Assigment2_tb02

Assigment2_tb02 - 2 1) THEC h a p t ECONOMIC PROBLEM e...

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2 ECONOMIC PROBLEM Production Possibilities and Opportunity Cost Topic: Production Possibilities Frontier Skill: Conceptual 1) The production possibilities frontier is the boundary between those combination of goods and services that can be A) produced and those that can be consumed. B) consumed domestically and those that can be consumed by foreigners. C) produced and those that cannot be produced. D) consumed and those that cannot be produced. Answer: Topic: Production Possibilities Frontier Skill: Recognition 2) The production possibilities frontier A) depicts the boundary between those combina- tions of goods and services that can be pro- duced and those that cannot given resources and the current state of technology. B) shows how many goods and services are con- sumed by each person in a country. C) is a model that assumes there is no scarcity and no opportunity cost. D) is a graph with price on the vertical axis and income on the horizontal axis. Answer: Topic: Production Possibilities Frontier Skill: Conceptual 3) The production possibilities frontier illustrates A) all goods that can be produced by an eco- nomy B) the combination of goods and services that can be produced efficiently C) all goods and services that are desired but cannot be produced due to scarce resources. D) all possible production of capital goods Answer: Topic: Production Possibilities Frontier Skill: Analytical 4) Jane produces only corn and cloth. Taking ac- count of her preferences for corn and cloth A) makes her production possibilities frontier straighter. B) steeper. C) flatter. D) does not affect her production possibilities frontier. Answer: 49 C h a p t e r
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5 0 C H A P T E R 2 Topic Production Possibilities Skill: Analytical 5) The above figure illustrates that if this country wishes to move from its current production point (labeled “Current”) and have 10 more tons of food, it can do this by producing A) 10 more tons of clothing. B) 10 fewer tons of clothing. C) 5 more tons of clothing. D) 5 fewer tons of clothing. Answer: Topic: Production Efficiency Skill: Analytical 6) A point inside a production possibilities fronti- er A) could indicate that some resources are unem- ployed. B) is unattainable. C) is more efficient than points on the produc- tion possibilities frontier. D) implies that too much capital and not enough labor are being used. Answer: Topic: Production Efficiency Skill: Analytical 7) A point inside a production possibilities fronti- er A) could indicate that resources are misallocated. B) is more efficient than a point on the produc- tion possibilities frontier. C) reflects the fact that more technology needs to be developed to fully employ all resources. D) implies that too much labor and not enough capital is being used.
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This note was uploaded on 02/28/2009 for the course ECON 322 taught by Professor Francisco during the Spring '07 term at Rutgers.

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Assigment2_tb02 - 2 1) THEC h a p t ECONOMIC PROBLEM e...

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