Chapter 03 - Economic Efficiency and PPF

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Unformatted text preview: Page 1 of 23 Test Bank Microeconomics: Theory and Policy Chapter 03: Economic Efficiency & PPF B. Modjtahedi Question 1 Which of the following means producing the mix of goods and services the society desires the most? A. Allocative efficiency. B. Economic efficiency. C. Pareto efficiency. D. All of the above. E. None of the above. Question 2 Which of the following statements is most accurate? A. If an economic system is productively efficient, it is also allocatively efficient. B. If there is full employment, there will also be allocative efficiency. C. Productive efficiency is a necessary condition for full employment. D. Unemployment and allocative efficiency cannot coexist. E. None of the above. Question 3 Which of the following statements is most accurate? A. It is possible to have full employment and allocative inefficiency. B. It is possible to have unemployment and productive efficiency. C. It is possible to have allocative efficiency but productive inefficiency. D. It is possible to have unemployment and allocative efficiency. E. None of the above. Question 4 What is the reason why PPF is negatively sloped? A. Scarcity B. Diminishing marginal productivity of labor C. Productive inefficiency D. Unemployment E. None of the above. Question 5 What is the reason why PPF is bowed out? A. Scarcity B. Diminishing marginal productivity of labor C. Productive inefficiency D. Unemployment E. None of the above. Question 6 Why is a production possibilities frontier downward sloping? Page 2 of 23 A. Limited amount of resources and a given technology. B. Law of diminishing returns. C. Sunk costs of production. D. Lower productivity of land relative to capital. E. None of the above. Question 7 Which of the following statements is true for sure about the PPF above? A. At point A we have unemployment. B. At point A we have full employment. C. At point F we have unemployment. D. At point C we have full employment. E. None of the above. Question 8 Which point in the PPF above represents a recession? A. Point A B. Point B C. Point E D. Point F E. None of the above. Question 9 Which point in the PPF above is unattainable? A. Point A 10 20 30 40 50 60 70 80 90 100 110 1 2 3 4 5 X Y A B C D F E Page 3 of 23 B. Point B C. Point E D. Point F E. None of the above. Question 10 Consider the PPF above. If the economy gets out of a recession and employment starts increasing, A. The economy will move from a point like B to a point like C. B. The economy will move from a point like F to a point like C. C. The economy will move from a point like E to a point like C. D. The economy will move from a point like C to a point like A. E. None of the above. Question 11 Consider the PPF above. If the economy gets out of a recession and employment starts increasing, A. The economy will move from a point like A to a point like C....
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Chapter 03 - Economic Efficiency and PPF - Page 1 of 23...

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