NAIMMCQ: Production Possibilities Frontier Framework

Refer to Exhibit 2-9. For Adam, the opportunity cost of producing one unit of good A is __ unit(s) of good B.

Refer to Exhibit 2-9. For Adam, the opportunity cost of producing one unit of good A is ____________ unit(s) of good B.

a. 3.00
b. 0.33
c. 0.75
d. 1.33

ANS: D

Refer to Exhibit 2-9. For Adam, the opportunity cost of producing one unit of good B is __ unit(s) of good A.

Refer to Exhibit 2-9. For Adam, the opportunity cost of producing one unit of good B is ____________ unit(s) of good A.

a. 3.00
b. 0.33
c. 0.75
d. 1.33

ANS: C

Refer to Exhibit 2-9. For Alex, the opportunity cost of producing one unit of good B is __ unit(s) of good A.

Refer to Exhibit 2-9. For Alex, the opportunity cost of producing one unit of good B is ____________ unit(s) of good A.

a. 3.00
b. 0.33
c. 0.75
d. 1.33

ANS: B

Refer to Exhibit 2-9. For Alex, the opportunity cost of producing one unit of good A is __ unit(s) of good B.

Refer to Exhibit 2-9. For Alex, the opportunity cost of producing one unit of good A is ____________ unit(s) of good B.

a. 3.00
b. 0.33
c. 0.75
d. 1.33

ANS: A

Refer to Exhibit 2-9. If Alex and Adam each specialize in the good in which he has a comparative advantage and then engage in trade, ____ can consume a combination of goods that lies beyond his PPF.

a. Alex, but not Adam,
b. Adam, but not Alex
c. Alex and Adam
d. neither Alex nor Adam

ANS: C

Refer to Exhibit 2-9. Who has the comparative advantage in the production of good B?

a. Alex
b. Adam
c. Both Alex and Adam
d. Neither Alex nor Adam

ANS: A

Refer to Exhibit 2-9. Who has the comparative advantage in the production of good A?

a. Alex
b. Adam
c. Both Alex and Adam
d. Neither Alex nor Adam

ANS: B

Refer to Exhibit 2-8. For Maria, the opportunity cost of producing one unit of good Y is ___________ unit(s) of good X.

a. 2.00
b. 1.00
c. 10.00
d. 0.50

ANS: B

Refer to Exhibit 2-8. For Maya, the opportunity cost of producing one unit of good Y is ___________ unit(s) of good X.

a. 2.00
b. 1.00
c. 10.00
d. 0.50

ANS: A

Refer to Exhibit 2-8. For Maria, the opportunity cost of producing one unit of good X is ___________ unit(s) of good Y.

a. 2.00
b. 1.00
c. 10.00
d. 0.50

ANS: B

Refer to Exhibit 2-8. For Maya, the opportunity cost of producing one unit of good X is ___ unit(s) of good Y.

Refer to Exhibit 2-8. For Maya, the opportunity cost of producing one unit of good X is ___________ unit(s) of good Y.

a. 2.00
b. 1.00
c. 10.00
d. 0.50

ANS: D

Refer to Exhibit 2-8. If Maria and Maya each specialize in the good in which she has a comparative advantage and then engage in trade, _______ can consume a combination of goods that lies beyond her PPF.

Refer to Exhibit 2-8. If Maria and Maya each specialize in the good in which she has a comparative advantage and then engage in trade, ____________________ can consume a combination of goods that lies beyond her PPF.

a. Maria, but not Maya,
b. Maya, but not Maria,
c. both Maria and Maya
d. neither Maria nor Maya

ANS: C

Refer to Exhibit 2-8. Who has the comparative advantage in the production of good Y?

a. Maria
b. Maya
c. Both Maria and Maya
d. Neither Maria nor Maya

ANS: A

Refer to Exhibit 2-8. Who has the comparative advantage in the production of good X?

a. Maria
b. Maya
c. Both Maria and Maya
d. Neither Maria nor Maya

ANS: B

The PPF between goods X and Y will be a downward-sloping

a. straight line if increasing opportunity costs exist.
b. straight line if decreasing opportunity costs exist.
c. curve that is bowed inward if increasing opportunity costs exist.
d. straight line if constant opportunity costs exist.

ANS: D

Suppose Andrea is taking just two courses and is at a point inside her PPF of grades for those two courses. If Andrea changes her work habits then it is impossible for

a. either one of her grades to rise.
b. both of her grades to rise.
c. both of her grades to fall.
d. either one of her grades to rise while the other grade remains constant.
e. none of the above is impossible in this situation

ANS: E

Suppose Andrea is taking just two courses and is at a point on her PPF of grades for those two courses. Now this PPF shifts inward and Andrea moves to a point on the new PPF. Then it is impossible for

a. both of her grades to fall.
b. both of her grades to rise.
c. one of her grades to rise and the other grade to fall.
d. one of her grades to fall while the other grade stays constant.

ANS: B

Between 1910 and today, the number of farmers in the United States dramatically as a result of _ in farming in the twentieth century.

Between 1910 and today, the number of farmers in the United States _ dramatically as a result of _______ in farming in the twentieth century.

a. dropped; technological improvements
b. rose; technological improvements
c. dropped; technological declines
d. rose; technological declines

ANS: A

A person has a comparative advantage in the production of a good when they can produce the product at a(n) ________ opportunity cost compared to another person.

a. higher
b. increasing
c. lower
d. equal

ANS: C

Michael can produce the following combinations of X and Y: 10X and 10Y, 5X and 15Y, and 0X and 20Y. Vernon can produce the following combinations of X and Y: 100X and 20Y, 50X and 30Y, or 0X and 40Y. It follows that

a. Michael has the comparative advantage in producing X and Vernon has the comparative advantage in producing Y.
b. Michael has the comparative advantage in producing Y and Vernon has the comparative advantage in producing X.
c. Neither Michael nor Vernon has a comparative advantage in producing X.
d. Neither Michael nor Vernon has a comparative advantage in producing Y.
e. There is not enough information to answer the question.

ANS: B