Question 1

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) inside its production possibilities frontier.
C) outside its production possibilities frontier with respect to food, but inside with respect to high- technology goods.
D) inside its production possibilities frontier with respect to food, but outside with respect to high- technology goods.

Accepted Answer

When highly skilled technicians and scientists are forced to engage in unskilled agricultural labor, they are not able to use their skills and knowledge to their fullest potential. This results in a decrease in overall productivity and an inefficient use of resources. Therefore, the policy likely caused China to produce inside its production possibilities frontier.

Question 2

Production efficiency is achieved when
A) the ability is gained to produce goods and services that are desired beyond the PPF boundary
B) all goods and services desired by consumers can be produced in the economy
C) producing one more unit of one good cannot occur without producing less of some other good.
D) producing inside the production possibilities frontier

Accepted Answer

Production efficiency is achieved when resources are allocated in such a way that producing more of one good would require sacrificing some of another good, which occurs on the production possibilities frontier (PPF).

Question 3

-Refer to the production possibilities frontier in the figure above. If the country moves from point a
To point c, the opportunity cost of the move is
A) 10 million consumption goods.
B) 10 million capital goods.
C) 30 million capital goods.
D) 20 million capital goods.

Accepted Answer

The answer of 
-Refer to the production possibilities frontier in...

Question 4

-In the figure above, moving from production at point d to production at point a requires
A) a decrease in unemployment.
B) technological change.
C) decreasing the output of consumer goods in order to boost the output of capital goods.
D) both capital accumulation and a decrease in unemployment.

Accepted Answer

Moving from point d to point a on a production possibilities curve typically involves reallocating resources from producing consumer goods to producing capital goods, which means decreasing the output of consumer goods to increase the output of capital goods.

Question 5

-Refer to the production possibilities frontier in the figure above. Suppose a country is producing at point a. A movement to point _ means that the country _ .
A) e; is not operating efficiently
B) b; is producing at an inefficient point.
C) d; gives up 10 million consumer goods.
D) d; must give up 20 million capital goods

Accepted Answer

The answer of 
-Refer to the production possibilities frontier in...

Question 6

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

Accepted Answer

If the production point of two goods is inside the production possibilities frontier, it means that the economy is not utilizing all its resources efficiently and can produce more of both goods without sacrificing the production of the other good. Therefore, production is inefficient.

Question 7

-Point C on the production possibilities frontier in the above diagram illustrates
A) all goods and services that are desired but cannot be produced due to scarce resources.
B) a point with maximum and efficient production of Goods A and Goods B
C) an underutilization of resources
D) a combination of goods and services that cannot be produced efficiently

Accepted Answer

Point C on the production possibilities frontier represents a combination of Goods A and Goods B that is produced with maximum efficiency, utilizing all available resources.

Question 8

-Refer to the production possibilities frontier in the figure above. Which production point is unattainable?
A) Point a
B) Point b
C) Point c
D) Point e

Accepted Answer

The answer of 
-Refer to the production possibilities frontier in...

Question 9

-In the above figure, which point represents an unattainable production combination of the two goods?
A) Point D
B) Point L
C) Point N
D) Point C

Accepted Answer

The answer of 
-In the above figure, which point represents...

Question 10

A tradeoff is illustrated by
A) a point outside the PPF.
B) a change in the slope of the PPF.
C) a point inside the PPF.
D) the negative slope of the PPF.

Accepted Answer

A tradeoff is illustrated by the negative slope of the PPF because it shows that to produce more of one good, some of another good must be given up.

Question 11

When producing goods and services, tradeoffs exist because
A) society has only a limited amount of productive resources.
B) human wants and needs are limited at a particular point in time.
C) not all production is efficient.
D) buyers and sellers often must negotiate prices.

Accepted Answer

Tradeoffs exist because society has only a limited amount of productive resources. This means that choices must be made about how to allocate these resources, which results in tradeoffs between producing one good and producing another.

Question 12

A tradeoff is
A) represented by a point outside a PPF.
B) a constraint that requires giving up one thing to get another.
C) a transaction at a price either above or below the equilibrium price.
D) represented by a point inside a PPF.

Accepted Answer

A tradeoff refers to a situation where one has to give up something in exchange for another. This involves making a decision between two or more alternatives where one alternative is chosen at the expense of another. This means that a tradeoff is a constraint that requires giving up one thing to get another. Option A is incorrect because a tradeoff is indicated by a point on a PPF, not outside it. Option C is incorrect because a tradeoff does not necessarily involve a price transaction above or below the equilibrium price. Option D is also incorrect because a point inside a PPF represents a situation of underutilization of resources, not a tradeoff.

Question 13

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

Accepted Answer

If a society is operating inside its production possibilities frontier, it means that it is not using its resources efficiently and is not producing at its maximum potential. Therefore, the society is being inefficient in its resource utilization.

Question 14

A nation produces at a point inside its PPF
A) when it produces inefficiently.
B) when its PPF is bowed out.
C) when it trades with other nations.
D) never.

Accepted Answer

Producing at a point inside the PPF means that the nation is not fully utilizing its resources and is producing inefficiently.

Question 15

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

Accepted Answer

A society that is producing on its production possibilities frontier is fully utilizing all of its productive resources. This means that the society is operating at maximum efficiency and is producing the most output possible given its available resources and technology.

Question 16

-In the above figure, which point represents an attainable but inefficient production point?
A) Point D
B) Point L
C) Point C
D) Point N

Accepted Answer

The answer of 
-In the above figure, which point represents...

Question 17

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

Accepted Answer

Unemployment is described as producing at a point inside the PPF curve because it represents a situation where the economy is not utilizing all of its resources efficiently. This means that there are resources available that are not being used, resulting in a level of production that is lower than what is possible on the PPF curve.

Question 18

-Refer to the production possibilities frontier in the figure above. Which production point indicates that resources are NOT fully utilized or are misallocated?
A) Point a
B) Point b
C) Point c
D) Point e

Accepted Answer

The answer of 
-Refer to the production possibilities frontier in...

Question 19

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) must be producing outside the production possibilities frontier and will continue to do so in the future.
C) must not have private ownership of property and will have to follow planning authorities' decisions today and in the future.
D) be producing along the production possibilities frontier today and its production possibilities frontier will shift outward if it produces more capital goods.

Accepted Answer

If a country must decrease current consumption to increase the amount of capital goods it produces today, it means it is at a point along the production possibilities frontier. By reallocating resources to produce more capital goods, the production possibilities frontier will shift outward, allowing for increased consumption in the future. Therefore, the only logical choice is D.

Question 20

-Refer to the production possibilities frontier in the figure above. Production point represents an production point.
A) c; inefficient.
B) e; inefficient.
C) b; unattainable.
D) c; unattainable.

Accepted Answer

Production point c is inefficient because it is not on the production possibilities frontier.

Quiz 2: The Economic Problem

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 efficiency is achieved when

-Refer to the production possibilities frontier in the figure above. If the country moves from point a To point c, the opportunity cost of the move is

-In the figure above, moving from production at point d to production at point a requires

-Refer to the production possibilities frontier in the figure above. Suppose a country is producing at point a. A movement to point _ means that the country _ .

If production point of two goods is inside the production possibilities frontier

-Point C on the production possibilities frontier in the above diagram illustrates

-Refer to the production possibilities frontier in the figure above. Which production point is unattainable?

-In the above figure, which point represents an unattainable production combination of the two goods?

A tradeoff is illustrated by

When producing goods and services, tradeoffs exist because

A tradeoff is

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

A nation produces at a point inside its PPF

A society that is producing on its production possibilities frontier is

-In the above figure, which point represents an attainable but inefficient production point?

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

-Refer to the production possibilities frontier in the figure above. Which production point indicates that resources are NOT fully utilized or are misallocated?

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

-Refer to the production possibilities frontier in the figure above. Production point represents an production point.