Question 1

Production efficiency is defined as producing the mix of goods and services most desired by society.

Accepted Answer

A) True 
 B)False

Question 2

In economics, the term capital refers to

Accepted Answer

A)   money available to firms.
B)   markets where companies go to raise funds.
C)   the primary city in each governmental jurisdiction where most economic activity occurs.
D)   manufactured buildings and equipment used to produce other goods and services.E) All of the above
F) C) and D)

Question 3

(Table)  Suppose an economy can produce the combinations of bread and cookies shown in the table. The opportunity cost of increasing bread production from 25 to 50 loaves is _____, and the opportunity cost of increasing bread production from 50 to 75 loaves is _____.

Accepted Answer

A)   25 loaves of bread; 30 dozen cookies
B)   15 dozen cookies; 30 dozen cookies
C)   90 dozen cookies; 45 dozen cookies
D)   75 loaves of bread; 50 loaves of breadE) B) and D)
F) All of the above

Question 4

When a country is operating at its full potential output, it is producing at a point

Accepted Answer

A)   above and to the right of the production possibility frontier.
B)   on the production possibility frontier.
C)   below and to the left of the production possibility frontier.
D)   on the production possibilities curve that is farthest from the origin.E) None of the above
F) All of the above

Question 5

The derivation of a production possibilities frontier assumes that

Accepted Answer

A)   some resources are not being used.
B)   there is a fixed quantity of resources and technology available.
C)   some resources are not being produced efficiently.
D)   technology is free.E) A) and D)
F) A) and B)

Question 6

A country should always produce the items in which it has an absolute advantage.

Accepted Answer

A) True 
 B)False

Question 7

(Table)  Based on the table

Accepted Answer

A)   Mexico has an absolute advantage over Canada in producing both steel and airplanes.
B)   Canada has an absolute advantage over Mexico in producing both steel and airplanes.
C)   Mexico has a comparative advantage in producing steel.
D)   Canada has a comparative advantage in producing airplanes.E) B) and D)
F) None of the above

Question 8

(Figure: Wheat and Autos in the United States and South Korea)  According to the graph, for every extra

Accepted Answer

A)   bushel of wheat the United States wants to produce, it must give up 100 automobiles.
B)   automobile South Korea wants to produce, it must give up 40,000 bushels of wheat.
C)   automobile the United States wants to produce, it must give up 100 bushels of wheat.
D)   automobile South Korea wants to produce, it must give up half a bushel of wheat.E) A) and B)
F) C) and D)

Question 9

The theory that suggested countries would mutually benefit from trade by specializing in export goods they could produce at lower opportunity costs than another country is called

Accepted Answer

A)   marginal utility.
B)   labor specialization theory.
C)   absolute advantage.
D)   comparative advantage.E) A) and B)
F) C) and D)

Question 10

(Figure: Interpreting PFF Shifts 4)  The graph depicts the effects of an improvement in technology. One can conclude from the graph that the technology

Accepted Answer

A)   provided minimal benefit to this society.
B)   affected the production of x more than the production of y.
C)   reduced unemployment.
D)   affected the production of y more than the production of x.E) B) and C)
F) B) and D)

Question 11

Which pair does NOT relate?

Accepted Answer

A)   capital - interest
B)   land - revenue
C)   labor - wages
D)   entrepreneurial ability - profitE) A) and D)
F) All of the above

Question 12

"How goods and services are advertised" is one of the three basic economic questions that each society must answer.

Accepted Answer

A) True 
 B)False

Question 13

(Figure: Tanks and Health Care) Which points in the graph and table are considered attainable and why?  ​
​

Accepted Answer

All points on the production possibiliti...

Question 14

The _____ shows the combination of two goods that are possible for a society to produce at full employment.

Accepted Answer

A)   full employment line
B)   production possibilities frontier
C)   goods and services frontier
D)   maximal productivity curveE) B) and D)
F) None of the above

Question 15

(Figure: Production Possibilities)  Which statement is NOT correct regarding point X?

Accepted Answer

A)   The combination produced at point X is productively efficient.
B)   Society might prefer other combinations on the line to the mix of output at point X.
C)   Because it is on the line, the combination at point X has no opportunity cost.
D)   The combination of output at point X might not be allocatively efficient.E) A) and D)
F) B) and C)

Question 16

(Table: Production Possibilities Schedule)  In the table, a combination of 4,500 iPads and 2,000 HDTVs

Accepted Answer

A)   is unattainable.
B)   is a point on the production possibilities frontier.
C)   is a point inside of the production possibilities frontier.
D)   is accomplished at full employment.E) A) and C)
F) All of the above

Question 17

(Figure: Corn and Oil in the United States and the United Kingdom)  Refer to the graphs for the United States and the United Kingdom. If the starting point is a, what is the opportunity cost of the United Kingdom producing one more barrel of oil?

Accepted Answer

A)   0.5 bushel of corn
B)   1 bushel of corn
C)   1.5 bushels of corn
D)   2 bushels of cornE) A) and D)
F) All of the above

Question 18

Trade is

Accepted Answer

A)   a way for rich countries to take advantage of poor countries.
B)   good for rich countries and bad for poor countries.
C)   a factor that slows down the economies of the trading countries.
D)   a driver of economic growth.E) A) and B)
F) A) and C)

Question 19

The law of comparative advantage suggests that

Accepted Answer

A)   each country should strive to produce roughly equal amounts of all goods.
B)   nations can benefit if they trade with each other.
C)   free trade among nations is generally harmful to an economy.
D)   each country should strive to be self-sufficient.E) All of the above
F) A) and D)

Question 20

When the mix of goods and services produced is just what society desires, _____ exists.

Accepted Answer

A)   socialism
B)   communism
C)   production efficiency
D)   allocative efficiencyE) B) and C)
F) B) and D)

Exam 2: Production, Economic Growth, and Trade

(Table) Suppose an economy can produce the combinations of bread and cookies shown in the table. The opportunity cost of increasing bread production from 25 to 50 loaves is _____, and the opportunity cost of increasing bread production from 50 to 75 loaves is _____.

Correct AnswerverifiedShow Answer

(Figure: Interpreting PFF Shifts 4) The graph depicts the effects of an improvement in technology. One can conclude from the graph that the technology

Correct AnswerverifiedShow Answer

The law of comparative advantage suggests that

Correct AnswerverifiedShow Answer

A country should always produce the items in which it has an absolute advantage.

Correct AnswerverifiedShow Answer

(Table: Production Possibilities Schedule) In the table, a combination of 4,500 iPads and 2,000 HDTVs

Correct AnswerverifiedShow Answer

(Figure: Production Possibilities) Which statement is NOT correct regarding point X?

Correct AnswerverifiedShow Answer

The theory that suggested countries would mutually benefit from trade by specializing in export goods they could produce at lower opportunity costs than another country is called

Correct AnswerverifiedShow Answer

Which pair does NOT relate?

Correct AnswerverifiedShow Answer

(Figure: Tanks and Health Care) Which points in the graph and table are considered attainable and why? ​ ​

Correct AnswerverifiedAll points on the production possibiliti...View AnswerShow Answer

(Figure: Wheat and Autos in the United States and South Korea) According to the graph, for every extra

Correct AnswerverifiedShow Answer

Trade is

Correct AnswerverifiedShow Answer

The derivation of a production possibilities frontier assumes that

Correct AnswerverifiedShow Answer

The _____ shows the combination of two goods that are possible for a society to produce at full employment.

Correct AnswerverifiedShow Answer

(Table) Based on the table

Correct AnswerverifiedShow Answer

Production efficiency is defined as producing the mix of goods and services most desired by society.

Correct AnswerverifiedShow Answer

"How goods and services are advertised" is one of the three basic economic questions that each society must answer.

Correct AnswerverifiedShow Answer

When the mix of goods and services produced is just what society desires, _____ exists.

Correct AnswerverifiedShow Answer

In economics, the term capital refers to

Correct AnswerverifiedShow Answer

(Figure: Corn and Oil in the United States and the United Kingdom) Refer to the graphs for the United States and the United Kingdom. If the starting point is a, what is the opportunity cost of the United Kingdom producing one more barrel of oil?

Correct AnswerverifiedShow Answer

When a country is operating at its full potential output, it is producing at a point

Correct AnswerverifiedShow Answer

(Table) Suppose an economy can produce the combinations of bread and cookies shown in the table. The opportunity cost of increasing bread production from 25 to 50 loaves is _, and the opportunity cost of increasing bread production from 50 to 75 loaves is _.

Correct Answer
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(Figure: Tanks and Health Care) Which points in the graph and table are considered attainable and why?

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All points on the production possibiliti...
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