Econ 101

The law of increasing opportunity costs states that as

more of a good is produced, the higher the opportunity costs of producing that good.

If the law of increasing opportunity costs is operable, and currently the opportunity cost of producing the 1,000th unit of good X is 0.5Y, then the opportunity cost of producing the 2,001st unit of good is X is most likely to be

more than 0.5Y.

Within the production possibilities frontier (PPF) framework, choice is depicted by the

need to select among the points making up the PPF.

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 efficient point.

The economy was at point A producing 100X and 200Y. It then moves to point B where it produces 200X and 300Y. It follows that

point A may have been a point below the economy's PPF, while point B may lie on the PPF.

Which of the following statements is true?

Productive inefficiency implies that it is possible to produce more of one good and no less of another, even without additional resources.

Some of our farm fields are being left unused. Does this have any implications for the economy's PPF diagram (with agricultural products on one axis and all other products on the other axis)?

With unemployed resources, we are at a point below (inside) the PPF.

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

an increase in unemployment of some resources.

A PPF is a straight line as a result of

constant opportunity costs.

The economy is currently on its production possibilities frontier (PPF). A politician says that it is possible to get more of everything---more infrastructure, more schools, more national defense, more spending on social programs, and so on. The politician is

correct if he is assuming a rightward-shifting PPF.

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

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

The PPF between goods X and Y will be a downward-sloping

curve that is bowed outward if increasing opportunity costs exist.

If the economy is currently producing at a point on its production possibilities frontier (PPF), the economy is

productive efficient.

For each additional lamp produced, a constant opportunity cost is incurred in terms of bookshelves. This means that

for every lamp produced, a constant number of bookshelves is forfeited.

Productive efficiency implies that

gains are impossible in one area without losses in another.

If the law of increasing opportunity costs is operable, and currently the opportunity cost of producing the 101st unit of good X is 5Y, then the opportunity cost of producing the 201st unit of good is X is

greater than 5Y.

A PPF is bowed outward as a result of

increasing opportunity costs.

Country X has a high unemployment rate. It follows that country X is operating

inside (below) its PPF.

If there is always a 4-for-1 tradeoff between producing good X and good Y, it follows that the opportunity cost of X (in terms of Y) ____________________ and the PPF for these two goods is ______________________.

is always the same; a straight line

Consider two straight-line PPFs. They have the same vertical intercept, but curve I is flatter than curve II. The opportunity cost of producing the good on the vertical axis

is greater along curve I.

Consider two straight-line PPFs. They have the same vertical intercept, but curve I is flatter than curve II. The opportunity cost of producing the good on the horizontal axis

is greater along curve II.

A society is productive inefficient when

it does not produce the maximum amount of output with its given resources and technology.

Productive efficiency implies that

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

Productive inefficiency implies that

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

A person has a comparative advantage in the production of a good when they can produce the product at a(n) ________ opportunity cost compared to another person.

lower

An economy is productive efficient if it produces

maximum output with given resources and technology.

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

the implementation of a new law that interferes with productive efficiency.

Productive efficiency implies

the impossibility of gains in one area without losses in another.

If a production possibilities frontier (PPF) is concave outward, it follows that

the opportunity cost (of producing the good on the horizontal axis) rises as more of the good is produced.

An advance in technology commonly refers to the ability to produce

the same output with a smaller quantity of resources.

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

0.5

Suppose an economy can produce a maximum of 10 units of good X and the opportunity cost of 1X is always 2Y. What is the maximum number of units of good Y the economy can produce?

20

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.

Carlos can produce the following combinations of X and Y: 10X and 10Y, 5X and 15Y, and 0X and 20Y. The opportunity cost of one unit of X for Carlos is

1 unit of Y.

The endpoints of an economy's production possibilities frontier (PPF) for goods X and Y are: (2,000X, 0Y) and (0X, 500Y). Furthermore, the opportunity cost between these two goods is always constant. Which of the following combinations of the two goods, X and Y, lies on the economy's PPF?

1,000 units of X and 250 units of Y

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.

1.0

In an eight-hour day, Andy can produce either 24 loaves of bread or 8 pounds of butter. In an eight-hour day, John can produce either 8 loaves of bread or 8 pounds of butter. The opportunity cost of producing 1 pound of butter is

3 loaves of bread for Andy and 1 loaf of bread for John.

Currently an economy is producing at a point on its production possibilities frontier for goods X and Y. It is producing 100 units of good X and the opportunity cost of producing 1X is 3Y. If good X is produced at increasing opportunity costs, then when the economy produces 120 units of good X (on the same PPF) the opportunity cost of producing 1X could be ______Y.

4

Consider two points on the PPF: point A, at which there are 50 apples and 40 pears, and point B, at which there are 46 apples and 41 pears. If the economy is currently at point A, the opportunity cost of moving to point B is

4 apples.

Keisha can produce the following combinations of X and Y: 100X and 20Y, 50X and 30Y, or 0X and 40Y. The opportunity cost of one unit of Y for Keisha is

5 units of X.

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

An economy can produce either of these two combinations of goods X and Y: 1,000X and 0Y or 400Y and 0X. Furthermore, the opportunity cost between the two goods is always constant. Which of the following combinations of the two goods, X and Y, lies on the economy's production possibilities frontier?

700 units of X and 280 units of Y

Which scenario below most accurately describes the process by which a technological change can affect employment patterns across industries?

A technological advance makes it possible to produce more of good X with less labor. As a result, labor is released from producing good X. Some of this labor ends up producing goods Y and Z.

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

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

Which of the following statements is true?

Efficiency implies that it is impossible to get more of one good without getting less of another.

Which of the following statements is true?

If scarcity did not exist, neither would a PPF.

Which of the following statements is false?

If there are only two goods, guns and butter, it is possible to produce more of both goods if the economy is currently operating at a productive efficient point.

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

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

Michael can produce the following combinations of X and Y: 10X and 10Y, 5X and 15Y, and 0X and 20Y. Vernon can produce the following combinations of X and Y: 100X and 20Y, 50X and 30Y, or 0X and 40Y. It follows that

Michael has the comparative advantage in producing Y and Vernon has the comparative advantage in producing X.

If an economy is operating on its production possibilities frontier (PPF), are there any unemployed resources in the economy?

No, because if there were any unemployed resources the economy would be producing below its PPF.

As a result of 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.

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

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.

Country 1 produces two goods, A and B. Country 2 produces the same two goods. Currently, country 1 produces 100A and 200B and country 2 produces 300A and 700B. Which of the following statements is true?

The PPF for country 1 may be closer to the origin (or further to the left) than the PPF for country 2.

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

a downward-sloping curve that is bowed outward.

Along its production possibilities frontier (PPF) an economy can produce 0X and 15Y, 10X and 10Y, 20X and 5Y, or 30X and 0Y. It follows that the PPF is

a downward-sloping straight line.

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.

If there is always a three-for-one tradeoff between goods X and Y, then the PPF between X and Y is

a downward-sloping straight line.

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

a new law that interferes with productive efficiency.

An economy can produce the following combinations of goods: 50X and 0Y, 40X and 10Y, 30X and 20Y, 20X and 30Y, 10X and 40Y, and 0X and 50Y. The production possibilities frontier (PPF) for the economy is

a straight (downward-sloping) line because the opportunity cost of producing the two goods is constant.

The point where the PPF intersects the horizontal axis is

attainable and productive efficient.

The point where the PPF intersects the vertical axis is

attainable and productive efficient.

Points inside (below) the production possibilities frontier (PPF) are

attainable and productive inefficient.

Points that lie inside (or below) the PPF are

attainable and productive inefficient.

If there is an increase in the amount of good B foregone as every additional unit of good A is produced, the PPF between goods A and B would

be a bowed-outward curve.

With a constant opportunity cost between goods A and B, the PPF for goods A and B would

be a straight line.

A PPF is more likely to be a downward-sloping curve that is bowed outward than a downward-sloping straight line because most resources are

better suited for the production of some goods than others.

Suppose Andrea is taking just two courses and is at a point inside (or below) her PPF of grades for those two courses. If Andrea becomes more efficient in her study habits then it is impossible for ____________________, ceteris paribus.

both of her grades to fall

Suppose Andrea is taking just two courses and is at a point on her PPF of grades for those two courses. Now this PPF shifts inward and Andrea moves to a point on the new PPF. Which of the following would be impossible after her PPF has shifted inward compared to before the PPF shifted?

both of her grades to rise

If resources are better suited toward the production of one good than toward another good, then the PPF for those two goods is

bowed outward.

A productive efficient society

can produce more of one good only by producing less of another good.

A PPF can

shift inward or outward.

Economic growth causes the PPF to

shift rightward.

In the production possibilities framework, economic growth is depicted by the PPF

shifting rightward (away from the origin).

A decrease in the quantity of resources

shifts the PPF leftward.

An increase in the quantity of resources available

shifts the PPF rightward.

The PPF between goods X and Y will be a downward-sloping

straight line if constant opportunity costs exist.

Points that lie outside (or beyond) the PPF are

unattainable.

Which of the following is not true about production possibilities frontiers?

unemployment of resources is shown by shifting the PPF inward