ECO201 Chapter 1 Exam Solution
• Question 1
1 out of 1 points
Exhibit 2-3
Refer to Exhibit 2-3. If PPF1 is the relevant production
... [Show More] possibilities frontier, PPF2 may depict
Selected Answer: e.
all of the above
Answers: a.
economic growth.
b.
an increase in resources.
c.
an increase in technology.
d.
both b and c
e.
all of the above
• Question 2
1 out of 1 points
Exhibit 2-10
Person A
Good X Good Y
200 0
150 50
100 100
50 150
0 200
Person B
Good X Good Y
0 160
40 120
80 80
120 40
160 0
Refer Exhibit 2-10. Which of the following statements is true?
Selected Answer: a.
There would be no gains from trade between person A and person B because they have the opportunity cost of producing one unit of good X (or one unit of good Y) is the same for both persons.
Answers: a.
There would be no gains from trade between person A and person B because they have the opportunity cost of producing one unit of good X (or one unit of good Y) is the same for both persons.
b.
Both person A and person B will benefit from trade as long as person B produces both good X and good Y, and person A produces neither good.
c.
Both person A and person B will benefit from trade as long as person A produces both good X and good Y, and person B produces neither good.
d.
Both person A and person B will benefit from specialization and trade as long as person A specializes in the production of good Y and person B specializes in the production of good X.
e.
Both person A and person B will benefit from specialization and trade as long as person A specializes in the production of good X and person B specializes in the production of good Y.
• Question 3
1 out of 1 points
Exhibit 2-5
Refer to Exhibit 2-5. The economy is currently operating at point F. The opportunity cost of moving to point E is approximately
Selected Answer: d.
zero televisions.
Answers: a.
35 televisions.
b.
40 televisions.
c.
55 televisions.
d.
zero televisions.
• Question 4
1 out of 1 points
Consider the following combinations of guns and butter that can be produced: 0 guns, 20,000 units of butter; 5,000 guns, 15,000 units of butter; 10,000 guns, 10,000 units of butter; 15,000 guns, 5,000 units of butter; 20,000 guns, 0 units of butter. The PPF between guns and butter is
Selected Answer: b.
a downward-sloping straight line.
Answers: a.
a downward-sloping bowed-out curve.
b.
a downward-sloping straight line.
c.
an upward-sloping straight line.
d.
It is impossible to answer this question without knowing which good would be plotted on the vertical axis.
• Question 5
0 out of 1 points
Exhibit 2-2
Refer to Exhibit 2-2. If PPF2 is the relevant production possibilities frontier, then point __________ illustrates productive inefficiency.
Selected Answer: b.
B
Answers: a.
A
b.
B
c.
C
d.
J
e.
a, b, or c
• Question 6
1 out of 1 points
Exhibit 2-5
Refer to Exhibit 2-5. "In order to produce one more television set, we must forfeit the production of one fax machine." This statement describes a movement from
Selected Answer: b.
point D to point C.
Answers: a.
point E to point D.
b.
point D to point C.
c.
point D to point E.
d.
point C to point D.
e.
point E to point F.
• Question 7
1 out of 1 points
Exhibit 2-1
Refer to Exhibit 2-1. A movement from point B to point D
Selected Answer: c.
could only happen through economic growth.
Answers: a.
is necessarily a movement from a productive inefficient point to another productive inefficient point.
b.
is a movement from a productive efficient point to another productive efficient point.
c.
could only happen through economic growth.
d.
is necessarily a movement from a productive efficient point to a productive inefficient point.
• Question 8
1 out of 1 points
Exhibit 2-9
Alex Adam
Good A Good B Good A Good B
0 300 0 160
25 225 30 120
50 150 60 80
75 75 90 40
100 0 120 0
Refer to Exhibit 2-9. If Alex and Adam each specialize in the good in which he has a comparative advantage and then engage in trade, ____________________ can consume a combination of goods that lies beyond his PPF.
Selected Answer: c.
Alex and Adam
Answers: a.
Alex, but not Adam,
b.
Adam, but not Alex
c.
Alex and Adam
d.
neither Alex nor Adam
• Question 9
0 out of 1 points
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.
Selected Answer: False
Answers: True
False
• Question 10
0 out of 1 points
Exhibit 2-8
Maria Maya
Good X Good Y Good X Good Y
90 0 60 0
60 30 40 10
30 60 20 20
0 90 0 30
Refer to Exhibit 2-8. Who has the comparative advantage in the production of good Y?
Selected Answer: b.
Maya
Answers: a.
Maria
b.
Maya
c.
Both Maria and Maya
d.
Neither Maria nor Maya
• Question 11
1 out of 1 points
Which scenario below most accurately describes the process by which a technological change can affect employment patterns across industries?
Selected 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.
Answers: 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.
e.
none of the above
• Question 12
1 out of 1 points
Points that lie outside (or beyond) the PPF are
Selected Answer: a.
unattainable.
Answers: a.
unattainable.
b.
attainable.
c.
inefficient.
d.
efficient.
• Question 13
1 out of 1 points
Consider two points on the PPF: point A, at which there are 10 apples and 20 pears, and point B, at which there are 7 apples and 21 pears. If the economy is currently at point A, the opportunity cost of moving to point B is
Selected Answer: d.
3 apples.
Answers: a.
21 pears.
b.
7 apples.
c.
1 pear.
d.
3 apples.
• Question 14
1 out of 1 points
If the law of increasing opportunity costs is operable, and currently the opportunity cost of producing the 101st unit of good X is 5Y, then the opportunity cost of producing the 201st unit of good is X is most likely to be
Selected Answer: c.
more than 5Y
Answers: a.
less than 5Y.
b.
less than 1/5Y but more than zero.
c.
more than 5Y
d.
more than 1/5Y but less than 5Y.
• Question 15
1 out of 1 points
Exhibit 2-1
Refer to Exhibit 2-1. If the economy is at point C, it follows that
Selected Answer: c.
more guns and more butter could be produced with available resources than are currently being produced.
Answers: a.
C is an unattainable point.
b.
only more butter can be produced with available resources than are currently being produced.
c.
more guns and more butter could be produced with available resources than are currently being produced.
d.
only more guns could be produced with available resources than are currently being produced.
• Question 16
1 out of 1 points
Productive efficiency implies that
Selected Answer: d.
gains are impossible in one area without losses in another.
Answers: a.
all consumers' wants are satisfied.
b.
no advance in technology will occur in the future.
c.
the attainable region is greater than the unattainable region.
d.
gains are impossible in one area without losses in another.
e.
all of the above
• Question 17
1 out of 1 points
Both country 1 and country 2 are located on their respective production possibilities frontiers (PPFs) for consumer goods and capital goods, but country 1 produces twice the output of both types of goods compared to country 2. It follows that
Selected Answer: a.
country 1's PPF lies further to the right than country 2's PPF.
Answers: a.
country 1's PPF lies further to the right than country 2's PPF.
b.
country 1 has a smaller population than country 2.
c.
country 1 has a bigger population than country 2.
d.
country 1 is efficient and country 2 is inefficient.
e.
none of the above
• Question 18
1 out of 1 points
Exhibit 2-6
Refer to Exhibit 2-6. Which graph depicts a technological breakthrough in the production of good X only?
Selected Answer: c.
(3)
Answers: a.
(1)
b.
(2)
c.
(3)
d.
(4)
e.
none of the above
• Question 19
1 out of 1 points
Exhibit 2-6
Refer to Exhibit 2-6. Which graph depicts the result of an increase in the unemployment rate?
Selected Answer: e.
none of the above
Answers: a.
(1)
b.
(2)
c.
(3)
d.
(4)
e.
none of the above
• Question 20
0 out of 1 points
If there is always a 4-for-1 tradeoff between producing good X and good Y, it follows that the opportunity cost of X (in terms of Y) ____________________ and the PPF for these two goods is ______________________.
Selected Answer: c.
decreases at low levels of X; a straight line
Answers: a.
rises at high levels of Y; bowed-outward
b.
is always the same; a straight line
c.
decreases at low levels of X; a straight line
d.
decreases at high levels of X; bowed-outward
• Question 21
1 out of 1 points
In an eight-hour day, Andy can produce either 24 loaves of bread or 8 pounds of butter. In an eight-hour day, John can produce either 8 loaves of bread or 8 pounds of butter. The opportunity cost of producing 1 pound of butter is
Selected Answer: c.
3 loaves of bread for Andy and 1 loaf of bread for John.
Answers: a.
1/3 hour for Andy and 1 hour for John.
b.
1 hour for Andy and 1 hour for John.
c.
3 loaves of bread for Andy and 1 loaf of bread for John.
d.
1/3 loaves of bread for Andy and 1 loaf of bread for John.
e.
none of the above
• Question 22
1 out of 1 points
An increase in the quantity of resources available
Selected Answer: b.
shifts the PPF rightward.
Answers: a.
moves the economy to a new point up along a given PPF.
b.
shifts the PPF rightward.
c.
moves the economy to a new point down along a given PPF.
d.
shifts the PPF leftward.
• Question 23
1 out of 1 points
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.
Selected Answer: True
Answers: True
False
• Question 24
1 out of 1 points
Exhibit 2-2
Refer to Exhibit 2-2. If PPF2 is the relevant production possibilities frontier, then point __________ is productive efficient.
Selected Answer: e.
both b and d
Answers: a.
B
b.
D
c.
I
d.
F
e.
both b and d
• Question 25
1 out of 1 points
An economy can produce either of these two combinations of goods X and Y: 1,000X and 0Y or 400Y and 0X. Furthermore, the opportunity cost between the two goods is always constant. Which of the following combinations of the two goods, X and Y, is it possible for the economy to produce?
Selected Answer: a.
700 units of X and 280 units of Y
Answers: a.
700 units of X and 280 units of Y
b.
100 units of X and 600 units of Y
c.
400 units of X and 150 units of Y
d.
300 units of X and 280 units of Y
e.
600 units of X and 250 units of Y [Show Less]