Economics 1021A/B Chapter Notes - Chapter 2: Marginal Utility, Human Capital, Marginal Cost
ECON 1021A/B Full Course Notes
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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
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I only |
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I and iii |
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ii and iii |
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I and ii |
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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.
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can; cannot |
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cannot; can |
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cannot; cannot |
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can; can |
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QUESTION 3
If the production possibilities frontier between two goods is a straight line, then the
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the line does not qualify as a production possibilities frontier because the unattainable production points are too close to the inefficient production points. |
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opportunity cost is not a ratio. |
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increasing opportunity costs. |
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resources are equally productive in both goods. |
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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?
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It might increase, decrease, or remain constant depending on how much people value the additional units of the good. |
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It decreases. |
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It increases. |
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It remains constant. |
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QUESTION 5
"Comparative advantage" is defined as a situation in which one person can produce
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more of a good than another person. |
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a good for a lower dollar cost than another person. |
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a good for a lower opportunity cost than another person. |
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more of all goods than another person. |
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QUESTION 6
When a production possibilities frontier is bowed outward, as more of one good is produced, its opportunity cost
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increases. |
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decreases. |
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might increase, decrease, or remain constant depending on how much people value the additional units of the good. |
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remains constant. |
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QUESTION 7
A bowed out production possibility frontier shows that the
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opportunity cost relationship is linear. |
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the opportunity cost of a good is constant as more of the good is produced. |
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the opportunity cost of a good increase as more of the good is produced. |
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the opportunity cost of a good decrease as more of the good is produced. |
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QUESTION 8
Which of the following statements is correct?
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The production possibilities frontier shows that there are no limits to production. |
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Any point on or within the PPF is production efficient. |
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If capital is idle, the economy is producing at its full potential. |
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A tradeoff is a limit that forces an exchange or a substitution of one thing for something else. |
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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?
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A tradeoff would occur to replace the resources and goods destroyed. |
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It would shift inward because some of the nation's resources, such as capital and labor, would be destroyed. |
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It would shift outward because unemployment would be reduced. |
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Nothing would happen because the nation would still have the same capabilities. |
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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
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must increase. |
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must decrease. |
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must remain the same. |
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must change but they might increase or decrease. |
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QUESTION 11
Moving along a country's PPF, a reasonable opportunity costs increase is that
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unemployment increases as a country produce more and more of one good. |
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unemployment decreases as a country produces more and more of one good. |
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some resources are better suited for producing one good rather than the other. |
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technology declines as a country produce more and more of one good. |
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QUESTION 12
A reason the production possibilities frontier exists is
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scarcity of resources and unlimited technology. |
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unemployment. |
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scarcity of resources. |
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unlimited resources and technology. |
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QUESTION 13
Moving from one point to another on a production possibilities frontier implies
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increasing the production of one good and decreasing the production of another. |
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increasing the production of both goods. |
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decreasing the production of both goods. |
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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
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outside its production possibilities frontier. |
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on its trading partner's production possibilities frontier. |
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inside its production possibilities frontier. |
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on its production possibilities frontier. |
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QUESTION 15
The production possibilities frontier is the
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the boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced when technology is changing. |
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the minimum output that can be produced when resources are used inefficiently. |
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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. |
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maximum output that can be produced at an opportunity cost of zero. |
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QUESTION 16
The opportunity cost of economic growth is ________ and the benefit of economic growth is ________.
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decreased current consumption; decreased future consumption |
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decreased current consumption; increased future consumption |
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increased current consumption; increased future consumption |
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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?
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International trade shifts the nation's production possibilities frontier outward. |
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International trade shifts the production possibilities frontier outward for the goods that are exported and inward for the goods that are imported. |
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International trade shifts the nation's production possibilities frontier inward. |
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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
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goods and services that people want. |
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limits to people's wants. |
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resources the economy possesses, but not it is the level of technology. |
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maximum combinations of goods and services that can be produced. |
1 point
QUESTION 19
As we move along the production possibilities frontier,
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the possibilities of tradeoffs diminish. |
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the production of one good increases as the production of the other good decreases. |
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more of both goods can be produced. |
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a tradeoff is not possible because nations need all goods. |
1 point
QUESTION 20
What is the opportunity cost of economic growth?
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Eliminate scarcity |
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Land. |
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Capital goods. |
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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.
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ii only |
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iii only |
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I only |
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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.
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ii only. |
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I only. |
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I and iii. |
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iii only. |
1 point
QUESTION 23
When drawing a production possibilities frontier, which of the following is held constant?
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the amount of money in the economy |
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the prices of goods and services |
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the quantity of the goods and services that are produced |
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the available factors of production and the state of technology |
1 point
QUESTION 24
To increase its economic growth, a nation should
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encourage spending on goods and services. |
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increase in current consumption. |
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encourage education because that increases the quality of labor. |
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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
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some pizza slices we have to give up to get one extra soda. |
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the total number of sodas that we have divided by the total number of pizza slices that we have. |
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the total number of pizza slices that we have divided by the total number of sodas that we have. |
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the number of sodas we have to give up to get one extra pizza slice. |
The opportunity cost of one more slice of pizza in terms of sodas is the
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the total number of pizza slices that we have divided by the total number of sodas that we have. |
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the number of sodas we have to give up to get one extra pizza slice. |
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the number of pizza slices we have to give up to get one extra soda. |
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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
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how money can be allocated among two kinds of goods. |
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the limits to the future growth of a nation. |
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the various combinations of output a nation can produce at a certain time, given its available resources and technology. |
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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
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remains constant. |
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might increase, decrease, or remain constant depending on how much people value the additional units of the good. |
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increases. |
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decreases. |
1 point
QUESTION 4
When all of the available factors of production are being efficiently employed, the
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the economy is producing at a point within its PPF. |
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PPF disappears. |
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the economy is producing at a point beyond its PPF. |
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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
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its PPF will shift inward. |
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its economic growth will slow down. |
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its PPF will shift outward. |
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some productive factors will become unemployed. |
1 point
QUESTION 6
A point on the production possibilities frontier reflects an
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the attainable point with full employment of all resources. |
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attainable point without full employment of all resources. |
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unattainable point without full employment of all resources. |
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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?
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the available factors of production and the state of technology |
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the amount of money in the economy |
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the prices of goods and services |
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the quantity of the goods and services that are produced |
1 point
QUESTION 8
As we move along the production possibilities frontier,
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more of both goods can be produced. |
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the possibilities of tradeoffs diminish. |
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a tradeoff is not possible because nations need all goods. |
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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.
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I and iii |
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ii only |
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I, ii, and iii |
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I only |
1 point
QUESTION 10
To achieve gains from trade, a country
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needs to have an absolute advantage in the production of all goods. |
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specializes in producing a good in which it has a lower opportunity cost. |
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must produce at a point beyond its PPF. |
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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.
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a comparative advantage |
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more production efficiency |
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a marginal benefit |
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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
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iii only |
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ii only |
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I only |
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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?
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John has a comparative advantage in producing cakes. |
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Phyllis has an absolute advantage in both goods. |
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Phyllis has a comparative advantage in producing cakes. |
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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?
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It decreases. |
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It might increase, decrease, or remain constant depending on how much people value the additional units of the good. |
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It remains constant. |
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It increases. |
1 point
QUESTION 15
The production possibilities frontier illustrates the
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goods and services that people want. |
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maximum combinations of goods and services that can be produced. |
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resources the economy possesses, but not it is the level of technology. |
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limits to people's wants. |
1 point
QUESTION 16
The United States produced approximately ________ worth of goods and services in 2007.
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$14 billion |
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$14 trillion |
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$140 billion |
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$140 trillion |
1 point
QUESTION 17
The fact of increasing opportunity cost when moving on the PPF means that
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to increase the production of one product requires smaller and smaller sacrifices of the other good. |
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to decrease the production of one product requires smaller and smaller sacrifices of the other good. |
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to increase the production of one product requires larger and larger sacrifices of the other good. |
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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,
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China will grow faster than India. |
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India will be able to eliminate scarcity faster than China. |
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India will be able to eliminate opportunity cost faster than China. |
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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
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zero opportunity cost. |
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producing at a point that lies beyond the PPF. |
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opportunity benefit. |
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a tradeoff. |
1 point
QUESTION 20
Moving from one point to another on a production possibilities frontier implies
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increasing the production of both goods. |
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increasing the production of one good and decreasing the production of another. |
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holding the production levels of both goods constant. |
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decreasing the production of both goods. |
1 point
QUESTION 21
The United States is one of the richest nations in the world,
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but it can still benefit from specialization and trade. |
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so does not need to trade with poor nations to achieve any gains from trade. |
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so might not have a comparative advantage in producing any goods. |
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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
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more of all goods than another person. |
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a good for a lower opportunity cost than another person. |
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a good for a lower dollar cost than another person. |
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more of a good than another person. |
1 point
QUESTION 23
The idea of increasing opportunity cost is reflected in the
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the linear shape of the production possibilities frontier. |
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bowed in the shape of the production possibilities frontier. |
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bowed out the shape of the production possibilities frontier. |
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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.
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I only. |
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I and ii. |
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I and iii. |
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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
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shift rightward. |
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not shift because the society moves from one point on the frontier to a point inside the frontier. |
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not shift because the society moves from a point inside the frontier to a point on the frontier. |
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shift leftward. |
1 point
