ECN Quiz 2 URI

12. Consider two points on the PPF: point A, at which there are 50 oranges and 100 apricots, and point B, at which there are 51 oranges and 98 apricots. If the economy is currently at point B, the opportunity cost of moving to point A is a. 2 apricots. b. 1 orange. c. 98 apricots. d. 3 oranges.

B

13. An increase in resources a. shifts the PPF inward. b. shifts the PPF outward. c. moves the economy up a given PPF. d. moves the economy down a given PPF.

B

19. Economic growth causes the PPF to a. shift inward. b. shift outward. c. remain constant. d. go from a straight line to a curve.

B

Points outside (or beyond) the PPF are a. attainable. b. unattainable. c. efficient. d. inefficient.

B

11. 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 a. 1 pear. b. 7 apples. c. 3 apples. d. 21 pears.

C

15. The increased production of lamps comes at constant opportunity costs in terms of bookshelves. This means a. that it takes more resources to produce a lamp than a bookshelf. b. that it takes fewer resources to produce a lamp than a bookshelf. c. that for every lamp produced, the same number of bookshelves is forfeited. d. that for every lamp produced, a different number of bookshelves is forfeited. e. none of the above

C

17. The PPF between goods X and Y will be a downward-sloping a. straight line if increasing opportunity costs exist. b. straight line if decreasing opportunity costs exist. c. curve that is bowed outward if increasing opportunity costs exist. d. curve that is bowed outward if constant opportunity costs exist.

C

14. A decrease in resources a. shifts the PPF inward. b. shifts the PPF outward. c. moves the economy up a given PPF. d. moves the economy down a given PPF.

A

16. 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. b. As more cars are produced, the opportunity cost of each additional car is less than for the preceding unit. c. As more cars are produced, the opportunity cost of each additional car is the same as for the preceding unit. d. People pay higher prices for cars the higher the costs of producing cars.

A

18. 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 a. better suited for the production of some goods than others. b. used efficiently. c. relatively cheap at low levels of output. d. used to produce consumption goods.

A

22. If it is impossible to produce more of one good without getting less of another, then the economy is operating a. efficiently. b. at less than peak performance. c. inefficiently. d. at technological inferiority.

A

24. Productive inefficiency implies that a. it is possible to obtain gains in one area without losses in another. b. it is impossible to obtain gains in one area without losses in another. c. there are too many resources. d. there are too few resources. e. none of the above

A

25. Productive efficiency implies that a. it is impossible to obtain gains in one area without losses in another. b. it is possible to obtain gains in one area without losses in another. c. there are too many resources. d. there are too few resources. e. none of the above

A

5. Both country 1 and country 2 are located on their respective production possibilities frontiers (PPFs), but country 1 produces twice the output that country 2 produces. It follows that a. country 1's PPF lies further to the right than country 2's PPF. b. country 1 has a smaller population than country 2. c. country 1 has a bigger population than country 2. d. country 1 practices capitalism and country 2 practices socialism. e. none of the above

A

53. The economy can produce 15X and 15Y, 10X and 20Y, 5X and 25Y, or OX and 30Y, or. It follows that the production possibility frontier (PPF) is a. a downward-sloping straight line. b. an upward-sloping straight line. c. a downward-sloping convex curve. d. a downward-sloping concave curve.

A

56. Which scenario below most accurately describes the process by which a technological change can affect employment patterns across industries? a. 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. b. A technological advance makes it possible to produce less of good X with less labor. As a result, labor is released from producing good X. Some of this labor ends up producing good Y. c. A technological advance makes it possible to produce more of good X with more labor. As a result, more labor is needed to produce good X. There is less labor available to produce goods Y and Z. d. A technological advance makes it possible to produce more of good X with less labor. As a result, labor becomes more important to the production of good X. More labor ends up producing good X. e. none of the above

A

69. In the United States, farmers accounted for approximately ____ of the population in 1910, but that figure had changed to around ____ by the late 1990's. a. 35%; 2% b. 32%; 5% c. 23%; 5% d. 2%; 35%

A

10. A PPF can a. shift outward but not inward. b. shift inward but not outward. c. shift inward or outward. d. shift neither inward nor outward.

C

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 a. production possibilities frontier (PPF) after the war is probably farther away from the origin than its PPF before the war. b. PPF after the war is probably closer to the origin than its PPF before the war. c. PPF after the war is probably the same PPF as before the war. d. ability to produce goods and services has increased. e. b and d

B

55. If a production possibilities frontier (PPF) is concave downward, it follows that a. opportunity costs are constant between two goods. b. the opportunity costs (of producing the good on the horizontal axis) rise as more of the good is produced. c. the opportunity costs (of producing the good on the horizontal axis) fall as more of the good is produced. d. the opportunity costs (of producing the good on the horizontal axis) first rise and then fall as more of the good is produced. e. none of the above

B

58. In a growing economy we would expect to see fewer intense political battles than in a stagnant economy because a. in a growing economy one political group can get more of what it wants but only at the expense of some other political group. b. in a growing economy one political group can get more of what it wants while another political group can get more of what it wants, too. c. in a growing economy not only can one political group get more of what it wants, but if it does, it necessarily means that another political group gets more of what it wants, too. d. none of the above

B

59. 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. concave downward because the opportunity cost of producing the 10th unit of Y is greater than the opportunity cost of producing the first unit of Y. b. a straight (downward-sloping) line because the opportunity cost of producing the two goods is constant. c. concave downward because the opportunity cost of producing the 40th unit of Y is less than the opportunity cost of producing the 10th unit of Y. d. a straight (downward-sloping) line because the opportunity cost of producing the 10th unit of X is greater than the opportunity cost of producing the 40th unit of X. e. a straight (downward-sloping) line because the opportunity cost of producing the 30th unit of Y is greater than the opportunity cost of producing the 30th unit of X.

B

68. Technological __________ in American agriculture has __________ other types of employment. a. improvement; drawn labor away from b. improvement; released labor to go to c. stagnation; drawn labor away from d. stagnation; released labor to go to

B

8. 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. a downward-sloping bowed-out curve. b. a downward-sloping straight line. c. an upward-sloping straight line. d. It is impossible to answer this question without knowing which good would be plotted on the vertical axis.

B

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 than unattainable points in every PPF diagram.

B

20. Which of the following statements is false? a. If there are only two goods, guns and butter, it is possible to get more of both goods through economic growth. b. If there are only two goods, guns and butter, it is possible to get more of both goods if the economy is currently operating at an inefficient point. c. If there are only two goods, guns and butter, it is possible to get more of both goods if the economy is currently operating at an efficient point. d. If there are only two goods, guns and butter, more of one means less of the other if the economy is currently operating at an efficient point.

C

21. An economy exhibits productive efficiency if it produces a. more than enough food to feed everyone. b. more goods and services in each successive year. c. maximum output with given resources and technology. d. enough output so that no one lives in poverty.

C

46. 46. The law of increasing opportunity costs states that as a. less of a good is produced, the higher the opportunity costs of producing that good. b. more of a good is produced, the lower the opportunity costs of producing that good. c. more of a good is produced, the higher the opportunity costs of producing that good. d. more of a good is produced, the opportunity cost of producing the good remains the same. e. a and b

C

47. Jose has one evening in which to prepare for two exams and can employ two possible strategies: Strategy Score in Economics Score in Statistics A 94 79 B 77 90 The opportunity cost of receiving a 94 on the Economics exam in terms of the number of points on the Statistics exam is a. 79 b. 17 c. 11 d. 90

C

57. If people (on average) live longer, and the production possibilities frontier (PPF) in the economy shifts outward, does it follow that per-capita output will rise? a. Yes, because if the PPF shifts outward, it means there is more output. b. No, because when the PPF shifts outward, and there is greater output, the population always rises by a greater percentage than the rise in output. c. Not necessarily. First, it depends on whether or not the capacity to produce more output is realized. Then, it depends on the percentage rise in output relative to the percentage rise in the population. d. Not necessarily. First, it depends on whether or not the capacity to produce more output is realized. Then, it depends on the percentage rise in output relative to the percentage rise in income.

C

6. Points inside (or below) the PPF are a. unattainable. b. attainable and efficient. c. attainable but inefficient. d. attainable and neither efficient nor inefficient.

C

60. Which of the following is not true about production possibilities frontiers? a. moving from one point to another on a PPF incurs a tradeoff b. economic growth is shown by shifting the PPF outward c. unemployment of resources is shown by shifting the PPF inward d. a PPF can shift inward or outward

C

61. Country X has a high unemployment rate. It follows that country X is operating a. beyond its production possibilities frontier (PPF). b. on its PPF. c. inside (below) its PPF. d. at an efficient point on its PPF. e. b and d

C

67. In the United States, farming today is __________ productive compared to ninety years ago, resulting in there being __________ farmers today than at the turn of the century. a. about as; fewer b. about as; more c. much more; fewer d. much more; more

C

23. Which of the following statements is true? a. Productive inefficiency implies that it is possible to produce more of one good and no less of another, but only if additional resources are made available. b. Productive efficiency implies that it is possible to produce more of one good and no less of another, even without additional resources. c. Productive inefficiency implies that it is impossible to produce more of one good and no less of another. d. Productive inefficiency implies that it is possible to produce more of one good and no less of another, even without additional resources.

D

54. If the economy is on the production possibilities frontier (PPF), the economy is operating a. inefficiently. b. with no unemployed resources. c. efficiently. d. b and c e. none of the above

D

7. If the tradeoff between goods X and Y increases as more of good X is produced, the PPF between the two goods is a. a downward-sloping straight line. b. circular. c. an upward-sloping curve d. a downward-sloping curve that is bowed outward.

D

70. An advance in technology commonly refers to the ability to produce a. the same output with a smaller quantity of resources. b. more output with a fixed quantity of resources. c. more output with a greater quantity of resources. d. both a and b e. both b and c

D

4. The economy moves from point A, where it produces 100X and 200Y, to point B, where it produces 200X and 150Y. It follows that a. point A is an inefficient point. b. point A may be an inefficient point. c. point A may be an efficient point. d. point B is an efficient point. e. b and c

E

45. 45. 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 a. correct if he is assuming a rightward-shifting PPF. b. incorrect if he is assuming a rightward-shifting PPF. c. incorrect if he is assuming a PPF that does not change. d. correct if he is assuming a PPF that does not change. e. a and c

E

Which of the following statements is true? a. In a world of efficiently used scarce resources, more of one good necessarily means less of some other good. b. The law of increasing opportunity costs assumes that all people have the same ability to produce goods. c. Efficiency implies that it is impossible to get more of one good without getting less of another. d. Even if a country has unemployed resources, it can still be operating on its production possibilities frontier (PPF). e. a and c

E