ECON102 Lecture Notes - Lecture 2: Opportunity Cost, Microsoft Powerpoint, Intermediate Good
Document Summary
Get access
Related Documents
Related Questions
The opportunity cost of one more slice of pizza in terms of sodas is the
the total number of pizza slices that we have divided by the total number of sodas that we have. |
||
the number of sodas we have to give up to get one extra pizza slice. |
||
the number of pizza slices we have to give up to get one extra soda. |
||
the total number of sodas that we have divided by the total number of pizza slices that we have. |
1 point
QUESTION 2
A production possibilities frontier shows
how money can be allocated among two kinds of goods. |
||
the limits to the future growth of a nation. |
||
the various combinations of output a nation can produce at a certain time, given its available resources and technology. |
||
that if the price of one good decreases, the price of the other has to increase. |
1 point
QUESTION 3
When a production possibilities frontier is bowed outward, as more of one good is produced, its opportunity cost
remains constant. |
||
might increase, decrease, or remain constant depending on how much people value the additional units of the good. |
||
increases. |
||
decreases. |
1 point
QUESTION 4
When all of the available factors of production are being efficiently employed, the
the economy is producing at a point within its PPF. |
||
PPF disappears. |
||
the economy is producing at a point beyond its PPF. |
||
the economy is producing at a point on its PPF. |
1 point
QUESTION 5
If a nation devotes a larger share of its current production to consumer goods, then
its PPF will shift inward. |
||
its economic growth will slow down. |
||
its PPF will shift outward. |
||
some productive factors will become unemployed. |
1 point
QUESTION 6
A point on the production possibilities frontier reflects an
the attainable point with full employment of all resources. |
||
attainable point without full employment of all resources. |
||
unattainable point without full employment of all resources. |
||
the unattainable point with full employment of all resources. |
1 point
QUESTION 7
When drawing a production possibilities frontier, which of the following is held constant?
the available factors of production and the state of technology |
||
the amount of money in the economy |
||
the prices of goods and services |
||
the quantity of the goods and services that are produced |
1 point
QUESTION 8
As we move along the production possibilities frontier,
more of both goods can be produced. |
||
the possibilities of tradeoffs diminish. |
||
a tradeoff is not possible because nations need all goods. |
||
the production of one good increases as the production of the other good decreases. |
1 point
QUESTION 9
Which of the following is an assumption used when drawing a production possibilities frontier?
i.Human wants and desires are limited to what is available.
ii. Only two goods are considered.
iii. The level of technology is fixed and unchanging.
I and iii |
||
ii only |
||
I, ii, and iii |
||
I only |
1 point
QUESTION 10
To achieve gains from trade, a country
needs to have an absolute advantage in the production of all goods. |
||
specializes in producing a good in which it has a lower opportunity cost. |
||
must produce at a point beyond its PPF. |
||
should produce at the midpoint of its PPF. |
1 point
QUESTION 11
Relative to Al, Joe has ________ if Joe can produce a good at a lower opportunity cost than Al.
a comparative advantage |
||
more production efficiency |
||
a marginal benefit |
||
a comparative benefit |
1 point
QUESTION 12
Does economic growth depend upon which of the following?
i.Improving the quality of labor
ii. Technological advancement
iii. Increasing the amount of capital
iii only |
||
ii only |
||
I only |
||
I, ii, and iii |
1 point
QUESTION 13
In one hour John can produce 20 loaves of bread or 18 cakes. In one hour Phyllis can produce 30 loaves of bread or 15 cakes. Which of the following statements is true?
John has a comparative advantage in producing cakes. |
||
Phyllis has an absolute advantage in both goods. |
||
Phyllis has a comparative advantage in producing cakes. |
||
John has an absolute advantage in both goods. |
1 point
QUESTION 14
As an economy produces more of one of the goods on a bowed out production possibilities frontier, what happens to the opportunity cost of producing the good?
It decreases. |
||
It might increase, decrease, or remain constant depending on how much people value the additional units of the good. |
||
It remains constant. |
||
It increases. |
1 point
QUESTION 15
The production possibilities frontier illustrates the
goods and services that people want. |
||
maximum combinations of goods and services that can be produced. |
||
resources the economy possesses, but not it is the level of technology. |
||
limits to people's wants. |
1 point
QUESTION 16
The United States produced approximately ________ worth of goods and services in 2007.
$14 billion |
||
$14 trillion |
||
$140 billion |
||
$140 trillion |
1 point
QUESTION 17
The fact of increasing opportunity cost when moving on the PPF means that
to increase the production of one product requires smaller and smaller sacrifices of the other good. |
||
to decrease the production of one product requires smaller and smaller sacrifices of the other good. |
||
to increase the production of one product requires larger and larger sacrifices of the other good. |
||
when the government forces a movement from one point on the PPF to another point, no production is lost. |
1 point
QUESTION 18
Other things equal, if India devotes more resources to educate its population than China,
China will grow faster than India. |
||
India will be able to eliminate scarcity faster than China. |
||
India will be able to eliminate opportunity cost faster than China. |
||
India will grow faster than China. |
1 point
QUESTION 19
For Ireland to grow more potatoes, wool production must decrease. This situation is an example of
zero opportunity cost. |
||
producing at a point that lies beyond the PPF. |
||
opportunity benefit. |
||
a tradeoff. |
1 point
QUESTION 20
Moving from one point to another on a production possibilities frontier implies
increasing the production of both goods. |
||
increasing the production of one good and decreasing the production of another. |
||
holding the production levels of both goods constant. |
||
decreasing the production of both goods. |
1 point
QUESTION 21
The United States is one of the richest nations in the world,
but it can still benefit from specialization and trade. |
||
so does not need to trade with poor nations to achieve any gains from trade. |
||
so might not have a comparative advantage in producing any goods. |
||
so it must have a comparative advantage in the production of all goods. |
1 point
QUESTION 22
"Comparative advantage" is defined as a situation in which one person can produce
more of all goods than another person. |
||
a good for a lower opportunity cost than another person. |
||
a good for a lower dollar cost than another person. |
||
more of a good than another person. |
1 point
QUESTION 23
The idea of increasing opportunity cost is reflected in the
the linear shape of the production possibilities frontier. |
||
bowed in the shape of the production possibilities frontier. |
||
bowed out the shape of the production possibilities frontier. |
||
the positive slope of the production possibilities frontier. |
1 point
QUESTION 24
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.
I only. |
||
I and ii. |
||
I and iii. |
||
ii and iii. |
1 point
QUESTION 25
If society moves from a period of time with significant unemployment to a time with full employment, its production possibilities frontier will
shift rightward. |
||
not shift because the society moves from one point on the frontier to a point inside the frontier. |
||
not shift because the society moves from a point inside the frontier to a point on the frontier. |
||
shift leftward. |
1 point
Question 26 pts
Which of the following is not a reason why specialization and trade are beneficial to society?
Specialization fosters learning by doing, thus lowering the unit-costs of products | |
Firms and workers become less dependent on others for producing goods and services |
The total output of economic goods may be increased even without any increase in resources | |
Scarce resources are utilized more efficiently by exploiting differences among them |
Question 27 pts
Laissez-faire capitalism limits the government's economic functions to the following, except:
Protecting private property rights | |
Establishing a legal environment to enforce contracts among individuals |
Setting prices of individual goods and services | |
Preventing individuals and firms from coercing others |
Question 28 pts
A production system where various workers concentrate on different specialized tasks to contribute towards a whole product is referred to as:
Roundabout production | |
A coincidence of wants |
Freedom of enterprise | |
Division of labor |
Question 29 pts
The market system is said to be characterized by "consumer sovereignty." This is because:
A sovereign government determines which consumer goods will be produced | |
Firms must match their production decisions to the consumers' choices |
The prices of consumer goods are regulated by a sovereign government | |
Consumer goods are considered to be more important than capital goods |
Question 30 pts
Consumers express self-interest when they:
Seek the lowest price for a product | |
Reduce business losses |
Exclude others in their thinking | |
Collect economic profits |
Question 311 pts
Refer to the above graph with three demand curves. An "increase in quantity demanded" would be illustrated by a change from:
Point 5 to point 1 | |
Point 4 to point 1 |
Point 2 to point 5 | |
Point 4 to point 6 |
Question 32 pts
The table below shows the weekly demand for hamburger in a market where there are just three buyers.
Refer to the above table. At a price of $6, the weekly market quantity demanded for hamburger is:
17 | |
23 |
24 | |
18 |
Question 33pts
If farmers withhold some of their current corn harvest from the market because they anticipate a higher price of corn in the near future, then this would cause a(n):
Movement up along the current supply curve of corn | |
Movement down along the current supply curve of corn |
Leftward shift in the current supply of corn | |
Rightward shift in the current supply of corn |
Question 34 pts
Which of the following will not cause the supply curve to shift?
A technological change in the production of the good | |
A change in the prices of other goods that producers could be producing |
A change in the costs of resources needed to produce the good | |
A change in the price of the good |
Question 35 pts
All of the following would affect the position of the supply curve for cranberries, except the:
Price of agricultural land for cranberries | |
Cost of fertilizers for cranberry production |
Popularity of cranberry drinks | |
Development of a new pest control for cranberries |
Question 36 pts
When high-school and college graduates apply for jobs in the labor markets,
Job applicants and employers are both "buyers". | |
Job applicants are the "sellers" while employers are the "buyers". |
Job applicants and employers are both "sellers". | |
Job applicants are the "buyers" while employers are the "sellers". |
Question 37 pts
Refer to the figure above, which shows three supply curves for corn. Which of the following would cause the supply of corn to shift from S1 to S2?
A decrease in consumer incomes, assuming corn is a normal good | |
The development of a more effective insecticide against corn rootworm |
An increase in the price of fertilizer | |
A change in consumer tastes away from cornbread |
Question 38 pts
Which is of the following statements is correct?
If demand increases, then price will decrease | |
If demand decreases, then price will decrease |
If price decreases, then demand will decrease | |
If price increases, then demand will decrease |
Question 39 pts
Which would be a likely cause of an increase in the demand for pizza?
A decrease in the price of hamburger sandwiches | |
A health report showing eating pizza reduces stress |
A reduced desire for take-out and fast-food dining | |
A decrease in the prices of cheese, pepperoni, and mushrooms |
Question 40 pts
A market for a product reaches equilibrium when:
Price falls further after there is a shortage | |
The price rises further after there is a surplus |
Buyers intend to buy a quantity equal to the quantity that sellers intend to sell | |
The actual quantity bought by buyers equals actual quantity sold by sellers |
Question 41 pts
A higher price reduces the quantity demanded for a product because:
Individuals can afford less of the product and will switch to substitutes | |
The financial assets of individuals increase |
Individuals will buy more of the product and less of its substitutes | |
The purchasing power of individuals increases |
Question 42 pts
The idea of the Law of Demand, as applied to electric cars, assumes which of the following to be constant?
Price of electric cars | |
How much sellers are charging customers for electric cars |
Price of gasoline cars | |
Quantity of electric cars demanded by buyers |
Question 43 pts
Use the following graph of the demand for coffee:
Refer to the above diagram of three demand curves for coffee. An increase in the price of coffee, other factors constant, would cause a:
Movement from point a to point b | |
Movement from point b to point a |
Shift from D1 to D2 | |
Shift from D1 to D3 |
Question 44 pts
Which of the following factors will decrease the current demand for a product?
A decrease in the current price of a complementary product | |
A decrease in the current price of a substitute product |
An increase in the current price of a substitute product | |
An expected increase in the future price of the product |
Question 45pts
In competitive markets, a surplus or shortage will:
Cause shifts in the demand and supply curves that tend to eliminate the surplus or shortage | |
Cause changes in the quantities demanded and supplied that tend to intensify the surplus or shortage |
Cause changes in the quantities demanded and supplied that tend to eliminate the surplus or shortage | |
Never exist because the markets are always at equilibrium |
Question 46 pts
Which of the following would cause a leftward shift in the supply curve for car washes?
A decrease in taxes on car washes | |
An increase in the price of car washing equipment |
A decrease in the price of water | |
An increase in the number of cars in the city |
Question 47pts
The market system automatically corrects a surplus condition in a competitive market by:
Raising the price of the commodity in question while decreasing the quantity demanded | |
Raising the price of the commodity in question while increasing the quantity demanded |
Reducing the price of the commodity in question while increasing the quantity demanded | |
Reducing the price of the commodity in question while decreasing the quantity demanded |
Question 48 pts
A leftward shift of the supply curve for oil in the United States is most likely to result from:
A decrease in the world price of oil | |
An increase in the costs of exploration and drilling for oil |
An increase in the subsidy for oil exploration and drilling | |
A decrease in the fees that oil companies must pay for drilling licenses |
Question 49 pts
A fall in the price of milk, used in the production of ice cream, will:
Decrease the supply of ice cream | |
Have no effect on the supply of ice cream |
Increase the supply of ice cream | |
Cause a movement along the supply curve of ice cream |
Question 50 pts
Refer to the above graph, which shows the market for beef where demand shifted from D1 and D2. The change in equilibrium from E1 to E2 is most likely to result from:
An increase in the cost of cattle feed | |
A decrease in consumer incomes |
A decrease in the tax on beef products | |
An increase in the price of pork |