Question 1

Which scenario below most accurately describes the process by which a technological change can affect employment patterns across industries?

Accepted Answer

A)  A technological advance makes it possible to produce more of good X with less labor. As a result, labor is released from producing good X. Some of this labor ends up producing goods Y and Z.
B)  A technological advance makes it possible to produce less of good X with less labor. As a result, labor is released from producing good X. Some of this labor ends up producing good Y.
C)  A technological advance makes it possible to produce more of good X with more labor. As a result, more labor is needed to produce good X. There is less labor available to produce goods Y and Z.
D)  A technological advance makes it possible to produce more of good X with less labor. As a result, labor becomes more important to the production of good X. More labor ends up producing good X.

Question 2

The economy can produce 0X and 15Y, 10X and 10Y, 20X and 5Y, or 30X and 0Y. It follows that opportunity cost of 1X is ___Y.

Accepted Answer

A)  5.0
B)  0.5
C)  2.5
D)  1.0
E)  2.0

Question 3

If the PPF for two goods is a downward-sloping straight line, the resources used to produce those goods are equally well-suited to the production of both goods.

Accepted Answer

A) True 
 B)False

Question 4

A decrease in the quantity of resources

Accepted Answer

A)  shifts the PPF leftward.
B)  shifts the PPF rightward.
C)  moves the economy up a given PPF.
D)  moves the economy down a given PPF.

Question 5

Exhibit 2-9  Refer to Exhibit 2-9. Who has the comparative advantage in the production of good A?

Accepted Answer

A)  Alex
B)  Adam
C)  Both Alex and Adam
D)  Neither Alex nor Adam

Question 6

With respect to a PPF for goods X and Y, productive efficiency implies that in order to produce more of good X there will be a reduction in production of good Y.

Accepted Answer

A) True 
 B)False

Question 7

Why is the production possibilities frontier (PPF)typically bowed-outward? Under what circumstances would the PPF be a straight line?

Accepted Answer

The PPF is typically bowed-outward due t...

Question 8

The economy was at point A producing 100X and 200Y. It then moves to point B where it produces 200X and 300Y. It follows that

Accepted Answer

A)  point A may have been a point below the economy's PPF, while point B may lie on the PPF.
B)  the economy's PPF could have shifted inward and point A was a point on the economy's old PPF.
C)  the economy has moved from one point on its PPF to another point on the same PPF.
D)  the economy moved from an unattainable point to an attainable point.

Question 9

Which of the following is not true about production possibilities frontiers?

Accepted Answer

A)  moving from one point to another on a PPF incurs a tradeoff
B)  economic growth is shown by shifting the PPF outward
C)  unemployment of resources is shown by shifting the PPF inward
D)  a PPF can shift inward or outward

Question 10

If a society's unemployment rate rises from 5 percent to 8 percent, the result will be a leftward shift of the society's PPF.

Accepted Answer

A) True 
 B)False

Question 11

Exhibit 2-3 1 is the relevant production possibilities frontier, society can only choose to produce at a point that lies A) below PPF1. B) below or on PPF1. C) on PPF2. D) above (beyond) PPF2." class="answers-bank-image d-inline" rel="preload" >
Refer to Exhibit 2-3. If PPF1 is the relevant production possibilities frontier, society can only choose to produce at a point that lies

Accepted Answer

A)  below PPF1.
B)  below or on PPF1.
C)  on PPF2.
D)  above (beyond) PPF2.

Question 12

Exhibit 2-8  Refer to Exhibit 2-8. Who has the comparative advantage in the production of good Y?

Accepted Answer

A)  Maria
B)  Maya
C)  Both Maria and Maya
D)  Neither Maria nor Maya

Question 13

Exhibit 2-7 
Refer to Exhibit 2-7. For which of the following is the statement "In order to get more civilian goods, we have to forfeit some military goods" true?

Accepted Answer

A)  a movement from A to C
B)  a movement from B to D
C)  a movement from C to D
D)  a movement from F to D

Question 14

The point where the PPF intersects the horizontal axis is

Accepted Answer

A)  unattainable.
B)  attainable and productive efficient.
C)  attainable but productive inefficient.
D)  attainable and neither productive efficient nor productive inefficient.

Question 15

Country X has a high unemployment rate. It follows that country X is operating

Accepted Answer

A)  beyond its production possibilities frontier (PPF) .
B)  on its PPF.
C)  inside (below) its PPF.
D)  at a productive efficient point.

Question 16

If there is an increase in the amount of good B foregone as every additional unit of good A is produced, the PPF between goods A and B would

Accepted Answer

A)  be a straight line.
B)  be a bowed-outward curve.
C)  be a bowed-inward curve.
D)  not exist.

Question 17

For each additional lamp produced, a constant opportunity cost is incurred in terms of bookshelves. This means that

Accepted Answer

A)  it takes more resources to produce a lamp than a bookshelf.
B)  it takes fewer resources to produce a lamp than a bookshelf.
C)  for every lamp produced, a constant number of bookshelves is forfeited.
D)  for every lamp produced, a different number of bookshelves is forfeited.

Question 18

A PPF can

Accepted Answer

A)  shift outward but not inward.
B)  shift inward but not outward.
C)  shift inward or outward.
D)  shift neither inward nor outward.

Question 19

Which of the following is an illustration of the law of increasing opportunity costs?

Accepted Answer

A)  As more cars are produced, the opportunity cost of each additional car is greater than for the preceding unit.
B)  As more cars are produced, the opportunity cost of each additional car is less than for the preceding unit.
C)  As more cars are produced, the opportunity cost of each additional car is the same as for the preceding unit.
D)  People pay lower prices for cars the higher the costs of producing cars.

Question 20

If increasingly more units of good Y must be given up as each successive unit of good X is produced, then the PPF for these two goods is

Accepted Answer

A)  a downward-sloping straight line.
B)  circular.
C)  an upward-sloping curve.
D)  a downward-sloping curve that is bowed outward.
E)  a downward-sloping curve that is bowed inward.

Exam 2: Production Possibilities Frontier Framework

A PPF can

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If the PPF for two goods is a downward-sloping straight line, the resources used to produce those goods are equally well-suited to the production of both goods.

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If there is an increase in the amount of good B foregone as every additional unit of good A is produced, the PPF between goods A and B would

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A decrease in the quantity of resources

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Exhibit 2-3 Refer to Exhibit 2-3. If PPF1 is the relevant production possibilities frontier, society can only choose to produce at a point that lies

Correct AnswerverifiedShow Answer

With respect to a PPF for goods X and Y, productive efficiency implies that in order to produce more of good X there will be a reduction in production of good Y.

Correct AnswerverifiedShow Answer

Which scenario below most accurately describes the process by which a technological change can affect employment patterns across industries?

Correct AnswerverifiedShow Answer

The economy can produce 0X and 15Y, 10X and 10Y, 20X and 5Y, or 30X and 0Y. It follows that opportunity cost of 1X is ___Y.

Correct AnswerverifiedShow Answer

Exhibit 2-7 Refer to Exhibit 2-7. For which of the following is the statement "In order to get more civilian goods, we have to forfeit some military goods" true?

Correct AnswerverifiedShow Answer

Why is the production possibilities frontier (PPF)typically bowed-outward? Under what circumstances would the PPF be a straight line?

Correct AnswerverifiedThe PPF is typically bowed-outward due t...View AnswerShow Answer

Country X has a high unemployment rate. It follows that country X is operating

Correct AnswerverifiedShow Answer

If increasingly more units of good Y must be given up as each successive unit of good X is produced, then the PPF for these two goods is

Correct AnswerverifiedShow Answer

The economy was at point A producing 100X and 200Y. It then moves to point B where it produces 200X and 300Y. It follows that

Correct AnswerverifiedShow Answer

Exhibit 2-9 Refer to Exhibit 2-9. Who has the comparative advantage in the production of good A?

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The point where the PPF intersects the horizontal axis is

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Which of the following is an illustration of the law of increasing opportunity costs?

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Exhibit 2-8 Refer to Exhibit 2-8. Who has the comparative advantage in the production of good Y?

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If a society's unemployment rate rises from 5 percent to 8 percent, the result will be a leftward shift of the society's PPF.

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Which of the following is not true about production possibilities frontiers?

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For each additional lamp produced, a constant opportunity cost is incurred in terms of bookshelves. This means that

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Exhibit 2-3 Refer to Exhibit 2-3. If PPF₁ is the relevant production possibilities frontier, society can only choose to produce at a point that lies

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The PPF is typically bowed-outward due t...
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