ECO 153 Ch.2

b. the points along and inside the production possibility frontier.

The attainable production points on a production possibility curve are Question options: a. the horizontal and vertical intercepts. b. the points along and inside the production possibility frontier. c. the points outside the area enclosed by the production possibilities frontier. d. the points along the production possibilities frontier.

True

The basis for trade is comparative advantage, not absolute advantage. Question options: True False

True

True or False Entrepreneurs bring together the factors of production to produce goods and services.

a. the opportunity cost of producing more of either of the two goods is constant.

A production possibilities frontier will be linear instead of bowed out if Question options: a. the opportunity cost of producing more of either of the two goods is constant. b. the opportunity cost of producing either of the two goods always increases. c. the opportunity cost of producing more of either of the two goods is zero. d. resources are employed efficiently.

c. produce more of a good or service than competitors using the same amount of resources.

Absolute advantage is the ability of an individual, firm, or country to Question options: a. consume more goods or services than others at lower costs. b. produce a good or service at a lower opportunity cost than other producers. c. produce more of a good or service than competitors using the same amount of resources. d. produce more goods without giving up much

c. For markets to work, people must be free to pursue their self-interest.

According to Adam Smith, which of the following is necessary for the proper functioning of the market system? Question options: a. For markets to work, people and government need to coordinate their decisions. b. For markets to work, government should help citizens make the right decisions. c. For markets to work, people must be free to pursue their self-interest. d. For markets to work, people should take into account how their decisions affect society as a whole.

c. Individuals usually act in a rational, self-interested way.

According to Adam Smith, which of the following is true? Question options: a. Market prices can come to reflect the prices desired by all consumers. b. Markets work because producers, aided by government, ensure that neither too many nor too few goods are produced. c. Individuals usually act in a rational, self-interested way. d. All of the other answers are correct

c. the process by which individuals acting in their own self-interest bring about a market outcome that benefits society as a whole.

Adam Smith's invisible hand refers to Question options: a. property ownership laws and the rule of the court system. b. the laws of nature that influence economics decisions. c. the process by which individuals acting in their own self-interest bring about a market outcome that benefits society as a whole. d. the government's unobtrusive role in ensuring that the economy functions efficiently.

b. Graph C ***when one variable is much better than the other one, the graph is bowed out

Carlos Vanya grows tomatoes and strawberries on his land. A portion of his land is more suitable for growing tomatoes and the other portion is better suited for strawberry cultivation. Which of the graphs in the figure above represent his production possibilities frontier? Question options: a. either Graph A or Graph B b. Graph C c. Graph B either Graph B or Graph C d. Graph A

c. 2 units of food

Consider the table above. What is country A s opportunity cost of producing 1 unit of clothing? Question options: a. 2 units of clothing b. 1/2 a unit of food c. 2 units of food d. 6 units of food

c. Country A has a comparative advantage in the production of food; Country B has a comparative advantage in the production of clothing. ***careful with placement of words

Consider the table below. Which country has a comparative advantage in the production of each good? a. Country A has a comparative advantage in the production of both goods. b. Country B has a comparative advantage in the production of food; Country A has a comparative advantage in the production of clothing. c. Country A has a comparative advantage in the production of food; Country B has a comparative advantage in the production of clothing. d. Country B has a comparative advantage in the production of both goods.

false

Crude oil is not an example of a factor of production, but when crude oil is processed into gasoline, it is a factor of production. Question options: True False

a. shifting outward.

Economic growth is represented on a production possibilities frontier model by the production possibility frontier Question options: a. shifting outward. b. becoming flatter. c. shifting inward. d. becoming steeper.

a. movement from H to J in Graph B.

German auto producer BMW currently produces two types of automobiles sports utility vehicles, (SUVs) and coupes, in its U.S. plant. Since it opened in 1994, the company had made and continues to make several strategic production decisions. Figure 2-6 shows changes to its production possibilities frontier in response to some of these production strategies. Refer to the figure above. In response to changing consumer demands, BMW has cut back on the production of SUVs and increased its production of coupes. This strategy is best represented by Question options: a. movement from H to J in Graph B. b. movement from K to L in Graph C. c. movement from G to H in Graph B. d. movement from E to F in Graph A.

False *** there is no way for you to determine a comparative advantage because there is not another variable. Instead, she has an absolute advantage.

If Sanjaya can shuck more oysters in one hour than Tatiana, then Sanjaya has a comparative advantage in shucking oysters. Question options: True False

a. has a lower opportunity cost in the production of that good.

If a country has a comparative advantage in the production of a good, then that country Question options: a. has a lower opportunity cost in the production of that good. b. all of the other answers are correct c. should allow another country to specialize in the production of that good. d. also has an absolute advantage in producing that good.

False

If a country produces only two goods, it is possible to have a comparative advantage in the production of both those goods. Question options: True False

c. a significant number of people will be willing to risk their funds by investing them in local businesses.

If property rights are not well enforced, all of the following are likely to occur except Question options: a. economic efficiency will be reduced. b. fewer goods and services will be produced. c. a significant number of people will be willing to risk their funds by investing them in local businesses. d. an economy will produce inside its production possibilities frontier.

c. people continue to consume the same amount of medical services and reduce spending on other goods and services, because medical services are viewed as a necessity.

If the price of a good or service rises, households have to choose whether to buy less of that good or service or spend less on other goods and services. Studies have shown that when the price of health care rises, Question options: a. people consume more medical services because these services are viewed as being more valuable, and they significantly reduce spending on other goods and services. b. people cut back on their spending of medical services. c. people continue to consume the same amount of medical services and reduce spending on other goods and services, because medical services are viewed as a necessity. d. there is no correlation between the rising prices of medical services and the quantity of these services consumed.

linear

If the production possibilities frontier is ________, then opportunity costs are constant as more of one good is produced. Question options: bowed in linear non-linear bowed out

a. entrepreneurs

In a free market system, which of the following groups brings together the factors of production—labor, capital, and natural resources—in order to produce goods and services? Question options: a. entrepreneurs b. lobbyists c. politicians d. the government

c. D *** people/households are factors of production

In the circular-flow diagram above, which arrow shows the flow of income paid to the factors of production? Question options: a. C b. B c. D d. A

False ***the opportunity cost of the good on the HORIZONTAL axis is represented by the slope of the production possibility frontier.

On a diagram of a production possibility frontier, the opportunity cost of the good on the vertical axis is represented by the slope of the production possibility frontier. Question options: True False

a. Y to Z

Refer to the figure above which shows various points on three different production possibilities frontiers for a nation. A movement from ________ is the result of advancements in plastic production technology. Question options: a. Y to Z b. Z to W c. W to X d. V to X

b. it increases

Refer to the graph above. As you move from point A to point B and then to point C on this graph, what happens to the marginal opportunity cost of producing extra automobiles? Question options: a. It decreases b. It increases. c. It remains constant d. It equals zero.

c. 0

Refer to the graph above. How many roadsters are produced at the point where BMW produces 800 SUVs? Question options: a. exactly 800 b. 400 c. 0 d. any amount up to 800

ten pies

Refer to the graph above. In this problem, what is the opportunity cost of producing five cakes? Question options: a. There is insufficient information to answer the question b. zero cakes c. zero pies d. ten pies

a. There is a higher opportunity cost of producing either aircraft carriers or automobiles, so long as the quantity produced of that good is increasing.

Refer to the graph above. What does the term increasing marginal opportunity cost mean in this graph? Question options: a. There is a higher opportunity cost of producing either aircraft carriers or automobiles, so long as the quantity produced of that good is increasing. b. There is a higher opportunity cost of producing either aircraft carriers or automobiles, so long as the quantity produced of that good is decreasing. c. Increasing the production of aircraft carriers results in higher automobile production costs, such as the costs of labor and capital to build automobiles. d. Increasing the production of either aircraft carriers or automobiles creates more opportunities in the economy.

c. 150 aircraft carriers

Refer to the graph above. What is the opportunity cost of moving from point B to point C? Question options: a. 200 automobiles b. 400 automobiles c. 150 aircraft carriers d. 50 aircraft carriers

d. 600 automobiles

Refer to the graph above. What is the opportunity cost of producing 400 aircraft carriers? Question options: a. 200 automobiles b. 50 aircraft carriers c. 200 automobiles d. 600 automobiles

d. moving from B to C

Refer to the graph above. Which of the following best represents the situation in which BMW must face a trade-off between producing SUVs and producing roadsters? Question options: a. any point on the graph represents that trade-off b. moving from C to G c. moving from F to B d. moving from B to C

d. combination F

Refer to the graph above. Which of the following combinations is inefficient? Question options: a. both F and G b. combination G c. combinations A or E d. combination F

c. combination g

Refer to the graph above. Which of the following combinations is unattainable with the current resources available in this economy? Question options: a. combination F b. None of the combinations presented by the other answers can be attained with current resources. c. combination G d. combinations A or E

c. 4 cakes and 7 pies

Refer to the graph above. Which of the following combinations of pies and cakes is unattainable given existing resources? Question options: a. 1 cake and 7 pies b. 0 cakes and 10 pies c. 4 cakes and 7 pies d. 2 cakes and 6 pies

b. Country B

Refer to the graphs above. Each graph represents one country. Which country has a comparative advantage in the production of shirts? Question options: a. neither country b. Country B c. both countries d. Country A

c. Country A (because Country A's opportunity cost (1) is lower than country B (3))

Refer to the graphs above. Each graph represents one country. Which country should specialize in the production of chips? Question options: a. Neither country; they both should produce some chips and some shirts. b. Country B c. Country A d. Both countries should specialize in the production of chips.

c. the graph on the right

Refer to the graphs above. Which graph better represents an improvement only in the technology used to make automobiles? Question options: a. neither graph b. both graphs c. the graph on the right d. the graph on the left

the graph on the left

Refer to the graphs above. Which graph represents the concept of economic growth? neither graph the graph on the left the graph on the right both graphs

a. an increase in technology that affects the production of both aircraft carriers and automobiles

Refer to the graphs above. Which of the following could have caused the outward shift of the curve in the graph on the left side? Question options: a. an increase in technology that affects the production of both aircraft carriers and automobiles b. unemployment in the economy c. technological change that affects only the aircraft carrier industry d. a change in the cost of producing automobiles

C

Refer to the graphs below. If you have a comparative advantage in the production of apples, what point would best represent your production with trade? Question options: C A A' D

b. b. Point B' is your neighbor's consumption after trade.

Refer to the graphs below. What is point B' on your neighbor s PPF curve? a. Point B' is your neighbor's production after trade. b. Point B' is your neighbor's consumption after trade. c. Point B' is your neighbor's consumption before trade. d. Point B' is your neighbor's production before trade.

a. inside Tomaso's production possibilities frontier.

Refer to the table above. Assume Tomaso's Trattoria only produces pizzas and calzones. A combination of 24 pizzas and 15 calzones would appear Question options: a. inside Tomaso's production possibilities frontier. b. along Tomaso's production possibilities frontier. c. outside Tomaso's production possibilities frontier. d. at the horizontal intercept of Tomaso's production possibilities frontier.

d. 200 roadsters

Suppose BMW is currently at point B. What is the opportunity cost of producing 200 more SUVs? Question options: a. 200 SUVs b. 400 roadsters c. 400 SUVs d. 200 roadsters

a. 4/3 pounds of vegetables

The figure above shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables. What is the opportunity cost of one pound of meat? Question options: a. 4/3 pounds of vegetables b. 16 pounds of vegetables c. 1.6 pounds of vegetables d. 3/4 pounds of vegetables

d. the tradeoff between meat and vegetables is constant.

The figure above shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables.The linear production possibilities frontier in the figure indicates that Question options: a. Mendonca has a comparative disadvantage in the production of meat. b. Mendonca has a comparative advantage in the production of vegetables. c. it is progressively more expensive to produce meat. d. the tradeoff between meat and vegetables is constant.

c. Pakistan will specialize in and export cashews

The figure above shows the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews. If these two countries decide to specialize and trade then Question options: a. Indonesia will specialize in and export cashews b. Pakistan will specialize in and export cotton c. Pakistan will specialize in and export cashews d. Indonesia will specialize in and import cotton

b. 1 3/5 bolts of cotton

The figure above shows the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews.What is the opportunity cost of producing 1 pound of cashews in Pakistan? Question options: a. 240 bolts of cotton b. 1 3/5 bolts of cotton c. 5/8 of a bolt of cotton d. 3/8 of a bolt of cotton

a. encourage the expenditure of funds on research and development to create new products

The primary purpose of patents and copyrights is to Question options: a. encourage the expenditure of funds on research and development to create new products b. protect firms from being taken advantage of by competing firms. c. protect domestic firms from foreign competition. d. provide owners with large profit forever.

a. smaller

The principle of increasing marginal opportunity cost states that the more resources devoted to any activity, the __________ the payoff to devoting additional resources to that activity. Question options: a. smaller b. greater c. proportional d. more instant

d. outside Tomaso's production possibilities frontier.

The table above presents the production choices for Tomaso's Trattoria. Assume Tomaso's Trattoria only produces pizzas and calzones. A combination of 36 pizzas and 30 calzones would appear. Question options: a. along Tomaso's production possibilities frontier. b. inside Tomaso's production possibilities frontier. c. at the horizontal intercept of Tomaso's production possibilities frontier. d. outside Tomaso's production possibilities frontier.

0.04

The table above shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea. What is China's opportunity cost of producing one pound of wheat? Question options: a. 25 digital cameras b. 0.04 units of a digital camera c. 4 digital cameras d. 40 digital cameras

George has an comparative advantage in lawn mowing

The table above shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens. Which of the following statements is true? Question options: a. George has an absolute advantage in both tasks. b. Jack has an absolute advantage in garden cultivating and George in lawn mowing c. Jack has an absolute advantage in lawn mowing and George in garden cultivating. d. George has an comparative advantage in lawn mowing

a. Haley has an absolute advantage in making bracelets and Serena in making necklaces.

The table above shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces.Which of the following statements is true? Question options: a. Haley has an absolute advantage in making bracelets and Serena in making necklaces. b. Haley has an absolute advantage in making both products. c. Haley has an absolute advantage in making necklaces and Serena in making bracelets. d. Serena has an absolute advantage in making both products.

b. Country A has an absolute advantage in the production of each good.

The table below shows the quantity of two goods that a worker in Country A and a worker in Country B can produce per day. Which country has an absolute advantage in the production of each good? a. Neither country has an absolute advantage in the production of each good. b. Country A has an absolute advantage in the production of each good. c. Both countries have an absolute advantage in the production of each good. d. Country B has an absolute advantage in the production of each good.

True

To increase gas mileage, automobile manufacturers make cars small and light. Large cars absorb more of the impact of an accident than small cars but yield lower gas mileage. These facts suggest that a negative relationship exists between safety and gas mileage. Question options: True False

c. protect intellectual property rights

What are patents and copyrights designed to do? Question options: a. prevent entrepreneurs from earning excessive profits b. eliminate unnecessary duplication whenever it arises c. protect intellectual property rights d. all of the other answers are correct

c. The country is operating on its production

What happens if a country produces a combination of goods that uses all of the resources available in the economy? Question options: a. The country has eliminated scarcity. b. All of the other answers are correct. c. The country is operating on its production possibilities frontier. d. The country is maximizing its opportunity cost.

b. opportunity cost

What is the name given to the highest-valued alternative that must be given up to engage in any activity? Question options: a. scarcity b. opportunity cost c. a trade-off d. the production possibilities frontier

b. households and firms

Which of the following comprises the two key groups of participants in the circular flow of income? Question options: a. buyers and sellers b. households and firms c. product markets and factor markets d. government and the financial sector

c. product markets

Which of the following refers to markets where goods such as computers or services such as medical treatment are offered? Question options: a. factor markets b. competitive markets c. product markets d. essential markets

b. The United States benefits if it specializes in the production of some goods, and then trades some of them to other countries.

Which of the following statements is most consistent with positive economic analysis? Question options: a. The United States should produce at home the goods that it now imports—that way the nation can generate additional jobs here at home. b. The United States benefits if it specializes in the production of some goods, and then trades some of them to other countries. c. The United States would be better off being self-sufficient, so it wouldn't need to rely on other nations for certain goods. d. The United States should establish trade with friendly countries and avoid trade with its enemies.

a. discovering a cheap way to convert sunshine into electricity ***because the only two factors that can shift it are tech advancements or change in resources

Which of the following would shift a nation's production possibilities frontier outward? Question options: a. discovering a cheap way to convert sunshine into electricity b. a decrease in the unemployment rate c. an increase in demand for the nation's products d. a law requiring workers to retire at age 50