Microeconomics Chapter 2

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? 1. It equals zero 2. It decreases 3. It remains constant 4. It increases

It increases

Refer to the graph above. Which of the following combinations is inefficient? 1. combinations A or E 2. combination F 3. combination G 4. both F and G

combination F

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? 1. moving from B to C 2. moving from F to B 3. moving from C to G 4. any point on the graph represents that trade off

moving from B to C

Absolute advantage is the ability of an individual, firm, or country to 1.produce more of a good or service than competitors using the same amount of resources 2. produce a good or service at a lower opportunity cost than other producers 3. produce more goods without giving up much 4. consume more goods or services than others at a lower costs.

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

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. 1. greater 2. more instant 3. proportional 4. smaller

smaller

A production possibilities frontier will be linear instead of bowed out if 1. the opportunity cost of producing more of either of the two goods is constant. 2. the opportunity cost of producing either of the two goods always increases. 3.the opportunity cost of producing more of either of the two goods is zero. 4. resources are employed efficiently.

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

Refer to the graph above. How many roadsters are produced at the point where BMW produces 800 SUVs? 1. exactly 800 2. 0 3. any amount up to 800 4. 400

0

Refer to the graph above. What is the opportunity cost of moving from point B to point C? 1. 200 automobiles 2. 400 automobiles 3. 150 aircrafts carries 4. 50 aircraft carriers

150 aircraft carries

Consider the table above. What is country A s opportunity cost of producing 1 unit of clothing? 1. 6 units of food 2. 2 units of clothing 3. 1/2 a unit of food 4. 2 units of food

2 units of food

Suppose BMW is currently at point B. What is the opportunity cost of producing 200 more SUVs? 1. 200 SUVs 2. 400 SUVs 3. 400 roadsters 4. 200 roadsters

200 roadsters

Refer to the graph above. Which of the following combinations of pies and cakes is unattainable given existing resources? 1. 2 cakes and 6 pies 2. 4 cakes and 7 pies 3. 1 cake and 7 pies 4. 0 cakes and 10 pies

4 cakes and 7 pies

Refer to the graph above. What is the opportunity cost of producing 400 aircraft carriers? 1. 200 automobiles 2. 600 automobiles 3. 50 aircraft carries 4. 200 automobiles

600 automobiles

Refer to the graphs above. Each graph represents one country. Which country should specialize in the production of chips? 1. Both countries should specialize in the production of chips. 2. Country A 3. Neither country; they both should produce some chips and some shirts. 4. Country B

Country A

Consider the table below. Which country has a comparative advantage in the production of each good? 1. Country A has a comparative advantage in the production of both goods. 2. Country B has a comparative advantage in the production of food; Country A has a comparative advantage in the production of clothing. 3. Country A has a comparative advantage in the production of food; Country B has a comparative advantage in the production of clothing. 4.Country B has a comparative advantage in the production of both goods.

Country A has a comparative advantage in the production of food; Country B has a comparative advantage in the production of clothing.

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? 1. Country B has an absolute advantage in the production of each. 2. Country A has an absolute in the production of each good 3. Neither country has an absolute advantage in the production of each good. 4.Both countries have an absolute advantage in the production of each good.

Country A has an absolute in the production of each good

Refer to the graphs above. Each graph represents one country. Which country has a comparative advantage in the production of shirts? 1. Country B 2. Country A 3. neither country 4. both countries

Country B

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? 1. George has an absolute advantage in both tasks. 2. Jack has an absolute advantage in lawn mowing, and George in garden cultivating. 3. George has a comparative advantage in lawn mowing 4. Jack has an absolute advantage in garden cultivating and George in lawn mowing.

George has a comparative advantage in lawn mowing

Refer to the graphs below. What is point B' on your neighbor PPF curve? 1. Point B' is your neighbor's production before trade. 2. Point B' is your neighbor's production after trade. 3. Point B' is your neighbor's consumption after trade. 4. Point B' is your neighbor's consumption before trade.

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

Which of the following statements is most consistent with positive economic analysis? 1. The United States should produce at home the goods that it now imports—that way the nation can generate additional jobs here at home. 2. The United States benefits if it specializes in the production of some goods, and then trades some of them to other countries. 3. The United States should establish trade with friendly countries and avoid trade with its enemies. 4. The United States would be better off being self-sufficient, so it wouldn't need to rely on other nations for certain goods.

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

What happens if a country produces a combination of goods that uses all of the resources available in the economy? 1. The country is maximizing its opportunity cost. 2. All of the answers are correct 3. The country has eliminated scarcity 4. The country is operating on its production possibilities frontier

The country is operating on its production possibilities frontier

Refer to the graph above. What does the term increasing marginal opportunity cost mean in this graph? 1. There is a higher opportunity cost of producing either aircraft carriers or automobiles, so long as the quantity produced of that good is decreasing. 2. There is a higher opportunity cost of producing either aircraft carriers or automobiles, so long as the quantity produced of that good is increasing. 3. Increasing the production of aircraft carriers results in higher automobile production costs, such as the costs of labor and capital to build automobiles. 4. Increasing the production of either aircraft carriers or automobiles creates more opportunities in the economy.

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 graphs above. Which of the following could have caused the outward shift of the curve in the graph on the left side? 1. technological change that affects only the aircraft carrier industry 2. unemployment in the economy 3. a change in the cost of producing automobiles 4. an increase in technology that affects the production of both aircraft carriers and automobiles

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

Refer to the graph above. Which of the following combinations is unattainable with the current resources available in this economy? 1. None of the combinations presented by the other answers can be attained with current resources. 2. combination F 3. combination G 4. combinations A or E

combination G

If a country has a comparative advantage in the production of a good, then that country 1. also has an absolute advantage in producing that good 2. should allow another country to specialize in the production of that good. 3. has a lower opportunity cost in the production of that good. 4. all of the other answers are correct

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

What is the name given to the highest-valued alternative that must be given up to engage in any activity? 1. a trade-off 2. opportunity cost 3. the production possibilities frontier 4. scarcity

opportunity cost

Refer to the graph above. In this problem, what is the opportunity cost of producing five cakes? 1. ten pies 2. There is insufficient information to answer this question 3. zero pies 4. zero cakes

ten pies

Refer to the graphs above. Which graph represents the concept of economic growth? 1. neither graph 2. both graphs 3. the graph on the left 4. the graph on the right

the graph on the left

Refer to the graphs above. Which graph better represents an improvement only in the technology used to make automobiles? 1. both graphs 2. neither graph 3. the graph on the right 4. the graph on the left

the graph on the right