econ 2

21. A PPF is a straight line as a result of

constant opportunity costs

30. Refer to Exhibit 2-7. Point F is

(D. all of the above ) 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

17. Refer to Exhibit 2-3. If PPF1 is the relevant production possibilities frontier, society may move to PPF2 as a result of

(D. both a and c ) A. an increase in resources C. an increase in technology.

2. Which of the following statements is true?

(E. a and c ) A. In a world of efficiently used scarce resources, more of one good necessarily means less of some other good. C. Efficiency implies that it is impossible to get more of one good without getting less of another.

19. A society is productive inefficient when

(E. all of the above ) A. it produces at a point inside (below) its PPF. B. it does not produce the maximum output with its given resources and technology. C. it can produce more of one good without giving up some of another good.

18. A productive efficient society

(E. all of the above ) A. produces at a point on its PPF. B. can produce more of one good only by giving up some of another good. C. cannot produce unlimited amounts of a good. D. still has to make choices.

Jose has one evening in which to prepare for two exams and can employ one of two possible strategies:

17

16. Refer to Exhibit 2-1. The opportunity cost of moving from point A to B is

20,000 units of butter.

7. Consider two points on the PPF: point A, at which there are 10 apples and 20 pears, and point B, at which there are 7 apples and 21 pears. If the economy is currently at point A, the opportunity cost of moving to point B is

3 apples.

26. 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)

29. Refer to Exhibit 2-6. Which graph depicts the result of an increase in the number of illegal immigrants entering the country?

A. (1)

37. Refer to Exhibit 2-8. For Maya, the opportunity cost of producing one unit of good Y is ___________ unit(s) of good X.

A. 2.00

10. Which of the following is an illustration of the law of increasing opportunity costs?

A. As more cars are produced, the opportunity cost of each additional car is greater than for the preceding unit.

11. A PPF is more likely to be a downward-sloping curve that is bowed outward than a

A. better suited for the production of some goods than others.

4. Both country 1 and country 2 are located on their respective production possibilities frontiers (PPFs) for consumer goods and capital goods, but country 1 produces twice the output of both types of goods compared to country 2. It follows that

A. country 1's PPF lies further to the right than country 2's PPF.

13. Productive inefficiency implies that

A. it is possible to obtain gains in one area without losses in another

27. Refer to Exhibit 2-6. Which graph best depicts the consequence of a large-scale natural disaster?

B. (2)

36. Refer to Exhibit 2-8. For Maria, the opportunity cost of producing one unit of good X is ___________ unit(s) of good Y.

B. 1.00

38. Refer to Exhibit 2-8. For Maria, the opportunity cost of producing one unit of good Y is ___________ unit(s) of good X.

B. 1.00

39. Refer to Exhibit 2-9. Who has the comparative advantage in the production of good A?

B. Adam

3. Through war, many of the factories in country 1 are destroyed and many of its people are killed. As a result, the country's

B. PPF after the war has probably shifted to the left compared to its PPF prior to the war.

31. What is the reason for the law of increasing opportunity costs?

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.

20. A PPF is bowed outward as a result of

B. increasing opportunity costs.

1. Points that lie outside (or beyond) the PPF are

B. unattainable.

23. Jose has one evening in which to prepare for two exams and can employ one of two possible strategies:

C. 11

14. Refer to Exhibit 2-1. The movement from point A to point B is a movement from

C. a productive efficient point to another productive efficient point.

5. Points that lie inside (or below) the PPF are

C. attainable but productive inefficient.

15. Refer to Exhibit 2-1. If the economy is at point C, it follows that

C. only more butter can be produced with available resources than are currently being produced.

12. An economy is productive efficient if it produces

C. relatively cheap at low levels of output.

22. Refer to Exhibit 2-5. The economy is currently operating at point F. The opportunity cost of moving to point E is approximately

C. zero televisions

25. Refer to Exhibit 2-6. Which graph depicts a technological breakthrough in the production of good Y only?

D. (4)

35. Refer to Exhibit 2-8. For Maya, the opportunity cost of producing one unit of good X is ___________ unit(s) of good Y.

D. 0.50

32. If Luke can bake bread at a lower opportunity cost than Jason, and Jason can produce paintings at a lower opportunity cost than Luke, it follows that

D. Luke has a comparative advantage in baking bread and Jason has a comparative advantage in producing paintings

6. If increasingly more units of good Y must be given up as each successive unit of good X is produced, then the PPF for these two goods is

D. a downward-sloping curve that is bowed outward.

8. Suppose the economy goes from a point on its production possibilities frontier (PPF) to a point below that PPF. Assuming that the PPF has not shifted, this could be due to

D. a new law that interferes with economic efficiency

28. Refer to Exhibit 2-6. Which graph depicts the result of a decrease in the unemployment rate?

E. none of the above

33. Refer to Exhibit 2-8. Who has the comparative advantage in the production of good X?

Maya

34. Refer to Exhibit 2-8. If Maria and Maya each specialize in the good in which she has a comparative advantage and then engage in trade, ____________________ can consume a combination of goods that lies beyond her PPF.

Maya, but not Maria

9. An increase in the quantity of resources available

shifts the PPF rightward