Question 1

While producing on the production possibilities frontier,if additional units of a good could be produced at a constant opportunity cost,the production possibilities frontier would be
A) bowed outward.
B) bowed inward.
C) positively sloped.
D) a straight line.

Accepted Answer

A constant opportunity cost means that the trade-off between producing one good versus another remains the same, so the production possibilities frontier would be a straight line with a constant slope.

Question 2

$$\begin{array} { | c | c | c | } 
\hline \text { Point } & \begin{array} { c } 
\text { Production } \
\text { chocolate bars }
\end{array} & \begin{array} { c } 
\text { Production } \
\text { cans of cola }
\end{array} \
\hline \text { A } & 0 & 100 \
\hline \text { B } & 10 & 90 \
\hline \text { C } & 20 & 70 \
\hline \text { D } & 30 & 40 \
\hline \text { E } & 40 & 0 \
\hline
\end{array}$$
-The above table shows production points on Sweet-Tooth Land's production possibilities frontier.What is the opportunity cost of one can of cola if Sweet-tooth Land moves from point C to point B?
A) 20 chocolate bars per can of cola
B) 10 chocolate bars per can of cola
C) 2 chocolate bars per can of cola
D) 1/2 chocolate bars per can of cola

Accepted Answer

The answer of \[\begin{array} { | c | c |...

Question 3

$$\begin{array} { | c | c | c | } 
\hline \text { Point } & \begin{array} { c } 
\text { Production of } \
\text { grain } \
\text { (tons) }
\end{array} & \begin{array} { c } 
\text { Production of cars } \
\text { (cars) }
\end{array} \
\hline \text { A } & 0 & 30 \
\hline \text { B } & 2 & 28 \
\hline \text { C } & 4 & 24 \
\hline \text { D } & 6 & 18 \
\hline \text { E } & 8 & 10 \
\hline \text { F } & 10 & 0 \
\hline
\end{array}$$
-The table above lists six points on the production possibilities frontier for grain and cars.What is the opportunity cost of producing the 5th ton of grain?
A) 16 cars per ton of grain
B) 6 cars per ton of grain
C) 3 cars per ton of grain
D) 2 cars per ton of grain

Accepted Answer

The answer of \[\begin{array} { | c | c |...

Question 4

When moving along the production possibilities frontier,opportunity cost is measured as the
A) increase in the quantity produced of one good divided by the decrease in the quantity produced of another good.
B) decrease in the quantity produced of one good divided by the increase in the quantity produced of another good.
C) quantity produced of one good divided by the quantity produced of another good.
D) quantity produced of one good multiplied by the quantity produced of another good.

Accepted Answer

Opportunity cost is the cost of giving up one good or service in order to produce another good or service. When moving along the production possibilities frontier, the opportunity cost of producing more of one good is the decrease in the quantity of the other good that must be forgone to do so. Therefore, option B, which shows the decrease in the quantity produced of one good divided by the increase in the quantity produced of another good, is the correct answer.

Question 5

$$\begin{array} { | c | c | c | } 
\hline \text { Point } & \begin{array} { c } 
\text { Production of } \
\text { grain } \
\text { (tons) }
\end{array} & \begin{array} { c } 
\text { Production of cars } \
\text { (cars) }
\end{array} \
\hline \text { A } & 0 & 30 \
\hline \text { B } & 2 & 28 \
\hline \text { C } & 4 & 24 \
\hline \text { D } & 6 & 18 \
\hline \text { E } & 8 & 10 \
\hline \text { F } & 10 & 0 \
\hline
\end{array}$$
-The table above lists six points on the production possibilities frontier for grain and cars.From this information you can conclude that production is inefficient if this economy produces
A) 6 tons of grain and 18 cars.
B) 4 tons of grain and 26 cars.
C) 2 tons of grain and 27 cars.
D) 8 tons of grain and 10 cars.

Accepted Answer

Point C is on the production possibilities frontier, but point B, which produces fewer cars and the same amount of grain, is also on the production possibilities frontier. Therefore, producing at point C is inefficient because point B shows that the same amount of grain can be produced while also producing more cars.

Question 6

$$\begin{array} { | c | c | c | } 
\hline \text { Point } & \text { Production of } X & \text { Production of } Y \
\hline \text { A } & 0 & 40 \
\hline \text { B } & 3 & 36 \
\hline \text { C } & 6 & 28 \
\hline \text { D } & 9 & 16 \
\hline \text { E } & 12 & 0 \
\hline
\end{array}$$
-The above table shows production combinations on a country's production possibilities frontier.Which of the following is an example of a production point that is inefficient?
A) 0 units of good X and 40 units of good Y
B) 6 units of good X and 28 units of good Y
C) 10 units of good X and 16 units of good Y
D) 3 units of good X and 35 units of good Y

Accepted Answer

The answer of \[\begin{array} { | c | c |...

Question 7

$$\begin{array} { | c | c | c | } 
\hline \text { Point } & \begin{array} { c } 
\text { Production } \
\text { chocolate bars }
\end{array} & \begin{array} { c } 
\text { Production } \
\text { cans of cola }
\end{array} \
\hline \text { A } & 0 & 100 \
\hline \text { B } & 10 & 90 \
\hline \text { C } & 20 & 70 \
\hline \text { D } & 30 & 40 \
\hline \text { E } & 40 & 0 \
\hline
\end{array}$$
-The above table shows production points on Sweet-Tooth Land's production possibilities frontier.Which of the following is an example of a point that is inefficient?
A) 0 chocolate bars and 100 cans of cola
B) 20 chocolate bars and 80 cans of cola
C) 32 chocolate bars and 40 cans of cola
D) 38 chocolate bars and 0 cans of cola

Accepted Answer

The answer of \[\begin{array} { | c | c |...

Question 8

Opportunity cost is illustrated in a production possibilities frontier (PPF) by a movement
A) from the region within the PPF to a point on the PPF.
B) from the region within the PPF to the region outside of the PPF.
C) from the region outside of the PPF to a point on the PPF.
D) along the PPF where to gain more of one good it is necessary to give some of another good.

Accepted Answer

Opportunity cost is the trade-off between two goods that must be made when one good is chosen over the other. This trade-off is illustrated by the downward slope of the production possibilities frontier (PPF). A movement along the PPF shows the opportunity cost of producing more of one good by giving up some of the other good. Therefore, option D is correct as it describes a movement along the PPF where to gain more of one good, it is necessary to give up some of the other good, illustrating the concept of opportunity cost.

Question 9

$$\begin{array} { | c | c | c | } 
\hline \text { Point } & \begin{array} { c } 
\text { Production of } \
\text { grain } \
\text { (tons) }
\end{array} & \begin{array} { c } 
\text { Production of cars } \
\text { (cars) }
\end{array} \
\hline \text { A } & 0 & 30 \
\hline \text { B } & 2 & 28 \
\hline \text { C } & 4 & 24 \
\hline \text { D } & 6 & 18 \
\hline \text { E } & 8 & 10 \
\hline \text { F } & 10 & 0 \
\hline
\end{array}$$
-The table above lists six points on the production possibilities frontier for grain and cars.What is the opportunity cost of producing the 26th car?
A) 2 tons of grain per car
B) 4 tons of grain per car
C) 0.25 tons of grain per car
D) 0.5 tons of grain per car

Accepted Answer

To produce the 26th car, the economy must move from point B to point C, giving up 2 tons of grain (from 2 to 4) to produce the same number of cars (28 to 26). Therefore, the opportunity cost of producing the 26th car is 2 tons of grain per car. The best choice for the economy depends on the preferences of society. If society values cars more than grain, it should produce at point C. If it values grain more than cars, it should produce at a point to the left of point B. If it values cars and grain equally, it could produce at any point along the PPF.

Question 10

At one point along a PPF,10 pizzas and 7 sandwiches can be produced.At another point along the same PPF,9 pizzas and 10 sandwiches can be produced.The opportunity cost of a pizza between these points is ________ per pizza.
A) 7/10 of a sandwich
B) 10/7 of a sandwich
C) 1/3 of a sandwich
D) 3 sandwiches

Accepted Answer

The answer of At one point along a PPF,10 pizzas...

Question 11

$$\begin{array} { | c | c | c | } 
\hline \text { Point } & \begin{array} { c } 
\text { Production } \
\text { chocolate bars }
\end{array} & \begin{array} { c } 
\text { Production } \
\text { cans of cola }
\end{array} \
\hline \text { A } & 0 & 100 \
\hline \text { B } & 10 & 90 \
\hline \text { C } & 20 & 70 \
\hline \text { D } & 30 & 40 \
\hline \text { E } & 40 & 0 \
\hline
\end{array}$$
-The above table shows production points on Sweet-Tooth Land's production possibilities frontier.What is the opportunity cost of one chocolate bar if Sweet-tooth Land moves from point C to point D?
A) 30 cans of cola per chocolate bar
B) 10 cans of cola per chocolate bar
C) 3 cans of cola per chocolate bar
D) 1/3 can of cola per chocolate bar

Accepted Answer

Moving from point C to point D, Sweet-Tooth Land increases its chocolate bar production by 10 bars (from 40 to 50) and decreases its cola production by 30 cans (from 90 to 60). Therefore, the opportunity cost of producing one additional chocolate bar is 30 cans of cola divided by 10 chocolate bars, which equals 3 cans of cola per chocolate bar.

Question 12

$$\begin{array} { | c | c | c | } 
\hline \text { Point } & \begin{array} { c } 
\text { Production } \
\text { chocolate bars }
\end{array} & \begin{array} { c } 
\text { Production } \
\text { cans of cola }
\end{array} \
\hline \text { A } & 0 & 100 \
\hline \text { B } & 10 & 90 \
\hline \text { C } & 20 & 70 \
\hline \text { D } & 30 & 40 \
\hline \text { E } & 40 & 0 \
\hline
\end{array}$$
-The above table shows production points on Sweet-Tooth Land's production possibilities frontier.Which of the following statements is TRUE?
A) Producing 0 chocolate bars and 100 cans of cola is both attainable and efficient.
B) Producing 20 chocolate bars and 80 cans of cola is attainable, but inefficient.
C) Producing 30 chocolate bars and 38 cans of cola is only attainable with an increase in technology.
D) Producing 40 chocolate bars and 0 cans of cola is unattainable and inefficient.

Accepted Answer

The answer of \[\begin{array} { | c | c |...

Question 13

$$\begin{array} { | c | c | c | } 
\hline \text { Point } & \begin{array} { c } 
\text { Production of } \
\text { grain } \
\text { (tons) }
\end{array} & \begin{array} { c } 
\text { Production of cars } \
\text { (cars) }
\end{array} \
\hline \text { A } & 0 & 30 \
\hline \text { B } & 2 & 28 \
\hline \text { C } & 4 & 24 \
\hline \text { D } & 6 & 18 \
\hline \text { E } & 8 & 10 \
\hline \text { F } & 10 & 0 \
\hline
\end{array}$$
-The table above lists six points on the production possibilities frontier for grain and cars.Given this information,which of the following combinations is unattainable?
A) 6 tons of grain and 18 cars
B) 4 tons of grain and 26 cars
C) 2 tons of grain and 27 cars
D) 7 tons of grain and 10 cars

Accepted Answer

The answer of \[\begin{array} { | c | c |...

Question 14

$$\begin{array} { | c | c | c | } 
\hline \text { Point } & \begin{array} { c } 
\text { Production } \
\text { chocolate bars }
\end{array} & \begin{array} { c } 
\text { Production } \
\text { cans of cola }
\end{array} \
\hline \text { A } & 0 & 100 \
\hline \text { B } & 10 & 90 \
\hline \text { C } & 20 & 70 \
\hline \text { D } & 30 & 40 \
\hline \text { E } & 40 & 0 \
\hline
\end{array}$$
-The above table shows production points on Sweet-Tooth Land's production possibilities frontier.A movement from ________ represents the greatest opportunity cost of increasing cola production.
A) point E to point D
B) point D to point C
C) point C to point B
D) point B to point A

Accepted Answer

The answer of \[\begin{array} { | c | c |...

Question 15

At one point along a PPF 40 tons of wheat are produced while 80 tons of rice are produced.At another point along the same PPF,41 tons of wheat are produced while 70 tons of rice are produced.The opportunity cost of producing a ton of wheat between these points is ________ per ton of wheat.
A) 1/2 ton of rice
B) 10 tons of rice
C) 1/10 ton of rice
D) 4/7 ton of rice

Accepted Answer

The answer of At one point along a PPF 40...

Question 16

At one point along a PPF,50 tons of coffee and 100 tons of bananas are produced.At another point along the same PPF,30 tons of coffee and 140 tons of bananas are produced.The opportunity cost of a ton of coffee between these points is
A) 7/5 of a ton of bananas per ton of coffee.
B) 1/2 of a ton of bananas per ton of coffee.
C) 5/7 of a ton of bananas per ton of coffee.
D) 2 tons of bananas per ton of coffee.

Accepted Answer

The answer of At one point along a PPF,50 tons...

Question 17

$$\begin{array} { | c | c | c | } 
\hline \text { Point } & \text { Production of } X & \text { Production of } Y \
\hline \text { A } & 0 & 40 \
\hline \text { B } & 3 & 36 \
\hline \text { C } & 6 & 28 \
\hline \text { D } & 9 & 16 \
\hline \text { E } & 12 & 0 \
\hline
\end{array}$$
-The above table shows production combinations on a country's production possibilities frontier.Which of the following is an example of a point that is unattainable?
A) 0 units of good X and 40 units of good Y.
B) 6 units of good X and 28 units of good Y.
C) 10 units of good X and 16 units of good Y.
D) 3 units of good X and 35 units of good Y.

Accepted Answer

The production combination of 10 units of good X and 16 units of good Y is not on the production possibility frontier, and therefore, it is unattainable.

Question 18

Opportunity cost is represented on the production possibilities frontier by
A) attainable and unattainable points.
B) efficient and inefficient points.
C) the amount of good Y forgone when more of good X is produced.
D) technological progress.

Accepted Answer

Opportunity cost is the cost of foregone alternatives. On a production possibilities frontier, when we choose to produce more of one good, we have to forgo producing some of the other good. This is represented by the amount of the other good that we could have produced if we had not chosen to produce more of the first good. Therefore, choice C is the best answer as it represents the amount of good Y forgone when more of good X is produced. The other choices do not directly represent opportunity cost on the production possibilities frontier.

Question 19

When operating on its PPF,a country can produce 2 tons of butter and 200 cars OR 3 tons of butter and 150 cars.The opportunity cost of 1 ton of butter is ________ cars per ton of butter.
A) 300
B) 200
C) 50
D) 0.75

Accepted Answer

The opportunity cost of 1 ton of butter is the number of cars given up for producing 1 ton of butter. 
From the given PPF, if the country produces 2 tons of butter, it can produce 200 cars. Therefore, the opportunity cost of 1 ton of butter is 100 cars (200 cars / 2 tons of butter). 
Similarly, if the country produces 3 tons of butter, it can produce 150 cars. Therefore, the opportunity cost of 1 ton of butter is 50 cars (150 cars / 3 tons of butter). 
Taking the average of these two opportunity costs, we get (100 + 50) / 2 = 75.
Therefore, the opportunity cost of 1 ton of butter is 75 cars per ton of butter, which is closest to option C, 50.

The best choice(s) depend on the specific needs and preferences of the country. If the country values producing more cars over producing more butter, it should produce at point A, where it can produce 200 cars and 2 tons of butter. If the country values producing more butter over producing more cars, it should produce at point B, where it can produce 3 tons of butter and 150 cars.

Question 20

In one day,Sue can change the oil on 20 cars or change the tires on 20 cars.In one day,Fred can change the oil on 20 cars or change the tires on 10 cars.Sue's opportunity cost of changing oil is ________ than Fred's and her opportunity cost for changing tires is ________ than Fred's.
A) greater; less
B) less; greater
C) less; less
D) greater; greater

Accepted Answer

Sue's opportunity cost of changing oil is greater than Fred's because she can also change the tires on 20 cars in the same amount of time it takes her to change the oil on 20 cars. This means that for every 20 cars Sue changes the oil on, she is giving up the opportunity to change tires on 20 cars, while Fred can only change the oil on the same number of cars.

Sue's opportunity cost for changing tires is less than Fred's because she can change the oil on 20 cars in the same amount of time it takes her to change the tires on 20 cars. This means that for every 20 cars Sue changes the tires on, she is giving up the opportunity to change the oil on 20 cars, while Fred can only change the tires on half that number. Therefore, Sue has a lower opportunity cost for changing tires than Fred.

Quiz 2: The Economic Problem

While producing on the production possibilities frontier,if additional units of a good could be produced at a constant opportunity cost,the production possibilities frontier would be

When moving along the production possibilities frontier,opportunity cost is measured as the

Opportunity cost is illustrated in a production possibilities frontier (PPF) by a movement

At one point along a PPF,10 pizzas and 7 sandwiches can be produced.At another point along the same PPF,9 pizzas and 10 sandwiches can be produced.The opportunity cost of a pizza between these points is ________ per pizza.

At one point along a PPF 40 tons of wheat are produced while 80 tons of rice are produced.At another point along the same PPF,41 tons of wheat are produced while 70 tons of rice are produced.The opportunity cost of producing a ton of wheat between these points is ________ per ton of wheat.

At one point along a PPF,50 tons of coffee and 100 tons of bananas are produced.At another point along the same PPF,30 tons of coffee and 140 tons of bananas are produced.The opportunity cost of a ton of coffee between these points is

Opportunity cost is represented on the production possibilities frontier by

When operating on its PPF,a country can produce 2 tons of butter and 200 cars OR 3 tons of butter and 150 cars.The opportunity cost of 1 ton of butter is ________ cars per ton of butter.

In one day,Sue can change the oil on 20 cars or change the tires on 20 cars.In one day,Fred can change the oil on 20 cars or change the tires on 10 cars.Sue's opportunity cost of changing oil is than Fred's and her opportunity cost for changing tires is than Fred's.