Econ 102 Quiz Week 2 - The PPF and Trade

If the production possibility frontier is a straight line, which of the following is true?

Opportunity costs are constant.

Trade can be beneficial to an economy because:

more goods and services can be obtained at lower opportunity cost.

The slope of a typical production possibility frontier is:

negative.

If an economy is producing a level of output that is on its production possibility frontier, the economy has:

no idle resources and is using resources efficiently.

Economists usually make the assumption that production is subject to increasing opportunity costs because:

not all resources are equally suited to producing every good

Efficient production exists when the economy is:

operating on its production possibility frontier.

The ________ illustrates the trade-offs facing an economy that produces only two goods.

production possibility frontier

The U.S. production possibility frontier would ________ if all computers using Microsoft operating systems contracted a virus that deleted all information on those computers.

shift in

The U.S. production possibility frontier will ________ if there is a large influx of immigrants.

shift out

Increases in resources or improvements in technology will tend to cause a society's production possibility frontier to:

shift outward to the right.

Technological improvements will:

shift the production possibility frontier outward.

Economists generally believe that a country should specialize in the production of a good or service if:

the country can produce the product while forgoing fewer alternative products than any other country.

The production possibility frontier illustrates:

the maximum quantity of one good that can be produced given the quantity of the other good produced.

A production possibility frontier that is a straight line sloping down from left to right would suggest that:

the opportunity costs of the products are constant.

A production possibility frontier illustrates the ________ facing an economy that ________ only two goods.

trade-offs; produces

Free trade between countries:

will allow for greater levels of consumption than without trade.

If Farmer Sam MacDonald can produce 200 pounds of cabbages and no potatoes or no cabbages and 100 pounds of potatoes and if he faces a linear production possibility frontier for his farm, the opportunity cost of producing an additional pound of cabbage is ________ pound(s) of potatoes.

1/2

Mark and Julie are going to sell brownies and cookies for their third annual fundraiser bake sale. In one day, Mark can make 40 brownies or 20 cookies, and Julie can make 15 brownies or 15 cookies. What is Mark's opportunity cost to produce one brownie?

1/2 cookie

If Farmer Sam MacDonald can produce 200 pounds of cabbages and no potatoes or no cabbages and 100 pounds of potatoes and if he faces a linear production possibility frontier for his farm, the opportunity cost of producing an additional pound of potatoes is ________ pound(s) of cabbage.

2

Frances has a linear production possibility frontier when she produces tomatoes and green beans. If she uses all of her resources, she can produce 400 bushels of tomatoes or 800 bushels of green beans. Which of the following combinations is not efficient for Frances?

200 bushels of tomatoes and 200 bushels of green beans

Mark and Julie are going to sell brownies and cookies for their third annual fundraiser bake sale. In one day, Mark can make 40 brownies or 20 cookies, and Julie can make 15 brownies or 15 cookies. With specialization, how many brownies and cookies will be made in one day for the bake sale?

40 brownies and 15 cookies

Alexander has a straight-line, or linear, production possibility frontier when he produces soybeans and corn. If he uses all of his resources to grow soybeans, he can produce 200 bushels of soybeans; if he uses all of his resources for corn production, he can produce 400 bushels of corn. Which of the following combinations of corn and soybeans are not possible for him to produce?

600 bushels of corn and 200 bushels of soybeans

Smallville has a linear production possibility frontier in the production of good X and good Y. It can produce 6 of X per hour or 8 of Y per hour. Suppose it has 240 hours of labor and divides labor hours equally between good X production and good Y production. What is the maximum amount of good Y it can produce?

960 Y

If Brazil gives up 3 automobiles for each ton of coffee it produces, while Peru gives up 7 automobiles for each ton of coffee it produces, then:

Brazil has a comparative advantage in coffee production and should specialize in coffee production.

Assume that Colombia gives up three motorcycles for each ton of coffee it produces, while Bolivia gives up seven motorcycles for each ton of coffee it produces.

Colombia has a comparative advantage in coffee production and should specialize in coffee production.

In a single day, George can bake 10 cakes and Greta can bake 5 cakes. We know that:

George has an absolute advantage in baking cakes

In Kessy's old kitchen, he could bake 10 cookies or mix 15 glasses of lemonade in one day. Now Kessy has a larger oven and refrigerator. How does this affect his production possibility frontier?

It shifts out his production possibility frontier.

If they spend all night writing computer programs, Laurence can write 10 programs while Carrie Anne can write 5. If they spend all night making sunglasses, Laurence can make 6 while Carrie Anne can make 4. We know that:

Laurence has a comparative advantage in programs. Laurence's opportunity cost of writing programs is less than that of Carrie Anne.

If they spend all night writing computer programs, Laurence can write 10 programs while Carrie Anne can write 5. If they spend all night making sunglasses, Laurence can make 6 while Carrie Anne can make 4. Given this information and supposing Laurence and Carrie Anne have constant opportunity costs, we know that:

Laurence has an absolute advantage in both programs and sunglasses.

Mark and Julie are going to sell brownies and cookies for their third annual fundraiser bake sale. In one day, Mark can make 40 brownies or 20 cookies, and Julie can make 15 brownies or 15 cookies. Based on this information, ________ has the comparative advantage in making brownies and ________ has the comparative advantage in making cookies.

Mark; Julie

Mark and Julie are going to sell brownies and cookies for their third annual fundraiser bake sale. In one day, Mark can make 40 brownies or 20 cookies, and Julie can make 15 brownies or 15 cookies. Based on this information, ________ has the absolute advantage in making brownies and ________ has the absolute advantage in making cookies.

Mark; Mark

If they produce only hamburgers, in a single day Sarah can produce 10 hamburgers while Abe can produce 5 hamburgers. If they make milkshakes only, in a single day Sarah can produce 10 milkshakes while Abe can produce 4 milkshakes. We know that:

Sarah has an absolute advantage and a comparative advantage in making milkshakes. Correct

Suppose Indiana produces only steel and corn, with fixed amounts of land, labor, and capital resources. Which of the following best creates potential economic growth?

The percentage of Indiana residents with a college degree rises from 25% to 30%.

An inward shift in the U.S. economy's production possibility frontier could represent which of the following?

U.S. workers moving to Canada

Which of the following statements is true?

Very untalented people have a comparative advantage in something they do.

In terms of the production possibility frontier, inefficient use of available resources is shown by:

a point inside the production possibility frontier.

The production possibility frontier will shift outward for all of the following reasons except:

an increase in the unemployment rate.

If Poland decides to increase the production of steel—and decrease the production of vodka—the bowed-out production possibility frontier would suggest that there will be ________ opportunity cost of producing more steel.

an increasing

Suppose the state of Oklahoma decides to produce only two goods, oil and football helmets. According to the production possibility frontier, as oil production increases, the production of football helmets will:

decrease

The process observed when an economy's production possibility frontier is shifted outward is:

economic growth.

All points on the production possibility frontier are:

efficient production points.

If the opportunity cost of manufacturing automobiles is higher in the United States than in Britain and the opportunity cost of manufacturing airplanes is lower in the United States than in Britain, then the United States will:

export airplanes to Britain and import automobiles from Britain.

If the opportunity cost of manufacturing machinery is higher in the United States than in Britain and the opportunity cost of manufacturing sweaters is lower in the United States than in Britain, then the United States will:

export sweaters to Britain and import machinery from Britain.

Greta starts using a new baking technique and she can now do twice as much of everything—in a single day Greta can now make 10 cakes or 8 pies, rather than the 5 cakes and 4 pies she could previously bake. We now know that Greta's production possibility frontier:

has shifted right, but her opportunity costs of making pies are unchanged

Abe starts exercising regularly, and after a few months he can do twice as much of everything—in a single day Abe can now make 10 hamburgers or 8 milkshakes rather than the 5 hamburgers and 4 milkshakes he made in the past. We now know that Abe's production possibility frontier:

has shifted right, but his opportunity costs of making milkshakes are unchanged.

Coworkers Yvonne and Rodney are trying to finish cleaning up the store by washing dishes and sweeping the floors. To finish both tasks as quickly as possible, they know that each of them should focus on just one task, but they don't know who should do what. To decide which coworker should wash dishes, Yvonne and Rodney should determine which one:

has the comparative advantage in dishwashing.

An economy is said to have a comparative advantage if it:

has the lowest cost for producing a particular good.

An economy is said to have a comparative advantage in the production of one good if it:

has the lowest opportunity cost for producing a particular good.

If the opportunity cost of manufacturing automobiles is lower in the United States than in Britain and the opportunity cost of manufacturing airplanes is higher in the United States than in Britain, then the United States will:

import airplanes from Britain and export automobiles to Britain.

The fact that a society's production possibility frontier is bowed out or concave to the origin of a graph demonstrates the law of:

increasing opportunity cost

All points inside the production possibility frontier represent:

inefficient production points.

If a production possibility frontier is a straight line, it tells us that the opportunity cost of producing one more unit of good X:

is a constant amount of good Y.

In movement along a production possibility frontier, the opportunity cost to society of getting more of one good:

is measured by the amount of the other good that must be given up.

The opportunity cost of production:

is what you give up to produce the good.

If an economy is producing at a point on its production possibilities frontier:

it is efficient in production but not necessarily in allocation.