Question 1

A country that must decrease production of one good in order to increase the production of another
A) must be using resources inefficiently.
B) must be producing on its production possibilities frontier.
C) must be producing beyond its production possibilities frontier.
D) must have private ownership of property.

Accepted Answer

A country that must decrease production of one good in order to increase the production of another is operating at its production possibilities frontier, meaning it is using its resources in the most efficient way possible given its current level of technology and resources. If it were operating inefficiently or beyond its production possibilities frontier, it would not be able to increase production of one good without giving up the production of another. The presence or absence of private property ownership is not relevant to this concept.

Question 2

Any point on a production possibilities frontier (PPF) itself is
A) production efficient.
B) unattainable.
C) inefficient.
D) equitable.

Accepted Answer

Any point on a PPF represents the maximum possible production of two goods given available resources and technology, thus it is production efficient. Points beyond the PPF are unattainable and points inside the PPF are inefficient. Equitability is not relevant to the PPF concept.

Question 3

A reduction in the amount of unemployment
A) shifts the production possibilities frontier outward.
B) moves the economy's point of production closer to the production possibilities frontier.
C) moves the economy's point of production along the production possibilities frontier.
D) moves the economy's point of production further away from the production possibilities frontier.

Accepted Answer

A reduction in unemployment signifies an increase in productive resources being utilized in the economy, which leads to higher output levels. As a result, the economy's point of production moves closer to the production possibilities frontier.

Question 4

-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.

Accepted Answer

The answer of 
-The above figure illustrates that if this...

Question 5

When resources are assigned to inappropriate tasks, that is, tasks for which they are not the best match, the result will be producing at a point
A) where the slope of the PPF is positive.
B) where the slope of the PPF is zero.
C) inside the PPF.
D) outside the PPF.

Accepted Answer

When resources are assigned to inappropriate tasks, they are not being used efficiently and producing less than they potentially could. This results in being inside the PPF, as the economy is not producing at its maximum potential using available resources.

Question 6

Sam's production possibilities frontier has good A on the horizontal axis and good B on the vertical axis. If Sam is producing at a point inside his frontier, then he
A) can increase production of both goods with no increase in resources.
B) is fully using all his resources.
C) values good A more than good B.
D) values good B more than good A.

Accepted Answer

Producing inside the production possibilities frontier indicates that not all resources are being fully utilized. Therefore, Sam can increase production of both goods without needing more resources.

Question 7

If production point is inside the production possibilities frontier,
A) it is not possible to produce more of both goods.
B) production is inefficient.
C) in order to produce more of one good, less of the other must be produced.
D) production is in the "unattainable" region.

Accepted Answer

If the production point is inside the PPF, it means that the economy is not fully utilizing its resources and is producing at an inefficient level. This indicates that more of both goods can be produced by reallocating resources or increasing efficiency.

Question 8

Some time ago the government of China required many highly skilled technicians and scientists to engage in unskilled agricultural labor in order to develop "proper social attitudes." This policy probably caused China to produce
A) at an inappropriate point along its production possibilities frontier.
B) outside its production possibilities frontier with respect to food, but inside with respect to high-technology goods.
C) inside its production possibilities frontier with respect to food, but outside with respect to high-technology goods.
D) inside its production possibilities frontier.

Accepted Answer

Requiring highly skilled technicians and scientists to engage in unskilled agricultural labor likely resulted in a less efficient use of human resources, causing the economy to operate inside its production possibilities frontier. This is because these individuals could have contributed more effectively to the economy in their areas of expertise.

Question 9

Production points inside the production possibilities frontier
A) are unattainable.
B) are attainable only with the full utilization of all resources.
C) are associated with unused or misallocated resources.
D) result in more rapid growth.

Accepted Answer

Production points inside the production possibilities frontier indicate that not all resources are being used efficiently; there is some level of unused or misallocated resources.

Question 10

If a country must decrease current consumption to increase the amount of capital goods it produces today, then it must
A) be using resources inefficiently today, but will be more efficient in the future.
B) be producing along the production possibilities frontier today and its production possibilities frontier will shift outward if it produces more capital goods.
C) must be producing outside the production possibilities frontier and will continue to do so in the future.
D) must not have private ownership of property and will have to follow planning authorities' decisions today and in the future.

Accepted Answer

If a country must decrease current consumption to increase the amount of capital goods it produces today, then it is producing along the production possibilities frontier today. If it wants to produce more capital goods, it must shift its production possibilities frontier outward through investment in capital goods. This means that in the future, the country will be able to produce more goods and have a higher standard of living.

Question 11

A society that is producing on its production possibilities frontier is
A) not utilizing all of its resources.
B) not being technologically efficient.
C) producing too much output.
D) fully utilizing all of its productive resources.

Accepted Answer

A society that is producing on its production possibilities frontier is fully utilizing all of its productive resources. This means that it is operating at maximum efficiency and using all available resources to produce the optimal combination of goods and services.

Question 12

A president of the United States promises to produce more defense goods without any decreases in the production of other goods. This promise can be valid
A) if the United States is producing at a point on its production possibilities frontier.
B) if the United States is producing at a point inside its production possibilities frontier.
C) if the United States is producing at a point beyond its production possibilities frontier.
D) only if the production possibilities frontier shifts rightward.

Accepted Answer

If the United States is producing at a point inside its production possibilities frontier, it has idle resources that can be used to produce more defense goods without decreasing the production of other goods. However, if the United States is already producing at the point on or beyond its production possibilities frontier, any increase in defense goods production would require sacrificing the production of other goods. The production possibilities frontier can only shift rightward if there is an improvement in technology or an increase in the available resources.

Question 13

A point inside a production possibilities frontier
A) could indicate that resources are misallocated.
B) is more efficient than a point on the production 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.

Accepted Answer

A point inside the production possibilities frontier means that the economy is not fully utilizing all of its resources, indicating that resources are misallocated. Therefore, option A is the best choice.

Question 14

-Suppose the country of Popcorn produces only jets and corn. If Popcorn cannot produce any more jets without giving up corn, we say that Popcorn has achieved
A) the highest marginal benefit.
B) production efficiency.
C) the lowest marginal cost.
D) the highest opportunity cost.

Accepted Answer

Popcorn has achieved production efficiency because it cannot produce more of one good without giving up some of another good, indicating that resources are being used in the most efficient way possible.

Question 15

A situation in which some resources are NOT fully utilized is represented in a production possibilities frontier diagram by
A) any point on either the horizontal or the vertical axis.
B) the midpoint of the production possibilities frontier.
C) a point outside the production possibilities frontier.
D) a point inside the production possibilities frontier.

Accepted Answer

A point inside the production possibilities frontier represents a situation where resources are not fully utilized because the economy is not producing at its maximum potential. This could be due to inefficiency, lack of resources, or any other factors that hinder the economy from producing at its full capacity.

Question 16

Using the production possibilities frontier model, unemployment is described as producing at a point
A) on the exact middle of the PPF curve.
B) on either end of the PPF curve.
C) inside the PPF curve.
D) outside the PPF curve.

Accepted Answer

Unemployment is represented by a point inside the PPF curve because it indicates that resources are not being fully utilized and the economy is not producing at its maximum potential.

Question 17

If an economy is operating at a point inside the production possibilities frontier, then
A) society's resources are being inefficiently utilized.
B) the PPF curve will shift inward.
C) society's resources are being used to produce too many consumer goods.
D) economic policy must retard further growth of the economy.

Accepted Answer

If an economy is operating inside the PPF curve, it means that it is not using its resources to their full potential, leading to an inefficient utilization of resources. Thus, choice A is the best option. B, C, and D are incorrect because they do not correctly explain the consequences of operating inside the PPF curve.

Question 18

-The figure above shows Roger's production possibilities frontier. Point a is an ________ point and at that point production is ________.
A) attainable; efficient
B) attainable; inefficient
C) unattainable; inefficient
D) unattainable; efficient

Accepted Answer

The answer of 
-The figure above shows Roger's production possibilities...

Question 19

A point inside a production possibilities frontier
A) could indicate that some resources are unemployed.
B) is unattainable.
C) is more efficient than points on the production possibilities frontier.
D) implies that too much capital and not enough labor are being used.

Accepted Answer

If a point is inside the production possibilities frontier, it means that the economy is not using all its resources efficiently, i.e., some resources are unemployed. Therefore, option A is the correct answer. Option B is incorrect because an unattainable point would be outside the production possibilities frontier. Option C is incorrect because the points on the production possibilities curve are efficient points in terms of resource allocation. Option D is also incorrect because a point inside the production possibilities frontier does not necessarily imply that too much capital and not enough labor are being used.

Question 20

If a society is operating at a point inside its production possibilities frontier, then this society's
A) resources are being inefficiently utilized.
B) production possibilities frontier will shift rightward.
C) resources are being used in the most efficient manner.
D) economy will grow too fast.

Accepted Answer

If a society is operating inside its production possibilities frontier, it means that it is not using all of its resources to their fullest potential. This indicates that the resources are being inefficiently utilized.

Quiz 2: The Economic Problem

A country that must decrease production of one good in order to increase the production of another

Any point on a production possibilities frontier (PPF) itself is

A reduction in the amount of unemployment

-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

When resources are assigned to inappropriate tasks, that is, tasks for which they are not the best match, the result will be producing at a point

Sam's production possibilities frontier has good A on the horizontal axis and good B on the vertical axis. If Sam is producing at a point inside his frontier, then he

If production point is inside the production possibilities frontier,

Some time ago the government of China required many highly skilled technicians and scientists to engage in unskilled agricultural labor in order to develop "proper social attitudes." This policy probably caused China to produce

Production points inside the production possibilities frontier

If a country must decrease current consumption to increase the amount of capital goods it produces today, then it must

A society that is producing on its production possibilities frontier is

A president of the United States promises to produce more defense goods without any decreases in the production of other goods. This promise can be valid

A point inside a production possibilities frontier

-Suppose the country of Popcorn produces only jets and corn. If Popcorn cannot produce any more jets without giving up corn, we say that Popcorn has achieved

A situation in which some resources are NOT fully utilized is represented in a production possibilities frontier diagram by

Using the production possibilities frontier model, unemployment is described as producing at a point

If an economy is operating at a point inside the production possibilities frontier, then

-The figure above shows Roger's production possibilities frontier. Point a is an point and at that point production is .

A point inside a production possibilities frontier

If a society is operating at a point inside its production possibilities frontier, then this society's