Thinking Like an Economist 283
158.
A production possibilities frontier shifts outward when
a.
the economy experiences economic growth.
b.
the desires of the economy’s citizens change.
c.
at least one of the basic principles of economics is violated.
d.
opportunity costs are lessened.
159.
In a certain economy, jam and bread are produced, and the economy currently operates on its
production
possibilities frontier. Which of the following events would allow the economy to
produce more jam and more bread,
relative to the quantities of those goods that are being
produced now?
a.
Unemployed labor is put to work producing jam and bread.
b.
The economy puts its idle capital to work producing jam and bread.
c.
The economy experiences economic growth.
d.
All of the above are correct.
160.
In a certain economy, toys and greeting cards are produced, and the economy currently operates
on its production
possibilities frontier. Which of the following events would allow the economy to
produce more toys and more
greeting cards, relative to the quantities of those goods that are
being produced now?
a.
The economy experiences economic growth.
b.
There is a technological advance in the toy industry, but the greeting card industry experiences
no such
advance.
c.
There is a technological advance in the greeting card industry, but the toy industry experiences
no such
advance.
d.
All of the above are correct.
161.
The country of Gerance produces two goods, cars and wine. Last year, it produced 1,000 cars
and 15,000 cases of
wine. This year, it produced 1,300 cars and 20,000 cases of wine. Given no
other information, which of the
following events could not explain this change?
a.
Gerance experienced a reduction in unemployment.
b.
Gerance experienced an improvement in car-making technology.
c.
Gerance acquired more resources.
d.
Any of these events could explain the change.
Thinking Like an Economist 285
162.
Suppose an economy produces two goods, food and machines. This economy always operates
on its production
possibilities frontier. Last year, it produced 1000 units of food and 47 machines.
This year, it is producing 1050 units
of food and 52 machines. Which of the following events
could not explain the increase in output?
a.
a reduction in unemployment
b.
an increase in available labor
c.
an improvement in technology
d.
Any of these events could explain the increase in output.
163.
Suppose an economy produces two goods, food and machines. This economy always operates
on its production
possibilities frontier. Last year, it produced 1000 units of food and 47 machines.
This year it experienced a
technological advance in its machine-making industry. As a result,
this year the society wants to produce 1050 units
of food and 47 machines. Which of the
following statements is correct?
a.
Because the technological advance occurred in the machine-making industry, it will not be
possible to
increase food production without reducing machine production below 47.
b.
Because the technological advance occurred in the machine-making industry, increases in
output can only
occur in the machine industry.
c.
In order to increase food production in these circumstances without reducing machine
production, the
economy must reduce inefficiencies.
d.
The technological advance reduced the amount of resources needed to produce 47 machines,
so these
resources could be used to produce more food.
164.
Suppose an economy only produces two goods, robots and ice cream. Last month, the economy
produced 10 robots
and 200 gallons of ice cream. This month, the same economy produced 15
robots and 240 gallons of ice cream.
Which of the following statements could explain this change?
a.
This month, the economy reduced the unemployment of its resources.
b.
This month, the economy experienced an improvement in technology.
c.
This month, the economy experienced an increase in resources
d.
All of the above are correct.
165.
A certain production possibilities frontier shows production possibilities for two goods, jewelry and
clothing. Which
of the following concepts cannot be illustrated by this model?
a.
the flow of dollars between sellers of jewelry and clothing and buyers of jewelry and clothing
b.
the tradeoff between production of jewelry and production of clothing
c.
the opportunity cost of clothing in terms of jewelry
d.
the effect of economic growth on production possibilities involving jewelry and clothing
Thinking Like an Economist 287
166.
The production possibilities frontier is used to illustrate some basic economic ideas, including
a.
scarcity.
b.
opportunity cost.
c.
economic growth.
d.
All of the above are correct.
Table 2-3
Production Possibilities for Footville
Shoes
Socks
800
0
600
400
400
700
200
900
0
1000
167.
Refer to Table 2-3. What is the opportunity cost to Footville of increasing the production of
shoes from 400 to
600?
a.
400 socks
b.
300 socks
c.
200 socks
d.
100 socks
168.
Refer to Table 2-3. Which of the following statements is correct?
a.
The opportunity cost of an additional 200 shoes is constant at 200 socks.
b.
The opportunity cost of an additional 200 shoes is constant at 300 socks.
c.
Footville’s production possibilities frontier is a straight, downward-sloping line.
d.
The opportunity cost of an additional 200 shoes increases as more socks are produced.
Table 2-4
Production Possibilities for Picnicland
Hotdogs
Burgers
1800
0
1350
450
900
750
450
975
0
1125
169.
Refer to Table 2-4. What is the opportunity cost to Picnicland of increasing the production of
hotdogs from 450 to
900?
a.
150 burgers
b.
225 burgers
c.
300 burgers
d.
450 burgers
170.
Refer to Table 2-4. What is the opportunity cost to Picnicland of increasing the production of
burgers from 450 to
750?
a.
150 hotdogs
b.
225 hotdogs
c.
300 hotdogs
d.
450 hotdogs
Figure 2-4
171.
Refer to Figure 2-4. At which point is this economy producing its maximum possible quantity
of doors?
a.
R
b.
S
c.
T
d.
U
172.
Refer to Figure 2-4. This economy has the ability to produce at which point(s)?
a.
Q, R, T, U
b.
R, T, U
c.
R, U
d.
T
173.
Refer to Figure 2-4. This economy cannot produce at which point(s)?
a.
Q
b.
Q, S
c.
Q, S, T
d.
S
174.
Refer to Figure 2-4. Efficient production is represented by which point(s)?
a.
Q, R, U
b.
R, T, U
c.
R, U
d.
S, T
175.
Refer to Figure 2-4. Inefficient production is represented by which point(s)?
a.
Q, S
b.
Q, S, T
c.
R, U
d.
T
176.
Refer to Figure 2-4. Unemployment could cause this economy to produce at which point(s)?
a.
Q, S
b.
Q, S, T
c.
R, U
d.
T
Thinking Like an Economist 293
Figure 2-5
177.
Refer to Figure 2-5. If this economy devotes all of its resources to the production of dryers,
then it will produce
a.
0 dryers and 100 washers.
b.
60 dryers and 50 washers.
c.
80 dryers and 0 washers.
d.
80 dryers and 50 washers.
178.
Refer to Figure 2-5. It is possible for this economy to produce
a.
60 dryers and 50 washers.
b.
60 dryers and 60 washers.
c.
80 dryers and 50 washers.
d.
All of the above.
179.
Refer to Figure 2-5. It is not possible for this economy to produce at point
a.
A.
b.
B.
c.
C.
d.
D.
Thinking Like an Economist 295
180.
Refer to Figure 2-5. This economy cannot currently produce 70 washers and 70 dryers because
a.
it is not using all of its resources.
b.
it is not using the most efficient production process.
c.
it does not have the resources and technology to produce that level of output.
d.
All of the above are correct.
181.
Refer to Figure 2-5. Suppose this economy is producing at point D. Which of the following
statements would best
explain this situation?
a.
The economy has insufficient resources to produce at a more desirable point.
b.
The economy’s available technology prevents it from producing at a more desirable point.
c.
There is widespread unemployment in the economy.
d.
Any of the above statements would be a legitimate explanation for this situation.
182.
Refer to Figure 2-5. Efficient production is represented by which point(s)?
a.
A, B
b.
A, B, D
c.
A, B, C
d.
C
183.
Refer to Figure 2-5. Inefficient production is represented by which point(s)?
a.
A, B
b.
C
c.
C, D
d.
D
184.
Refer to Figure 2-5. The opportunity cost of this economy moving from point A to point B is
a.
20 dryers.
b.
20 washers.
c.
20 dryers and 20 washers.
d.
60 dryers.
185.
Refer to Figure 2-5. The opportunity cost of obtaining 40 additional dryers by moving from
point D to point C is
a.
0 washers.
b.
20 washers.
c.
40 washers.
d.
None of the above; the economy cannot move from point D to point C.
186.
Refer to Figure 2-5. The opportunity cost of obtaining 20 additional dryers by moving from
point D to point A is
a.
0 washers.
b.
20 washers.
c.
40 washers.
d.
None of the above; the economy cannot move from point D to point A.
Figure 2-6
Thinking Like an Economist 299
187.
Refer to Figure 2-6. If this economy devotes all of its resources to the production of blankets,
then it will produce
a.
0 blankets and 360 pillows.
b.
200 blankets and 240 pillows.
c.
320 blankets and 120 pillows.
d.
360 blankets and 0 pillows.
188.
Refer to Figure 2-6. If this economy devotes one-half of its available resources to the production
of blankets and
the other half to the production of pillows, it could produce
a.
120 pillows and 320 blankets.
b.
180 pillows and 180 blankets.
c.
240 pillows and 200 blankets.
d.
We would have to know the details of this economy’s technology in order to determine this.
189.
Refer to Figure 2-6. A movement from point H to point K could be caused by
a.
unemployment.
b.
a decrease in society’s preference for pillows.
c.
fewer resources available for production of pillows.
d.
All of the above are correct.
190.
Refer to Figure 2-6. If this economy moves from point F to point G, then which of the
following statements is
correct?
a.
This economy has moved from a point of inefficient production to a point of efficient
production.
b.
This economy has experienced economic growth.
c.
This economy has experienced an increase in employment.
d.
None of the above is correct.
191.
Refer to Figure 2-6. The opportunity cost of this economy moving from point I to point H is
a.
120 pillows.
b.
120 blankets.
c.
120 blankets and 120 pillows.
d.
200 blankets.
192.
Refer to Figure 2-6. The opportunity cost of this economy moving from point I to point F is
a.
zero.
b.
40 blankets.
c.
120 pillows.
d.
360 blankets.
193.
Refer to Figure 2-6. The opportunity cost of this economy moving from point K to point H is
a.
zero.
b.
50 blankets.
c.
60 pillows.
d.
50 blankets and 60 pillows.
Figure 2-7