QUIZ 2 - QUIZ 2 VERSION 1 1) Suppose that 1 unit of labour...

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QUIZ 2 VERSION 1 1) Suppose that 1 unit of labour can produce either 5 units of wool or 2 pineapples. What is the opportunity cost of producing 1 pineapple? A) 2 units of wool B) zero C) 5/2 units of wool D) 5 units of wool 2) The production possibilities boundary depicts the fact that A) when a society combines its resources efficiently, it cannot produce more of one good without producing less of the other good. B) when a society combines its resources efficiently, it cannot produce more of one good without producing more of the other good. C) the demand for goods always exceeds the supply. D) all points inside the curve are preferred to all points on the curve. 3) If a production possibilities boundary is drawn as a straight line (as in Figure 1-1) it would indicate A) increasing opportunity cost of producing more of a good. B) decreasing opportunity cost of producing more of a good. C) constant opportunity cost of producing more of a good. D) the use of the scarce resources in an economy. 4) Suppose a scientific breakthrough led to a lower-cost method of producing battery-operated cars in Canada. The likely effect would be to move Canada's current production A) possibility boundary outward. B) to a point beyond its production possibility boundary. C) possibility boundary inward. D) possibilities ahead of the United States' possibilities. 5) According to Figure 1, the levels of health and education expenditures at point C A) are not attainable from the given budget. B) could be achieved if the prices of health and/or education increased. C) are equal to those of point A and point B. D) are more cost-effective than those at points A, B, and D. FIGURE 1
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6) Consider Figure 1-2. If Country X is constrained by the production possibility boundary PPB 1 , and it is currently producing the combination of goods indicated at point C, then it could A) not produce more of either good. B) produce more capital goods but no more consumer goods. C) produce more consumer goods but no more capital goods. D) produce more of both capital and consumer goods. 7) Consider Figure 1-2. If Country X, constrained by the production possibility boundary PPB 1 , is currently producing the combination of goods indicated at point A, it can produce more capital goods by moving to point A) B. B) E. C) F. D) C. E) D. 8) The existence of absolute advantage A) refers to a situation where one country can produce one unit of a given product with fewer resources than the other country. B) is not physically possible. C) fosters the self-sufficiency of the two nations. D) refers to a situation in which one country can produce one unit of all goods with fewer resources than can another country. 9)
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QUIZ 2 - QUIZ 2 VERSION 1 1) Suppose that 1 unit of labour...

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