ECON Chapter 3

As an economy grows... A) The opportunity cost of production will approach ) B) Its PPF shifts outward C) It can eliminate scarcity D) Its PPF doesn't shift; instead, the production point moves from inside the PPF to be closer to the PPF. E) The opportunity cost of production will increase

B

Economic growth depends on which of the following: 1) Improving the quality of labor 2) Technological advancement 3) Increasing the amount of capital A) 2 B) 3 C) 1, 2, and 3 D) 1 and 3 E) 1

C

Hank requires 1 hour to cut the grass and 3 to clean the house. His sister Holly requires 1 hour to cut the grass and 4 hours to clean the house. Which of the following is true? A) Hank and Holly both have a comparative advantage in cutting the gras. B) Hank has a comparative advantage in both cutting the grass and cleaning the house. C) Holly has comparative advantage in cutting the grass D) Hank has an absolute advantage in both cutting the grass and cleaning the house. E) Hank has a lower opportunity cost of cutting the grass

C

A country has a cooperative advantage in the production of a good if it can: A) Produce more of the good than another country B) Produce the good on and remain on its production possibilities frontier C) Produce more of the good most efficiently D) Produce the good at the lowest opportunity cost E) Tradeoff producing the good for another good

D

Assume that an association of young workers has lobbied Congress to require that all workers retire once they reach the age of fifty. What impact would this law have on the nation's production possibilities frontier? A) No impact at all B) The number of young workers would increase so the production possibilities frontier would shift outward. C) The level of unemployment would decrease so the production possibilities frontier would shift outward. D) The production possibilities frontier would shift inward. E) The nation would move to a new position on its production possibilities frontier but the frontier itself wouldn't shift.

D

The saying "there is no such thing as a free lunch" applies.... A) When there is some unemployment B) To unattainable combinations of goods and services C) At all points inside the PPF D) On the production possibilities frontier E) When more of one good can be produced without decreasing production of another

D

When all of the available factors of production are being efficiently employed, the: A) Opportunity cost of changing production is infinite B) PPF disappears C) Economy is producing at a point within its PPF D) Economy is producing at a point on its PPF E) Economy is producing at a point beyond its PPF

D

Alice and Gene work in the mailroom, sorting and delivering mail. In order for them to benefit from specialization and trade, Alice must: A) Be able to both sort and deliver faster than Gene B) Be equally productive in both sorting and delivering C) Be equally productive as Gene in both sorting and delivering D) Have a comparative advantage in both sorting and delivering E) Have a comparative advantage in one task and Gene must have a comparative advantage in the other task

E

When production efficiency doesn't occur: 1) an economy is producing at a point within its PPF. 2) There are unemployed resources 3) Allocative efficiency can not occur A) 3 only B) 1 only C) 2 and 3 D) 1 and 2 E) 1, 2, and 3

E