Question 1

(Figure: Pork and Corn PPF 2)  If we want to produce 10 units of corn, then we can produce no more than _____ unit(s)  of pork.

Accepted Answer

A)   1
B)   2
C)   3
D)   4

Question 2

Opportunity cost applies only to personal purchasing decisions.

Accepted Answer

A) True 
 B)False

Question 3

A production possibilities frontier will have a curved, or "bowed out," shape if

Accepted Answer

A)   opportunity costs are declining.
B)   opportunity costs are increasing.
C)   resources are scarce.
D)   the economy is growing.

Question 4

Which statement about entrepreneurs is NOT correct?

Accepted Answer

A)   Entrepreneurs combine other resources to produce goods and services.
B)   Entrepreneurs manage day-to-day marketing, finance, and production decisions.
C)   The payment that entrepreneurs earn is called profit.
D)   Entrepreneurs do not take on any business risks.

Question 5

The idea that resources are specialized is the reason for increasing opportunity costs.

Accepted Answer

A) True 
 B)False

Question 6

Why would it be risky for Haiti to specialize in sugar cane production even if it has a comparative advantage in this area over most other countries?

Accepted Answer

First, every transaction involves costs,...

Question 7

Economists refer to the payment toward capital as

Accepted Answer

A)   rent.
B)   wages.
C)   interest.
D)   profit.

Question 8

(Table: Production Possibilities Schedule)  If the table is graphed, the production possibilities frontier shows

Accepted Answer

A)   constant opportunity costs.
B)   increasing opportunity costs.
C)   decreasing opportunity costs.
D)   a constant slope.

Question 9

Paolo can walk three dogs or mow two lawns in two hours. Ashanti can walk six dogs or mow three lawns in two hours. According to trade theory, _____ should walk dogs because ____.

Accepted Answer

A)   Ashanti; she produces more than Paolo does in a two-hour period
B)   Ashanti; she enjoys a comparative advantage in dog-walking
C)   Paolo; he faces a lower opportunity cost for walking dogs
D)   Paolo; he enjoys an absolute advantage in dog-walking

Question 10

Why does society have more influence over the amount and characteristics of capital than it has over any other resource?

Accepted Answer

A)   There is more capital than any other resource, so all or part of it can be used.
B)   Capital is money; more money (currency)  can be printed in any denomination.
C)   Capital is the only resource that is manufactured.
D)   Capital never wears out or loses its productivity.

Question 11

(Figure: Tanks and Health Care) Why is the "bowed out" curve shown in the figure a more realistic depiction of the production possibilities frontier (PPF) than a straight line?  ​
​

Accepted Answer

This PPF curve is bowed out from the ori...

Question 12

A production possibilities frontier with constant opportunity costs is

Accepted Answer

A)   convex.
B)   concave.
C)   a straight line.
D)   horizontal.

Question 13

Imagine two countries with identical endowments of resources. Using all its resources, Broland can produce 5,000 books or 8,000 forks. Using the same resources, Nomia could produce 4,000 books or 7,000 forks. Which country has a comparative advantage producing forks?

Accepted Answer

A)   Broland, because it gives up 0.63 book for each fork produced
B)   Nomia, because it gives up 0.57 book for each fork produced
C)   Broland, because it gives up 1.6 books for each fork produced
D)   Nomia, because it gives up 1.75 books for each fork produced

Question 14

What is considered a labor resource?

Accepted Answer

A)   a sewing machine
B)   a trainee
C)   mineral deposits
D)   a copier

Question 15

(Figure: Ships and Autos in Countries A and B)  Two countries manufacture autos and ships. Based on the graphs

Accepted Answer

A)   Country A should specialize in automotive manufacturing and country B should specialize in ship building.
B)   There are no advantages to trade because country A can produce more of both goods.
C)   There are no advantages to trade because the lines are downward sloping.
D)   Country A should specialize in ship building and country B should specialize in automotive manufacturing.

Question 16

A nation that consumes most of what it produces will have a lower growth rate than another nation that focuses more on the production of capital goods.

Accepted Answer

A) True 
 B)False

Question 17

Economic growth is shown as a _____ the PPF.

Accepted Answer

A)   shift to the left of
B)   shift to the right of
C)   an upward movement along
D)   a downward movement along

Question 18

Natural resources in the production process are called land, and their payment is called interest.

Accepted Answer

A) True 
 B)False

Question 19

Which statement defines absolute advantage?

Accepted Answer

A)   Goods and services that are produced at their lowest resource (opportunity)  cost.
B)   The mix of goods and services produced is just what the society desires.
C)   One country has a lower opportunity cost of producing a good than another country.
D)   One country can produce more of a good than another country if both work with identical resources.

Question 20

Economists include mineral deposits, oil, natural gas, and water in their definition of land.

Accepted Answer

A) True 
 B)False

Exam 2: Production, Economic Growth, and Trade

Why would it be risky for Haiti to specialize in sugar cane production even if it has a comparative advantage in this area over most other countries?

Correct AnswerverifiedFirst, every transaction involves costs,...View AnswerShow Answer

Economists refer to the payment toward capital as

Correct AnswerverifiedShow Answer

A nation that consumes most of what it produces will have a lower growth rate than another nation that focuses more on the production of capital goods.

Correct AnswerverifiedShow Answer

The idea that resources are specialized is the reason for increasing opportunity costs.

Correct AnswerverifiedShow Answer

(Figure: Tanks and Health Care) Why is the "bowed out" curve shown in the figure a more realistic depiction of the production possibilities frontier (PPF) than a straight line? ​ ​

Correct AnswerverifiedThis PPF curve is bowed out from the ori...View AnswerShow Answer

Which statement about entrepreneurs is NOT correct?

Correct AnswerverifiedShow Answer

What is considered a labor resource?

Correct AnswerverifiedShow Answer

Economists include mineral deposits, oil, natural gas, and water in their definition of land.

Correct AnswerverifiedShow Answer

(Figure: Ships and Autos in Countries A and B) Two countries manufacture autos and ships. Based on the graphs

Correct AnswerverifiedShow Answer

Which statement defines absolute advantage?

Correct AnswerverifiedShow Answer

Natural resources in the production process are called land, and their payment is called interest.

Correct AnswerverifiedShow Answer

Opportunity cost applies only to personal purchasing decisions.

Correct AnswerverifiedShow Answer

A production possibilities frontier with constant opportunity costs is

Correct AnswerverifiedShow Answer

Paolo can walk three dogs or mow two lawns in two hours. Ashanti can walk six dogs or mow three lawns in two hours. According to trade theory, _____ should walk dogs because ____.

Correct AnswerverifiedShow Answer

A production possibilities frontier will have a curved, or "bowed out," shape if

Correct AnswerverifiedShow Answer

(Figure: Pork and Corn PPF 2) If we want to produce 10 units of corn, then we can produce no more than _____ unit(s) of pork.

Correct AnswerverifiedShow Answer

Economic growth is shown as a _____ the PPF.

Correct AnswerverifiedShow Answer

Imagine two countries with identical endowments of resources. Using all its resources, Broland can produce 5,000 books or 8,000 forks. Using the same resources, Nomia could produce 4,000 books or 7,000 forks. Which country has a comparative advantage producing forks?

Correct AnswerverifiedShow Answer

Why does society have more influence over the amount and characteristics of capital than it has over any other resource?

Correct AnswerverifiedShow Answer

(Table: Production Possibilities Schedule) If the table is graphed, the production possibilities frontier shows

Correct AnswerverifiedShow Answer

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First, every transaction involves costs,...
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(Figure: Tanks and Health Care) Why is the "bowed out" curve shown in the figure a more realistic depiction of the production possibilities frontier (PPF) than a straight line?

Correct Answer
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This PPF curve is bowed out from the ori...
View Answer

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Paolo can walk three dogs or mow two lawns in two hours. Ashanti can walk six dogs or mow three lawns in two hours. According to trade theory, _ should walk dogs because .

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