(1) Implicit costs are the opportunity costs of using the resources of ---------------------------------------------
a. outsiders.
b. banks.
c. retained earnings.
d. owners.
(2) The Principle of Comparative Advantage implies that:
a. Two countries can benefit from trade only if one country is better at producing a good compared to another in absolute terms.
b. Two countries can benefit from specialization and trade even if one country is better at one good compared to another in absolute terms.
c. all countries should specialize in whatever they have a higher opportunity cost to producing.
d. all countries are better off when each produces all goods for themselves and they do not trade with each other.
(3) Points inside a production possibilities frontier represent
a. unemployment of resources
b. unattainable production combinations
c. efficient use of resources
d. supply exceeds demand
(4) In a free market --------------------------------
a. governments intervene
b. governments plan production
c. governments interfere
d. prices adjust to reconcile scarcity and desires
(1) Implicit costs are the opportunity costs of using the resources of ---------------------------------------------
a. outsiders.
b. banks.
c. retained earnings.
d. owners.
(2) The Principle of Comparative Advantage implies that:
a. Two countries can benefit from trade only if one country is better at producing a good compared to another in absolute terms.
b. Two countries can benefit from specialization and trade even if one country is better at one good compared to another in absolute terms.
c. all countries should specialize in whatever they have a higher opportunity cost to producing.
d. all countries are better off when each produces all goods for themselves and they do not trade with each other.
(3) Points inside a production possibilities frontier represent
a. unemployment of resources
b. unattainable production combinations
c. efficient use of resources
d. supply exceeds demand
(4) In a free market --------------------------------
a. governments intervene
b. governments plan production
c. governments interfere
d. prices adjust to reconcile scarcity and desires
Related textbook solutions
Related questions
A bowed out PPF reflects which of the following ideas?
i.increasing opportunity cost
ii. resources are not equally productive in all activities
iii. prices of goods increase over time
| Ā | Ā |
I only |
| Ā | Ā |
I and iii |
| Ā | Ā |
ii and iii |
| Ā | Ā |
I and ii |
1 point
QUESTION 2
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.
| Ā | Ā |
can; cannot |
| Ā | Ā |
cannot; can |
| Ā | Ā |
cannot; cannot |
| Ā | Ā |
can; can |
1 point
QUESTION 3
If the production possibilities frontier between two goods is a straight line, then the
| Ā | Ā |
the line does not qualify as a production possibilities frontier because the unattainable production points are too close to the inefficient production points. |
| Ā | Ā |
opportunity cost is not a ratio. |
| Ā | Ā |
increasing opportunity costs. |
| Ā | Ā |
resources are equally productive in both goods. |
1 point
QUESTION 4
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?
| Ā | Ā |
It might increase, decrease, or remain constant depending on how much people value the additional units of the good. |
| Ā | Ā |
It decreases. |
| Ā | Ā |
It increases. |
| Ā | Ā |
It remains constant. |
1 point
QUESTION 5
"Comparative advantage" is defined as a situation in which one person can produce
| Ā | Ā |
more of a good than another person. |
| Ā | Ā |
a good for a lower dollar cost than another person. |
| Ā | Ā |
a good for a lower opportunity cost than another person. |
| Ā | Ā |
more of all goods than another person. |
1 point
QUESTION 6
When a production possibilities frontier is bowed outward, as more of one good is produced, its opportunity cost
| Ā | Ā |
increases. |
| Ā | Ā |
decreases. |
| Ā | Ā |
might increase, decrease, or remain constant depending on how much people value the additional units of the good. |
| Ā | Ā |
remains constant. |
1 point
QUESTION 7
A bowed out production possibility frontier shows that the
| Ā | Ā |
opportunity cost relationship is linear. |
| Ā | Ā |
the opportunity cost of a good is constant as more of the good is produced. |
| Ā | Ā |
the opportunity cost of a good increase as more of the good is produced. |
| Ā | Ā |
the opportunity cost of a good decrease as more of the good is produced. |
1 point
QUESTION 8
Which of the following statements is correct?
| Ā | Ā |
The production possibilities frontier shows that there are no limits to production. |
| Ā | Ā |
Any point on or within the PPF is production efficient. |
| Ā | Ā |
If capital is idle, the economy is producing at its full potential. |
| Ā | Ā |
A tradeoff is a limit that forces an exchange or a substitution of one thing for something else. |
1 point
QUESTION 9
A major earthquake occurs in the central part of the United States. What impact would this have on the nation's production possibilities frontier and why?
| Ā | Ā |
A tradeoff would occur to replace the resources and goods destroyed. |
| Ā | Ā |
It would shift inward because some of the nation's resources, such as capital and labor, would be destroyed. |
| Ā | Ā |
It would shift outward because unemployment would be reduced. |
| Ā | Ā |
Nothing would happen because the nation would still have the same capabilities. |
1 point
QUESTION 10
When a nation is producing on its production possibilities frontier, if more resources are used to produce one good, then the production of other goods
| Ā | Ā |
must increase. |
| Ā | Ā |
must decrease. |
| Ā | Ā |
must remain the same. |
| Ā | Ā |
must change but they might increase or decrease. |
1 point
QUESTION 11
Moving along a country's PPF, a reasonable opportunity costs increase is that
| Ā | Ā |
unemployment increases as a country produce more and more of one good. |
| Ā | Ā |
unemployment decreases as a country produces more and more of one good. |
| Ā | Ā |
some resources are better suited for producing one good rather than the other. |
| Ā | Ā |
technology declines as a country produce more and more of one good. |
1 point
QUESTION 12
A reason the production possibilities frontier exists is
| Ā | Ā |
scarcity of resources and unlimited technology. |
| Ā | Ā |
unemployment. |
| Ā | Ā |
scarcity of resources. |
| Ā | Ā |
unlimited resources and technology. |
1 point
QUESTION 13
Moving from one point to another on a production possibilities frontier implies
| Ā | Ā |
increasing the production of one good and decreasing the production of another. |
| Ā | Ā |
increasing the production of both goods. |
| Ā | Ā |
decreasing the production of both goods. |
| Ā | Ā |
holding the production levels of both goods constant. |
1 point
QUESTION 14
Specialization and trade make a country better off because with trade the country can consume at a point
| Ā | Ā |
outside its production possibilities frontier. |
| Ā | Ā |
on its trading partner's production possibilities frontier. |
| Ā | Ā |
inside its production possibilities frontier. |
| Ā | Ā |
on its production possibilities frontier. |
1 point
QUESTION 15
The production possibilities frontier is the
| Ā | Ā |
the boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced when technology is changing. |
| Ā | Ā |
the minimum output that can be produced when resources are used inefficiently. |
| Ā | Ā |
the boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology. |
| Ā | Ā |
maximum output that can be produced at an opportunity cost of zero. |
1 point
QUESTION 16
The opportunity cost of economic growth is ________ and the benefit of economic growth is ________.
| Ā | Ā |
decreased current consumption; decreased future consumption |
| Ā | Ā |
decreased current consumption; increased future consumption |
| Ā | Ā |
increased current consumption; increased future consumption |
| Ā | Ā |
increased current consumption; decreased future consumption |
1 point
QUESTION 17
In terms of a nation's production possibilities frontier, what impact does international trade have?
| Ā | Ā |
International trade shifts the nation's production possibilities frontier outward. |
| Ā | Ā |
International trade shifts the production possibilities frontier outward for the goods that are exported and inward for the goods that are imported. |
| Ā | Ā |
International trade shifts the nation's production possibilities frontier inward. |
| Ā | Ā |
International trade allows the nation to consume at a point outside its production possibilities frontier. |
1 point
QUESTION 18
The production possibilities frontier illustrates the
| Ā | Ā |
goods and services that people want. |
| Ā | Ā |
limits to people's wants. |
| Ā | Ā |
resources the economy possesses, but not it is the level of technology. |
| Ā | Ā |
maximum combinations of goods and services that can be produced. |
1 point
QUESTION 19
As we move along the production possibilities frontier,
| Ā | Ā |
the possibilities of tradeoffs diminish. |
| Ā | Ā |
the production of one good increases as the production of the other good decreases. |
| Ā | Ā |
more of both goods can be produced. |
| Ā | Ā |
a tradeoff is not possible because nations need all goods. |
1 point
QUESTION 20
What is the opportunity cost of economic growth?
| Ā | Ā |
Eliminate scarcity |
| Ā | Ā |
Land. |
| Ā | Ā |
Capital goods. |
| Ā | Ā |
Consumption of goods. |
1 point
QUESTION 21
Which of the following statements is correct?
i.As the economy grows, the opportunity costs of economic growth decrease.
ii. Economic growth has no opportunity cost.
iii. The opportunity cost of economic growth is current consumption forgone.
| Ā | Ā |
ii only |
| Ā | Ā |
iii only |
| Ā | Ā |
I only |
| Ā | Ā |
I and iii |
1 point
QUESTION 22
Does economic growth depend upon which of the following?
i. Increasing the quantity of labor.
ii. Lowering the prices of goods and services.
iii. Advancing technology.
| Ā | Ā |
ii only. |
| Ā | Ā |
I only. |
| Ā | Ā |
I and iii. |
| Ā | Ā |
iii only. |
1 point
QUESTION 23
When drawing a production possibilities frontier, which of the following is held constant?
| Ā | Ā |
the amount of money in the economy |
| Ā | Ā |
the prices of goods and services |
| Ā | Ā |
the quantity of the goods and services that are produced |
| Ā | Ā |
the available factors of production and the state of technology |
1 point
QUESTION 24
To increase its economic growth, a nation should
| Ā | Ā |
encourage spending on goods and services. |
| Ā | Ā |
increase in current consumption. |
| Ā | Ā |
encourage education because that increases the quality of labor. |
| Ā | Ā |
limit the number of people in college because they produce nothing. |
1 point
QUESTION 25
The opportunity cost of one more slice of pizza in terms of sodas is the
| Ā | Ā |
some pizza slices we have to give up to get one extra soda. |
| Ā | Ā |
the total number of sodas that we have divided by the total number of pizza slices that we have. |
| Ā | Ā |
the total number of pizza slices that we have divided by the total number of sodas that we have. |
| Ā | Ā |
the number of sodas we have to give up to get one extra pizza slice. |
