sample test for chapter 1

7/23/2019 Sample Test for Chapter 1

1/40

Assignment Print View

1

award:

10 00

points

Page 1 o 40

Wi1ici1Cifihetolkiwiii9 .isr;Citoiieot tile ii1ree.core ec:aiiomic.issuestf1ai ;nusf e resoivea?

r

How to produce the goods and services we select.

_ I

What to produce with unlimited resources.

I Who should get the goods and services we produce .

I What to produce with limited resources.

Resources are not unlimited.

Multiple Choice

Difficulty: 1 Easy

award:

2

10 00

points

3

theunaamentarjif bi em

ot

eon m s s

The law of increasing opportunity costs .

_ I

The scarcity of resources relative to human wants .

I How to get government to operate efficiently .

How to create employment for everyone .

Wants will always exceed resources.

Multiple Choice Difficulty: 1 Easy

award :

10 00

points

;; conseq.uence oitlie ecoiiam-c problem of scardtYis that .

_ I Choices have to be made about how resources are used .

I There is never too much of any good or service produced.

Learning Objective: 01-03 The three

core economic questions that every

society must answer.

Learning Objective: 01-01 How

scarcity creates opportunity costs.

I The production of goods and services must be controlled by the government.

I The production possibilities curve is bowed outward .

Scarcity means choices must

be

made.

Multiple Choice

Difficulty: 1 Easy

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5

6

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\ Vhicticifiiletoilowin9 s.notata.ct'orc;t pr:oc:iu Ctioi1? .

I

A psychiatrist

-> ( The $100,000 used to start a new business .

(

A bulldozer.

I

Six thousand acres

of

farmland .

Land, labor, capital , and entrepreneurship are the factors

of

production. Money does not fall under any category of the

factors of production. Factors of production are what are needed on a camping trip . Money

is

not needed on a

camping trip.

Multiple hoice

Difficulty : 2 Medium



award:

10 00

points

(

Factors

of

production are also known as resources .

In order to produce any good or service , it is necessary to have factors of production .

I Factors of production include land, labor, capital , and entrepreneurship.

>C

Only those resources that are privately owned are counted as factors of production.

Even resources owned by governments count as factors of production.

Multiple

hoice

award :

10 00

points

Difficulty: 2 Medium



.... .....

Which ciftile toilowiii.9"i5 '

ihe

.best"exampie

cif

land?

I The ethanol refined from corn .

A factory that produces new goods and services.

-+ The water used to make a soft drink.

I A barber's chair.

If it directly becomes a part

of

the final product, it is land or a raw material. Water used to float a boat

is

the same as a

delivery van.

In

this case it would be capital.

Multiple hoice





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Assignment Print

iew

Page 3

of

40

7

8

9

awa

r

:

10.00

points

cai:>itai,

as economists

use

itie ierm: refers

c;

.

r

The money needed to start a new business.

( ; The costs of operating a business .

( Shares o stock issued by businesses.

-- Final goods that are used to produce other goods and services .

Physical capital is used to produce other goods and services, including other capital goods . Hammers produce

houses. Forklifts move forklift parts around a forklift factory. Money is financial capital, which is a throughput. It is used

to

acquire a hammer or physical capital.

Multiple Choice

award:

10.00

points

Difficulty: 1 Easy



Which

eCOnoniSfarguea

hat'

ree

markets

u l e a s h f t h e ~ : l f i i a l spiriiS 'Oen irtipreneus. iOj:)Sinng innovatiOn

technology, and growth?

Lord Kelvin.

Kenneth Olsen.

{ Irving Fisher.

-- John Maynard Keynes.

Competition leads companies to always try to do something better and more efficiently in order to maximize profits.

Multiple Choice

Difficulty: 1 Easy

award:

10.00

points

Economics.

can

.

:ie

.defined sihe.stlid.

ot

r

For whom resources are allocated to increase efficiency .

{ How society spends the income o individuals .



--

How scarce resources are allocated on a macro level to best meet society s goals or on a micro level to

best meet an individual s or firm s goals.

r

None of the choices are correct.

Economics studies how we get the most we can out o what we have.

Multiple Choice Difficulty: 1 Easy


scarcity creates opportunity costs .

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Page 4 o 40

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points

................. he

gun-

sversus

butter;; dilemma ttia'iaH nations.confront is

.t i lac

.

.

... ..............

11

12

Guns and butter can be produced using the same resources at the same time .

.r

An increase in national defense implies more sacrifices of civilian goods and services.

r

An increase

in

national defense is possible only if we produce more butter.

r

All

of

the choices are correct.

To get more

of

one good, we must sacrifice production

of

other goods. Guns versus butter

is

a figurative way of

expressing the trade-off between defense and civilian goods and services .

ultiple hoice

award:

10 00

points

Difficulty: 1 Easy

Learning Objective:

01

-

01

How


liihicil

c;t

itietoilowing .sa:;;a'ssumptionunder which the pr.

odu Ction

.p.o.sslbiiities c-c;;:;;e;

[5

drawn?

Total unemployment is zero.

- .r

The supply

of

resources is fixed.

(

The price level is changing.

( '

Technology is changing.

The production possibilities curve

is

a snapshot

of

a short time frame when resources are fixed .

ultiple hoice

award:

10 00

points

Difficulty: 1 Easy

Learning Objective: 01-02 What the

production-possibilities curve

represents.

..

Which

of

thefoiiCiwing correctiy

ch

.aracterizes.the shape

of

a 'coris'iant'opportu'riity C:ost'produCiiori .pos.sibi'iitiesC'urve?

...

.

r A straight line indicating that the law

of

increasing opportunity costs applies.

- .r

A straight line when there is constant opportunity costs.

A line that curves outward when resources are perfectly adaptable

in

the production

of

different goods.

A line that curves inward when resources are perfectly adaptable

in

the production o f different goods.

A straight-line production possibilities curve means resources are equally adaptable to producing either good.

ultiple hoice


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Learning Objective : 01-02 What the


represents .

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........................... Accordin9.o.he .

aw

. :i finc.easin9 .of portunity

c:asts

, .

...............

...... ...............................

14.

15.

( Greater production leads to greater inefficiency.

(

Greater production means factor prices rise.

__.( Greater production

o

one good requires increasingly larger sacrifices

o

other goods.

(

Higher opportunity costs induce higher output per unit of input

The opportunity cost rises incrementally as more

o

one particular good is produced.

Multiple Choice

award

10.00

points

Difficulty : 1 Easy


production-possibil ities curve

represents.

ira.,:;

e;c:oiiorliY'e:XiJ

.9i:re

nc:es

inc.easin9 c,r;i)oitlii1i yc:as.s-witii.

espeCi

.a.Wo .

9oods

:ilen.ile.>roduction

possitii iiiies

curve between the two goods will be

__.(

Bowed outward or concave from below.

(

A straight, downward-sloping line.

( Bowed inward or convex from below.

r Bowed outward until the two goods are equal, and then bowed inward.

A bowed-out production possibilities curve means opportunity costs are increasing as we move from one point to

another along the curve.

Multiple Choice

award

10.00

points




represents.

ittiia uilited.

staies

.ci'ecici'es'iac:c;neit

a.uiomoi:ii'le

aCiories .

o

.

ani< produc:tioii

:as

.ii

did

durii19.wa

ri

awar l:>uti'ii'ds

that some auto manufacturing facilities are not well suited to tank production, then

r The production possibilities curve between tanks and automobiles will appear as a straight line.

r The production possibilities curve between tanks and automobiles will shift outward.

(

Decreasing opportunity costs will occur with greater automobile production .

__.( Increasing opportunity costs will occur with greater tank production.

Factors

o

production, including capital, are specialized , meaning they are generally better suited for one use.

Multiple Choice Difficulty : 3 Hard

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represents.

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Adiy;s -dedsi.

oil tolimit

.

siTioi


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points

1/iihidi cif'thefollowing' is 'noia macroeccinom'ic'siiitem'ei lt?'''' '

' '''' ''

23

r The unemployment rate for the United States rose to 5 percent

in

the last quarter.

r

The Federal Reserve lowered interest rates at its last meeting .

Congress increased the minimum wage rate in January.

__ r Jenny's wage rate rose , and in response, she decided to work more hours.

The wages of a particular worker are a microeconomics topic.

Multiple Choice

award:

10.00

points

Difficulty : 1 Easy

Learning Objective: 01 04 How

market and government approaches

to economic problems diffe

r

file study Ofm icroeco-nomictheory focuses c;nthe

24

__

C: Structure and performance

of

individual markets and the operation

of

the price system.

r

Operation of the entire economy.

r

Role of the banking system in the economy.

Interaction of international trade and domestic production

of

goods and services.

Microeconomics studies how the foundation of an economy and individual markets work.

Multiple Choice

Difficulty: 1 Easy

award:

10.00

points

Microeconomcs

isc ncerne wiih issuessuch s

__ r The demand for bottled water by individuals.

r

The level of inflat ion in the economy.

Maintaining a strong level

of

economic growth.

r All

of


The demand for a particular product is a microeconomic topic.

Multiple Choice

Difficulty : 1 Easy

Learning Objective:

01 04

How


to economic problems differ.

Learning Objective:

01 04

How



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26

award:

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Economic models are use i by. conomists to

r

Predict economic behavior.

r Develop economic policies.

(

Explain economic behavior.

_ r

All

of


The economic models are designed to benefit society and prevent us from doing things that lead to lower living

standards.

Multiple hoice

award:

10.00

points

D

Figue 1 1

Difficulty : 1 Easy

o

us n

g

P1oduction Possibilities Curve




At which point

s

society employing some of its available technology but not all of it? See Figure 1.1.)

A

r s.

_

c.

r D.

We could produce more by using the resources we have more efficiently.

Multiple hoice




represents.

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27

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points

8

D

PP1 PP2

OUTPU

T

OF

PL SMA

TELEVIS

IO

NS

Figure 1 4

A movement from point C to point A in Figure 1.4 results in

(

More efficient production.

( Permanent unemployment of workers producing plasma televisions.

( A reallocation of resources from MP3 player production to plasma television production.

___.(

A reallocation of resources from plasma television production to MP3 player production.

Moving from one point to another on the same production possibilities curve represents changing the combination of

the two goods.

Multiple

hoice

Difficulty : 3 Hard

Learning Objective: 01 02 What the

production possibilities curve

represents.


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10.00

points

s

PPl PP

OUTPUT OF

PlASMA

TELEVIS

I

ONS

Figure 1 4

In

Figure 1.4 a shift

of

the production possibilities curve from PP to PP2 could be caused by

( An increase in the unemployment rate.

_,( Implementation of training programs that improve the skills

of

workers.

r A flu epidemic that makes many workers sick.

(

Tougher pollution controls for the producers

of

plasma televisions and MP3 players.

An increase

in

any resource including physical or human capital increases the production possibilities curve.

ultiple

Choice

Difficulty : 3 Hard



represents.

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40

29

award

10 00

points

D

PP PP2

OUTPUT

OF

OUGHNUTS

Figu e 1 5

Using Figure 1.5 if an economy

is

currently producing on PP2 which o the following would shift the production

possibilities curve toward PP1?

( An increase

in

the quantity

o

labor available.

--->( A decrease in the amount

o

capital available.

r An increase

in

the level

o

unemployment above the normal level.

I

An advancement in technology.

If resources decrease the production possibilities curve will shift inward toward the origin.

Multiple

Choice

Difficulty: 3 Hard



represents.


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points

u

0

t -

: :

a

t -

>

0

Figure 1.6

Page 13 of 40

PP

PP

OUTPUT OF

SUVs

Us

i

ng

Figure 1.6 if

an

economy has the capacity

to

produce represented by

PP1

then point E represents

I A combination of cars and SUVs that

is

not attainable.

A constant trade-off between cars and SUVs.

I A change

in

technology.

_ I

An efficient use of resources.

Any point on the production possibilities curve

is

considered efficient.

ultiple

Choice

Difficulty : 3 Hard

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Learning Objective:

1

- 2What the

production -possibilities curve

represents.

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Assignment Print

View

Page 14 of 40

31

award:

10 00

points

.

....................................

PP PP2

OUTPUT

O SUVs

Figure 1 6

In Figure 1.6, at which of the following points would the opportunity cost of producing one more car be the lowest?

.r F

r s.

r c.

r D

Since most of the economy is devoted to SUV production at point F allowing more resources to go toward car

production would result in only a small loss

of

SUVs (a low opportunity cost) . Since point D is not on a PPC, its

slope cannot not be determined .

Multiple hoice

Difficulty: 3 Hard

Learning Objective: 01 02 What the


represents.

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40

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10.00

points

. . ... . . ......

PP1 PP2

OUTPUT OF SUVs

Figure 1.6

In Figure 1.6 at which

of

the following points would the opportunity cost

of

producing one more

SUV

be highest?

C

A.

r s.

r c.

_ r

F.

Opportunity cost is determined by the slope of the production possibilities curve.

The

slope

is

steepest at point F for

all

of

the possible answers. Since point A is not on a PPC, its slope cannot be determined .

Multiple Choice Difficulty: 3 Hard

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Learning Objective: 01 -02 What the


represents.

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1

:;:)

a..

1

:::

0

0

0

0

u..

-

....

tO

Q

>

\....

Q

0

J l

.

.c:

:;,

-

A

. I

B:

tE

I

0

:

I I

- - - - - - - -

t

IF IH

I I

I I

I I

K L M

ClOTHING OUTPUT

(units per year

Refer to Figure 1.7. This economy will achieve efficiency in production at

I Point D only.

I Point G only.

r

Point J only.

r Points

D,

G, and J.

Page 16 of 40

Any point along the production possibilities curve is considered an efficient point.

Multiple

Choice

Difficulty: 3 Hard

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represents.

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points

I

B I ff

0

I I

-------- p:-----

IF IH

l I

l I

I I

K L M

CLOTHING OUTPUT

(units per

year

Figu1e 1.7

Refer to Figure 1.7. The cost of producing at point G rather than point

Dis

OA units

of

food .

I KL units of clothing .

_ r

AB units of food.

r

OL units of clothing .

Page 7 o 40

To get additional clothing, food must be given up as resources are shifted out of the food industry.

Multiple Choice

Difficulty: 3 Hard




represents.

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10 00

points

0

I

t

I

I

I

I I

t

_ _

IF

t

I

I

I

K L M

ClOTHING OUTPUT

{units per

year

Figue 1 7

Refer to Figure 1.7. The benefit of producing at point G rather than point

Dis

O units of food.

_ r KL units

of

clothing.

r

AB units

of

food.

OL units of clothing.

Page

18

o 40

By moving resources out

of

the food industry and into the clothing industry more clothing may be produced .


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I

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represents.

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points

B

0

I

- t.-

,E

I

I I

- - - - - - - - f

IF IH

I

I

I

K L M

, ,N

CLOTHING

OUTPUT

units per year

Figue 1.7

Refer to Figure 1 7. The cost of producing at point D rather than point J is

_.(' KM

units

of

clothing .

('

AC

units of food.

('

OM units

of

clothing .

('

OA units of food.

Page

9 o

40

Additional food may be produced by giving up the opportunity to produce clothing.


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represents.

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Assignment

Print View

Page

2

of

4

37

award:

10.00

points

1- 'C

t

0.. Q

I

1 >

i

Oc .

B - -

tE-

l

I

l

0

c:

0 s

u

0

Figue 1.7

I I

- - -- - - - -

t:

-

IF :a

I

I

I

K L M

ClOTHING OUTPUT

(units per year

Refer to Figure 1.7. If this economy is currently producing at point F, then by employing more resources this economy

Can move to point D, but not points G

or

J .

__ r Can move to points D, G, or J .

Can move to point

G,

but not points D or J .

(

Will remain at point F.

Inefficient production results when resources are not being fully used. Using more resources moves us toward-in

this case, onto-the production possibilities curve.

Multiple Choice

Difficulty : 3 Hard



represents.

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...................................................................................................

A

B

0

Figute 1.7

I

--------t:E

I

I

I I

,_ - _,- - - - - t t

,F IH

I

I

I

K L M

ClOT:HIING OUTPUT

units per year)

Page 2 o 40

Refer to Figure 1.7. Which of the following points are considered to be inefficient?

r

D

->(' E.

('

G

(' D

G, and J.

Production choices that fall inside the production possibilities curve are considered inefficient.

Multiple

Choice

Difficulty: 3 Hard




represents.

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points

. . , .

0

Figu e 1.7

f

N

t

E

:J

I I

f:

---

IF IH

I J

I I

I I

K L M

C

LOTHING OUTPUT

units per year

Page 22 of40

Refer to Figure 1.7. Which of the following points show unemployment

of

resources above the normal rate?

_ r

H.

r J.

r

N.

r D

Resources must be unemployed at production levels below the production possibilities curve .

Multiple Choice

Difficulty: 3 Hard

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i a l : > i e 1 f s t i o w s i i l e t i y p o t t 1 e t i C : a f i r a d e ~ o H

I : > e i W e e n

r e n l c o m 5 i r i a i i o r i s o f s l e a H h

h o m 5 e r s a n d b o m l : > e r s

t t i a i

might be produced in a year with the limited U.S. capacity, ceteris paribus Complete the table by calculating the

required opportunity costs for both the

B-1

and Stealth bombers.

O

pp

ortunity cost

O p p o r t u n i t ~

N

umb

er

o f S

l t h

Cost

ofB ls

in

of

Stealth

Bombers in

N

umb

er

Tenus

of Stealth

Combination

Bombers

Terms ofB

l

s

ofB

l

s

Bombers

s 10

0

T 9

1

lJ

7

)

v J

.

.

_

.

Table

1 1

Production ssibilities fm Bombers

In the production range of 7 to 9 Stealth bombers, the opportunity cost of producing 1 more Stealth bomber in terms of B

-1s is

o.

r 3.

_ r o.s.

c 2.

In this production range, 2 additional stealth bombers require us to forgo the opportunity to produce one entire

B-1

bomber, or half a B-1 bomber for each Stealth bomber.

Opportunity cost

Number

of

Stealth

of

Stealth Bombers

in

Co

mbinati

on

Bombers

Terms

ofB ls

s

10

T

9

1 1

= 1

tT

7

l

+ 2

= 0.5

y

4

t

1

0 0 '

';

= ,.) ,)

Table 1 1 n ~ w e r s

Multiple

Choice

Difficulty: 3 Hard

Opportunity

Cost

ofB ls

li

Number

Tenus of

Stealth

ofB ls

Bombers

0

1

1

T

1

:::::;:

1

2

2 -;-

1

::::;: )

.., ..,

J

..,

.

;

= ,)

Learning Objective:

01

-

01

How


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Page 24 of 40

41

award:

10 00

points

................... i'ahie 1.:fsii.ows

iile

. tiypoiiiet i'cai rade-otfhetvie.enartterent

c:

amhl.riai ions.Cif'steartii.hom5ers.aria o m h

might be produced in a year with the limited U.S. capacity, cet

is paribus Complete the table by calculating the

requ ired opportunity costs for both the B-1 and Stealth bombers.

Oppor

tunity cost

Opportunity

Nu

mber

of

Stealth

Cost o

fB-1

sin

of Stealth

Bo

mbers in

Number

Terms of Stealth

Combination Bombers

Terms of B-ls

ofB

-

ls

Bombers

s

10

0

T

1

l

7

2

\

J

' '

T

ab l

e l l

Pt

oducti o

trl

P

ossibili

ties f o li

o b

ers

The highest opportunity cost anywhere in Table 1.1 for Stealth bombers in terms

of

B-1 bombers is

__ r 1 B-1 bomber per Stealth bomber.

r

3 B-1 bombers per Stealth bomber.

r 2 B-1 bombers per Stealth bomber.

r

0.5 B-1 bomber per Stealth bomber.

This is one of the extreme points on the production possibilities curve where it meets the axis on the Stealth bomber

end.

Op

port

unity c.ost

Number

of

Stealth

of

Stealth

Bombers

in

Combination

Bombers Tenus ofB -ls

s

0

T

1 1

= 1

l

7

1

+ 2

=

0.5

,.

4

J

.

- \

- 0 .

-:- _ -

,. .

T

abl

e 11 An

swe

ts

Multiple Choice

Difficulty : 3 Hard

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Opportunity

Co t of

B-l s in

N

umber

Tenn

.:

of

Stealth

ofB -ls Bombers

0

1 1

1

=

1

2

2

1

= 2

'

...

1

= .i

_

-:-

Learning Objective:

01

-01 How


9117/2013


25/40


Page 25 of 40

42

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points

Tat>ie;

:; :s .ows tlle.tiypothet iC:afirade-otf t>etvie.en di.fferentcoilihi'riaiioils.of'.s ea iih . o m b e r s a i C i s ~ ..


required opportunity costs for both the B-1 and Stealth bombers.

Oppo

rtunity cost

Opportunity

N

umb

er

of

SteaJth Cost

f

B-1

H

in

of Stealth Bombers in

Number

Terms

of

Stealth

Combination Bombers.

Tenn s of

B 1

s ofB -ls

Bombers

s

10

0

T 9

1

u

7

')

v

4

._

, '

T tble 1 1

P1oducdon Possibilities fot Bombers

The highest opportunity cost anywhere in Table 1.1 for B-1 bombers in terms of Stealth bombers is

I 1 Stealth bomber per B-1 bomber.

>r

3 Stealth bombers per

B-1

bomber.

( 2 Stealth bombers per B-1 bomber.

I 0.5 Stealth bomber per

B-1

bomber.

This is one of the extreme points on the production possibilities curve where it meets the axis on the B-1 bomber end.

p p o r

t u n i t

cost

Nmnber

of

Stealth

of Stealth Bombers in

Combination

Bombers Terms ofB -ls

s

[0

T 9

I+

l

;;;::; 1

lT

7

1 + 2 = 0.5

\ .

4

I

1

_: _ -

0

.

_. \

- -,

.

Table 1 1 Answers

Multiple Cho ice

Difficulty : 3 Hard

Opportunity

Cost of B

-l

s in

Number

Terms

of

Stealth

ofB -ls Bombers

0

1

1 1 = 1

)

2 7 1 = 2

.)

;) +

-



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26/40


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40

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10.00

points

: : r a b i e

1 s t i o w s t i l e

i l ' Y i > o t h e t i c ~ i ' i t r a d e ~ o f i

.. etween.. i f i e r e n t c o m b i l 1 a i i o l 1 5 o i s i e a h h t o m b e r s i i f s ~ b a m b e r s

f i 1 a i

might be produced in a year with the limited U.S. capacity,

ceteris paribus

Complete the table by calculating the


B 1


N

umber

of

Stealth

Combination Bombers

s 10

T 9

tT

7

v 4

Table

1.1

Opp()I tlmity

cost

of

Stealth

Bombers in

Tenus ofB ls

Production

Possibilities fm Bontbers

Number

ofB ls

0

1

2

Opportunity

Cost

of

B-1 s in

Terms of Stealth

Bombers

The lowest opportunity cost anywhere in Table 1.1 for B 1 bombers in terms

of

Stealth bombers is

r

0 Stealth bombers per B 1 bomber.

C,

2 Stealth bombers per B 1 bomber.

_ r 1 Stealth bomber per B 1 bomber.

0.5 Stealth bomber per B 1 bomber.

This

is

one of the extreme points on the production possibilities curve where it meets the axis on the Stealth bomber

end.

Number

of

Stealth

Combination Bombers

s

10

T 9

u

7

ultiple

Choice

I

I

p p o r t u n t ~ cost

of Stealth

Bombers

in

Terms of B ls

1+ 1 = 1

1

;

2

=

0.5

Difficulty: 3 Hard

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Number

ofB

ls

0

1

2

Oppotiunity

Cost

of

B-1 s in

Terms

of

Stealth

Bombers

1 + 1 = 1

2 + 1 = 2



9/17/2013


27/40

Assignment Print

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award :

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points

fabie 1.2 sil.ows i l e i l y p o t t i e t i c a i i r a d e ~ o t f b e t w e e n a i t t e r e n t c.oiTi6inatioii.s ofstealth bombersanCi f b o i T i 5 e r s tilai


required opportunity costs for both the B-1 and Stealth bombers.

l

Opportunity Cost of

Number of

Skalth Bomb


28/40

Assignment

Print

View

Page

28 of

4

45.

award:

10.00

points

fable 12"5ilows .

i1e

i l y p o t i l e t i r a C i e ~ o t f 5 e t v : i e e n a i f i e r e n t c o m b t i c i i i s

s i e a

i h h o m b e i s bomhe.

rs

.

ilat

might be produced in a year with the limited U.S. capacity ,

ceteris paribus.

Complete the table by calculating the


B-1


Opportunity Cost

of

Numher

of

Sh alth

Bombers in Number

of

Opportunity Cost

ofR

-

Stealth

Terms

ofB

-1

B-1

1 Bombers in

Tenns of

Combination

Bombers Bombers

Bomber

s Stealth Bombers

. 195

20

B 180

35

(

150 45

D

100

50

.

Ta ble 1.1

rroduction Possibilities fot Bombers

On the basis of your calculations in Table 1.2 what is gained by producing at point B rather than po int A?

r

35 B-1 bombers.

( ' 195 Stealth bombers.

.r 15 B-1

bombers.

( ' 15 Stealth bombers.

Reallocating resources to

B-1

bombers will allow 15 35- 20) B-1 bombers to be produced .

I

Opportunity

C o ~ t

of

umber

of

Stealth Bombers in

Stealth

Tenus ofB

-1

Combination Bombers Bombers

_\

I

195

B

180 5 15 1

c

1

50

10 30:::: 0.33

D

100

5

5 =

O.l

Table 12

Ans

wers

Multiple Choice

Difficulty : 3 Hard

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tpx

Number

of

Opportunity Cost

ofB

-

B-1 l

Bombers in T

enns of

Bombers Stealth Bombers

20

-..

1

5 15

1

4 5

3

+ 1

=

3

50 50 5

=

10

Learning Objective:

01

-

01

How


9/17/2013


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10.00

points

i'a&i9

'

:3

'

5ti

.

ows

f e

..

i y i o i f 1 e i i c a i i r a C i e ~ o f : r e ; t : . : v e ; e ; i 1 o n ; h r r i a : i o f h r u s f l e 5 a r i C I o m h s i f 1 a t 9 t i t p r o J u c e a

in a year with the limited capacity for Country X,

ceteris paribus

Complete the table by calculating the required

opportunity costs for brushes and combs.

O

pp

ortunity Cost

Number

of Brushes in Opportunity Cost

of Terms

: lumber

of

Combs in Terms

Combination Bmshes

of

Combs

of

Combs of

Brushes

J 0

4

K

10

..

L

17 2

M

21 1

N 23 0

Table 1.3

Production Possibilities for Brushes and Combs

On the basis

o

your calculations in Table 1 3, what is gained by producing at point M rather than point N?

r

23 combs.

r 21 combs.

_ r 1 comb.

(

2 combs.

Sh

ifting resources toward production

o

combs allows for greater comb production (1 - 0).

O

pp

ortunity Cost

Number

of Brushes in

of

T


30/40


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tabie1:3.

5tiows

.

itie

..

l y p o i t i e t k : a f i r a d e ~ o f i

b e t w e e i l a Y f i e r e n c o r l i b f r 1 a i i o r 1 5 o i h r u s

t i e s a r 1 a

c : c ; r r ; t i t i a f

r r ; i 9 h i . 5 9

proauc:ea

in

a year with the limited capacity for Country

X ceteris paribus.

Complete the table

by

calculating the required


Opportunity Cost

Number

ofBnn:hes in

Oppm1unity

Cost

of

Terms

~ u m e r

of

Combs in Terms

Combi11ation

Brushes

of

Co

mb

s

of Combs

of Brushes

J 0

4

K

10

3

L

17

2

M

21

1

N

-

0

Table 1.3

Production Possibilities for Brushes ami

Combs

On the basis of your calculations in Table 1.3 what is gained from producing at point L rather than point

K?

I 17 combs.

10 combs.

1 brush.

__.( 7 brushes.

Shifting resources toward production of brushes allows for greater brush production

17-

10 .

Number

of

Combination B111sltes

J 0

K

10

L

17

M

21

N

23

Table 1.3 Answers

Multiple Choice

Opportunity Cost

ofBrushes

in

Terms

of Combs

1710

=

0.10

177 =0

.

14

1

+

4 = 0.25

1 + 2 = 0.50

Difficulty: 3 Hard

Opportunity Cost

~ u m e r

ofCombs in

Tenus

of Combs

ofBnlshes

4

3

I

10

7 1

=

10

2

i

7 1=7

I

1

I

4

;

1 = 4

0

2 1

=2



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points

Ta6ie1

:

35tiow5 i l e i l Y i > o i i l e t i C : a f i r a d e ~ o H b e t w e a i f i e r e o m i n i i o n o T h r l i s f 1 e s and

.

com55

.

if1afmi911i

be

proa

ucea

in a year with the limited capacity for Country X

ceteris paribus


opportunity costs for brushes and combs .

Opportunity Cost

Number

of Brushes in

Opportunity Cost

of

Terms )Jumber

ofCombs in Terms

Co

mbination

Bntshe of Combs

of Combs

of

Brushes

J

0

4

K 10

..

_

L

17

2

M 21

1

N

' ) '

-

0

Table 1.3

Prmluction Possibilities for Brushes and Combs

On

the basis of your calculations in Table 1.3 the law of increasing opportunity costs applies to

>r

Both brushes

and

combs.

Combs but not brushes.

r

Brushes but not combs.

I Neither brushes nor combs.

A production possibilities curve will be bowed out from the origin where there are increasing opportunity costs.

Opportunity Cost

Number

of Bt1lshes

in

of Terms

Combittation Brushes

of

Combs

J

0

K 10

1 7 10 = 0.10

L 17

7 7=0.

14

~ v (

21

1

.;.

4 = 0.25

N 23 1 .;. 2

=

0.50

Table 1.3 Answers

Multiple hoice

Difficulty: 3 Hard

http:/ ezio.mhecloud.mcgraw-hill.comlhm.tpx

Opportunity Cost

Jumber

ofCombs

in

Terms

of Combs

ofBrushes

4

i

3

10

l = 10

2

7-7-1=7

1

4+ 1=4

0

I

I

2.; .1=2



9/17/2013


32/40

Assignment

Print

View

Page 32

of

4

49.

award:

10.00

points

fabie 1.35ti.ow5.ifle t i y i o t h e t f r a i e o f 6 e t w e e n dittererit.comhi.riations.of'5-us'hes

anci com55 .i

i1a

t mi

9'h't

.he

pr

oCiucea

in a year with the limited capacity for Country X, ceteris paribus



Opportunity

Co

st

Number

of Brushes in

Opportunity Cost

of

Terms

::.lum

ber

of

Combs in

Tenu

s

Combination

Bms

hes

of Combs

of

Co

mbs

ofBrushes

J 0

4

K

10

3

L

17

2

M

21

1

N

-'

0

Table 1.3

Pr

oduction Possibilities for Brushes anc:l

Combs

On the basis of your calculations

in

Table 1.3,

in

the production range of 2 to 3 combs the opportunity cost of producing

1 more comb in terms

of

brushes is

r

3.33.

(

7.0.

r

o.67.

r

o.14.

Shifting resources toward more combs requires a drop in the production

of

brushes.

Opportunity Cost

N

umb

er of Brushes in

of

Terms

Combination Bm shes of Combs

J 0

K

10

1-:-10 = 0.10

L 17

1-:-7 = 0.14

lvf 21

1 ..;. 4 = 0.25

N

2 '

I

..;..

2

=

0.50

T11ble

1.3 An

s

wer

s


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Opportunity

Cos

t

Number

of

Combs in Te

nu

s

of

Combs

of Brushes

4

3

I

I

10-:-1 = 10

2

I

7 :

1 = 7

1

I

4 .;.. 1= 4

0

I

2 .;.. 1 = 2

Learning Object ive: 01-01 H

ow


9/ 17/2013


33/40


Page 33

of

40

award:

50

10.00

points

ra5i91:3.5iiows tfie i y i > o t h e t i C : a T i r a d e ~ o t t e t w e e n

a i i f e

r , t e : c ; n ; b r r a t i o r 5 o f b r i J s i i e s a r 1 C i c o m s t i i a t m i ~ i h i i > r o d u c e d

in a year with the limited capacity for Country X, ceteris paribus Complete the table by calculating the required


Opportunity Cost

Number

of r u s h ~

s

in

Oppmiunity

Cost

of

Terms

~ u m b e r

of Combs in Tenus

Combination

Bmshes

of

Combs

of Combs

of

Brushes

J

0

4

K 10

3

L

17

2

1v[

21

1

N

23

0

Table

1.3

Production

Possibilities

for

Brushes

anti

Combs

On the basis

o

your calculations

in

Table 1.

3,

in the production range

o 21

to 23 brushes the opportunity cost

o

producing more comb

in

terms

o

brushes

is

r 1/21 .

21/23.

_ r

1/2.

4.

Shifting resources toward more brushes (2) requires a drop

in

the production

o

combs 1 ). Therefore for each 1

brush, Y a comb is given up

1

divided by 2).

Opportunity Cost

Number

ofBrushes

in

of Terms

Combination

Bmshes

of

Combs

J

0

K 10

1 : 10

=0

.10

L 17

1 7

=0 .14

} ;{

21

1 ; 4 = 0.25

N

23

1 ;

2 = 0.50

Table

1.3 Answers



Opportunity Cost

~ u m b e r

ofCombs

in Terms

of

Combs

of

Brushes

4

3

I

10 -i-

1 = 10

2

I

7-:-1=7

I

1

I

4 1=4

0

I

2 1

= 2



9/17/2013


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Page 34 of 40

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10.00

points

. . i abie 1 3shows the hypotheticaf r d e ~ o f f between different'combinations'

of

hrus.hesand'comtisthat might be-produced

in a year with the limited capacity for Country

X

ceteris paribus Complete the table by calculating the required


Opportunity Cost

Number

of

Brushes in

Opportunity Cost

of

Terms

:.I

umber

of

Combs in Terms

Combination

Bmshes

of Combs.

of Combs

of

Brushes

J

0

4

K

10

3

L

17

)

M

21

1

N

23

.

0

Table 1.3

Production Possibilities for Brushes and Combs

On

the basis of your calculations

in

Table 1.3,

in

the production range

of

1 to 2 combs the opportunity cost

of

producing

1 more comb

in

terms

of

brushes is

_ r 4.

( 1/2.

r 2111

( 1/7.

Shifting resources toward more combs requires a drop in the production

of

brushes.

Opportunity Cost

Numbet

ofBrushes

in

of

Terms

Combination Bmsltes of Combs

J

0

K

10

1..;-10

=0 .10

L

17

1..;-7

=0

14

lvf

21 1.;. 4

=

0.25

N l.;. 2 = 0.50

~ l b l e 1.3 Answers


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Opportunity Cost

:.I

umber

ofCombs

in Terms

of

Combs

I

ofBrushes

4

3

I I

10..;-1 = 10

2

7..;-1 = 7

1

I

I

4 ; 1=4

0

I

I

2+1=2

I



9117/2013


35/40


Page 35 of 40

52.

awa

rd

:

10.00

points

.

....

. faiJie 1

Ssti

.ows ttie

t i y p o t i l e t r a d e i e t w e e n

di fferen

t c

cimbinations ot b

ru

s

h

es .and combs.ttiat .mi9 hi.tie produced.

in

a year with the limited capacity for Country X , ceteris paribus. Complete the table by calculating the requ ired


Opportuni ty Cost

Number

o

fB

rushes in

Oppmiunity Cost

of

Terms

:.lumber

of Combs in Tenus

Combination

Brushes of Co

mb

s

of Combs

ofBr

ushes

J 0

4

K 10

'

L

17 2

M

21 1

N

?'

.

0

Table 1.3

Pr

oduction

Possibilities for Bru shes and Combs

On the basis

of

your calculations

in

Table 1.3, the highest opportunity cost for brushes

in

terms

of

combs is

( 0.10 comb per brush .

(

23 combs per brush.

__.(

0.50 comb per brush .

( 0.29 comb per brush.

This is a point where the production possibilities curve touches the axis. The opportunity costs are 0.1 0, 0.14, 0.25,

and 0.5, respectively , as

we

increase brush production.

Oppormnity Cost

Number of B

ru

shes in

of

Terms

Combination Brushes

of

Co

mb

s

J

0

K

10

1 7 10 = 0 10

L

17

17

7 = 0.14

vf

21

1 7 4 = 0.25

N

,

1 + 2 = 0 50

T ~ l b l e 1.3 An

sw

ers

Multiple

Choice

Difficulty: 3 Hard

http:/ ezto.mhecloud.mcgraw-hill.comlhm.tpx

Op

port

unity Cost

:Jumber

of

Combs in

Ten

us

of Combs

of

Br

ushes

4

3

2

1

0

17 = 10

I

77

= 7

I

4+

1= 4

I

2+

1 = 2

Learning Objective:

01

-02 What the


represents.

9/17/2013


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Page 36 of40

53.

award:

10.00

points

................. .

........

ffibi9

1. ShOWS .ih9

hYPOihE tiC8

fi

rade ot

f

betwe

en

different

com'binaiiO.

l S

.Ofhrush9S

8nd

COrrlbS ihat

might b9

poauced

n

a year with the limited capacity for Country X,

ceteris paribus


opportunity costs for brushes and combs .

Opportunity Cost

Number of

Brushes

in

Opportunity Cost

of

Tenns

~ u

of Co

mb

s in Terms

Co mbi1tr 2 brushes per comb.

r 0.33 brush per comb.

8.5 brushes

per

comb.

This is a point where the production possibilities curve touches the axis. For each combination , the opportunity costs

for 1 comb are 10, 7, 4, and 2.

Oppl)ft\lnity Cost

Number

of

Brushes

in

of

Tenn s

Combination Bntshes

of

Combs

J 0

K

10

1-;-10=0 .10

L

17

}-;-7 =0. 14

}v(

21

1 ; 4 = 0.25

N

2:1

1

.;.

2 = 0.50

~ l b l e

1.3 Answers

Multiple hoice

Difficulty: 3 Hard

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Opportunity Cost

:'-Jumber

of Co

mbs in Terms

of

Combs

I

ofBrushes

4

3

2

1

0

I

I

10 ; 1

=

10

7-;-1 = 7

I

4 ; 1=4

I

2 ; 1=2



represents.

9/17/2013


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Page 37 of 40

54.

award:

10.00

points

. . . .

.......

.

4 5

4.0

3.5

3.0

2 5

2.0

l.S

l O

5

Figure

1.8

1

0

20 30

S

TUD

Y

TIME

Rehding t ~ d e s

and

Hours Studied

Figure 1.8 suggests that

40

The law o increasing opportunity cost does not apply.

5 ]

Resources can be perfectly adapted between study time and grade po int average.

_

The relationship between study time and grade point average is first linear then nonlinea

r

The relationship between study time and grade point average is constant.

The function beg ins with a constant positive slope and then

it

becomes nonconstant

Multiple Choice

Difficulty : 2 Med ium



represents.

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55

award:

10.00

points

y

80

50

30

15

0

25 50

7

Figure 1 9

Ivf

100

In

Figure 1.9 the slope

o

the line between points K and L is

r 1.25.

_.r

o.

8o

.

o. .

o.

6o

.

Page 38 of 40

x

The slope

is

calculated as the change

in

the vertical variable divided by the change

in

the horizontal variable 0.80 =

20/25).

Multiple Choice


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Learning Objective: 01 -01 How


9/17/2013


39/40


award:

56

10 00

points

....... ..

.

. .

y

80

50

3

5

0

25

50 75

Figure 1 9

In Figure 1.9 the slope of the line is

Greater at point K than point L

Equal

to

zero at all points.

The same at points J and K.

___,( , Greater at point M than point L

Page 39 of 40

100

The slope increases as we move from left to right because the curve is getting steeper.

57

Multiple

hoice

award:

10 00

points




iiius

.

i19

a

9i.Ji1s alid

6liiter

.

proauc:Hc;

i

possibiiiiiescuiVe

wiifl.

ncreasii19

.

opportui1iiY

c:ost

p; oaudil9

:nc;;.9

ar;a

:nc:i;.e

tanks

(

Lowers the cost

of

each individual tank.

r Can be done at a constant opportunity cost.

_ r Requires us to give up larger and larger amounts of butter per tank produced.

Is not possible due to scarcity.

This is because

of

the law

of

increasing opportunity cost.

Multiple

Choice

Difficulty: 3 Hard



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.mhecloud.mcgraw hill.corn/hm. px

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58

award :

10 00

points

Page 40 of4

G.reaier.re9Liiaiion.

io

correc:tiile.i m5alai1ces.iii ttie.economy:-a;;;ei 9overnmeili . i1teiVentioii .

io

;:naintaintull

employment, was associated primarily with the work of

.1 John Maynard Keynes.

I Adam Smith.

I Karl Marx.

I Ronald Reagan.

This forms the basis of the Keynesian school of economics.

Multiple

Choice Difficulty :

2

Medium

Learning Objective: -04 How



sample test for chapter 1

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