ECON2301 Ch. 02 SCQ

Refer to Exhibit 2-8. For Maya, the opportunity cost of producing one unit of good X is ___________ unit(s) of good Y. a) 2.00 b) 1.00 c) 10.00 d) 0.50

d) 0.50

Refer to Exhibit 2-5. The opportunity cost of moving from point C to point B is a) 15,000 televisions. b) 15,000 fax machines. c) 10,000 televisions. d) 20,000 fax machines.

d) 20,000 fax machines.

Refer to Exhibit 2-2. If PPF2 is the relevant production possibilities frontier, then point __________ is unattainable. a) A b) G c) D d) J

d) J

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 a) 1 unit of Y. b) 2 units of Y. c) 1/2 unit of Y. d) 1/4 unit of Y. e) none of the above

a) 1 unit of Y.

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 a) 5 units of X. b) 0.2 units of X. c) 3 units of X. d) 1/2 unit of X. e) none of the above

a) 5 units of X.

Refer to Exhibit 2-5. Which of the following labeled points are productive efficient? a) A, B, C, D, and E b) B, C and D only c) C only d) All of the points are productive efficient. e) None of the points are productive efficient.

a) A, B, C, D, and E

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. b) country 1 has a smaller population than country 2. c) country 1 has a bigger population than country 2. d) country 1 is efficient and country 2 is inefficient.

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

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 would be ______Y. a) greater than 3 b) 2.5 c) 2 d) 1

a) greater than 3

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.

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

Assuming that an economy is operating on its PPF, a decrease in the quantity of resources a) shifts the PPF leftward. b) shifts the PPF rightward. c) moves the economy up a given PPF. d) moves the economy down a given PPF.

a) shifts the PPF leftward.

Refer to Exhibit 2-8. Who has the comparative advantage in the production of good X? a) Maria b) Maya c) Both Maria and Maya d) Neither Maria nor Maya

b) Maya

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 a) Michael has the comparative advantage in producing X and Vernon has the comparative advantage in producing Y. b) Michael has the comparative advantage in producing Y and Vernon has the comparative advantage in producing X. c) Neither Michael nor Vernon has a comparative advantage in producing X. d) Neither Michael nor Vernon has a comparative advantage in producing Y. e) There is not enough information to answer the question.

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

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 has probably shifted to the right compared to its PPF prior to the war. b) PPF after the war has probably shifted to the left compared to its PPF prior to 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.

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

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) a downward-sloping straight line.

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

If there is an increase in the amount of good B foregone (given up) as every additional unit of good A is produced, the PPF between goods A and B would a) be a straight line. b) be a bowed-outward curve. c) be a bowed-inward curve. d) a bow tie.

b) be a bowed-outward curve.

Refer to Exhibit 2-2. If PPF2 is the relevant production possibilities frontier, a significant loss of the quantity of resources available could a) move this society from point D to point G on PPF. b) shift this society to PPF. c) shift this society to PPF. d) not affect this society.

b) shift this society to PPF.

In the production possibilities framework, economic growth is depicted by the PPF a) shifting leftward (toward the origin). b) shifting rightward (away from the origin). c) becoming a straight line rather than a bowed outward curve. d) becoming bowed outward rather than a straight line.

b) shifting rightward (away from the origin).

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

b) unattainable.

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? a) 10 b) 200 c) 20 d) 500

c) 20

Refer to Exhibit 2-1. The opportunity cost of moving from point A to B is a) 10,000 units of butter. b) 20,000 units of butter. c) 20,000 units of guns. d) 10,000 units of guns.

c) 20,000 units of guns.

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 a) 1/3 hour for Andy and 1 hour for John. b) 1 hour for Andy and 1 hour for John. c) 3 loaves of bread for Andy and 1 loaf of bread for John. d) 1/3 loaves of bread for Andy and 1 loaf of bread for John.

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

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)? a) There are no implications because the PPF deals only with resources in use. b) The PPF cannot be drawn if some resources are idle. c) With unemployed resources, we are d) The PPF would be upward sloping.

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

Refer to Exhibit 2-1. The movement from point A to point B is a movement from a) a productive efficient point to a productive inefficient point. b) a point with more guns and less butter to a point with more butter and even more guns. c) a productive efficient point to another productive efficient point. d) a productive inefficient point to a productive efficient point.

c) a productive efficient point to another productive efficient point.

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 a) less than 5Y. b) greater than 1/5Y but less than 5Y. c) greater than 5Y. d) less than 1/5Y but more than zero.

c) greater than 5Y.

Refer to Exhibit 2-4. As more fax machines are produced, the opportunity cost of producing them a) increases. b) decreases. c) remains constant. d) first decreases and then increases.

c) remains constant.

Productive efficiency implies a) the possibility of gains in one area without losses in another. b) that more output has been produced. c) the impossibility of gains in one area without losses in another. d) that prices are stable.

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

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 a) Luke has a comparative advantage in paintings and Jason has a comparative advantage in baking bread. b) Both Luke and Jason have a comparative advantage in baking bread. c) Both Luke and Jason have a comparative disadvantage in producing paintings. d) Luke has a comparative advantage in baking bread and Jason has a comparative advantage in producing paintings. e) There is not enough information to answer the question.

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

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 a) Luke has a comparative advantage in paintings and Jason has a comparative advantage in baking bread. b) Both Luke and Jason have a comparative advantage in baking bread. c) Both Luke and Jason have a comparative disadvantage in producing paintings. d) Luke has a comparative advantage in baking bread and Jason has a comparative advantage in producing paintings. e) There is not enough information to answer the question.

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

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) a downward-sloping straight line. b) circular. c) an upward-sloping curve. d) a downward-sloping curve that is bowed outward. e) a downward-sloping curve that is bowed inward.

d) a downward-sloping curve that is bowed outward.

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) a downward-sloping straight line. b) circular. c) an upward-sloping curve. d) a downward-sloping curve that is bowed outward. e) a downward-sloping curve that is bowed inward.

d) a downward-sloping curve that is bowed outward.

Refer to Exhibit 2-7. Point F is 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. d) all of the Possible Answers are true.

d) all of the Possible Answers are true.

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) a gain of resources. b) a loss of resources. c) technological improvement in the production of both goods. d) an increase in unemployment of some resources.

d) an increase in unemployment of some resources.

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) a gain of resources. c) technological improvement in the production of both goods. d) an increase in unemployment of some resources.

d) an increase in unemployment of some resources.

Productive efficiency implies that a) all consumers' wants are satisfied. b) no advance in technology will occur in the future. c) the attainable region is greater than the unattainable region. d) gains are impossible in one area without losses in another.

d) gains are impossible in one area without losses in another.

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 inward if increasing opportunity costs exist. d) straight line if constant opportunity costs exist.

d) straight line if constant opportunity costs exist.

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 a) a gain of resources. b) a loss of resources. c) technological improvement in the production of both goods. d) the implementation of a new law that interferes with productive efficiency.

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

A productive efficient society 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. e) all of the given responses are correct.

e) all of the given responses are correct.