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Chapter 02

ECON Chapter 02 Study Questions

QuestionAnswer
Points outside (or beyond) the PPF are unattainable.
Which of the following statements is true? a and c
If there is always a three-for-one tradeoff between goods X and Y, then the PPF between X and Y is a downward-sloping straight line.
Consider two points on the PPF: point A, at which there are 50 oranges and 100 apricots, and point B, at which there are 51 oranges and 98 apricots. If the economy is currently at point B, the opportunity cost of moving to point A is 1 orange.
Suppose the economy goes from a point on its production possibilities frontier (PPF) to a point below that PPF. Assuming that the PPF has not shifted, this could be due to a new law that interferes with economic efficiency.
The increased production of lamps comes at constant opportunity costs in terms of bookshelves. This means that for every lamp produced, a constant number of bookshelves is forfeited.
The PPF between goods X and Y will be a downward-sloping curve that is bowed outward if increasing opportunity costs exist.
An economy is productive efficient if it produces maximum output with given resources and technology.
Which of the following statements is true? Productive inefficiency implies that it is possible to produce more of one good and no less of another, even without additional resources.
Refer to Exhibit 2-1. The PPF illustrates constant opportunity costs between guns and butter.
Technological __________ in American agriculture has __________ other types of employment. improvement; released labor to go to
Refer to Exhibit 2-2. If PPF2 is the relevant production possibilities frontier, then point __________ is unattainable. J
Refer to Exhibit 2-2. If PPF2 is the relevant production possibilities frontier, a significant loss of resources will move this society to PPF .
Refer to Exhibit 2-3. If PPF1 is the relevant production possibilities frontier, PPF2 may depict all of the above
A society is productive inefficient when all of the above
An advance in technology commonly refers to the ability to produce both a and b
Refer to Exhibit 2-4. As more fax machines are produced, the opportunity cost of producing them remains constant.
Refer to Exhibit 2-5. The economy is currently operating at point F. The opportunity cost of moving to point E is approximately zero fax machines.
Jose has one evening in which to prepare for two exams and can employ two possible strategies: Strategy Score in Economics Score in Statistics A 94 79 B 77 90 The opportunity cost of receiving a 94 on the Economic Statistics exam is 11.
Refer to Exhibit 2-6. Which graph depicts a technological breakthrough in the production of good Y only? (4)
Refer to Exhibit 2-7. Which of the following statements is true? If the economy's PPF is represented by PPF1, points A and B are productive efficient, while C and D are unattainable.
If the economy is on the production possibilities frontier (PPF), the economy is b and c
If an economy can produce a maximum of 100 units of good X and the opportunity cost of 1X is always 5Y, then what is the maximum number of units of good Y the economy can produce? 500
The law of increasing opportunity costs states that as more of a good is produced, the higher the opportunity costs of producing that good.
Which scenario below most accurately describes the process by which a technological change can affect employment patterns across industries? 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.
If Sean can bake bread at a lower opportunity cost than Jason, and Jason can produce paintings at a lower opportunity cost than Sean, it follows that Sean has a comparative advantage in baking bread and Jason has a comparative advantage in producing paintings.
Created by: Taysia
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