Ch. 2 Practice Questions SIYU WANG

When a production possibilities frontier is bowed outward, the opportunity cost of producing an additional unit of a good a. Increasing as more of the good is produced b. decreases as more of the good is produced c. does not change as more of the good is produced d. may increase, decrease, or not change as more of the good is produced

a. Increasing as more of the good is produced

Efficient production a. on the PPF b. below PPF c. above the PPF

a. on the PPF

Economists make assumptions to a. provide issues for political discussion b. make a complex world easier to understand c. make it easier to tech economic concepts and analysis d. create policy alternatives that are incomplete or subject to criticism

b. Make a complex world easier to understand

Harvey receives his first paycheck for working as an ice cream vendor. Which does this transaction directly contribute? a. Markets for Goods and Services to Households b. Markets for Factors of Production to Households c. Markets for Factors of Production to Firms d. Markets for Goods and Services to Firms

b. Markets for Factors of Production to Households

Any point on a country's production possibilities frontier represents a combination of two goods that an economy a. will never be able to produce b. can produce using all available resources and technology c. can produce using some portion, but not all, of its resources and technology d. may be able to produce in the future with more resources and/or superior technology

b. can produce using all available resources and technology

The economy cannot currently produce 70 washer and 70 dryers (outside the PPF) because a. it is not using all of its resources b. it is not using the most efficient production process c. it does not have the resources and technology to produce that level of output d. all of the above are correct

c. It does not have the resources and technology to produce that level of output

Suppose this economy is producing below the PPF. Which of the following statements would best explain this situation? a. The economy has insufficient resources to produce at a more desirable point b. The economy's available technology prevents it from producing at a more desirable point c. There is widespread unemployment in the economy d. Any of the above statements would be a legitimate explanation for this situation

c. There is widespread unemployment in the economy

A circular-flow model and production possibilities frontier are similar in that a. neither allows economic analysis to occur b. neither can be represented visually on a graph c. both make use of assumptions d. both make use of complex equations to arrive at solutions

c. both make use of assumptions

A circular-flow diagram is a model that a. helps to explain how participants in the economy interact with one another b. helps explain how the economy is organized c. incorporates all aspects of the real economy d. both A and B

d. Both A and B a. Helps to explain how participants in the economy interact with one another b. Helps to explain how the economy is organized

Economic models a. cannot be useful if they are based on false assumptions b. were once thought to be useful, but that is no longer true c. must incorporate all aspects of the economy if they are to be useful d. can be useful, even if they are not particularly realistic

d. can be useful, even if they are not particularly realistic