Production Possibilities Frontier Framework Answer Key 2

45. Refer to Exhibit 2-2. If PPF2 is the relevant production possibilities frontier, then point __________ is productive efficient. a. B b. D c. I d. F e. both b and d ANS: E 46. Refer to Exhibit 2-2. If PPF2 is the relevant production possibilities frontier, a significant loss of resources will a. move this society from point D to point G on PPF . b. move this society to PPF . c. move this society to PPF . d. not affect this society. ANS: B 47. Refer to Exhibit 2-2. The production possibilities frontiers shown in this exhibit depict _______________ opportunity costs. a. constant b. increasing c. decreasing d. There is not enough information provided to answer this question. ANS: B Exhibit 2-3 48. Refer to Exhibit 2-3. If PPF1 is the relevant production possibilities frontier, society may move to PPF 2 as a result of a. an increase in resources. b. a decrease in resources. c. an increase in technology. d. both a and c e. both b and c ANS: D 49. Refer to Exhibit 2-3. If PPF1 is the relevant production possibilities frontier, society can choose points that lie only a. below PPF1. b. below or on PPF1. c. on PPF2. d. none of the above ANS: B 50. Refer to Exhibit 2-3. If PPF1 is the relevant production possibilities frontier, PPF 2 may depict a. economic growth. b. an increase in resources. c. an increase in technology. d. both b and c e. all of the above ANS: E 51. A productive efficient society a. produces at a point on its PPF. b. can produce more of one good only by giving up some of another good. c. cannot produce unlimited amounts of a good. d. still has to make choices. e. all of the above ANS: E 52. If resources are better suited toward the production of one good than toward the other good, then the PPF for those two goods is a. a straight line. b. bowed outward. c. upward sloping. d. any of the above ANS: B 53. A society is productive inefficient when a. it produces at a point inside or below its PPF. b. it does not produce the maximum output with its given resources and technology. c. it can produce more of one good without giving up some of another good. d. both a and b e. all of the above ANS: E 54. With a constant opportunity cost between goods A and B, the PPF for goods A and B would a. be a straight line. b. be a bowed-outward line. c. be a bowed-inward line. d. not exist. ANS: A 55. Within the production possibilities frontier (PPF) framework, choice is depicted by the a. PPF itself. b. PPF being bowed outward. c. need to select among the points making up the PPF. d. straight-line PPF. ANS: C 56. If there is an increase in the amount of good B foregone as every additional unit of good A is produced, the PPF between goods A and B would a. be a straight line. b. be a bowed-outward curve. c. be a bowed-inward curve. d. not exist. ANS: B 57. A PPF is bowed outward as a result of a. constant opportunity costs. b. increasing opportunity costs. c. decreasing opportunity costs. d. scarcity. e. choice. ANS: B 58. A PPF is a straight line as a result of a. constant opportunity costs. b. increasing opportunity costs. c. decreasing opportunity costs. d. scarcity. e. choice. ANS: A 59. In an eight-hour day, Andy can produce either 24 loaves of bread or 8 pounds of butter. In an eighthour day, John can produce either 8 loaves of bread or 8 pounds of butter. The opportunity cost of producing 1 pound of butter is 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 ANS: C 60. An advance in technology commonly refers to the ability to produce a. the same output with a smaller quantity of resources. b. more output with a fixed quantity of resources. c. more output with a greater quantity of resources. d. both a and b e. both b and c ANS: D Exhibit 2-4 61. Refer to Exhibit 2-4. The line joining points A and D is called the a. production function frontier. b. utility function. c. production possibilities frontier. d. demand curve. ANS: C 62. Refer to Exhibit 2-4. This economy is productive a. efficient, if it operates at point B or C. b. efficient, if it operates at point A or D. c. inefficient, if it operates at point A or D. d. inefficient regardless of the particular point. e. both a and b ANS: E 63. Refer to Exhibit 2-4. The opportunity cost of moving from point A to point B is a. 60,000 copiers. b. 40,000 copiers. c. 20,000 copiers. d. 20,000 fax machines. e. 40,000 fax machines. ANS: C 64. Refer to Exhibit 2-4. As more fax machines are produced, the opportunity cost of producing them a. increases. b. decreases. c. remains constant. d. first decreases and then increases. ANS: C Exhibit 2-5 65. Refer to Exhibit 2-5. The economy is currently operating at point F. The opportunity cost of moving to point E is approximately a. 35 fax machines. b. 55 fax machines. c. zero fax machines. d. 40 fax machines. ANS: C 66. Refer to Exhibit 2-5. As more fax machines are produced, the opportunity cost of producing them a. increases. b. decreases. c. remains constant. d. first decreases and then increases. ANS: A 67. Refer to Exhibit 2-5. The opportunity cost of moving from point A to point B is approximately a. 5,000 televisions. b. 5,000 fax machines. c. 10,000 televisions. d. 10,000 fax machines. ANS: A 68. Refer to Exhibit 2-5. The opportunity cost of moving from point D to point C is a. 5,000 televisions. b. 5,000 fax machines. c. 10,000 televisions. d. 10,000 fax machines. ANS: D 69. Refer to Exhibit 2-5. The opportunity cost of moving from point C to point B is a. 15,000 televisions. b. 15,000 fax machines. c. 10,000 televisions. d. 20,000 fax machines. ANS: D 70. 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 a. point C to point D. b. point D to point E. c. point E to point F. d. point E to point D. e. point D to point C. ANS: E 71. Refer to Exhibit 2-5. Which of the following labeled points are productive efficient? a. A, B, C, D, and E b. B, C and D only c. C only d. All of the points are productive efficient. e. None of the points are productive efficient. ANS: A 72. Refer to Exhibit 2-5. Given available resources and technology, this economy can produce 50,000 television sets and 50,000 fax machines only if it chooses to a. have an equal distribution of goods. b. operate at both points C and D. c. combine points C and D. d. none of the above ANS: D 73. Some of our farm fields are being left unused. Does this have any implications for the economy's PPF diagram (with agricultural products on one axis and all other products on the other axis)? a. No implications, because the PPF deals only with resources in use. b. The PPF cannot be drawn if some resources are idle. c. With unemployed resources, we are at a point below the PPF. d. The PPF would be upward sloping. ANS: C 74. Productive efficiency implies that 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 ANS: D 75. Jose has one evening in which to prepare for two exams and can employ two possible strategies: Strategy A B Score in Economics 94 77 Score in Statistics 79 90 The opportunity cost of receiving a 94 on the Economics exam in terms of the number of points on the Statistics exam is a. 79. b. 17. c. 11. d. 90. ANS: C 76. Jose has one evening in which to prepare for two exams and can employ two possible strategies: Strategy A B Score in Economics 94 77 Score in Statistics 79 90 The opportunity cost of receiving a 90 on the Statistics exam in terms of the number of points on the Economics exam is a. 79. b. 17. c. 11. d. 90. ANS: B Exhibit 2-6 77. Refer to Exhibit 2-6. Which graph depicts a technological breakthrough in the production of good Y only? a. (1) b. (2) c. (3) d. (4) e. none of the above ANS: D 78. Refer to Exhibit 2-6. Which graph depicts a discovery of a new cheap source of energy that assists in the production of both good X and good Y? a. (1) b. (2) c. (3) d. (4) e. none of the above ANS: A 79. Refer to Exhibit 2-6. Which graph best depicts the consequence of a large-scale natural disaster? a. (1) b. (2) c. (3) d. (4) e. none of the above ANS: B 80. Refer to Exhibit 2-6. Which graph depicts society's choice to produce more of good X and less of good Y? a. (1) b. (2) c. (3) d. (4) e. none of the above ANS: E 81. Refer to Exhibit 2-6. Which graph depicts a technological breakthrough in the production of good X only? a. (1) b. (2) c. (3) d. (4) e. none of the above ANS: C 82. Refer to Exhibit 2-6. Which graph depicts the result of a decrease in the unemployment rate? a. (1) b. (2) c. (3) d. (4) e. none of the above ANS: E 83. Refer to Exhibit 2-6. Which graph depicts the result of an increase in the number of illegal immigrants entering the country? a. (1) b. (2) c. (3) d. (4) e. none of the above ANS: A 84. Refer to Exhibit 2-6. Which graph depicts the result of an increase in the unemployment rate? a. (1) b. (2) c. (3) d. (4) e. none of the above ANS: E