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-In the figure above, suppose that Mac and Izzie trade and reach point c. Then A) Mac and Izzie should both produce at point a. B) Mac should produce at point b and Izzie should produce at point d. C) Mac should produce at point d and Izzie should produce at point b. D) Mac and Izzie should both produce at point c. -In the figure above, suppose that Mac and Izzie trade and reach point c. Then


A) Mac and Izzie should both produce at point a.
B) Mac should produce at point b and Izzie should produce at point d.
C) Mac should produce at point d and Izzie should produce at point b.
D) Mac and Izzie should both produce at point c.

E) A) and B)
F) A) and C)

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-The table above represents different points along a production possibilities curve. What is the marginal cost of moving from 2 bushels to 3 bushels of beans? A) 9 bushels of carrots per bushel of beans B) 12 bushels of carrots per bushel of beans C) 3 bushels of carrots per bushel of beans D) 21 bushels of carrots per bushel of beans -The table above represents different points along a production possibilities curve. What is the marginal cost of moving from 2 bushels to 3 bushels of beans?


A) 9 bushels of carrots per bushel of beans
B) 12 bushels of carrots per bushel of beans
C) 3 bushels of carrots per bushel of beans
D) 21 bushels of carrots per bushel of beans

E) B) and C)
F) B) and D)

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-The figure above shows Freda's PPF. Freda currently produces 10 packets of fudge and no cookies. If Freda decides to produce 1 packet of cookies, her opportunity cost of the packet of cookies is ________ of fudge. A) 1 packet B) 1/2 packet C) 2 packets D) 0 packets -The figure above shows Freda's PPF. Freda currently produces 10 packets of fudge and no cookies. If Freda decides to produce 1 packet of cookies, her opportunity cost of the packet of cookies is ________ of fudge.


A) 1 packet
B) 1/2 packet
C) 2 packets
D) 0 packets

E) C) and D)
F) None of the above

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"Allocative efficiency requires that the maximum number of people have access to all of the goods and services that our economy produces." Is this statement true or false? Explain your answer.

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The statement is False. Allocative effic...

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When moving along the production possibilities frontier, opportunity cost is measured as the


A) increase in the quantity produced of one good divided by the decrease in the quantity produced of another good.
B) decrease in the quantity produced of one good divided by the increase in the quantity produced of another good.
C) quantity produced of one good divided by the quantity produced of another good.
D) quantity produced of one good multiplied by the quantity produced of another good.

E) A) and D)
F) All of the above

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A PPF bows outward because


A) not all resources are equally productive in all activities.
B) consumers prefer about equal amounts of the different goods.
C) entrepreneurial talent is more abundant than human capital.
D) resources are used inefficiently.

E) B) and C)
F) A) and C)

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-The table above lists six points on the production possibilities frontier for grain and cars. From this information you can conclude that production is inefficient if this economy produces A) 6 tons of grain and 18 cars. B) 4 tons of grain and 26 cars. C) 2 tons of grain and 27 cars. D) 8 tons of grain and 10 cars. -The table above lists six points on the production possibilities frontier for grain and cars. From this information you can conclude that production is inefficient if this economy produces


A) 6 tons of grain and 18 cars.
B) 4 tons of grain and 26 cars.
C) 2 tons of grain and 27 cars.
D) 8 tons of grain and 10 cars.

E) B) and C)
F) B) and D)

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Opportunity cost is represented on the production possibilities frontier by


A) attainable and unattainable points.
B) efficient and inefficient points.
C) the amount of good Y forgone when more of good X is produced.
D) technological progress.

E) A) and C)
F) None of the above

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-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. Which of the following statements is TRUE? A) Producing 0 chocolate bars and 100 cans of cola is both attainable and efficient. B) Producing 20 chocolate bars and 80 cans of cola is attainable, but inefficient. C) Producing 30 chocolate bars and 38 cans of cola is only attainable with an increase in technology. D) Producing 40 chocolate bars and 0 cans of cola is unattainable and inefficient. -The above table shows production points on Sweet-Tooth Land's production possibilities frontier. Which of the following statements is TRUE?


A) Producing 0 chocolate bars and 100 cans of cola is both attainable and efficient.
B) Producing 20 chocolate bars and 80 cans of cola is attainable, but inefficient.
C) Producing 30 chocolate bars and 38 cans of cola is only attainable with an increase in technology.
D) Producing 40 chocolate bars and 0 cans of cola is unattainable and inefficient.

E) None of the above
F) B) and C)

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A point inside a production possibilities frontier


A) could indicate that some resources are unemployed.
B) is unattainable.
C) is more efficient than points on the production possibilities frontier.
D) implies that too much capital and not enough labor are being used.

E) None of the above
F) A) and B)

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-The figure above represents the production possibilities frontier for a country. a)The nation is currently producing at point B and wants to move to point C. What is the opportunity cost of the move? b)The nation is currently producing at point B and wants to move to point A. What is the opportunity cost of the move? -The figure above represents the production possibilities frontier for a country. a)The nation is currently producing at point B and wants to move to point C. What is the opportunity cost of the move? b)The nation is currently producing at point B and wants to move to point A. What is the opportunity cost of the move?

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a)By moving from point B to point C, the...

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A computer software program is most strongly an example of


A) real property.
B) fiat property.
C) intellectual property.
D) vicarious property.

E) A) and D)
F) A) and C)

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-The Hobbits of the Shire are trying to decide how much bread and how much wine to produce. They ask you to be their economic consultant and give you the information in the first table above about different combinations of wine and bread that they can produce if they are fully employed and doing their best. The Hobbits also give you the information in the second table above about their willingness to pay for wine depending on how much wine they already have. To help the Hobbits solve their problem: a)Draw the Shire's production possibilities frontier. Put wine on the horizontal axis. b)What is the opportunity cost of the first two thousand bottles of wine? What is the marginal cost of the 3000th bottle of wine? What is the marginal cost of the 3,000th loaf of bread? c)Draw the marginal cost of wine curve. What happens to the marginal cost if production of wine increases? Why? d)Draw the marginal benefit from wine curve on the same figure on which you put the marginal cost curve. Describe the relationship between the quantity of wine produced and the marginal benefit from wine. e)What combination of bread and wine will you recommend the Hobbits to produce? Why? Explain to the Hobbits why they would be worse off by producing a different combination of bread and wine. -The Hobbits of the Shire are trying to decide how much bread and how much wine to produce. They ask you to be their economic consultant and give you the information in the first table above about different combinations of wine and bread that they can produce if they are fully employed and doing their best. The Hobbits also give you the information in the second table above about their willingness to pay for wine depending on how much wine they already have. To help the Hobbits solve their problem: a)Draw the Shire's production possibilities frontier. Put wine on the horizontal axis. b)What is the opportunity cost of the first two thousand bottles of wine? What is the marginal cost of the 3000th bottle of wine? What is the marginal cost of the 3,000th loaf of bread? c)Draw the marginal cost of wine curve. What happens to the marginal cost if production of wine increases? Why? d)Draw the marginal benefit from wine curve on the same figure on which you put the marginal cost curve. Describe the relationship between the quantity of wine produced and the marginal benefit from wine. e)What combination of bread and wine will you recommend the Hobbits to produce? Why? Explain to the Hobbits why they would be worse off by producing a different combination of bread and wine. -The Hobbits of the Shire are trying to decide how much bread and how much wine to produce. They ask you to be their economic consultant and give you the information in the first table above about different combinations of wine and bread that they can produce if they are fully employed and doing their best. The Hobbits also give you the information in the second table above about their willingness to pay for wine depending on how much wine they already have. To help the Hobbits solve their problem: a)Draw the Shire's production possibilities frontier. Put wine on the horizontal axis. b)What is the opportunity cost of the first two thousand bottles of wine? What is the marginal cost of the 3000th bottle of wine? What is the marginal cost of the 3,000th loaf of bread? c)Draw the marginal cost of wine curve. What happens to the marginal cost if production of wine increases? Why? d)Draw the marginal benefit from wine curve on the same figure on which you put the marginal cost curve. Describe the relationship between the quantity of wine produced and the marginal benefit from wine. e)What combination of bread and wine will you recommend the Hobbits to produce? Why? Explain to the Hobbits why they would be worse off by producing a different combination of bread and wine.

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a)The figure above shows the Shire's p...

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Marginal benefit is the benefit


A) that your activity provides to someone else.
B) of producing a good or service when the total benefit from the good or service exceeds its total cost.
C) that is received from consuming one more unit of a good or service.
D) of consuming another good or service divided by the total number of goods or services produced.

E) B) and C)
F) None of the above

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-Refer to the table above, which gives five points on a nation's PPF. The production of 7 units of X and 28 units of Y is A) impossible given the available resources. B) possible but leaves some resources less than fully used or misallocated. C) on the production possibilities frontier between points c and d. D) on the production possibilities frontier between points b and c. -Refer to the table above, which gives five points on a nation's PPF. The production of 7 units of X and 28 units of Y is


A) impossible given the available resources.
B) possible but leaves some resources less than fully used or misallocated.
C) on the production possibilities frontier between points c and d.
D) on the production possibilities frontier between points b and c.

E) A) and D)
F) B) and C)

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A marginal cost curve


A) is upward sloping.
B) shows that as more of a good is produced, opportunity costs of producing another unit increase.
C) is bowed inward so that its slope can become negative.
D) Both answers A and B are correct.

E) A) and D)
F) A) and C)

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On the vertical axis, the production possibilities frontier shows ________; on the horizontal axis, the production possibilities frontier shows ________.


A) the quantity of a good; the number of workers employed to produce the good
B) the quantity of a good; the price of the good
C) the quantity of a good; a weighted average of resources used to produce the good
D) the quantity of one good; the quantity of another good

E) B) and D)
F) B) and C)

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Using the production possibilities frontier model, unemployment is described as producing at a point


A) on the exact middle of the PPF curve.
B) on either end of the PPF curve.
C) inside the PPF curve.
D) outside the PPF curve.

E) A) and D)
F) A) and C)

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A country produces only pencils and erasers. Pencil production is allocatively efficient if the marginal ________ of a pencil equals the marginal ________ of ________.


A) cost; benefit; an eraser
B) cost; cost; an eraser
C) benefit; benefit; an eraser
D) benefit; cost; a pencil

E) A) and B)
F) None of the above

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-Consider the PPF for office buildings and housing shown in the figure above. Which point in the diagram shows that resources to produce office buildings and housing are being misallocated, unused, or both? A) point F B) point G C) point H D) point I -Consider the PPF for office buildings and housing shown in the figure above. Which point in the diagram shows that resources to produce office buildings and housing are being misallocated, unused, or both?


A) point F
B) point G
C) point H
D) point I

E) All of the above
F) None of the above

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