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230. Refer to Figure 2-13. Which of the following combinations of points are both efficient and
attainable for this economy?
a. G, H
b. F, I, L
c. F, G, H, I, L
d. J, K
231. Refer to Figure 2-13. Which of the following statements is true about point G for this economy?
a. Point G is currently unattainable.
b. Point G is efficient.
c. At point G, more cakes are produced than cookies.
d. There is unemployment at point G.
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232. Refer to Figure 2-13. Which points are not currently attainable but could become achievable
for this economy if there is an improvement in technology?
a. I, L
b. G, H
c. J, K
d. F, G
233. Refer to Figure 2-13. One difference between points F and G is that
a. Point G is unattainable with current resources, but point F is attainable.
b. All resources are fully employed at point F but there is unemployment at point G.
c. More output can be produced at point F but no additional output can be produced at point G.
d. This economy produces more cookies at point G than at point F.
Table 2-5
Corn (in bushels)
Wheat (in bushels)
2000
0
1600
700
1200
1300
800
1800
400
2200
0
2500
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234. Refer to Table 2-5. Table 2-5 shows one set of production possibilities. What is the opportunity
cost of increasing the production of corn from 400 bushels to 800 bushels?
a. 200 bushels of wheat
b. 400 bushels of wheat
c. 600 bushels of wheat
d. 800 bushels of wheat
235. Refer to Table 2-5. Table 2-5 shows one set of production possibilities. What is the opportunity
cost of an increase in the production of wheat from 700 bushels to 1300 bushels?
a. 800 bushels of corn
b. 600 bushels of corn
c. 400 bushels of corn
d. 400 bushels of wheat
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236. Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Which of the following
statements is correct?
a. The opportunity cost of a bushel of corn does not depend on how many bushels of wheat are
being produced.
b. The opportunity cost of a bushel of corn increases as more corn is produced.
c. The opportunity cost of a bushel of corn decreases as more corn is produced.
d. The opportunity cost of a bushel of wheat decreases as more wheat is produced.
237. Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Based on the values in
the table, the production possibilities frontier is
a. bowed outward indicating increasing opportunity costs.
b. bowed outward indicating decreasing opportunity costs.
c. a straight line indicating constant opportunity costs.
d. bowed inward indicating increasing opportunity costs.
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238. Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Which of the following
combinations of corn and wheat is not currently attainable but would be attainable if there was an
improvement in overall production technology?
a. 1600 bushels of corn and 300 bushels of wheat
b. 1400 bushels of corn and 800 bushels of wheat
c. 1000 bushels of corn and 2000 bushels of wheat
d. 600 bushels of corn and 1800 bushels of wheat
239. Home is a country that produces two goods, pears and cellular phones. Last year, Home
produced 450 bushels of pears and 1050 cellular phones. This year it produced 450 bushels of
pears and 2000 cellular phones. Given no other information, which of the following events could
explain this change?
a. Home experienced increased unemployment.
b. Home experienced a decline in pear-producing technology.
c. Home experienced an improvement in cellular phone-making technology.
d. Home experienced a reduction in resources.
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240. Indiadesh is a country that produces two goods, textiles and computers. Last year, Indiadesh
produced 50,000 textiles and 1300 computers. This year it produced 45,000 textiles and 1100
computers. Given no further information, which of the following events could explain this change?
a. Indiadesh decreased unemployment.
b. Indiadesh experienced an improvement in textile-making technology.
c. Indiadesh experienced an improvement in computer-making technology.
d. Indiadesh experienced a reduction in resources.
Figure 2-14
Consider the production possibilities curve for a country that can produce sweaters, apples (in
bushels), or a combination of the two.
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241. Refer to Figure 2-14. If this economy devotes all of its available resources to producing apples,
then it will produce
a. 0 bushels of apples and 200 sweaters.
b. 80 bushels of apples and 160 sweaters
c. 180 bushels of apples and 200 sweaters.
d. 180 bushels of apples and 0 sweaters.
242. Refer to Figure 2-14. Which combination of points show production possibilities only achievable
with improvements in technology or increases in resources?
a. Q, R, U, and V
b. S and X
c. T and W
d. None of the above is correct.
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243. Refer to Figure 2-14. If this society moves from point U to point V,
a. it gives up 40 bushels of apples to get 80 sweaters.
b. it gives up 140 bushels of apples to get 80 sweaters.
c. it gives up 80 sweaters to get 140 bushels of apples.
d. it gives up 80 sweaters to get 40 bushels of apples.
244. Refer to Figure 2–14. If this society is producing at point T,
a. there is unemployment.
b. production is efficient.
c. growth can only be achieved through an advancement in technology.
d. the opportunity cost of producing one more sweater is approximately 40 bushels of apples.
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245. Refer to Figure 2-14. The opportunity cost of moving from point U to point R is
a. 60 bushels of apples.
b. 80 bushels of apples.
c. 80 sweaters.
d. 160 sweaters.
Figure 2-15
332 Thinking Like an Economist
246. Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces
only sofas and cars. The opportunity cost of each car is
a. the slope of the production possibilities frontier.
b. 3/2 sofas.
c. 2/3 of a sofa.
d. Both a and b are correct.
247. Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces
only sofas and cars. When society moves from point A to point B,
a. the opportunity cost is the same as when society moves from point B to point C.
b. it is giving up cars to get sofas.
c. the opportunity cost is increasing.
d. it moves from an inefficient point to an efficient point.
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Multiple Choice – Section 01A: The Economist as Scientist
1. The field of economics is traditionally divided into two broad subfields,
a. national economics and international economics.
b. consumer economics and producer economics.
c. private sector economics and public sector economics.
d. microeconomics and macroeconomics.
2. Microeconomics is the study of
a. how money affects the economy.
b. how individual households and firms make decisions.
c. how government affects the economy.
d. how the economy as a whole works.
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3. Macroeconomics is the study of
a. individual decision makers.
b. international trade.
c. economy-wide phenomena.
d. markets for large products.
4. A microeconomist — as opposed to a macroeconomist — might study
a. the effect of a national healthcare program on the nation’s unemployment rate.
b. the effect of new regulations on production in the pulp and paper industry.
c. the effect of changes in interest rates on gross domestic product.
d. the growth rate of production in the economy.
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5. Which of the following areas of study typifies microeconomics as opposed to macroeconomics?
a. the impact of minimum-wage laws on employment in the fast food industry
b. the effect of changes in household saving rates on the growth rate of national income
c. the impact of faster money growth on the rate of inflation
d. a comparison of alternative tax policies and their respective impacts on the rate of the nation’s
economic growth
6. Which of the following would likely be studied by a microeconomist rather than a macroeconomist?
a. the effect of foreign direct investment on economic growth
b. the effect of a sales tax on the cigarette industry
c. the effect of an investment tax credit on the economy’s capital stock
d. the effect of a war on government spending
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7. A macroeconomist — as opposed to a microeconomist — might study the effect of
a. changes in the money supply on the inflation rate.
b. an increase in the gas tax on fuel consumption.
c. a technological advance on the natural gas industry.
d. a hurricane on prices in the orange industry.
8. A macroeconomist – as opposed to a microeconomist – would study
a. the effects of rent control on housing in New York City.
b. the effects of foreign competition on the US auto industry.
c. the effects of borrowing by the federal government.
d. the effects of raising the gasoline tax on transit ridership.
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9. Which of the following areas of study typifies macroeconomics as opposed to microeconomics?
a. the effects of rent control on the availability of housing in New York City
b. the economic impact of tornadoes on cities and towns in Oklahoma
c. how tariffs on shoes affects the shoe industry
d. the effect on the economy of changes in the nation’s unemployment rate
10. Which of the following would likely be studied by a macroeconomist rather than a microeconomist?
a. the effect of an increase in the alcohol tax on the market for beer
b. the effect of foreign competition on the domestic auto industry
c. the effect of a price war in the airline industry
d. the effect of an increase in the minimum wage on an economy’s overall rate of unemployment
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11. Which of the following statements best captures the relationship between microeconomics and
macroeconomics?
a. For the most part, microeconomists are unconcerned with macroeconomics, and
macroeconomists are unconcerned with microeconomics.
b. Microeconomists study markets for small products, whereas macroeconomists study markets for
large products.
c. Microeconomics and macroeconomics are distinct from one another, yet they are closely related.
d. Microeconomics is oriented toward policy studies, whereas macroeconomics is oriented toward
theoretical studies.
Multiple Choice – Section 02: The Economist as Policy Adviser
1. When economists are trying to explain the world, they are
a. scientists.
b. policy advisers.
c. in the realm of microeconomics rather than macroeconomics.
d. in the realm of normative economics rather than positive economics.
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2. When economists are trying to help improve the world, they are
a. in the realm of positive economics rather than normative economics.
b. in the realm of macroeconomics rather than microeconomics.
c. scientists.
d. policy advisers.
3. Which of the following statements is correct about the roles of economists?
a. Economists are best viewed as policy advisers.
b. Economists are best viewed as scientists.
c. In trying to explain the world, economists are policy advisers; in trying to improve the world, they
are scientists.
d. In trying to explain the world, economists are scientists; in trying to improve the world, they are
policy advisers.
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4. When an economist is asked a question like “why is unemployment higher for teenagers than for
older workers?” the economist
a. is asked to explain the cause of an economic event.
b. is asked to recommend a policy to improve economic outcomes.
c. is asked as a policy adviser.
d. does not have enough information to respond.
5. For economists, statements about the world are of two types:
a. assumptions and theories.
b. true statements and false statements.
c. specific statements and general statements.
d. positive statements and normative statements.
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6. Normative statements are
a. prescriptive, whereas positive statements are descriptive.
b. descriptive, whereas positive statements are prescriptive.
c. backward-looking, whereas positive statements are forward-looking.
d. forward-looking, whereas positive statements are backward-looking.
7. Positive statements are
a. prescriptive.
b. claims about how the world should be.
c. claims about how the world is.
d. made by economists speaking as policy advisers.
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8. Normative statements are
a. not usually made by economists.
b. claims about how the world should be.
c. claims about how variables in the economy normally behave.
d. pessimistic interpretations of the economy.
9. Positive statements are not
a. descriptive.
b. prescriptive.
c. claims about how the world is.
d. made by economists speaking as scientists.