Question

Figure 2-1

4) Refer to Figure 2-1. Point A is

A) technically efficient.

B) unattainable with current resources.

C) inefficient in that not all resources are being used.

D) the equilibrium output combination.

5) Refer to Figure 2-1. Point B is

A) technically efficient.

B) unattainable with current resources.

C) inefficient in that not all resources are being used.

D) the equilibrium output combination.

6) Refer to Figure 2-1. Point C is

A) technically efficient.

B) unattainable with current resources.

C) inefficient in that not all resources are being used.

D) is the equilibrium output combination.

7) In a production possibilities frontier, a point ________ the frontier is productively inefficient.

A) along

B) inside

C) outside

D) at either intercept of

8) Bella can produce either a combination of 60 silk roses and 80 silk leaves or a combination of 70 silk roses and 55 silk leaves. If she now produces 60 silk roses and 80 silk leaves, what is the opportunity cost of producing an additional 10 silk roses?

A) 2.5 silk leaves

B) 10 silk leaves

C) 25 silk leaves

D) 55 silk leaves

9) Pierre can produce either a combination of 20 bow ties and 30 neckties or a combination of 35 bow ties and 15 neckties. If he now produces 35 bow ties and 15 neckties, what is the opportunity cost of producing an additional 15 neckties?

A) 2 bow ties

B) 15 bow ties

C) 20 bow ties

D) 35 bow ties

10) If the production possibilities frontier is ________, then opportunity costs are constant as more of one good is produced.

A) bowed out

B) bowed in

C) non-linear

D) linear

  

   Figure 2-2

  

Figure 2-2 above shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables.

11) Refer to Figure 2-2. What is the opportunity cost of one pound of vegetables?

A) pound of meat

B) 1.2 pounds of meat

C) pounds of meat

D) 12 pounds of meat

12) Refer to Figure 2-2. What is the opportunity cost of one pound of meat?

A) pound of vegetables

B) pounds of vegetables

C) 1.6 pounds of vegetables

D) 16 pounds of vegetables

13) Refer to Figure 2-2. Suppose Mendonca is currently producing 60 pounds of vegetables per period. How much meat is it also producing, assuming that resources are fully utilized?

A) 45 pounds of meat

B) 75 pounds of meat

C) 80 pounds of meat

D) 100 pounds of meat

14) Refer to Figure 2-2. If Mendonca chooses to produce 160 pounds of vegetables, how much meat can it produce to maximize production?

A) 0 pounds of meat

B) 30 pounds of meat

C) 60 pounds of meat

D) 120 pounds of meat

15) Refer to Figure 2-2. If Mendonca chooses to produce 120 pounds of meat, how much vegetables can it produce to maximize production?

A) 0 pounds of vegetables

B) 60 pounds of vegetables

C) 100 pounds of vegetables

D) 160 pounds of vegetables

16) Refer to Figure 2-2. The linear production possibilities frontier in the figure indicates that

A) Mendonca has a comparative advantage in the production of vegetables.

B) Mendonca has a comparative disadvantage in the production of meat.

C) the trade-off between meat and vegetables is constant.

D) it is progressively more expensive to produce meat.

17) A production possibilities frontier with a bowed-outward shape indicates

A) the possibility of inefficient production.

B) constant opportunity costs as more and more of one good is produced.

C) increasing opportunity costs as more and more of one good is produced.

D) decreasing opportunity costs as more and more of one good is produced.

18) Increasing opportunity cost is represented by a ________ production possibilities frontier.

A) linear

B) bowed in

C) bowed out

D) vertical

19) The slope of a production possibilities frontier

A) has no economic relevance or meaning.

B) is always constant.

C) is always varying.

D) measures the opportunity cost of producing one more unit of a good.

20) ________ marginal opportunity cost implies that the more resources already devoted to any activity, the payoff from allocating yet more resources to that activity increases by progressively smaller amounts.

A) Increasing

B) Decreasing

C) Constant

D) Negative

21) If opportunity costs are constant, the production possibilities frontier would be graphed as

A) a ray from the origin.

B) a positively sloped straight line.

C) a negatively sloped curve bowed in toward the origin.

D) a negatively sloped straight line.

Figure 2-3

  

22) Refer to Figure 2-3. Sergio Vignetto raises cattle and llamas on his land. His land is equally suitable for raising either animal. Which of the graphs in Figure 2-3 represent his production possibilities frontier?

A) Graph A

B) Graph B

C) Graph C

D) either Graph A or Graph C

E) either Graph B or Graph C

23) Refer to Figure 2-3. Sergio Vignetto raises cattle and llamas on his land. A portion of his land is more suitable for raising cattle, and the other portion is better suited for raising llamas. Which of the graphs in Figure 2-3 represent his production possibilities frontier that displays increasing opportunity costs?

A) Graph A

B) Graph B

C) Graph C

D) either Graph A or Graph C

E) either Graph B or Graph C

24) Without an increase in the supply of the factors of production, how can a nation achieve economic growth?

A) by producing more high-value goods and fewer low-value goods

B) through technological advancement which enables more output with the same quantity of resources

C) by lowering the prices of factors of production

D) by increasing the prices of factors of production

Answer 1

-WYCHOT let us asa figure 2-1 is missing that ligure is like Good 21 All bundles lie on PPF are technically A. efficient Good 1 technically efficient In this case, Point A is because it lies on PPF. On the basis of above point B is inefficient in that not all resown -es are being lised, All bundles lies inside PPF are inefficient. Point c is resources unattainable with cuvent as it lies outside PPF. - 7 B Inside Au points inside PPF are inefficient because resources are not - 60 silk roses & 80 To silk roses & 55 silk silk leaves leaves This shows to produce additional of 10 silk roses, Bella has to reduce production of leaves from so to 55, Scanne opportu 25 silk leaves ) Gam'scarponety Coat =

To increase neckties Pierre has to reduce from 35 to 20 from 15 units to 3o. production of bow ties - 15 neckties & 35 bow ties , aby's 430 neckties & Zo bowties by 15 uty cost = 35-20= 15 bowties - 10 D linear Good 2 linear ppp has constant Opportunity Cost, Good 1 rs Scanned with CamScanner

Opportunity cost is the value of next best alternative foregone.