ECON QUESTIONS AND ANSWERS

376. The following graph is the production possibilities curve of a nation.

The marginal opportunity cost of the fourth unit of bread is

A. 0 unit of drill presses.

B. 1 unit of drill presses.

C. 3 units of drill presses.

D. 4 units of drill presses.

377. A movement from one point to another along the production possibilities curve would imply that

A. the labor force availableto society has grown.

B. productivity has increased over time.

C. productivity has declined over time.

D. society is producinga different combination of outputs.

378. If a nation is initially on its production possibilities curve, then it can increaseits production of one good only by

A. decreasing the production of the other good.

B. increasing the production of the other good.

C. holding constant the production of the other good.

D. decreasing the price of the other good.

379. Because of increasing opportunity costs, the production possibilities curve

A. is bowed out from (or concave to) the origin.

B. can be either downward- or upward-sloping.

C. at first rises, then falls eventually.

D. is a straight downward-sloping line.

380. The law of increasing opportunity costs states that

A. costs of production increase for one good, but costs decreasefor the other good.

B. increases in wages and other resource costs is what the increasing opportunity costs refer to.

C. increases in the production of one good require larger and larger sacrifices of the other good.

D. increases in the production of one good make the production of that good easier.

381. If the opportunity cost of producingextra units of one good (expressed in terms of the amount of another good given up) remains constant, then the shape ofthe production possibilities curve is

A. a straight horizontal line.

B. a straight downward-sloping line.

C. an upward-sloping line.

D. a vertical line.

382. Which of the followingstatements is an explanation for the law of increasing opportunity costs?

A. Many economic resources are better at producingone product rather than another.

B. The economy is employing all of its availableresources.

C. In any economy, the state of technology is changing and resources are variable.

D. The economy is achieving productive efficiency by producing goods at the least cost.

383. If the production possibilities curve is a straight line, then

A. the opportunity cost of producingone good is zero.

B. the law of increasing opportunity costs does not apply.

C. the societycan produce more of both goods simultaneously.

D. the societyis capable of producing only one of the goods and not the other.

384. If economic resources are perfectlyinterchangeable betweenthe two products shown on a production possibilities graph,

A. the economy will alwaysbe at full employment.

B. more of one product can be producedwithout producing less of the other product.

C. the production possibilities curve would be a straight line.

D. the two products are of equal value to the economy.

385. The bestoutput or the optimal production of the nation is

A. a combination of products at the midpoint of the production possibilities curve.

B. a combination of products at either of the two endpoints of the production possibilities curve.

C. determined by equalizing the marginal benefits and marginal costs of each product.

D. the production combination where the opportunity costs are minimized.

386. When a nation is under-allocating resources to the production of a good, then the

A. marginal benefit is greater than the marginal cost of the good.

B. marginal benefit is less than the marginal cost of the good.

C. marginal costof producing the good is decreasing.

D. marginal benefit of producing the good is increasing.

387. If the marginal benefit of a good is less than its marginal cost, then the nation should

A. produce more of that good.

B. Maintain the current level of production of that good.

C. reduce the marginal benefit of that good.

D. reduce the production of that good.

388. Suppose that a nation can only make two products: defense goods and civiliangoods. In a graph of the marginalbenefit (MB) and marginal cost (MC) of defense goods, a leftward shift of the MB curve willcause the optimal quantity of

A. civilian goods to decrease.

B. both civilian goods and defense goods to decrease.

C. defense goods to decrease.

D. defense goods to increase.

389. Imagine an ideal scenario where world peace prevails and all nations are led by peace-minded leaders. In such a world, the

A. MB for defense goods would shift left.

B. MB for defense goods would shift right.

C. MC for defense goods would shift left.

D. MC for defense goods would shift right.

397.

The graph provided shows the production possibilities curve for an economy producingtwo goods, X and Y. Which of the points on the graph indicate(s) unemployed resources?

A. D only

B. E and A only

C. Band A only

D. Band C only

398.

The graph provided shows the production possibilities curve for an economy producing two goods, X and Y. All of the followingmay allow the economy to produce combination D in the future, except

A. lower unemployment.

B. increasing laborsupply.

C. economic growth.

D. technological advances.

399.

Refer to the provided graph. Which of the following movements would indicate economic growth?

A. from point A to point C

B. from point B to point C

C. from point A to point E

D. from point C to point D

400. If a nation is operatingat a point inside the production possibilities curve, it indicates that the nation could

A. increase its production of both goods X and Y simultaneously.

B. increase its production of one good, but only at the expense of reducing the other good.

C. not produce any more of one of the goods X or Y.

D. not employ any more resources, because all resources are now employed.

401. Consider an economythat is producinginside its production possibilities curve. This economy could move closer towardits production possibilities curve by

A. distributing incomes more equally.

B. employing more of its availableresources.

C. increasing the levels of wages and prices.

D. acquiring additional resources.

402. A reductionin the level of unemployment would have which effect with respectto the nation's production possibilities curve?

A. It would shift the curve to the right.

B. It would shift the curve to the left.

C. It would not shift the curve; it would be represented by a movement from a point inside the curve towarda point on the curve.

D. It would not shift the curve; it would be represented by a movement from a point on the curve to a point outside the curve.

403.

Refer to the provided graph. Which of the followingmovements would indicate a reductionin unemployment and an increase in capacity utilization?

A. from point C to point D

B. from point F to point H.

C. from point E to point D.

D. from point D to point G.

404.

Refer to the provided graph. Which of the followingstatements about combination G is true?

A. The nation cannot produce combination G even if the nation gets additional resources.

B. The nation can currently produce combination G, but not if the nation specializes and trades with another nation.

C. The nation may not be able to produce combination G, but it can consumethat combination if it specializes and trades with other nations.

D. The nation would much prefer to be at combination F than at combination G.

405.

Which point or output-combination in the providedgraph could the nation produceonly if it experienced economic growth?

A. combination F

B. combination G

C. combination C

D. combination E

406. Economic growth may be represented by

A. a movement from one end of the production possibilities curve to the other.

B. an upward-sloping production possibilities curve.

C. a movement from a point inside to a point on the production possibilities curve.

D. a rightward shift of the production possibilities curve.

407. Economic growth is a result of

A. a reduction in the unemployment rate.

B. an increasein the opportunity costs of production.

C. a decrease in the demandfor resources.

D. an increase in the supply of resources.

408. A nation that devotes more of its resources to the production of capital goods rather than consumer goods is likely to

A. cause its production possibilities curve to shift outward.

B. cause its production possibilities curve to shift inward.

C. increase the slopeof its production possibilities curve.

D. decrease the slopeof its production possibilities curve.

409. Which of the followingstatements is not correct?

A. An increase in a nation's labor supplywill cause its potential output to increase.

B. Economic growth can be illustrated by an expansion of a nation's production possibilities curve.

C. An increase in the quantity of a nation's resources will cause economic growth, but an increase in the quality of resourceswill not.

D. New technologies or new ways of producingoutput can cause a nation's production possibilities curve to shift outward.

410.

Refer to the provided graph. Which point in the graph would allow a simultaneous increasein the production of both investment and consumer goods?

A. A

B. B

C. C

D. D

411.

Refer to the provided graph. The selection of which point on the production possibilities curve is most likelyto result in the fastest rate of economic growth over time?

A. A

B. B

C. C

D. D

412.

Refer to the provided graph. All of the followingdevelopments would allow a movement from point C to a point outside the production possibilities curve, except

A. an increasein the supply of resource.

B. an improvement in the qualityof resources.

C. a reduction in unemployment of resources.

D. a technological advance.

413.

Refer to the provided production possibilities curves. Curve (a) is the current curve for the economy. Focusing on curve (a), point N suggests that the economy currently produces

A. more goods for the future than at point P.

B. less goods for the future than at point P.

C. less goods for the present than at point P.

D. a combination of outputthat is less than its potential.

414.

Refer to the provided production possibilities curves.Curve (a) is the initial curve for the economy, and the nation is initially producing combination P. A shift from curve (a) to curve (b) suggests that the economy can then increase its production of capital goods

A. only if it reduces its production of consumer goods.

B. so as to produce the combination L.

C. and consumer goods simultaneously.

D. but will have to hold constant its production of consumergoods.