Question 1

The production possibilities curve for the nation of Economagic shifts to the left. This could have been caused by:

Accepted Answer

A)   an increase in Economagic's labor supply.
B)   innovation in the production of goods in Economagic.
C)   a war that destroyed some of Economagic's resource base.
D)   unemployment among Economagic's workers.E) A) and D)
F) All of the above

Question 2

If an economy is operating at a point inside the production possibilities curve,

Accepted Answer

A)   its resources are not being used efficiently.
B)   opportunity costs are decreasing as more of one good is traded for the other good.
C)   technology has improved.
D)   there is full employment of all resources.E) None of the above
F) A) and B)

Question 3

An analysis of production possibilities curves indicates that the reason why underdeveloped nations have difficulties increasing their economic growth rates is because:

Accepted Answer

A)   low population growth rates mean fewer workers to produce food and other necessities.
B)   their production possibilities curves shift in when resources are increased.
C)   the opportunity cost of shifting resources from consumption goods to capital goods is relatively low.
D)   they must cut back their already meager consumption levels to increase capital production.E) None of the above
F) All of the above

Question 4

A farmer is deciding whether or not to add fertilizer to his or her crops. If the farmer adds 1 pound of fertilizer per acre, the value of the resulting crops rises from $80 to $100 per acre. According to marginal analysis, the farmer should add fertilizer if it costs less than:

Accepted Answer

A)   $12.50 per pound.
B)   $20 per pound.
C)   $80 per pound.
D)   $100 per pound.E) C) and D)
F) A) and B)

Question 5

A nation can accelerate its economic growth by:

Accepted Answer

A)   reducing the number of immigrants allowed into the country.
B)   adding to its stock of capital.
C)   printing more money.
D)   imposing tariffs and quotas on imported goods.E) A) and B)
F) None of the above

Question 6

Adding more resources causes:

Accepted Answer

A)   downward movement along a production possibilities curve.
B)   the production possibilities curve to shift in.
C)   upward movement along a production possibilities curve.
D)   the production possibilities curve to shift out.E) A) and B)
F) C) and D)

Question 7

Exhibit 2-15 Production possibilities curve 
In Exhibit 2-15, the economy will experience the most future economic growth if it chooses what point now?

Accepted Answer

A)   J.
B)   K.
C)   M.
D)   N.E) C) and D)
F) A) and D)

Question 8

Exhibit 2-17 Production possibilities curve 
In Exhibit 2-17, if countries A and B currently have the same production possibilities curve (PPC)  as given in the figure, but this year country A locates at point A on its PPC and country B locates at point B on its PPC, then country A:

Accepted Answer

A)   is more efficient than country B.
B)   will grow at a faster rate than country B.
C)   will grow at a slower rate than country B.
D)   is producing more capital goods than country B.E) All of the above
F) None of the above

Question 9

When the opportunity cost of producing carrots increases as more carrots are produced, then:

Accepted Answer

A)   no more carrots will be produced.
B)   resources are equally suited to the production of carrots and to other goods.
C)   the production possibilities curve is a straight line.
D)   the law of increasing opportunity costs is presentE) B) and C)
F) A) and C)

Question 10

Exhibit 2-7 Production possibilities curve 
For the economy shown in Exhibit 2-7 to operate at point C, it must:

Accepted Answer

A)   be willing to lower the price of grain.
B)   use its given resources more efficiently than it would at point A.
C)   experience resource unemployment.
D)   experience an increase in its resources and/or an improvement in its technology.E) None of the above
F) A) and B)

Question 11

Exhibit 2-18 Production possibilities curves 
In Exhibit 2-18, a country is located at point A on its Year X production possibilities curve. In Year Y this same country is located at point B on its Year Y production possibilities curve. Which of the following could have brought about this outward shift in production possibilities curves?

Accepted Answer

A)   More efficient production in Year X than in Year Y.
B)   A natural disaster in Year X which leads to a destruction of resources.
C)   Higher unemployment in Year X.
D)   An advance in technology occurred in Year X.E) B) and D)
F) All of the above

Question 12

The production possibilities curve for the nation of Economania shifts to the right. This could have been caused by:

Accepted Answer

A)   a decrease in Economania's capital stock.
B)   technological innovation in the production of Economania goods.
C)   high unemployment in Economania the previous time period.
D)   Economania producing all consumer goods in the previous period.E) B) and C)
F) A) and D)

Question 13

If an economy keeps increasing its capital stock, then over time its production possibilities curve will:

Accepted Answer

A)   not move.
B)   shift to the left.
C)   shift to the right.
D)   disappear because scarcity ceases to exist.E) None of the above
F) All of the above

Question 14

Technological innovations will cause:

Accepted Answer

A)   the production possibilities curve to stay the same.
B)   the production possibilities curve to shift to the left.
C)   the production possibilities curve to shift to the right.
D)   an economy to operate below its production possibilities curve.E) A) and C)
F) A) and B)

Question 15

In Europe during the 14th century, the Black Plague killed 24 million people or close to 37 percent of the population. How would this affect the production possibilities curves for the countries of Europe at that time?

Accepted Answer

A)   The production possibilities curves for these countries would have shifted outward.
B)   The production possibilities curves for these countries would have shifted inward.
C)   The production possibilities curves for these countries would have been unaffected.
D)   This would have been illustrated by a movement along the production possibilities curves for these countries, but it would not have shifted them.E) A) and B)
F) C) and D)

Question 16

Exhibit 2-4 Production possibilities curve data   A  B  C  D  E  Capital goods 010203040 Consumer goods 200180140800\begin{array} { | l | r | r | r | c | c | } \hline & { 	ext { A } } &{ 	ext { B } } & 	ext { C } & 	ext { D } & 	ext { E } \\hline 	ext { Capital goods } & 0 & 10 & 20 & 30 & 40 \	ext { Consumer goods } & 200 & 180 & 140 & 80 & 0 \\hline\end{array} Capital goods  Consumer goods ​ A 0200​ B 10180​ C 20140​ D 3080​ E 400​​  In Exhibit 2-4, choose the best production alternative if the only goal of the economy is investment.

Accepted Answer

A)   A
B)   C
C)   E
D)   All production alternatives represent the same level of investment because all are efficient. E) None of the above
F) C) and D)

Question 17

Exhibit 2-1 Production possibilities curve data   Consumption  Goods  Capital  Goods 10091724304\begin{array} { | c | c | } \hline \begin{array} { c } 	ext { Consumption } \	ext { Goods }\end{array} & \begin{array} { c } 	ext { Capital } \	ext { Goods }\end{array} \\hline 10 & 0 \9 & 1 \7 & 2 \4 & 3 \0 & 4 \\hline\end{array} Consumption  Goods ​109740​ Capital  Goods ​01234​​  In Exhibit 2-1, why is the opportunity cost of producing the fourth unit of capital 4 units of consumption goods but the opportunity cost of producing 4 units of capital is 10 units of consumption goods?

Accepted Answer

A)   It isn't. The opportunity cost of the fourth unit and the opportunity cost of four units is the same.
B)   Because consumption goods are more valuable than capital goods.
C)   Because the opportunity cost of capital goods is constant while the opportunity cost of consumption goods is decreasing as this economy moves from more consumption goods to more capital goods.
D)   Because the opportunity cost of the fourth unit of capital is the consumption goods that must be given up for this economy to move from three units of capital to four units of capital, but the opportunity cots of four units of capital is the amount of consumption goods that must be given up to go from zero units of capital to four units of capital. E) A) and B)
F) None of the above

Question 18

Exhibit 2-13 Production possibilities curve 
In Exhibit 2-13, point H is:

Accepted Answer

A)   achievable with today's resource base.
B)   not achievable today because the economy has not achieved full employment.
C)   not achievable today because the economy is not at its maximum point of efficiency.
D)   not achievable today because of inadequate production capacity.E) None of the above
F) All of the above

Question 19

As production of a good increases, opportunity costs rise because:

Accepted Answer

A)   there will be more inefficiency.
B)   people always prefer having more goods.
C)   of inflationary pressures.
D)   workers are not equally suited to all tasks.E) All of the above
F) B) and D)

Question 20

According to marginal analysis, you should choose to do something if the extra benefit:

Accepted Answer

A)   is positive.
B)   outweighs the extra cost.
C)   exceeds the benefits of the previous time spent on the activity.
D)   will change the outcome.E) A) and B)
F) None of the above

Exam 2: Production Possibilities Opportunity Cost and Economic Growth

If an economy is operating at a point inside the production possibilities curve,

Correct Answer
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Exhibit 2-7 Production possibilities curve For the economy shown in Exhibit 2-7 to operate at point C, it must:

Correct Answer
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A farmer is deciding whether or not to add fertilizer to his or her crops. If the farmer adds 1 pound of fertilizer per acre, the value of the resulting crops rises from $80 to $100 per acre. According to marginal analysis, the farmer should add fertilizer if it costs less than:

Correct Answer
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Correct Answer
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In Europe during the 14th century, the Black Plague killed 24 million people or close to 37 percent of the population. How would this affect the production possibilities curves for the countries of Europe at that time?

Correct Answer
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Exhibit 2-13 Production possibilities curve In Exhibit 2-13, point H is:

Correct Answer
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An analysis of production possibilities curves indicates that the reason why underdeveloped nations have difficulties increasing their economic growth rates is because:

Correct Answer
verified

If an economy keeps increasing its capital stock, then over time its production possibilities curve will:

Correct Answer
verified

As production of a good increases, opportunity costs rise because:

Correct Answer
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When the opportunity cost of producing carrots increases as more carrots are produced, then:

Correct Answer
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Exhibit 2-17 Production possibilities curve In Exhibit 2-17, if countries A and B currently have the same production possibilities curve (PPC) as given in the figure, but this year country A locates at point A on its PPC and country B locates at point B on its PPC, then country A:

Correct Answer
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The production possibilities curve for the nation of Economania shifts to the right. This could have been caused by:

Correct Answer
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Exhibit 2-15 Production possibilities curve In Exhibit 2-15, the economy will experience the most future economic growth if it chooses what point now?

Correct Answer
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A nation can accelerate its economic growth by:

Correct Answer
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Correct Answer
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Adding more resources causes:

Correct Answer
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According to marginal analysis, you should choose to do something if the extra benefit:

Correct Answer
verified

The production possibilities curve for the nation of Economagic shifts to the left. This could have been caused by:

Correct Answer
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Technological innovations will cause:

Correct Answer
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Correct Answer
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Exam 2: Production Possibilities Opportunity Cost and Economic Growth

If an economy is operating at a point inside the production possibilities curve,

Correct AnswerverifiedShow Answer

Exhibit 2-7 Production possibilities curve For the economy shown in Exhibit 2-7 to operate at point C, it must:

Correct AnswerverifiedShow Answer

A farmer is deciding whether or not to add fertilizer to his or her crops. If the farmer adds 1 pound of fertilizer per acre, the value of the resulting crops rises from $80 to $100 per acre. According to marginal analysis, the farmer should add fertilizer if it costs less than:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In Europe during the 14th century, the Black Plague killed 24 million people or close to 37 percent of the population. How would this affect the production possibilities curves for the countries of Europe at that time?

Correct AnswerverifiedShow Answer

Exhibit 2-13 Production possibilities curve In Exhibit 2-13, point H is:

Correct AnswerverifiedShow Answer

An analysis of production possibilities curves indicates that the reason why underdeveloped nations have difficulties increasing their economic growth rates is because:

Correct AnswerverifiedShow Answer

If an economy keeps increasing its capital stock, then over time its production possibilities curve will:

Correct AnswerverifiedShow Answer

As production of a good increases, opportunity costs rise because:

Correct AnswerverifiedShow Answer

When the opportunity cost of producing carrots increases as more carrots are produced, then:

Correct AnswerverifiedShow Answer

Exhibit 2-17 Production possibilities curve In Exhibit 2-17, if countries A and B currently have the same production possibilities curve (PPC) as given in the figure, but this year country A locates at point A on its PPC and country B locates at point B on its PPC, then country A:

Correct AnswerverifiedShow Answer

The production possibilities curve for the nation of Economania shifts to the right. This could have been caused by:

Correct AnswerverifiedShow Answer

Exhibit 2-15 Production possibilities curve In Exhibit 2-15, the economy will experience the most future economic growth if it chooses what point now?

Correct AnswerverifiedShow Answer

A nation can accelerate its economic growth by:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Adding more resources causes:

Correct AnswerverifiedShow Answer

According to marginal analysis, you should choose to do something if the extra benefit:

Correct AnswerverifiedShow Answer

The production possibilities curve for the nation of Economagic shifts to the left. This could have been caused by:

Correct AnswerverifiedShow Answer

Technological innovations will cause:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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