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c.
be a bowed-inward curve.
d.
not exist.
69. A PPF is bowed outward as a result of
a.
constant opportunity costs.
b.
increasing opportunity costs.
c.
decreasing opportunity costs.
d.
scarcity.
e.
choice.
70. A PPF is a straight line as a result of
a.
constant opportunity costs.
b.
increasing opportunity costs.
c.
decreasing opportunity costs.
d.
scarcity.
e.
choice.
71. In an eight-hour day, Andy can produce either 24 loaves of bread or 8 pounds of butter. In an eight-hour day, John can
produce either 8 loaves of bread or 8 pounds of butter. The opportunity cost of producing 1 pound of butter is
a.
1/3 hour for Andy and 1 hour for John.
b.
1 hour for Andy and 1 hour for John.
c.
3 loaves of bread for Andy and 1 loaf of bread for John.
d.
1/3 loaves of bread for Andy and 1 loaf of bread for John.
e.
none of the above
72. An advance in technology commonly refers to the ability to produce
a.
the same output with a smaller quantity of resources.
b.
more output with a fixed quantity of resources.
c.
more output with a greater quantity of resources.
d.
both a and b
e.
both b and c
Exhibit 2-4
73. Refer to Exhibit 2-4. The line joining points A and D is called the
a.
production function frontier.
b.
utility function.
c.
production possibilities frontier.
d.
demand curve.
74. Refer to Exhibit 2-4. This economy is productive
a.
efficient, if it operates at point B or C.
b.
efficient, if it operates at point A or D.
c.
inefficient, if it operates at point A or D.
d.
inefficient regardless of the particular point.
e.
both a and b
75. Refer to Exhibit 2-4. The opportunity cost of moving from point A to point B is
a.
60,000 copiers.
b.
40,000 copiers.
c.
20,000 copiers.
d.
20,000 fax machines.
e.
40,000 fax machines.
76. Refer to Exhibit 2-4. As more fax machines are produced, the opportunity cost of producing them
a.
increases.
b.
decreases.
c.
remains constant.
d.
first decreases and then increases.
Exhibit 2-5
77. Refer to Exhibit 2-5. The economy is currently operating at point F. The opportunity cost of moving to point E is
approximately
a.
35 televisions.
b.
55 televisions.
c.
zero televisions.
d.
40 televisions.
78. Refer to Exhibit 2-5. As more fax machines are produced, the opportunity cost of producing them
a.
increases.
b.
decreases.
c.
remains constant.
d.
first decreases and then increases.
79. Refer to Exhibit 2-5. The opportunity cost of moving from point A to point B is approximately
a.
5,000 televisions.
b.
5,000 fax machines.
c.
10,000 televisions.
d.
10,000 fax machines.
80. Refer to Exhibit 2-5. The opportunity cost of moving from point D to point C is
a.
5,000 televisions.
b.
5,000 fax machines.
c.
10,000 televisions.
d.
10,000 fax machines.
81. Refer to Exhibit 2-5. The opportunity cost of moving from point C to point B is
a.
15,000 televisions.
b.
15,000 fax machines.
c.
10,000 televisions.
d.
20,000 fax machines.
82. Refer to Exhibit 2-5. "In order to produce one more television set, we must forfeit the production of one fax machine."
This statement describes a movement from
a.
point C to point D.
b.
point D to point E.
c.
point E to point F.
d.
point E to point D.
e.
point D to point C.
83. Refer to Exhibit 2-5. Which of the following labeled points are productive efficient?
a.
A, B, C, D, and E
b.
B, C and D only
c.
C only
d.
All of the points are productive efficient.
e.
None of the points are productive efficient.
84. Refer to Exhibit 2-5. Given available resources and technology, this economy can produce 50,000 television sets and
50,000 fax machines only if it chooses to
a.
have an equal distribution of goods.
b.
operate at both points C and D, simultaneously.
c.
produce at point C.
d.
produce at point D.
e.
none of the above
85. Some of our farm fields are being left unused. Does this have any implications for the economy's PPF diagram (with
agricultural products on one axis and all other products on the other axis)?
a.
No implications, because the PPF deals only with resources in use.
b.
The PPF cannot be drawn if some resources are idle.
c.
With unemployed resources, we are at a point below the PPF.
d.
The PPF would be upward sloping.
86. Productive efficiency implies that
a.
all consumers' wants are satisfied.
b.
no advance in technology will occur in the future.
c.
the attainable region is greater than the unattainable region.
d.
gains are impossible in one area without losses in another.
e.
all of the above
87. Jose has one evening in which to prepare for two exams and can employ one of two possible strategies:
Strategy
Score in Economics
Score in Statistics
A
94
79
B
77
90
The opportunity cost of receiving a 94 on the economics exam is __________ points on the statistics exam.
a.
79
b.
17
c.
11
d.
90
88. Jose has one evening in which to prepare for two exams and can employ one of two possible strategies:
Strategy
Score in Economics
Score in Statistics
A
94
79
B
77
90
The opportunity cost of receiving a 90 on the statistics exam is ___________ points on the economics exam.
a.
79
b.
17
c.
11
d.
90
Exhibit 2-6
89. Refer to Exhibit 2-6. Which graph depicts a technological breakthrough in the production of good Y only?
a.
(1)
b.
(2)
c.
(3)
d.
(4)
e.
none of the above
90. Refer to Exhibit 2-6. Which graph depicts a discovery of a new cheap source of energy that assists in the production of
both good X and good Y?
a.
(1)
b.
(2)
c.
(3)
d.
(4)
e.
none of the above
91. Refer to Exhibit 2-6. Which graph best depicts the consequence of a large-scale natural disaster?
a.
(1)
b.
(2)
c.
(3)
d.
(4)
e.
none of the above
92. Refer to Exhibit 2-6. Which graph depicts society's choice to produce more of good X and less of good Y?
a.
(1)
b.
(2)
c.
(3)
d.
(4)
e.
none of the above
93. Refer to Exhibit 2-6. Which graph depicts a technological breakthrough in the production of good X only?
a.
(1)
b.
(2)
c.
(3)
d.
(4)
e.
none of the above
94. Refer to Exhibit 2-6. Which graph depicts the result of a decrease in the unemployment rate?
a.
(1)
b.
(2)
c.
(3)
d.
(4)
e.
none of the above
95. Refer to Exhibit 2-6. Which graph depicts the result of an increase in the number of illegal immigrants entering the
country?
a.
(1)
b.
(2)
c.
(3)
d.
(4)
e.
none of the above
96. Refer to Exhibit 2-6. Which graph depicts the result of an increase in the unemployment rate?
a.
(1)
b.
(2)
c.
(3)
d.
(4)
e.
none of the above
Exhibit 2-7
97. Refer to Exhibit 2-7. Which of the following statements is true?
a.
Points B and D are more efficient than points A and C.
b.
If the economy's PPF is represented by PPF1, points A and B are productive efficient, while C and D are
unattainable.
c.
If the economy's PPF is represented by PPF2, points C and D are productive efficient, while A and B are
unattainable.
d.
both a and c
98. Refer to Exhibit 2-7. For which of the following is the statement "In order to get more civilian goods, we have to
forfeit some military goods" true?
a.
a movement from A to C
b.
a movement from B to D
c.
a movement from C to D
d.
a movement from F to D
e.
none of the above
99. Refer to Exhibit 2-7. Point F is
a.
unattainable if the economy's PPF is PPF1.
b.
inefficient if the economy's PPF is PPF2.
c.
attainable if the economy's PPF is PPF2.
d.
all of the above
e.
none of the above
100. Refer to Exhibit 2-7. For which of the following is the statement “In order to get more military goods, we have to
forfeit some civilian goods” true?
a.
a movement from A to C
b.
a movement from B to D
c.
a movement from F to D
d.
a movement from B to A
e.
none of the above
101. The economy can produce 15X and 15Y, 10X and 20Y, 5X and 25Y, or OX and 30Y. It follows that the production
possibility frontier (PPF) is
a.
a downward-sloping straight line.
b.
an upward-sloping straight line.
c.
a downward-sloping convex curve.
d.
a downward-sloping concave curve.
102. If the economy is on the production possibilities frontier (PPF), the economy is
a.
productive inefficient.
b.
operating with no unemployed resources.
c.
productive efficient.
d.
b and c
e.
none of the above
103. Points inside (below) the production possibilities frontier (PPF) are
a.
unattainable.
b.
attainable, but productive inefficient.
c.
preferable to points that lie on the PPF.
d.
attainable and productive efficient.
104. The economy can produce 15X and 15Y, 10X and 20Y, 5X and 25Y, or 0X and 30Y. It follows that opportunity cost
of 1X is ___Y.
a.
4.0
b.
5.0
c.
2.5
d.
1.0
e.
none of the above
105. If an economy can produce a maximum of 100 units of good X and the opportunity cost of 1X is always 5Y, then
what is the maximum number of units of good Y the economy can produce?
a.
250
b.
100
c.
20
d.
500
e.
none of the above
106. If an economy can produce a maximum of 10 units of good X and the opportunity cost of 1X is always 2Y, then what
is the maximum units of good Y the economy can produce?
a.
5
b.
200
c.
20
d.
500
e.
none of the above
107. An economy can produce either of these two combinations of goods X and Y: 1,000X and 0Y or 400Y and 0X.
Furthermore, the opportunity cost between the two goods is always constant. Which of the following combinations of the
two goods, X and Y, is it possible for the economy to produce?
a.
700 units of X and 280 units of Y
b.
600 units of X and 250 units of Y
c.
400 units of X and 150 units of Y
d.
100 units of X and 600 units of Y
e.
300 units of X and 280 units of Y
108. If there is always a 4-for-1 tradeoff between producing good X and good Y, it follows that the opportunity cost of X
(in terms of Y) ____________________ and the PPF for these two goods is ______________________.
a.
decreases at low levels of X; a straight line
b.
rises at high levels of Y; bowed-outward
c.
decreases at high levels of X; bowed-outward
d.
is always the same; a straight line
109. The economy is currently on its production possibilities frontier (PPF). A politician says that it is possible to get
more of everything---more infrastructure, more schools, more national defense, more spending on social programs, and so
on. The politician is
a.
correct if he is assuming a rightward-shifting PPF.
b.
incorrect if he is assuming a rightward-shifting PPF.
c.
incorrect if he is assuming a PPF that does not change.
d.
correct if he is assuming a PPF that does not change.
e.
a and c
110. The law of increasing opportunity costs states that as
a.
less of a good is produced, the higher the opportunity costs of producing that good.
b.
more of a good is produced, the lower the opportunity costs of producing that good.
c.
more of a good is produced, the higher the opportunity costs of producing that good.
d.
more of a good is produced, the opportunity cost of producing the good remains the same.
e.
a and b
111. Currently an economy is producing (at a point on its production possibilities frontier) 100 units of good X and the
opportunity cost of producing 1X is 3Y. If good X is produced at increasing opportunity costs, then when the economy
produces 120 units of good X (on the same PPF) the opportunity cost of producing 1Y (not 1X) could be
a.
1/4X.
b.
1/3X.
c.
1/2X.
d.
1X.
e.
none of the above
112. What is the reason for the law of increasing opportunity costs?
a.
There is no reason: it is just one of the laws of economics.
b.
Resources have varying abilities and those with lower opportunity costs of producing a good will be used to
produce it before resources with higher opportunity costs produce it.
c.
The price of a good rises as more of it is demanded.
d.
As more of a good is produced, the taxes applied to the production of the good rise.
e.
c and d
113. If a production possibilities frontier (PPF) is concave outward, it follows that
a.
opportunity costs are constant between two goods.
b.
the opportunity cost (of producing the good on the horizontal axis) rises as more of the good is produced.
c.
the opportunity cost (of producing the good on the horizontal axis) falls as more of the good is produced.
d.
the opportunity cost (of producing the good on the horizontal axis) first rises and then falls as more of the good
is produced.
e.
none of the above
