Question 1

Suppose that after specializing according to comparative advantage,a country is trading with another nation that also specializes according to its comparative advantage.Which of the following statements are true for the first country?
i.It enjoys gains from trade.
ii.It must have an absolute advantage in the production of the good it produces.
iii.It is producing at a point beyond its PPF.

Accepted Answer

A)   i only
B)   i and ii
C)   i and iii
D)   ii and iii
E)   i, ii, and iiiF) B) and D)
G) A) and B)

Question 2

Production efficiency occurs

Accepted Answer

A)   anywhere inside or on the production possibilities frontier.
B)   when the total cost of production is minimized.
C)   at all points on the production possibilities frontier.
D)   at only one point on the production possibilities frontier.
E)   at all points inside the production possibilities frontier.F) B) and C)
G) B) and E)

Question 3

When a production possibilities frontier is bowed outward,as more of one good is produced,its opportunity cost

Accepted Answer

A)   increases.
B)   decreases.
C)   remains constant.
D)   might increase, decrease, or remain constant depending on how much people value the additional units of the good.
E)   cannot be predicted.F) A) and B)
G) A) and C)

Question 4

-The figure above shows a production possibilities frontier.In the figure,which of the following combinations of the two goods cannot be produced with the current resources and technology?

Accepted Answer

A)   2 million cell phones and 13 million DVDs
B)   4 million cell phones and 4 million DVDs
C)   1 million cell phones and 14 million DVDs
D)   3 million cell phones and 5 million DVDs
E)   5 million cell phones and no DVDsF) A) and B)
G) A) and C)

Question 5

The United States can use all its resources to produce 250 DVDs or 500 shoes.China can use all of its resources to produce 30 DVDs or 300 shoes.The opportunity cost of producing a DVD in the United States is

Accepted Answer

A)   2 shoes.
B)   1/2 of a shoe.
C)   20 shoes.
D)   500 shoes.
E)   1 DVD.F) C) and D)
G) B) and E)

Question 6

What is gained when people engage in specialization and trade?

Accepted Answer

A)   Specialization and trade allow people to consume outside their individual production possibilities frontiers.
B)   Specialization and trade allow people to consume inside their production possibilities frontiers.
C)   Specialization and trade allow people to consume at a point on their production possibilities frontiers.
D)   Specialization and trade allow people to produce outside their individual production possibilities frontiers.
E)   There are no gains from specialization and trade.F) A) and D)
G) A) and E)

Question 7

With no international trade,a country ________ consume at a point outside of its PPF; with international trade,a country ________ consume at a point outside of its PPF.

Accepted Answer

A)   cannot; can
B)   can; cannot
C)   can; can
D)   cannot; cannot
E)   None of the above answers is correct because the presence or absence of international trade has nothing to do with where a country consumes in comparison to its PPF.F) B) and C)
G) A) and E)

Question 8

A bowed out production possibilities frontier shows

Accepted Answer

A)   that resources are equally productive in all uses.
B)   increasing opportunity cost.
C)   that resources are not equally productive in all uses.
D)   Both answers B and C are correct.
E)   Both answers A and B are correct.F) B) and E)
G) A) and B)

Question 9

-The figure above illustrates a small country's production possibilities frontier.Based on the figure,we can tell that the nation's resources are

Accepted Answer

A)   equally productive in all tasks because the slope is negative.
B)   equally productive in all tasks because the production possibilities frontier is bowed out.
C)   not equally productive in all tasks because the slope is negative.
D)   not equally productive in all tasks because the production possibilities frontier is bowed out.
E)   unlimited because the slope is negative and the PPF is bowed out.F) A) and C)
G) C) and E)

Question 10

-The figure above shows the production possibilities frontier for a country.In order for it to move from producing at point A to producing at point B,the country would need to

Accepted Answer

A)   decrease SUV production by 1 million.
B)   decrease SUV production by 3 million.
C)   decrease SUV production by 4 million.
D)   decrease compact car production by 3 million.
E)   acquire more resources and/or more advanced technology.F) A) and E)
G) B) and E)

Question 11

-The figure above shows Prakash's and Gail's production possibilities frontiers for writing books and magazine articles.
a.What is Prakash's opportunity cost of a book? What is Gail's opportunity cost? Who has the comparative advantage in writing books?
b.Who has the comparative advantage in writing magazine articles?
c.According to their comparative advantages,who should write books and who should write magazine articles?

Accepted Answer

a.In a year,Prakash can write 2 books or...

Question 12

As we move along the production possibilities frontier,

Accepted Answer

A)   the production of one good increases as the production of the other good decreases.
B)   the possibilities of tradeoffs diminish.
C)   a tradeoff is not possible because nations need all goods.
D)   more of both goods can be produced.
E)   less of both goods can be produced.F) A) and B)
G) C) and E)

Question 13

The figure above shows Liz's and Joe's production possibilities for Salads and Smoothies.
-Given the information in the figure above,Liz ________ benefit from trade with Joe because ________.

Accepted Answer

A)   can; each of them has a comparative advantage in one of the goods
B)   can; each of them has an absolute advantage in one of the goods
C)   cannot; she has an absolute advantage in both goods
D)   cannot; she has a comparative advantage in both goods
E)   can; Joe is more productive in producing one of the goodsF) B) and D)
G) None of the above

Question 14

A country has a comparative advantage in the production of a good if it can

Accepted Answer

A)   produce more of the good than another country.
B)   produce more of the good most efficiently.
C)   produce the good on and remain on its production possibilities frontier.
D)   tradeoff producing the good for another good.
E)   produce the good at the lowest opportunity cost.F) A) and B)
G) A) and E)

Question 15

-Deb and Pete have volunteered to help their favorite charity mail out fundraiser information.The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes.If Deb and Pete specialize and trade,how many packets will be assembled?

Accepted Answer

A)   40
B)   more than 40 and less than 80
C)   80
D)   160
E)   more than 80 and less than 160F) A) and E)
G) C) and D)

Question 16

-The figure above shows how the PPF for cell phones and new cell-phone factories can expand.In the figure,if the economy chose the point on this year's PPF that is above point K,the next year's PPF would

Accepted Answer

A)   shift outward along the horizontal axis farther than the new PPF shown in the figure.
B)   shift outward along the horizontal axis, but not as far as the new PPF shown in the figure.
C)   shift outward along the vertical axis, not along the horizontal axis.
D)   shift inward along the horizontal axis.
E)   shift inward along the vertical axis.F) A) and B)
G) None of the above

Question 17

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point A.What is the opportunity cost of increasing the production of rice to 12 tons?

Accepted Answer

A)   15 thousand bottles of wine
B)   6 thousand bottles of wine
C)   9 thousand bottles of wine
D)   12 tons of rice
E)   Nothing, it is a free lunch.F) A) and B)
G) A) and C)

Question 18

Other things equal,if Mexico devotes more resources to train its population than Spain,

Accepted Answer

A)   Mexico will be able to eliminate opportunity cost faster than Spain.
B)   Mexico will be able to eliminate scarcity faster than Spain.
C)   Spain will grow faster than Mexico.
D)   Mexico will have more current consumption than Spain.
E)   Mexico will grow faster than Spain.F) C) and D)
G) B) and C)

Question 19

-Suppose that Germany,France,Estonia,and India all have the same production possibilities,illustrated in the figure above.Based on the production points in the figure,which country is most likely to expand its PPF to PPF₁?

Accepted Answer

A)   France and Germany equally
B)   India
C)   Estonia
D)   France
E)   GermanyF) A) and B)
G) A) and C)

Question 20

A production point beyond the production possibilities frontier represents what?

Accepted Answer

A production point beyond the ...

Exam 3: The Economic Problem

A production point beyond the production possibilities frontier represents what?

Correct Answer
verified
A production point beyond the ...
View Answer

-Deb and Pete have volunteered to help their favorite charity mail out fundraiser information.The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes.If Deb and Pete specialize and trade,how many packets will be assembled?

Correct Answer
verified

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point A.What is the opportunity cost of increasing the production of rice to 12 tons?

Correct Answer
verified

Correct Answer
verified
a.In a year,Prakash can write 2 books or...
View Answer

-The figure above shows a production possibilities frontier.In the figure,which of the following combinations of the two goods cannot be produced with the current resources and technology?

Correct Answer
verified

With no international trade,a country consume at a point outside of its PPF; with international trade,a country consume at a point outside of its PPF.

Correct Answer
verified

When a production possibilities frontier is bowed outward,as more of one good is produced,its opportunity cost

Correct Answer
verified

As we move along the production possibilities frontier,

Correct Answer
verified

-The figure above shows how the PPF for cell phones and new cell-phone factories can expand.In the figure,if the economy chose the point on this year's PPF that is above point K,the next year's PPF would

Correct Answer
verified

Other things equal,if Mexico devotes more resources to train its population than Spain,

Correct Answer
verified

-The figure above shows the production possibilities frontier for a country.In order for it to move from producing at point A to producing at point B,the country would need to

Correct Answer
verified

What is gained when people engage in specialization and trade?

Correct Answer
verified

A bowed out production possibilities frontier shows

Correct Answer
verified

Correct Answer
verified

-The figure above illustrates a small country's production possibilities frontier.Based on the figure,we can tell that the nation's resources are

Correct Answer
verified

The United States can use all its resources to produce 250 DVDs or 500 shoes.China can use all of its resources to produce 30 DVDs or 300 shoes.The opportunity cost of producing a DVD in the United States is

Correct Answer
verified

Production efficiency occurs

Correct Answer
verified

The figure above shows Liz's and Joe's production possibilities for Salads and Smoothies. -Given the information in the figure above,Liz benefit from trade with Joe because .

Correct Answer
verified

A country has a comparative advantage in the production of a good if it can

Correct Answer
verified

-Suppose that Germany,France,Estonia,and India all have the same production possibilities,illustrated in the figure above.Based on the production points in the figure,which country is most likely to expand its PPF to PPF₁?

Correct Answer
verified

Exam 3: The Economic Problem

A production point beyond the production possibilities frontier represents what?

Correct AnswerverifiedA production point beyond the ...View AnswerShow Answer

-Deb and Pete have volunteered to help their favorite charity mail out fundraiser information.The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes.If Deb and Pete specialize and trade,how many packets will be assembled?

Correct AnswerverifiedShow Answer

-The above figure shows the production possibility frontier for a country.Suppose the country is producing at point A.What is the opportunity cost of increasing the production of rice to 12 tons?

Correct AnswerverifiedShow Answer

Correct Answerverifieda.In a year,Prakash can write 2 books or...View AnswerShow Answer

-The figure above shows a production possibilities frontier.In the figure,which of the following combinations of the two goods cannot be produced with the current resources and technology?

Correct AnswerverifiedShow Answer

With no international trade,a country ________ consume at a point outside of its PPF; with international trade,a country ________ consume at a point outside of its PPF.

Correct AnswerverifiedShow Answer

When a production possibilities frontier is bowed outward,as more of one good is produced,its opportunity cost

Correct AnswerverifiedShow Answer

As we move along the production possibilities frontier,

Correct AnswerverifiedShow Answer

-The figure above shows how the PPF for cell phones and new cell-phone factories can expand.In the figure,if the economy chose the point on this year's PPF that is above point K,the next year's PPF would

Correct AnswerverifiedShow Answer

Other things equal,if Mexico devotes more resources to train its population than Spain,

Correct AnswerverifiedShow Answer

-The figure above shows the production possibilities frontier for a country.In order for it to move from producing at point A to producing at point B,the country would need to

Correct AnswerverifiedShow Answer

What is gained when people engage in specialization and trade?

Correct AnswerverifiedShow Answer

A bowed out production possibilities frontier shows

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

-The figure above illustrates a small country's production possibilities frontier.Based on the figure,we can tell that the nation's resources are

Correct AnswerverifiedShow Answer

The United States can use all its resources to produce 250 DVDs or 500 shoes.China can use all of its resources to produce 30 DVDs or 300 shoes.The opportunity cost of producing a DVD in the United States is

Correct AnswerverifiedShow Answer

Production efficiency occurs

Correct AnswerverifiedShow Answer

The figure above shows Liz's and Joe's production possibilities for Salads and Smoothies. -Given the information in the figure above,Liz ________ benefit from trade with Joe because ________.

Correct AnswerverifiedShow Answer

A country has a comparative advantage in the production of a good if it can

Correct AnswerverifiedShow Answer

-Suppose that Germany,France,Estonia,and India all have the same production possibilities,illustrated in the figure above.Based on the production points in the figure,which country is most likely to expand its PPF to PPF₁?

Correct AnswerverifiedShow Answer

Correct Answer
verified
A production point beyond the ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a.In a year,Prakash can write 2 books or...
View Answer

Correct Answer
verified

With no international trade,a country consume at a point outside of its PPF; with international trade,a country consume at a point outside of its PPF.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The figure above shows Liz's and Joe's production possibilities for Salads and Smoothies. -Given the information in the figure above,Liz benefit from trade with Joe because .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified