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Unformatted text preview: University of Lethbridge - Department of Economics ECON 1010 - Introduction to Microeconomics Instructor: Michael G. Lanyi Lab #2 Chapter 2 — The Economic Problem 1) Which one of the following concepts is not illustrated by a production possibilities frontier? A) opportunity cost B) monetary exchange C) attainable and unattainable points D) scarcity E) the tradeoff between producing one good versus another Answer: B User1: Use the figure below to answer the following question(s). Figure 2.1 2) Complete the following sentence. In Figure 2.1, A) movement from c to b would require a technological improvement. B) some resources must be unemployed at point c . C) point b is superior to point a . D) the concept of decreasing opportunity cost is illustrated. E) movement from a to b would require a technological improvement. Answer: C User1: 1 3) If Sam is producing at a point inside his production possibilities frontier, then he A) is fully using all his resources. B) can increase production of both goods with no increase in resources. C) must be doing the best he can with limited resources. D) has a high opportunity cost of moving from this point. E) is unaffected by costs and technology. Answer: B User1: 4) If Sam is producing at a point on his production possibilities frontier, then he A) will be unable to gain from trade. B) can increase the production of one good only by decreasing the production of the other. C) is unaffected by costs and technology, since he is fully using his resources. D) cannot produce any more of either good. E) is not subject to scarcity. Answer: B User1: 5) A production possibilities frontier will be negatively sloped because A) some resources are not fully utilized. B) there is not enough capital in the economy. C) of more consumption. D) of opportunity costs. E) more goods are purchased as price falls. Answer: D User1: 6) The concept of opportunity cost A) is measured by the amount of the monetary costs of an activity. B) implies that because productive resources are scarce, we must give up some of one good in order to acquire more of another. C) implies that a double coincidence of wants must be present for exchange to take place. D) explains that goods are swapped for goods. E) implies that when a person is more efficient in the production of one good, he/she should produce that good and exchange it for some good that he/she is relatively less efficient at producing. Answer: B User1: 7) On a diagram of a production possibilities frontier, opportunity cost is represented by A) a point on the horizontal axis. B) a point on the vertical axis. C) the slope of the production possibilities frontier. D) the x- axis intercept. E) a ray through the origin....
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- Fall '08