Question 1

The saying "There's no such thing as a free lunch," applies

Accepted Answer

A)  when there is some unemployment.
B)  on the production possibilities frontier.
C)  to unattainable combinations of goods and services.
D)  when more of one good can be produced without decreasing production of another.
E)  at all points inside the PPF.F) B) and E)
G) C) and D)

Question 2

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.

Accepted Answer

A)  i only
B)  i and ii
C)  i and iii
D)  ii and iii
E)  i, ii, and iiiF) B) and C)
G) All of the above

Question 3

The opportunity cost of economic growth is

Accepted Answer

A)  0, because it means an expansion of production possibilities.
B)  the decrease in the current production of productive factors.
C)  a slower accumulation of human capital.
D)  the decrease in the current production of consumption goods.
E)  the increase in the nation's capital stock and/or its technology.F) All of the above
G) B) and D)

Question 4

Which of the following best describes comparative advantage?

Accepted Answer

A)  being able to produce more output than any other country
B)  using the fewest number of resources to produce a given amount of output
C)  having the largest number of resources compared to other countries
D)  forgoing the fewest units of one product to produce a unit of another product
E)  It is the same as absolute advantage.F) B) and D)
G) None of the above

Question 5

Possibility  Robots  Pizza A040B139C237D334E430F520G60\begin{array} { c c c } 	ext { Possibility } & 	ext { Robots } & 	ext { Pizza } \\hline A & 0 & 40 \B & 1 & 39 \C & 2 & 37 \D & 3 & 34 \E & 4 & 30 \F & 5 & 20 \G & 6 & 0\end{array} Possibility ABCDEFG​ Robots 0123456​ Pizza 4039373430200​​ 
-The table above shows a nation's production possibilities frontier. The opportunity cost of a robot between combination D and E is

Accepted Answer

A)  4 pizzas.
B)  34 pizzas.
C)  30 pizzas.
D)  1/4 of a pizza.
E)  undefined because neither point is production efficient. F) C) and E)
G) A) and E)

Question 6

Production efficiency is represented by ________ a production possibilities frontier.

Accepted Answer

A)  all points on
B)  all points inside
C)  all points outside
D)  a movement along
E)  only one point onF) A) and E)
G) A) and B)

Question 7

-In the above figure, Jack's opportunity cost of producing 1 gallon of soda is ________ of bottled water.

Accepted Answer

A)  1 gallon
B)  1/2 of a gallon
C)  6 gallons
D)  1/4 of a gallon
E)  2 gallonsF) C) and D)
G) A) and B)

Question 8

Economic growth depends upon which of the following?
I. Improving the quality of labor
Ii. Technological advancement
Iii. Increasing the amount of capital

Accepted Answer

A)  i only
B)  ii only
C)  iii only
D)  i and iii
E)  i, ii, and iiiF) All of the above
G) B) and E)

Question 9

If the production possibilities frontier between two goods is a straight line, then the

Accepted Answer

A)  opportunity cost is not a ratio.
B)  resources are equally productive in both goods.
C)  line does not qualify as a production possibilities frontier because the unattainable production points are too close to the inefficient production points.
D)  Both answers A and C are correct.
E)  Both answers A and B are correct.F) None of the above
G) A) and E)

Question 10

The figure above show Liz's and Joe's production possibilities for Salads and Smoothies.
-Given the information in the figure above, Liz ________ benefit from trade with Joe because ________.

Accepted Answer

A)  can; each of them has a comparative advantage in one of the goods
B)  can; each of them has an absolute advantage in one of the goods
C)  cannot; she has an absolute advantage in both goods
D)  cannot; she has a comparative advantage in both goods
E)  can; Joe is more productive in producing one of the goodsF) A) and B)
G) A) and E)

Question 11

In terms of a nation's production possibilities frontier, what impact does international trade have?

Accepted Answer

A)  International trade shifts the nation's production possibilities frontier outward.
B)  International trade shifts the nation's production possibilities frontier inward.
C)  International trade allows the nation to consume at a point outside its production possibilities frontier.
D)  International trade shifts the production possibilities frontier outward for the goods that are exported and inward for the goods that are imported.
E)  International trade shifts the production possibilities frontier outward for the goods that are imported and inward for the goods that are exported.F) All of the above
G) A) and D)

Question 12

Having a comparative advantage means a nation can

Accepted Answer

A)  benefit from trade.
B)  produce at a higher opportunity cost.
C)  produce more of the good.
D)  produce without incurring an opportunity cost.
E)  produce the good at a point beyond its PPF.F) D) and E)
G) A) and D)

Question 13

Moving along the production possibilities frontier itself illustrates

Accepted Answer

A)  the existence of tradeoffs.
B)  the existence of unemployment of some factors of production.
C)  the benefits of free lunches.
D)  how free lunches can be exploited through trade.
E)  how tradeoffs need not occur if the economy is efficient.F) B) and D)
G) A) and D)

Exam 3: The Economic Problem

Economic growth depends upon which of the following? I. Improving the quality of labor Ii. Technological advancement Iii. Increasing the amount of capital

Correct Answer
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Having a comparative advantage means a nation can

Correct Answer
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Production efficiency is represented by ________ a production possibilities frontier.

Correct Answer
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In terms of a nation's production possibilities frontier, what impact does international trade have?

Correct Answer
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Correct Answer
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The figure above show Liz's and Joe's production possibilities for Salads and Smoothies. -Given the information in the figure above, Liz benefit from trade with Joe because .

Correct Answer
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The saying "There's no such thing as a free lunch," applies

Correct Answer
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The opportunity cost of economic growth is

Correct Answer
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If the production possibilities frontier between two goods is a straight line, then the

Correct Answer
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Which of the following best describes comparative advantage?

Correct Answer
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Correct Answer
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Moving along the production possibilities frontier itself illustrates

Correct Answer
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-In the above figure, Jack's opportunity cost of producing 1 gallon of soda is ________ of bottled water.

Correct Answer
verified

Exam 3: The Economic Problem

Economic growth depends upon which of the following? I. Improving the quality of labor Ii. Technological advancement Iii. Increasing the amount of capital

Correct AnswerverifiedShow Answer

Having a comparative advantage means a nation can

Correct AnswerverifiedShow Answer

Production efficiency is represented by ________ a production possibilities frontier.

Correct AnswerverifiedShow Answer

In terms of a nation's production possibilities frontier, what impact does international trade have?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The figure above show Liz's and Joe's production possibilities for Salads and Smoothies. -Given the information in the figure above, Liz ________ benefit from trade with Joe because ________.

Correct AnswerverifiedShow Answer

The saying "There's no such thing as a free lunch," applies

Correct AnswerverifiedShow Answer

The opportunity cost of economic growth is

Correct AnswerverifiedShow Answer

If the production possibilities frontier between two goods is a straight line, then the

Correct AnswerverifiedShow Answer

Which of the following best describes comparative advantage?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Moving along the production possibilities frontier itself illustrates

Correct AnswerverifiedShow Answer

-In the above figure, Jack's opportunity cost of producing 1 gallon of soda is ________ of bottled water.

Correct AnswerverifiedShow Answer

Correct Answer
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The figure above show Liz's and Joe's production possibilities for Salads and Smoothies. -Given the information in the figure above, Liz benefit from trade with Joe because .

Correct Answer
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