Eu02L2


  • 1
  • Capital is _________________.

    any good with a long life
    the goods that can be used to produce other goods and services
    a special resource that organizes the other resources
    the money that firms have to spend


  • 2
  • Harry produces 2 balloon rides and 4 boat rides an hour. Harry could produce more balloon rides without producing fewer boat rides. Harry is ___________________his production possibility frontier.

    producing on
    moving along
    producing inside
    producing outside


  • 3
  • Production efficiency occurs when production _______________________.

    of more of any good requires producing less of some other good
    is at any attainable point
    is on the production possibility frontier or inside it
    is specialized


  • 4
  • The figure shows Roger's production possibility frontier. Point a is an ___________________ point and production is ___________________.


    eu03l001.gif

    unattainable; efficient
    attainable; inefficient
    unattainable; inefficient
    attainable; efficient


  • 5
  • Vicky currently produces at point a in the figure. If Vicky moves from point a to point b, her opportunity cost of a modem _______________________.


    eu03l002.gif

    remains the same
    increases
    decreases
    is zero


  • 6
  • A country produces only pencils and erasers. Pencil production is efficient if the marginal _____________ of a pencil equals the marginal _________ of ___________.

    cost; benefit; an eraser
    cost; cost; an eraser
    benefit; benefit; an eraser
    benefit; cost; a pencil


  • 7
  • When economic growth occurs, the

    production possibility frontier shifts inward
    production possibility frontier shifts outward
    economy moves along its production possibility frontier
    opportunity cost of all goods decreases


  • 8
  • In an hour, Andy can make either 6 pizzas or 12 pies and Chris can make either 6 pizzas or 18 pies. _____________________________advantage in making pizzas.

    Chris has a comparative
    Chris has an absolute
    Andy has a comparative
    Andy has an absolute


  • 9
  • Anna and Maria produce shirts and ties. The figure shows Anna's PPF and Maria's PPF. Anna and Maria can reap the gains from trade if Anna produces _______ and Maria produces __________.



    eu03l003.gif

    shirts; ties
    ties; shirts
    shirts and ties; only ties
    only ties; shirts and ties


  • 10
  • Big Lobster sells lobster and fish, and so too does H Salt. If Big Lobster's opportunity cost of preparing lobster exceeds H Salt's opportunity cost, then all the following are true except ____________.

    H Salt has a comparative advantage in lobster
    Big Lobster has a comparative advantage in lobster
    they will both gain if Big Lobster sells fish and H Salt sells lobster
    H Salt doesn't have a comparative advantage in cooking fish


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