Question : 3.5   Chapter Figures 1) The figure above shows a production possibilities : 1226381

 

3.5   Chapter Figures

 

 

1) The figure above shows a production possibilities frontier. In the figure, which of the following combinations of the two goods cannot be produced with the current resources and technology?

A) 2 million cell phones and 13 million DVDs

B) 4 million cell phones and 4 million DVDs

C) 1 million cell phones and 14 million DVDs

D) 3 million cell phones and 5 million DVDs

E) 5 million cell phones and no DVDs

2) The figure above shows a production possibilities frontier. In the figure, which of the following combinations of the two goods are efficient?

A) 2 million cell phones and 13 million DVDs

B) 5 million cell phones and 15 million DVDs

C) No cell phones and 15 million DVDs

D) 4 million cell phones and 4 million DVDs

E) None of these combinations is efficient.

 

3) The figure above shows a production possibilities frontier. In the figure, the economy faces a tradeoff when ________ cell phones and ________ DVDs. are produced.

A) 3 million; 9 million

B) 2 million; 9 million

C) 3 million; 8 million

D) 4.5 million; no

E) 5 million; 15 million

 

4) The figure above shows a production possibilities frontier. In the figure, when the economy moves from point E to point D, what is the opportunity cost of a DVD?

A) 0.25 cell phones

B) 0.5 cell phones

C) 1 cell phone

D) 4 cell phones

E) zero

5) The figure above shows a production possibilities frontier. In the figure, when the economy moves from point D to point C, the opportunity cost of producing one more DVD ________, and when it moves from point C to D, the opportunity cost of producing one more cell phone ________.

A) increases; increases

B) increases; decreases

C) decreases; decreases

D) decreases; increases

E) increases; remains the same

 

6) The figure above shows a production possibilities frontier. In the figure, when the economy moves from point C to point B, what is the opportunity cost of a DVD?

A) 0.5 cell phones

B) 2 cell phones

C) 0.5 million cell phones

D) 2 million cell phones

E) zero

 

7) The figure above shows how the PPF for cell phones and new cell-phone factories can expand. In the figure, if the economy produced 4 million cell phones using the resources efficiently, the PPF would

A) expand, but not as far as shown in the figure.

B) not expand.

C) expand farther than shown in the figure.

D) expand along the vertical axis and not along the horizontal axis.

E) expand evenly along both axes.

 

8) The figure above shows how the PPF for cell phones and new cell-phone factories can expand. In the figure, if the economy chose the point on this year’s PPF that is above point K, the next year’s PPF would

A) shift outward along the horizontal axis farther than the new PPF shown in the figure.

B) shift outward along the horizontal axis, but not as far as the new PPF shown in the figure.

C) shift outward along the vertical axis, not along the horizontal axis.

D) shift inward along the horizontal axis.

E) shift inward along the vertical axis.

9) The figure above shows how the PPF for cell phones and new cell-phone factories can expand. In the figure, if the economy chose the point on this year’s PPF that is below point K, the next year’s PPF would

A) shift outward along the horizontal axis farther than the new PPF shown in the figure.

B) shift outward along the horizontal axis, but not as far as the new PPF shown in the figure.

C) shift outward along the vertical axis, not along the horizontal axis.

D) shift inward along the horizontal axis.

E) shift inward along the vertical axis.

 

The figure above show Liz’s and Joe’s production possibilities for Salads and Smoothies.

 

10) Liz has a comparative advantage in ________ and an absolute advantage in ________.

A) smoothies only; both goods

B) smoothies only; smoothies only

C) both goods; both goods

D) salads only; both goods

E) salads only; salads only

11) Liz has a comparative advantage in ________ because ________.

A) smoothies; her opportunity cost of producing smoothies is lower than Joe’s

B) salads; her opportunity cost of producing salads is lower than Joe’s

C) smoothies; she can produce more smoothies per hour than Joe can

D) salads; she can produce more salads per hour than Joe can

E) both goods; she can produce more of both goods per hour than Joe can

 

12) Given the information in the figure above, Liz ________ benefit from trade with Joe because ________.

A) can; each of them has a comparative advantage in one of the goods

B) can; each of them has an absolute advantage in one of the goods

C) cannot; she has an absolute advantage in both goods

D) cannot; she has a comparative advantage in both goods

E) can; Joe is more productive in producing one of the goods

 

13) Given the information in the figure above, Joe can benefit from trade as far as the price at which he buys Liz’s smoothies is

A) below 5 salads per smoothie.

B) not higher than 2 salads per smoothie.

C) not lower than 2 salads per smoothie.

D) not lower than 1 salad per smoothie.

E) not higher than 4 salads per smoothie.

14) Using the figure above, suppose with no trade Liz and Joe each produce at point A on their respective PPFs. Then, Liz suggests that they specialize and trade. She would produces only smoothies and Joe would produce only salads. Then she would sell 10 smoothies to Joe at a price of 2.5 salads per smoothie. In this scenario,

A) Liz gains 10 smoothies and 5 salads, and Joe gains 5 smoothies.

B) Liz gains 5 smoothies, and Joe gains 10 smoothies.

C) Liz gains 10 smoothies, and Joe loses 5 smoothies.

D) Liz gains 5 smoothies and 5 salads, and Joe loses 5 salads.

E) None of the individuals gain from trade.

 

15) Using the figure above, suppose with no trade Liz and Joe each produce at point A on their respective PPFs. Then, Joe suggests that they specialize and trade. He would produces only salads and Liz would produce only smoothies. Then, Joe says, he would buy 16 smoothies from Liz at a price of 1.5 salads per smoothie. Liz should

A) accept Joe’s offer since she will gain 4 smoothies and 4 salads.

B) accept Joe’s offer as she will be as well off as with no trade.

C) not accept Joe’s offer as the price he offers is too low for her to gain from trade.

D) not accept Joe’s offer since she would lose 2 smoothies and 2 salads.

E) accept Joe’s offer since she will gain 4 salads.