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94.
Which of the following will not produce an outward shift of the production possibilities
curve?
A. upgrading the quality of a nation's human resources
95.
Unemployment
A.
causes the production possibilities curve to shift outward.
B.
can exist at any point on a production possibilities curve.
1-42
96.
If the production possibilities curve is a straight line,
A. the two goods will sell at the same market prices.
97.
A production possibilities curve illustrates
D.
the distribution of income.
98.
A production possibilities curve shows
A.
that resources are unlimited.
B.
that people prefer one of the goods more than the other.
1-43
99.
A nation's production possibilities curve is bowed out from the origin because
D.
wants are virtually unlimited.
100.
Answer the question on the basis of the data given in the following production
possibilities table.
Production Possibilities (Alternatives)
A
B
C
D
E
F
Capital Goods
5
4
3
2
1
0
Consumer
Goods
0
5
9
12
14
15
Refer to the table. If the economy is producing at production alternative C, the opportunity
cost of the 10th unit of consumer goods will be
A.
4 units of capital goods.
1-44
101.
Answer the question on the basis of the data given in the following production
possibilities table.
Production Possibilities (Alternatives)
A
B
C
D
E
F
Capital Goods
5
4
3
2
1
0
Consumer Goods
0
5
9
12
14
15
Refer to the table. As compared to production alternative D, the choice of alternative C
would
D.
tend to generate a slower growth rate.
102.
Answer the question on the basis of the data given in the following production
possibilities table.
1-45
Production Possibilities (Alternatives)
A
B
C
D
E
F
Capital Goods
5
4
3
2
1
0
Consumer
Goods
0
5
9
12
14
15
Refer to the table. A total output of 3 units of capital goods and 4 units of consumer goods
A.
is irrelevant because the economy is capable of producing a larger total output.
Production Possibilities (Alternatives)
A
B
C
D
E
F
Capital Goods
5
4
3
2
1
0
Consumer Goods
0
5
9
12
14
15
Refer to the table. For this economy to produce a total output of 3 units of capital goods and
13 units of consumer goods, it must
D.
achieve the full employment of available resources.
AACSB: Knowledge Application
1-46
104.
Answer the question on the basis of the data given in the following production
possibilities table.
Production Possibilities (Alternatives)
A
B
C
D
E
F
Capital Goods
5
4
3
2
1
0
Consumer
Goods
0
5
9
12
14
15
Refer to the table. For these data, the law of increasing opportunity costs is reflected in the
fact that
A. the amount of consumer goods that must be sacrificed to get more capital goods
diminishes beyond a point.
105.
When an economy is operating under conditions of full employment, the production of
more of commodity A will mean the production of less of commodity B because
A.
of the law of increasing opportunity costs.
B.
economic wants are insatiable.
106.
Assume that a change in government policy results in greater production of both
consumer goods and investment goods. We can conclude that
D.
the law of increasing opportunity costs does not apply in this society.
107.
The production possibilities curve
A.
shows all of those levels of production that are consistent with a stable price level.
B.
indicates that any combination of goods lying outside the curve is economically
inefficient.
1-48
108.
Any point inside the production possibilities curve indicates
A.
the presence of technological change.
109
.
1-49
Refer to the diagram. Other things equal, this economy will shift its production possibilities
curve outward the most if
A.
the ratio of capital to consumer goods is minimized.
B.
it chooses point C.
110.
1-50
Refer to the diagram. This economy will experience unemployment if it produces at point
A.
A.
111.
Which of the following is assumed in constructing a typical production possibilities
curve?
A.
The economy is using its resources inefficiently.
112.
The typical production possibilities curve is
A.
an upsloping line that is bowed out from the origin.
1-51
113.
The slope of the typical production possibilities curve
D.
decreases as one moves southeast along the curve.
114.
Assume an economy is incurring unemployment. The effect of resolving this problem
will be to
D.
shift its production possibilities curve to the right.
115.
1-52
Duckistan Production Possibilities
A
B
C
D
E
Civilian Goods
20
18
14
8
0
Military Goods
0
1
2
3
4
Herbania Production Possibilities
A
B
C
D
E
Civilian Goods
40
36
26
14
0
Military Goods
0
1
2
3
4
Refer to the tables. Suppose that the amount and quality of resources are the same in both
countries. We can conclude that
A.
Duckistan is technologically better than Herbania at producing military goods.
116.
Duckistan Production Possibilities
A
B
C
D
E
Civilian Goods
20
18
14
8
0
Military Goods
0
1
2
3
4
Herbania Production Possibilities
A
B
C
D
E
Civilian Goods
40
36
26
14
0
Military Goods
0
1
2
3
4
Refer to the tables. Suppose that technology and the quality of resources are the same in both
countries. We can conclude that
A. Duckistan has more resources than Herbania.
117.
Duckistan Production Possibilities
A
B
C
D
E
Civilian Goods
20
18
14
8
0
Military Goods
0
1
2
3
4
Herbania Production Possibilities
A
B
C
D
E
Civilian Goods
40
36
26
14
0
Military Goods
0
1
2
3
4
Refer to the tables. Opportunity costs of producing military goods are
A.
increasing in Duckistan but constant in Herbania.
1-54
118.
Duckistan Production Possibilities
A
B
C
D
E
Civilian Goods
20
18
14
8
0
Military Goods
0
1
2
3
4
Herbania Production Possibilities
A
B
C
D
E
Civilian Goods
40
36
26
14
0
Military Goods
0
1
2
3
4
Refer to the tables. Opportunity costs are
A.
constant in both Duckistan and Herbania.
119.
Duckistan Production Possibilities
A
B
C
D
E
Civilian Goods
20
18
14
8
0
Military Goods
0
1
2
3
4
1-55
Herbania Production Possibilities
A
B
C
D
E
Civilian Goods
40
36
26
14
0
Military Goods
0
1
2
3
4
Refer to the tables. Suppose that Duckistan and Herbania are each producing 14 units of
civilian goods and 2 units of military goods. Then
D.
neither Duckistan nor Herbania is fully employing its resources.
120.
In the figure are two linear production possibilities curves for countries Alpha and Beta. We
can conclude that
A.
different value systems make it impossible to compare opportunity costs in the two
121. Which of the following is not correct? A typical production possibilities curve
A.
indicates how much of two products society can produce.
B.
reveals how much each additional unit of one product will cost in terms of the other
122.
Refer to the diagram. This production possibilities curve is constructed so that
A.
resources are presumed to be perfectly shiftable between bread and tractors.
123.
Refer to the diagram. Which of the following is a normative statement?
D.
Other things equal, the combination of outputs represented by point D will result in more
rapid economic growth than will the combination represented by point C.
124.
Refer to the diagram. Which of the following is a positive statement?
A.
A point inside the production possibilities curve is superior to a point on the curve
because the former requires less work effort.
B.
Because any society should stress economic growth as its major goal, point D is superior
125.
Refer to the diagram. Starting at point A, the opportunity cost of producing each successive
unit of tractors is
A. a constant 2 units of bread.
