Econ 102 - Principles of Macroeconomics » Spring 2020 » iVAT Chapter 2

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Question #1
An intercept on either axis  represents a point:
A.   where 150 percent of the economy is devoted to producing that good
B.   comparative disadvantage
C.   of inefficiency
D.   where 100 percent of the economy is devoted to producing that good
E.   where 90 percent of the economy is devoted to producing that good
Question #2
When you steadily increase banana production and have to give up an ever increasing amount of coal production. This is an example of:
A.   production possibility surpluses
B.   diverting opportunity costs
C.   increasing opportunity costs
D.   decreasing marginal opportunity costs
E.   comparative complexity
Question #3
Suppose there is a simple two good economy that produces glass and iron.  If glass production is increased and relatively little iron is foregone. This means that the following is occuring:
A.   resources that are better suited towards iron production are being converted from the glass sector
B.   the production possibilities curve shifted inwards
C.   the production possibilities curve is becoming steeper
D.   resources that are better suited towards glass production are being converted from the iron sector
E.   the economy is violating the law of increasing costs
Question #4
Comparative advantage arises because:
A.   labor increases efficiency
B.   all resources are equally effective in the production of all goods
C.   some resources, people, firms, and nations are more efficient at producing certain goods/services than alternative goods/services.
D.   specialization and the division of labor help markets function more effectively
E.   opportunity costs are maximized.
Question #5
If you move along the production possibility curve and the opportunity cost of producing one good in terms of another increases steadily, than the production possibility curve must be:
A.   must be bowed inwards
B.   a straight line
C.   must be bowed outwards
D.   must be inverted
E.   an indeterminate shape
Question #6
Production possibility curve with increasing opportunity costs are:
A.   extremely flat
B.   bowed outward
C.   exponential
D.   a straight line
E.   relatively flat
Question #7
Points outside of the production possibility curve are:
A.   unattainable
B.   disentangled
C.   attainable and deficient
D.   attainable and inefficient
E.   due to comparative advantage
Question #8
Points below the production possibility curve:
A.   can occur when all resources are not being utilized
B.   can occur when the maximum amount of production possible is taking place
C.   can be due to comparative advantage
D.   can be attainable and efficient
E.   can be attainable and complex
Question #9
The shifting inwards of one of the production possibility curves intercepts represents:
A.   a productivity capacity decline in both goods
B.   disequilibrium
C.   gains from trade
D.   a productive capacity decline in one good
E.   comparative advantage gains
Question #10
Suppose that two countries engage in trade with one another and the production possibility model predicts that there will incredible gains from trade between the two countries.
A.   There can be productivity gains in one sector.
B.   Countries won't necessarily produce what they have comparative advantage in.
C.   All of the resources might not be able to transferred between the sectors in an economy.  This will effectively leave some resources to remain idle.
D.   All of the resources will be transferred between the sectors in an economy.  This will effectively leave some resources to remain idle. This can cause productivity declines in the short-term.
E.   A financial bubble an occur that causes production to be greater than predicted.

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