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194. Refer to Figure 2-7. If this economy devotes all of its resources to the production of engines,
then it will produce
a. 0 engines and 40 tvs.
b. 10 engines and 35 tvs.
c. 40 engines and 0 tvs.
d. 40 engines and 40 tvs.
195. Refer to Figure 2-7. This economy has the ability to produce at which point(s)?
a. N, O, P
b. L, M
c. L, M, N, O, P
d. L, M, Q
304 Thinking Like an Economist
196. Refer to Figure 2-7. This economy cannot produce at which point(s)?
a. L, M
b. N, O, P, Q
c. N, O, P
d. Q
197. Refer to Figure 2-7. Efficient production is represented by which point(s)?
a. L, M
b. L, M, N, P, Q
c. N, O, P
d. Q
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198. Refer to Figure 2-7. Inefficient production is represented by which point(s)?
a. L, M
b. N, O, P, Q
c. N, O, P
d. Q
199. Refer to Figure 2-7. Unemployment could cause this economy to produce at which point(s)?
a. L, M
b. N, O, P, Q
c. N, O, P
d. Q
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200. Refer to Figure 2-7. If this economy moved from point P to point N, then
a. it still would not be producing efficiently.
b. there would be no gain in either engines or tvs.
c. it would be producing more engines and more tvs than at point P.
d. It is not possible for this economy to move from point P to point N without additional
resources.
201. Refer to Figure 2-7. What is the opportunity cost of moving from point L to point M?
a. zero
b. 15 tvs
c. 20 engines and 15 tvs
d. 20 engines
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202. Refer to Figure 2-7. What is the opportunity cost of moving from point M to point L?
a. zero
b. 15 tvs
c. 20 engines and 15 tvs
d. 20 engines
Figure 2-8
203. Refer to Figure 2-8. Point K represents an outcome in which
a. production is inefficient.
b. some of the economy’s resources are unemployed.
c. the economy is using all of its resources to produce hammers.
d. the economy is using all of its nails to produce hammers.
308 Thinking Like an Economist
204. Refer to Figure 2-8. Which point on the graph best represents the fact that, because resources
are scarce, not every conceivable outcome is feasible?
a. point J
b. point K
c. point L
d. point M
205. Refer to Figure 2-8. Efficient production is represented by which point(s)?
a. J
b. J, K
c. J, K, L
d. J, K, M
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206. Refer to Figure 2-8. Inefficient production is represented by which point(s)?
a. K, M
b. L
c. L, M
d. M
207. Refer to Figure 2-8. To reach point L, the economy would have to
a. acquire more resources or experience a technological advance.
b. begin using its available resources more efficiently than it is currently using them.
c. shift resources away from the production of nails and toward the production of hammers.
d. None of the above are correct; the economy will never be able to reach point L.
310 Thinking Like an Economist
208. Refer to Figure 2-8. For this economy, as more and more hammers are produced, the
opportunity cost of an additional hammer produced, in terms of nails,
a. remains constant.
b. increases.
c. decreases.
d. This answer cannot be determined from the graph.
Figure 2-9
Panel (a) Panel (b)
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209. Refer to Figure 2-9, Panel (a). Production at point K is
a. possible and efficient.
b. possible but inefficient.
c. impossible but efficient.
d. impossible and inefficient.
210. Refer to Figure 2-9, Panel (a). Production is
a. possible at points J, K, L, and M, but efficient only at points J, L, and M.
b. possible at points J, K, L, and M, but efficient only at point K.
c. possible at points J, L, M, and N, but efficient only at points J, L, and M.
d. possible at points J, L, M, and N, but efficient only at point N.
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211. Refer to Figure 2-9, Panel (a). The movement from point M to point K could be caused by
a. an advance in production technology.
b. an improvement in efficiency.
c. economic growth.
d. unemployment.
212. Refer to Figure 2-9, Panel (a). The opportunity cost of moving from point J to point L is
a. 2 donuts.
b. 2 donuts and 2 cups of coffee.
c. 2 cups of coffee.
d. 6 cups of coffee.
213. Refer to Figure 2-9, Panel (a). The opportunity cost of moving from point M to point L is
a. 2 donuts.
b. 2 donuts and 4 cups of coffee.
c. 4 donuts.
d. 4 cups of coffee.
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214. Refer to Figure 2-9, Panel (a). The opportunity cost of moving from point K to point L is
a. 0 cups of coffee.
b. 1 donut.
c. 2 donuts.
d. 4 cups of coffee.
215. Refer to Figure 2-9, Panel (a). The opportunity cost of one cup of coffee is highest when the
economy produces
a. 0 cups of coffee.
b. 2 cups of coffee.
c. 4 cups of coffee.
d. 6 cups of coffee.
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216. Refer to Figure 2-9, Panel (a). To gain 2 donuts by moving from point L to point M, society
must sacrifice
a. efficiency.
b. employment.
c. 4 cups of coffee.
d. More than one of the above is correct.
217. Refer to Figure 2-9, Panel (a) and Panel (b). A shift of the economy’s production possibilities
frontier from Panel (a) to Panel (b) could be caused by
a. unemployment.
b. an improvement in donut production technology.
c. an improvement in coffee production technology.
d. an improvement in both donut and coffee production technology.
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218. Refer to Figure 2-9, Panel (a) and Panel (b). Which of the following is not a result of the
shift of the economy’s production possibilities frontier from Panel (a) to Panel (b)?
a. the tradeoff between the production of donuts and coffee changes
b. the opportunity cost of a cup of coffee is higher at all levels of coffee production
c. production of 4 donuts and 2 cups of coffee becomes possible
d. production of 1 donut and 4 cups of coffee becomes efficient
Figure 2-10
Panel (a) Panel (b)
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219. Refer to Figure 2-10, Panel (a). Production at point Y is
a. impossible and inefficient.
b. impossible but efficient.
c. possible but inefficient.
d. possible and efficient.
220. Refer to Figure 2-10, Panel (a). Production is
a. possible at points V, W, Y, and Z, but efficient only at points V, W, and Z.
b. possible at points V, W, Y, and Z, but efficient only at point Y.
c. possible at points U, V, W, and Z, but efficient only at points V, W, and Z.
d. possible at points U, V, W, and Z, but efficient only at point U.
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221. Refer to Figure 2-10, Panel (a). The movement from point W to point Y could be caused by
a. economic growth.
b. unemployment.
c. an improvement in efficiency.
d. an advance in production technology.
222. Refer to Figure 2-10, Panel (a). The opportunity cost of one sofa is highest when the economy
produces
a. 0 sofas.
b. 12 sofas.
c. 20 sofas.
d. 24 sofas.
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223. Refer to Figure 2-10, Panel (a). To gain 2 tractors by moving from point W to point V, society
must sacrifice
a. 12 sofas.
b. employment.
c. efficiency.
d. More than one of the above is correct.
224. Refer to Figure 2-10, Panel (a) and Panel (b). A shift of the economy’s production
possibilities frontier from Panel (a) to Panel (b) could be caused by
a. unemployment.
b. an improvement in sofa production technology.
c. an improvement in tractor production technology.
d. an improvement in both sofa and tractor production technology.
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225. Refer to Figure 2-10, Panel (a) and Panel (b). Which of the following is not a result of the
shift of the economy’s production possibilities frontier from Panel (a) to Panel (b)?
a. The tradeoff between the production of tractors and sofas changes.
b. Production of 2 tractors and 10 sofas becomes efficient.
c. Production of 6 tractors and 14 sofas becomes possible.
d. The opportunity cost of a sofa is higher at all levels of sofa production.
Figure 2-11
320 Thinking Like an Economist
226. Refer to Figure 2-11. Which of the following events would explain the shift of the production
possibilities frontier from A to B?
a. The economy’s citizens developed an enhanced taste for books.
b. The economy experienced a technological advance in the production of books.
c. More capital became available in the economy.
d. More labor became available in the economy.
227. Refer to Figure 2-11. The shift of the production possibilities frontier from A to B illustrates
a. simultaneous technological advances in the book and DVD industries.
b. a reallocation of resources away from the production of DVDs and toward the production of
books.
c. economic growth.
d. All of the above are correct.
Thinking Like an Economist 321
Figure 2-12
228. Refer to Figure 2-12. Which of the following would most likely have caused the production
possibilities frontier to shift outward from A to B?
a. a decrease in unemployment
b. a technological advance in the consumer goods industries
c. a general technological advance
d. an increase in the availability of capital-producing resources
322 Thinking Like an Economist
229. Refer to Figure 2-12. The shift of the production possibilities frontier from A to B can best be
described as
a. a downturn in the economy.
b. economic growth.
c. an enhancement of equality.
d. an improvement in the allocation of resources.
Figure 2-13