Question 1

England has a relatively cool and cloudy climate that is ill suited for grape growing.It can produce 200 units of wine for every 400 units of cloth.Portugal, in contrast, has a relatively warm and sunny climate that is good for growing grapes.It can produce 200 units of wine for every 100 units of cloth.Which country has the higher opportunity cost of producing cloth?

Accepted Answer

A)  Portugal: 2 units of wine for every unit of cloth
B)  England: 2 units of wine for every unit of cloth
C)  Portugal: ½ unit of wine for every unit of cloth
D)  England: ½ unit of cloth for every unit of wineE) A) and D)
F) B) and C)

Question 2

Suppose that in Slovakia one unit of labor can produce either 20 tons of wheat or 40 tons of soy and in Poland one unit of labor can produce either 40 tons of wheat or 20 tons of soy.If each country has two units of labor, which of the following consumption combinations can be attained only with trade?

Accepted Answer

A)  Slovakia consumes 80 tons of soy.
B)  Slovakia consumes 30 tons of both soy and wheat.
C)  Poland consumes 80 tons of wheat.
D)  Poland consumes 40 tons of wheat and 20 tons of soy.E) A) and D)
F) All of the above

Question 3

If a country takes advantage of the comparative advantage of some resources over others, its production possibility curve is likely to be:

Accepted Answer

A)  flat.
B)  straight.
C)  bowed outward.
D)  bowed inward.E) None of the above
F) All of the above

Question 4

Mexico has a comparative advantage in producing corn:

Accepted Answer

A)  if its opportunity cost of producing corn is higher than the opportunity cost in other countries.
B)  if its opportunity cost of producing corn is the same as the opportunity cost in other countries.
C)  if its opportunity cost of producing corn is lower than the opportunity cost in other countries.
D)  regardless of the opportunity cost in other countries.E) A) and D)
F) B) and D)

Question 5

A downward-sloping line that makes a 45-degree angle with the horizontal and vertical axes has a slope of:

Accepted Answer

A)  zero.
B)  1.
C)  -1.
D)  infinity.E) None of the above
F) A) and C)

Question 6

Consider the following information, which provides percentage change in GDP per year: Percentage
Increase in GDP
2012 -10.0
2013 -5.0
2014 -5.0
2015 4.0
2016 10.0
Given this information, which of the following statements is true?

Accepted Answer

A)  GDP in 2013 is less than in2012.
B)  GDP in 2013 is greater than in2012.
C)  GDP in 2016 is less than in2015.
D)  GDP in 2015 is greater than in2014.E) None of the above
F) C) and D)

Question 7

Trade based on comparative advantage benefits:

Accepted Answer

A)  consumers in all countries.
B)  consumers in some countries but hurts consumers in other countries.
C)  neither producers nor consumers.
D)  producers in all countries but not consumers.E) All of the above
F) B) and C)

Question 8

In election campaigns, presidents often promise more of everything (that is, more guns and more butter) .What would help those elected president fulfill that promise?

Accepted Answer

A)  The economy becomes more efficient.
B)  The United States limits imports into the country.
C)  Illegal immigration into the United States is severely limited.
D)  A minimum wage bill is passed.E) A) and B)
F) A) and C)

Question 9

Refer to the graph below.  Suppose that the opportunity cost of producing 10 chickens is always 8 turkeys.Given this, the relevant production possibility curve must be:

Accepted Answer

A)  I.
B)  II.
C)  III.
D)  IV.E) B) and D)
F) B) and C)

Question 10

The principle of increasing marginal opportunity costs states that the initial opportunity costs are:

Accepted Answer

A)  high but decrease the more you concentrate on the activity.
B)  low but increase the more you concentrate on the activity.
C)  high but increase the more you concentrate on the activity.
D)  low but decrease the more you concentrate on the activity.E) B) and D)
F) A) and D)

Question 11

The production possibility curves of two countries are given below:  Refer to the production possibility curves of the two countries.Without trade, the most each country could produce would be:

Accepted Answer

A)  15 chocolate and 15 textiles.
B)  20 chocolate and 20 textiles.
C)  30 chocolate and 30 textiles.
D)  60 chocolate and 60 textiles.E) A) and B)
F) A) and C)

Question 12

Refer to the graph below.  Point A represents a price of:

Accepted Answer

A)  3 and a quantity of3.
B)  3 and a quantity of5.
C)  5 and a quantity of3.
D)  5 and a quantity of5.E) All of the above
F) B) and C)

Question 13

If there is an inverse relationship between two variables, the graph relating the two variables will be:

Accepted Answer

A)  upward-sloping.
B)  downward-sloping.
C)  vertical.
D)  horizontal.E) A) and D)
F) All of the above

Question 14

Evan can grow both roses and carnations in his garden.His production possibility table is shown below.If he is currently producing 110 roses, his opportunity cost of producing 40 more roses is:

Accepted Answer

A)  20 carnations
B)  26 carnations
C)  31 carnations
D)  78 carnationsE) C) and D)
F) All of the above

Question 15

In the linear equation y = mx + b, m is the:

Accepted Answer

A)  variable on the horizontal axis.
B)  variable on the vertical axis.
C)  slope.
D)  vertical intercept.E) A) and B)
F) None of the above

Question 16

Which of the following cannot be determined by using a production possibility table?

Accepted Answer

A)  What combination of outputs can be produced
B)  How much less of one output must be produced if more of another output is produced
C)  What combination of outputs is best
D)  How much output can be produced from a given level of inputsE) A) and C)
F) A) and D)

Question 17

Which of the following factors will help the United States regain comparative advantages in industries in which it has lost comparative advantages?

Accepted Answer

A)  The value of the U.S.dollar falls.
B)  The value of the U.S.dollar rises.
C)  The United States imports more goods.
D)  Wages in the United States rise.E) B) and D)
F) All of the above

Question 18

Juan works at Texas Burgers in El Paso and earns $8.00 per hour.His twin brother Felipe works in Mexico Burgers in Ciudad Juarez just across the border and earns $3.00 per hour for exactly the same work.An economist looking at this situation sees:

Accepted Answer

A)  an incentive for Felipe to cross the border to get a job and thus reduce the gap.
B)  an incentive for Felipe to quit and find another job in Mexico.
C)  the tendency of the rich to get richer and the poor to get poorer, widening the gap.
D)  evidence that the law of one price has no support in the real world.E) None of the above
F) A) and B)

Question 19

To graphically demonstrate the principle of increasing marginal opportunity cost, the production possibility curve must be:

Accepted Answer

A)  flat.
B)  straight.
C)  bowed out.
D)  bowed in.E) C) and D)
F) A) and D)

Question 20

When you produce cars, it is enormously expensive to produce one car, but then the costs per car decrease as more are produced.This would be an example of:

Accepted Answer

A)  increasing marginal opportunity costs.
B)  decreasing marginal opportunity costs.
C)  constant marginal opportunity costs.
D)  increasing returns to scale.E) B) and C)
F) A) and D)

Exam 2: The Production Possibility Model, Trade, and Globalization

Refer to the graph below. Suppose that the opportunity cost of producing 10 chickens is always 8 turkeys.Given this, the relevant production possibility curve must be:

Correct Answer
verified

A downward-sloping line that makes a 45-degree angle with the horizontal and vertical axes has a slope of:

Correct Answer
verified

Evan can grow both roses and carnations in his garden.His production possibility table is shown below.If he is currently producing 110 roses, his opportunity cost of producing 40 more roses is:

Correct Answer
verified

To graphically demonstrate the principle of increasing marginal opportunity cost, the production possibility curve must be:

Correct Answer
verified

In the linear equation y = mx + b, m is the:

Correct Answer
verified

Which of the following cannot be determined by using a production possibility table?

Correct Answer
verified

Consider the following information, which provides percentage change in GDP per year: Percentage Increase in GDP 2012 -10.0 2013 -5.0 2014 -5.0 2015 4.0 2016 10.0 Given this information, which of the following statements is true?

Correct Answer
verified

Juan works at Texas Burgers in El Paso and earns $8.00 per hour.His twin brother Felipe works in Mexico Burgers in Ciudad Juarez just across the border and earns $3.00 per hour for exactly the same work.An economist looking at this situation sees:

Correct Answer
verified

Mexico has a comparative advantage in producing corn:

Correct Answer
verified

Correct Answer
verified

The principle of increasing marginal opportunity costs states that the initial opportunity costs are:

Correct Answer
verified

Trade based on comparative advantage benefits:

Correct Answer
verified

The production possibility curves of two countries are given below: Refer to the production possibility curves of the two countries.Without trade, the most each country could produce would be:

Correct Answer
verified

If there is an inverse relationship between two variables, the graph relating the two variables will be:

Correct Answer
verified

Correct Answer
verified

When you produce cars, it is enormously expensive to produce one car, but then the costs per car decrease as more are produced.This would be an example of:

Correct Answer
verified

Refer to the graph below. Point A represents a price of:

Correct Answer
verified

In election campaigns, presidents often promise more of everything (that is, more guns and more butter) .What would help those elected president fulfill that promise?

Correct Answer
verified

If a country takes advantage of the comparative advantage of some resources over others, its production possibility curve is likely to be:

Correct Answer
verified

Which of the following factors will help the United States regain comparative advantages in industries in which it has lost comparative advantages?

Correct Answer
verified

Exam 2: The Production Possibility Model, Trade, and Globalization

Refer to the graph below. Suppose that the opportunity cost of producing 10 chickens is always 8 turkeys.Given this, the relevant production possibility curve must be:

Correct AnswerverifiedShow Answer

A downward-sloping line that makes a 45-degree angle with the horizontal and vertical axes has a slope of:

Correct AnswerverifiedShow Answer

Evan can grow both roses and carnations in his garden.His production possibility table is shown below.If he is currently producing 110 roses, his opportunity cost of producing 40 more roses is:

Correct AnswerverifiedShow Answer

To graphically demonstrate the principle of increasing marginal opportunity cost, the production possibility curve must be:

Correct AnswerverifiedShow Answer

In the linear equation y = mx + b, m is the:

Correct AnswerverifiedShow Answer

Which of the following cannot be determined by using a production possibility table?

Correct AnswerverifiedShow Answer

Consider the following information, which provides percentage change in GDP per year: Percentage Increase in GDP 2012 -10.0 2013 -5.0 2014 -5.0 2015 4.0 2016 10.0 Given this information, which of the following statements is true?

Correct AnswerverifiedShow Answer

Juan works at Texas Burgers in El Paso and earns $8.00 per hour.His twin brother Felipe works in Mexico Burgers in Ciudad Juarez just across the border and earns $3.00 per hour for exactly the same work.An economist looking at this situation sees:

Correct AnswerverifiedShow Answer

Mexico has a comparative advantage in producing corn:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The principle of increasing marginal opportunity costs states that the initial opportunity costs are:

Correct AnswerverifiedShow Answer

Trade based on comparative advantage benefits:

Correct AnswerverifiedShow Answer

The production possibility curves of two countries are given below: Refer to the production possibility curves of the two countries.Without trade, the most each country could produce would be:

Correct AnswerverifiedShow Answer

If there is an inverse relationship between two variables, the graph relating the two variables will be:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When you produce cars, it is enormously expensive to produce one car, but then the costs per car decrease as more are produced.This would be an example of:

Correct AnswerverifiedShow Answer

Refer to the graph below. Point A represents a price of:

Correct AnswerverifiedShow Answer

In election campaigns, presidents often promise more of everything (that is, more guns and more butter) .What would help those elected president fulfill that promise?

Correct AnswerverifiedShow Answer

If a country takes advantage of the comparative advantage of some resources over others, its production possibility curve is likely to be:

Correct AnswerverifiedShow Answer

Which of the following factors will help the United States regain comparative advantages in industries in which it has lost comparative advantages?

Correct AnswerverifiedShow Answer

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