce 20 additional plasma televisions.
B) 30 LCD televisions that must be forgone to produce 60 additional plasma televisions.
C) 120 LCD televisions that must be forgone to produce 40 additional plasma televisions.
D) 30 LCD televisions that must be forgone to produce 20 additional plasma televisions.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-20
22
71) Refer to Figure 2.5. The marginal rate of transformation in moving from Point A to Point B is
A) -2/3.
B) -1.5.
C) -3.
D) -30.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-20
72) Refer to Figure 2.5. For this economy to move from Point B to Point C so that an additional 20 plasma
televisions could be produced, production of LCD televisions would have to be reduced by
A) exactly 30.
B) fewer than 30.
C) more than 30.
D) exactly 60.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-20
73) Refer to Figure 2.5. The best point for society would be
A) Point C, as at this point there are approximately equal amounts of LCD and plasma televisions being
produced.
B) either Point B or Point C, as the total amount being produced at either of these points is approximately
the same.
C) at any of the labeled points, as all of the points represent an efficient allocation of resources.
D) indeterminate from this information, as we don't have any information about the society's desires.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-20
74) Refer to Figure 2.5. The economy is currently at Point B. The opportunity cost of moving from Point B
to Point A is the
A) 40 plasma TVs that must be forgone to produce 120 additional LCD TVs.
B) 20 plasma TVs that must be forgone to produce 30 additional LCD TVs.
C) 30 LCD TVs that must be forgone to produce 40 additional plasma TVs.
D) 120 LCD TVs that must be forgone to produce 20 additional plasma TVs.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-20
23
75) Refer to Figure 2.5. The marginal rate of transformation in moving from Point B to Point A is
A) -2/3.
B) -3/4.
C) -1.5.
D) -20.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-20
76) Refer to Figure 2.5. For this economy to move from Point A to Point B, ________ additional plasma
TVs could be produced when the production of LCD TVs is reduced by 30.
A) exactly 20
B) fewer than 20
C) more than 20
D) exactly 90
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-20
77) Refer to Figure 2.5. For this economy to move from Point C to Point B, ________ additional LCD TVs
could be produced when the production of plasma TVs is reduced by 20.
A) exactly 30
B) fewer than 30
C) more than 30
D) exactly 60
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-20
78) If the opportunity costs of producing a good increase as more of that good is produced, the economy's
production possibility frontier will be
A) negatively sloped and "bowed inward" toward the origin.
B) negatively sloped and "bowed outward" from the origin.
C) a negatively sloped straight line.
D) a positively sloped straight line.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-20
24
79) As you move down the production possibility frontier, the absolute value of the marginal rate of
transformation
A) increases.
B) decreases.
C) initially increases, then decreases.
D) initially decreases, then increases.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-20
80) As more of a good, such as television sets, is produced, the opportunity costs of producing it
increases. This most likely occurs because
A) as more of a good is produced, the inputs used to produce that good will increase in price.
B) consumers would be willing to pay higher prices for the good as more of the good is produced.
C) resources are not equally well suited to producing all goods, and as more of a good is produced, it is
necessary to use resources less well suited to the production of that good.
D) as more of a good is produced, the quality of that good declines, and therefore the costs of production
increase.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-20
81) Economic growth most likely occurs when
A) a society moves inside its production possibility frontier.
B) a society learns to produce more using existing resources.
C) the society begins to produce the combination of goods society wants most.
D) a society moves along its production possibilities frontier.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-1
25
Refer to the information provided in Figure 2.6 below to answer the question(s) that follow.
Figure 2.6
82) Refer to Figure 2.6. Economic growth is represented by a
A) shift from ppf2 to ppf1.
B) shift from ppf1 to ppf2.
C) movement along ppf1.
D) movement along ppf2.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
83) Refer to Figure 2.6. An improvement in technology may be represented by a
A) shift from ppf2 to ppf1.
B) shift from ppf1 to ppf2.
C) movement along ppf2.
D) movement along ppf1.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
26
84) Refer to Figure 2.6. Which of the following will shift an economy's production possibility frontier
from ppf1 to ppf2?
A) a decrease in unemployment
B) an increase in production efficiency
C) a change in consumers' tastes
D) an increase in the economy's capital stock
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
85) Refer to Figure 2.6. Which of the following will not cause the production possibility frontier to shift
from ppf1 to ppf2?
A) the discovery of previously unknown oil fields
B) an improvement in technology
C) an increase in the stock of capital
D) a decrease in the unemployment rate
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-20
86) Refer to Figure 2.6. Which of the following is most likely to shift the production possibility frontier
from ppf1 to ppf2?
A) a change in consumer tastes
B) the purchase of stocks on the New York Stock Exchange
C) moving resources from capital to consumer goods
D) an increase in the general educational level of the population
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
27
87) Refer to Figure 2.6. If the economy is at ppf1, a change in consumer preferences would be shown by a
A) shift from ppf2 to ppf1.
B) movement along ppf1.
C) movement along ppf2.
D) shift from ppf1 to ppf2.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
88) Refer to Figure 2.6. An increase in the economy's capital stock is represented by a
A) shift from ppf2 to ppf1.
B) shift from ppf1 to ppf2.
C) movement along ppf1.
D) movement along ppf2.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
89) Refer to Figure 2.6. A shift from ppf1 to ppf2 may be caused by
A) an increase in inflation.
B) an increased desire for consumer goods.
C) a change in consumer tastes.
D) an improvement in technology.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
90) Refer to Figure 2.6. Which of the following will shift an economy's production possibility frontier
from ppf2 to ppf1?
A) a decrease in the economy's capital stock
B) an increase in production efficiency
C) a change in consumer's tastes
D) economic growth
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
28
91) Refer to Figure 2.6. Which of the following is most likely to shift the production possibility frontier
from ppf2 to ppf1?
A) a change in consumer tastes
B) the purchase of government Treasury bills
C) moving resources from consumer goods to capital goods
D) a decrease in the general educational level of the population
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
92) Refer to Figure 2.6. If the economy is at ppf2, a change in consumer taste would be shown by a
A) shift from ppf2 to ppf1.
B) movement along ppf1.
C) movement along ppf2.
D) shift from ppf1 to ppf2.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-2
93) During the Iraq War, many of Iraq's oil refineries were destroyed. This would best be represented by a
A) movement down Iraq's production possibility frontier.
B) movement off Iraq's production possibility frontier to some point inside the frontier.
C) shift of Iraq's production possibility frontier toward the origin.
D) movement up Iraq's production possibility frontier.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Analytical
AACSB: Analytical Thinking
Learning Outcome: Micro-20
94) For an economy to produce at a point beyond its current ppf, the economy must
A) waste less.
B) be more efficient.
C) reduce inputs.
D) increase its resource base.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-20
29
95) In terms of the production possibility frontier, an increase in productivity attributable to new
technology would best be shown by
A) a movement along the frontier.
B) the production possibility frontier shifting outward, away from the origin.
C) a movement from a point inside the frontier to a point on it.
D) a movement toward the origin.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-20
96) An improvement in technology will cause the
A) production possibility frontier to shift outward.
B) production possibility frontier to shift inward.
C) economy to move down the production possibility frontier.
D) economy to move closer to its production possibility frontier.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-20
97) Consider two countries, Japan and Malaysia. Japan devotes a smaller portion of its production to
capital. All other things equal, which of the following statements is most likely true?
A) Japan is a poorer country than Malaysia.
B) Japan will move up its production possibility curve faster than Malaysia.
C) Malaysia is producing inside its production possibility frontier, whereas Japan is producing at a point
on its production possibility frontier.
D) Malaysia's production possibility frontier will shift up and out farther and faster than Japan's.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-20
30
98) The gap between rich and poor countries
A) has decreased over time because poor countries can more easily devote resources to capital
production.
B) has increased over time because poor countries find it difficult to devote resources to capital
production.
C) has remained constant over time because technological advances can be easily shared among nations.
D) has remained constant over time because the rate of capital production has remained constant in rich
and poor nations.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Fact
Learning Outcome: Micro-19
99) An economy produces capital goods and consumer goods. This economy is operating at a point on its
production possibility frontier associated with a small amount of capital goods and a large amount of
consumer goods. This is most likely to be a
A) "poor" country because such a nation has difficulty devoting many resources to the production of
capital goods.
B) "rich" country because such a nation can afford to sacrifice.
C) country with a free market.
D) country with a command economy.
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Conceptual
AACSB: Reflective Thinking
Learning Outcome: Micro-19
100) The economic problem can best be stated as
A) How can the economy improve technology so as to shift the production possibility frontier up and to
the right?
B) Given scarce resources, how exactly do societies go about deciding what to produce, how to produce
it, and for whom to produce?
C) Given the fact that the economy is inefficient, how much and what type of government intervention
should be used to improve the efficiency of the economy?
D) What is the best rate of economic growth for a society?
Topic: Scarcity, Choice, and Opportunity Cost
Skill: Definition
Learning Outcome: Micro-1
