Economics Chapter 2 Answer Indicate Combinations Guns And Butter That

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Test Canvas : TestBanks Chapter 02: Economic Models: Trade–offs and Trade

Microeconom ics, 3e

Test Canvas: TestBanks Chapter 02: Economic Models: Trade-offs

and Trade

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1. True/False: Economic models that make unrealistic…

Question Economic models that make unrealistic assumptions may be useful in analyzing

some economic problems.

2. True/False: On any given production possibility f...

Question On any given production possibility frontier, we see the minimum quantity of one

good that can be produced for any given production of the other.

3. True/False: Suppose residents of Montana operate ...

Question

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Suppose residents of Montana operate on their production possibility frontier and

want to see increased wheat production as well as an increase in the production of

fly–fishing rods. According to the production possibility frontier, this cannot happen

without new resources or technological improvement.

4. True/False: A typical, bowed-out production possi...

Question A typical, bowed-out production possibility frontier between two goods—guns and

butter—shows that the opportunity cost of butter in terms of guns increases as

more butter is produced. This implies that the opportunity cost of guns in terms of

butter decreases as more guns are produced.

5. True/False: If the United States is more producti...

Question If the United States is more productive than Mexico in all lines of production, then

the United States cannot benefit from trade with Mexico.

6. True/False: Bangladesh produces much of the cloth...

Question Bangladesh produces much of the clothing we wear because it is more productive

in producing clothes than we are in the United States.

7. True/False: Nations can gain from trade with othe…

Question Nations can gain from trade with other nations even if they are less productive in all

industries than the nations they trade with.

8. True/False: Reference: Ref 2-26 (Table: Fish and…

Question

Points: 0

Reference: Ref 2-26

(Table: Fish and Coconut Production Possibilities) Look at the table Fish and

Coconut Production Possibilities. The table shows the maximum amount of fish or

coconuts that Tom and Hank can produce when each produces only one of the

goods. The table implies that Hank has an absolute advantage in the production of

both goods.

9. True/False: Reference: Ref 2-26 (Table: Fish and…

Question

Reference: Ref 2-26

(Table: Fish and Coconut Production Possibilities) Look at the table Fish and

Coconut Production Possibilities. The table shows the maximum amount of fish or

coconuts that Tom and Hank can produce when each produces only one of the

goods. The table implies that Tom has a comparative advantage in the production

of both goods.

10. True/False: Absolute advantage is the basis for g…

Question Absolute advantage is the basis for gains from trade.

11. True/False: The principle of comparative advantag…

Question The principle of comparative advantage suggests that if New York and Florida

exchange taxi parts for oranges, each state will be made worse off.

12. True/False: A firm is an organization that produc...

Question A firm is an organization that produces goods.

Points: 0

13. True/False: Fertilizer, used to grow pumpkins, is...

Question Fertilizer, used to grow pumpkins, is an example of a factor of production.

14. True/False: Labor and capital are the only two fa…

Question Labor and capital are the only two factors of production.

15. True/False: “Teachers in northern New Hamps…

Question “Teachers in northern New Hampshire should earn more money” is a normative

statement.

16. True/False: Positive economics is the branch of e…

Question Positive economics is the branch of economics that makes prescriptions about the

way the economy should work.

17. True/False: “Steel tariffs will prevent job...

Question “Steel tariffs will prevent job losses in the steel industry” is a positive statement.

18. True/False: “The unemployment rate should b...

Question “The unemployment rate should be higher” is a normative statement.

19. True/False: “Many economists agree that inc...

Question “Many economists agree that income taxes should be increased for rich people” is

a positive statement.

Points: 0

20. True/False: Economists disagree more over normati...

Question Economists disagree more over normative economics than positive economics.

21. Multiple Choice: A simplified representation that is u...

Question A simplified representation that is used to study a real situation is called:

a trade-off.

22. Multiple Choice: The models that economists construct:

Question The models that economists construct:

23. Multiple Choice: When building a model, economists:

Question When building a model, economists:

are careful to avoid the scientific method.

24. Multiple Choice: The models used in economics:

Question The models used in economics:

Points: 0

Answer are usually limited to variables that are directly related.

25. Multiple Choice: Economic models are:

Question Economic models are:

Answer created and used to duplicate reality.

26. Multiple Choice: The importance of an economic model i...

Question The importance of an economic model is that it allows us to:

Answer build a complex and accurate model of the economy.

27. Multiple Choice: The production possibility frontier i...

Question The production possibility frontier illustrates that:

Answer the economy will automatically end up at full employment.

Points: 0

28. Multiple Choice: Reference: Ref 2-1 (Table: Productio...

Question

Reference: Ref 2-1

(Table: Production Possibilities Schedule I) Look at the table Production

Possibilities Schedule I. If the economy produces 2 units of consumer goods per

period, it also can produce at most ________ units of capital goods per period.

Answer 30

29. Multiple Choice: Reference: Ref 2-1 (Table: Productio...

Question

Reference: Ref 2-1

(Table: Production Possibilities Schedule I) Look at the table Production

Possibilities Schedule I. If the economy produces 10 units of capital goods per

period, it also can produce at most ________ units of consumer goods per period.

Answer 5

30. Multiple Choice: Reference: Ref 2-1 (Table: Productio...

Question

Points: 0

Reference: Ref 2-1

(Table: Production Possibilities Schedule I) Look at the table Production

Possibilities Schedule I. The opportunity cost of producing the fourth unit of

consumer goods is ________ units of capital goods.

Answer 2

31. Multiple Choice: Figure: Guns and Butter Reference: Re…

Question Figure: Guns and Butter

Reference: Ref 2-2

(Figure: Guns and Butter) Look at the figure Guns and Butter. On this figure, points

A, B, E, and F:

Points: 0

indicate constant costs for guns and increasing costs for butter.

32. Multiple Choice: Figure: Guns and Butter Reference: Re…

Question Figure: Guns and Butter

Reference: Ref 2-2

(Figure: Guns and Butter) Look at the figure Guns and Butter. This production

possibility frontier is:

33. Multiple Choice: Figure: Guns and Butter Reference: Re…

Question

Points: 0

Figure: Guns and Butter

Reference: Ref 2-2

(Figure: Guns and Butter) Look at the figure Guns and Butter. If the economy were

operating at point B, producing 16 guns and 12 pounds of butter per period, a

decision to move to point E and produce 18 pounds of butter:

Answer indicates you can have more butter and guns simultaneously.

34. Multiple Choice: Figure: Guns and Butter Reference: Re…

Question

Points: 0

Figure: Guns and Butter

Reference: Ref 2-2

(Figure: Guns and Butter) Look at the figure Guns and Butter. The combination of

guns and butter at point H:

Answer can be attained but would cost too much.

35. Multiple Choice: Figure: Guns and Butter Reference: Re…

Question

Points: 0

Figure: Guns and Butter

Reference: Ref 2-2

(Figure: Guns and Butter) Look at the figure Guns and Butter. Suppose the

economy produced 8 guns and 12 pounds of butter per period.

36. Multiple Choice: If an economy has to sacrifice only o...

Question If an economy has to sacrifice only one unit of good X for each unit of good Y

produced throughout the relevant range, then its production possibility frontier has:

Answer a zero slope.

37. Multiple Choice: A production possibility frontier tha…

Question A production possibility frontier that is a straight line sloping down from left to right

would suggest that:

Points: 0

Answer more of both goods could be produced moving along the frontier.

38. Multiple Choice: Reference: Ref 2-3 (Table: Productio...

Question

Reference: Ref 2-3

(Table: Production Possibilities Schedule II) Look at the table Production

Possibilities Schedule II. If the economy is producing at alternative X, the

opportunity cost of producing at Y instead of X is ________ units of consumer

goods per period.

Answer 0

39. Multiple Choice: Reference: Ref 2-3 (Table: Productio...

Question

Reference: Ref 2-3

(Table: Production Possibilities Schedule II) Look at the table Production

Possibilities Schedule II. If an economy is producing at alternative W, the

opportunity cost of producing at X is ________ unit(s) of consumer goods per

period.

Answer 0

Points: 0

40. Multiple Choice: Reference: Ref 2-3 (Table: Productio...

Question

Reference: Ref 2-3

(Table: Production Possibilities Schedule II) Look at the figure Production

Possibilities Schedule II. The production of 14 units of consumer goods and 1 unit

of capital goods per period would:

Answer result in full employment.

result in no unused resources.

41. Multiple Choice: In movement along a production possib...

Question In movement along a production possibility frontier, the opportunity cost to society

of getting more of one good:

Answer is constant.

42. Multiple Choice: If an economy has to sacrifice increa...

Question If an economy has to sacrifice increasing amounts of good X for each unit of good

Y produced, then its production possibility frontier is:

Points: 0

a vertical line.

43. Multiple Choice: The fact that a society‘s production ...

Question The fact that a society‘s production possibility frontier is bowed out or concave to

the origin of a graph demonstrates the law of:

concave opportunity cost.

44. Multiple Choice: The economy‘s factors of production a...

Question The economy‘s factors of production are not equally suitable for producing different

types of goods. This principle generates:

Answer economic growth.

45. Multiple Choice: Figure: Strawberries and Submarines R...

Question

Points: 0

Figure: Strawberries and Submarines

Reference: Ref 2-4

(Figure: Strawberries and Submarines) Look at the figure Strawberries and

Submarines. Suppose the economy is operating at point G. This implies that:

Answer the economy can move to a point such as C only if it improves its technology.

46. Multiple Choice: Figure: Strawberries and Submarines R...

Question

Points: 0

Figure: Strawberries and Submarines

Reference: Ref 2-4

(Figure: Strawberries and Submarines) Look at the figure Strawberries and

Submarines. As the economy moves from point A toward point D, it will find that

the opportunity cost of each additional submarine:

Answer falls.

47. Multiple Choice: Figure: Strawberries and Submarines R...

Question

Points: 0

Figure: Strawberries and Submarines

Reference: Ref 2-4

(Figure: Strawberries and Submarines) Look at the figure Strawberries and

Submarines. Suppose the economy now operates at point C. Moving to point E

would require that the economy:

Answer achieve full employment and an efficient allocation of resources.

48. Multiple Choice: If an economy is producing a level of...

Question If an economy is producing a level of output that is on its production possibility

frontier, the economy has:

Answer idle resources.

49. Multiple Choice: Figure: Consumer and Capital Goods Re…

Question

Points: 0

Figure: Consumer and Capital Goods

Reference: Ref 2-5

(Figure: Consumer and Capital Goods) Look at the figure Consumer and Capital

Goods. The movement from curve 1 to curve 2 indicates:

50. Multiple Choice: Figure: Consumer and Capital Goods Re…

Question

Points: 0

Figure: Consumer and Capital Goods

Reference: Ref 2-5

(Figure: Consumer and Capital Goods) Look at the figure Consumer and Capital

Goods. Point Z:

51. Multiple Choice: Technological improvements will:

Question Technological improvements will:

Answer leave the production possibility frontier unchanged.

52. Multiple Choice: A production possibility frontier ill…

Question A production possibility frontier illustrates the ________ facing an economy that

________ only two goods.

Points: 0