Question 1
2 / 2 pts
The opportunity cost of every investment in capital goods is:
current consumption (consumer goods).
future consumption (capital goods today).
absolute advantage.
comparative advantage.
scarcity.
Question 2
2 / 2 pts
In the figure, point A is:
an efficient point.
unattainable with current resources.
an inefficient point.
the equilibrium.
the point where society would prefer to consume.
Question 3
2 / 2 pts
When one producer can create more of a good than another producer using the same quantity of
resources, the first producer has:
a zero-sum game.
gains from trade.
an absolute advantage.
a comparative advantage.
increasing relative costs.
Question 4
2 / 2 pts
A society that is producing its maximum combination of goods and using all available resources for
production:
has minimized its opportunity cost.
has maximized its opportunity cost.
is operating on its production possibilities frontier (PPF).
is operating outside its production possibilities frontier (PPF).
has eliminated scarcity.
Question 5
2 / 2 pts
As you move from one efficient point on the production possibilities frontier (PPF) to another efficient
point on the PPF, you experience:
decreasing relative cost.
opportunity cost.
macroeconomics.
unlimited resources.
unattainable combinations.
Question 6
2 / 2 pts
In the figure, point E is:
an efficient point.
unattainable with current resources.
an inefficient point.
the equilibrium.
evidence that trade does not enrich society.
Question 7
2 / 2 pts
Think of the production possibilities frontier (PPF) model. When society is producing the largest
possible output from its resources, it is operating:
inefficiently.
efficiently.
with no opportunity cost.
inside (within) the PPF.
beyond its opportunity cost.
Question 8
2 / 2 pts
Suppose you are studying a production possibilities frontier (PPF) that has a bowed-out shape
relative to the origin. What causes this shape?
economic growth
the law of increasing relative cost
absolute advantage
normative economics
more resources
Question 9
2 / 2 pts
How will a reduction in the national unemployment rate affect a nation’s production possibilities
frontier (PPF)?
It will cause the PPF to shift inward.
It will cause the PPF to shift outward.
It will move society to a point farther inside the PPF.
It will move society outward to a point closer to or on the PPF.
It will push society to a point outside its PPF.
Question 10
2 / 2 pts
Which of the following is a positive statement?
Individuals should make good long-term decisions.
Corporations should maximize shareholder value.
Government should reduce the level of unemployment.
The most important effects of policy happen in the short term.
The unemployment rate is 8%.
Question 11
2 / 2 pts
Two friends, Rachel and Joey, enjoy baking bread and making apple pies. Rachel takes two hours to
bake one loaf of bread and one hour to make one pie. Joey takes four hours to bake one loaf of bread
and four hours to make one pie. If Rachel and Joey decide to specialize in order to maximize their
combined output, who should produce what?
Joey should specialize in making pies because he has an absolute advantage.
Rachel should specialize in making pies and Joey should specialize in making bread.
Joey should specialize in making pies and Rachel should specialize in making bread.
Rachel should specialize in making bread and pies because she has a comparative advantage in
both.
Rachel should not specialize because she is better at producing both.
Question 12
2 / 2 pts
Ceteris paribus, if a society is producing at a point on the production possibilities frontier (PPF), it can
only increase the production of one good by:
also increasing the production of the second good.
decreasing the production of the second good.
increasing the price of the second good.
decreasing the price of the second good.
reducing the resources available for production.
Question 13
2 / 2 pts
Which of the following is a normative statement?
You should wear a helmet when cycling.
The sky is blue.
A bicycle has two wheels.
A unicycle has five wheels.
Electricity follows the path of least resistance.
Question 14
2 / 2 pts
Which of the following would NOT lead to an outward shift of a future production possibilities frontier
(PPF)?
population growth
increased investment today
an increase in technology
the discovery of new resources
a decline in life expectancy
Question 15
2 / 2 pts
Consumer goods:
are produced today to be used to produce more goods in the future.
are produced today to be consumed at some point in the future.
are invested today in order to consume more today.
are produced today to be consumed today.
generate economic growth.
Quiz Score: 30 out of 30
