Question 1

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 likely producing at a point on its production possibilities frontier (PPF), where it is already efficiently using its resources for current consumption and capital goods production. By redirecting resources towards capital goods production, the country can shift its PPF outward in the future, allowing for more consumption and capital goods production. Therefore, the correct answer is B.

Question 2

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 3

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 combination of two goods that can be produced with given resources and technology. Since it is on the PPF, it is efficient, which means all resources are used to their fullest potential. Therefore, the correct choice is A.

Question 4

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 5

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 6

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

When an economy is operating inside the production possibilities frontier, it means that the available resources are not being utilized efficiently. This could be due to factors such as unemployment or inefficient allocation of resources. Therefore, there is potential for the economy to produce more output without increasing the amount of resources used, and the PPF curve will not shift inward as it represents the maximum potential output given the available resources.

Question 7

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

When the amount of unemployment decreases, more people are employed and producing goods and services, which means the economy is operating closer to its maximum potential. Therefore, the economy's point of production moves closer to the production possibilities frontier.

Question 8

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

Production at a point inside the production possibilities frontier means that the economy is not producing at its maximum potential, indicating that it can increase production of defense goods without decreasing the production of other goods. Option A is incorrect because it implies that the economy is already producing at its maximum potential, making it impossible to increase the production of defense goods without decreasing the production of other goods. Option C is incorrect because it implies that the economy is already producing beyond its maximum potential, which is not possible as it would imply that the economy is using resources it does not have. Option D is incorrect because a rightward shift in the production possibilities frontier would provide the economy with more resources but might not necessarily mean that the economy can produce more defense goods without decreasing the production of other goods.

Question 9

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

Production efficiency means that a country is using its resources to produce the maximum amount of goods possible. If Popcorn cannot produce any more jets without giving up corn, they have reached the maximum production level with their resources, indicating production efficiency.

Question 10

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

Resources allocated to inappropriate tasks will not be used efficiently, and therefore, the result will be inside the PPF. This means that the economy will not be producing at the efficient frontier and will be wasting resources.

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

When a society is producing on its production possibilities frontier, it means that it is fully utilizing all of its productive resources. This includes all available labor, capital, and technology to produce the maximum amount of goods and services possible. Therefore, the best choice is D.

Question 12

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

When a country must decrease production of one good in order to increase the production of another, it is operating on its production possibilities frontier, which shows the maximum amount of goods that can be produced with given resources and technology. Any point inside the production possibilities frontier indicates that the country is not using its resources efficiently, while any point outside the frontier is unattainable and indicates that the country lacks sufficient resources or technology. Private ownership of property is not relevant to the production possibilities trade-off described in the question.

Question 13

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, then it means that the society is not using all of its resources efficiently. Thus, there is potential for the society to increase its production and move outwards towards the frontier. Therefore, resources are being inefficiently utilized.

Question 14

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 represents a situation where resources are not fully utilized, which means that an economy is producing below its maximum potential. Therefore, when an economy is operating below its production possibilities frontier (PPF), it is producing inefficiently and is experiencing unemployment. Hence, the point that represents unemployment will be inside the PPF curve.

Question 15

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

A point inside the production possibilities frontier indicates that some resources are unemployed, as the economy is not producing at its maximum potential.

Question 16

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 production possibilities frontier, it means that the economy is not using all its resources efficiently and is producing less than it is capable of producing. Thus, production is inefficient.

Question 17

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 in which some resources are not fully utilized, as the economy is not producing at its maximum potential.

Question 18

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 implies that resources are not being used efficiently, which could indicate a misallocation of resources.

Question 19

-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 20

-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...

Quiz 2: The Economic Problem

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

Production points inside the production possibilities frontier

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

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

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

A reduction in the amount of unemployment

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

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

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 society that is producing on its production possibilities frontier is

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

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

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

A point inside a production possibilities frontier

If production point is inside the production possibilities frontier

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

A point inside a production possibilities frontier

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

-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