Chapter 2 Econ Test

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

0

In a PPF graph of goods X and Y, points that lie beyond (to the right of) the PPF represent combinations of the two goods that are currently unattainable. T/F

True

Opportunity cost is illustrated by a movement from one point to another on the production possibilities frontier. T/F

True

Consider the following combinations of guns and butter that can be produced: 0 guns, 20,000 units of butter; 5,000 guns, 15,000 units of butter; 10,000 guns, 10,000 units of butter; 15,000 guns, 5,000 units of butter; 20,000 guns, 0 units of butter. The PPF between guns and butter is

a downward-sloping straight line

Refer to Exhibit 2-5. As more fax machines are produced, the opportunity cost of producing them

increases

The economy moves from point A, where it produces 100 units of X and 200 units of Y, to point B, where it produces 200 units of X and 150 units of Y. It follows that

-Point A may be a productive inefficient point -Point A may be a productive efficient point

The economy can produce 15X and 15Y, 10X and 20Y, 5X and 25Y, or 0X and 30Y. It follows that opportunity cost of 1X is ___Y.

1

Consider two points on a PPF: point A, at which there are 500 oranges and 100 apricots, and point B, at which there are 501 oranges and 95 apricots. If the economy is currently at point B, the opportunity cost of moving to point A is

1 orange

Refer to Exhibit 2-5. The opportunity cost of moving from point D to point C is

10,000 fax machines

Refer to Exhibit 2-5. The opportunity cost of moving from point C to point B is

20,000 fax machines

Refer to Exhibit 2-5. The opportunity cost of moving from point A to point B is approximately

5,000 televisions

If an economy can produce a maximum of 100 units of good X and the opportunity cost of 1X is always 5Y, then what is the maximum number of units of good Y the economy can produce?

500

A decrease in the quantity of resources available causes a movement from one point on a given PPF to another point along the same PPF. T/F

False

A decrease in unemployment causes the PPF to shift outward (to the right) T/F

False

In a situation where two goods can be produced by two different people, it is possible for one person to have a comparative advantage in the production of both goods and the other person to have the comparative advantage in the production of neither good. T/F

False

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

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

The possible combinations of two goods that can be produced during a certain span of time under the conditions of a given state of technology and fully employed resources...

Production Possibilities Frontier (PPF)

The point where the PPF intersects the horizontal axis

attainable and productive efficient

Which of the following statements is true? a. The concept of opportunity costs cannot be illustrated within a PPF framework b. If scarcity did not exist, neither would a PPF c. All PPFs are downward-sloping straight lines d. There are more attainable points unattainable points in every PPF diagram

b. If scarcity did not exist, neither would a PPF

PPF can be used to illustrate 7 economic concepts what are they

scarcity, choice, opportunity cost, productive efficiency, productive inefficiency, unemployed resources, economic growth