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Points Awarded 13. Points Missed 2. Percentage 86.7% 1. The production possibilities frontier model shows that A) if consumers decide to buy more of a product its price will increase. B) a market economy is more efficient in producing goods and services than is a centrally planned economy. C) economic growth can only be achieved by free market economies. D) if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good. Points Earned: 1.0/1. 2. Figure 2- Figure 2-2 above shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables. Refer to Figure 2-2. What is the opportunity cost of one pound of meat?
A) .75 pound of vegetables B) 1.33 pounds of vegetables C) 1.6 pounds of vegetables D) 16 pounds of vegetables Points Earned: 1.0/1. 3. Without an increase in the supplies of factors of production, how can a nation achieve economic growth? A) by producing more high-value goods and less of low-value goods B) through technological advancement which enables more output with the same quantity of resources C) by lowering the prices of factors of production D) by increasing the prices of factors of production Points Earned: 1.0/1. 4. Figure 2-
A) a only B) a and b only C) b and c only D) a, b, and c Points Earned: 0.0/1. 6. Figure 2- German auto producer BMW recently displayed hybrid concept cars at the North American International Auto Show. These hybrid vehicles deliver a 20 percent improvement in fuel economy. BMW also believes it can improve fuel economy by up to 10 percent for its traditional gasoline-engine vehicles. Assume BMW chooses to produce both the hybrid-engine vehicles and the gasoline-engine vehicles. Figure 2-6 shows changes to its production possibilities frontier in response to new developments and different strategic production decisions. Refer to Figure 2-6. Assume a technological advancement greatly reduces the cost to produce hybrid-engine vehicles. This is best represented by the A) movement from E to F in Graph A. B) movement from G to H in Graph B. C) movement from K to L in Graph C. D) movement from H to J in Graph B. Points Earned: 1.0/1.
Figure 2- German auto producer BMW recently displayed hybrid concept cars at the North American International Auto Show. These hybrid vehicles deliver a 20 percent improvement in fuel economy. BMW also believes it can improve fuel economy by up to 10 percent for its traditional gasoline-engine vehicles. Assume BMW chooses to produce both the hybrid-engine vehicles and the gasoline-engine vehicles. Figure 2-6 shows changes to its production possibilities frontier in response to new developments and different strategic production decisions. Refer to Figure 2-6. In response to changing consumer demands, BMW has cut back on the production of hybrids and increased its production of gasoline-powered vehicles. This strategy is best represented by the A) movement from F to E in Graph A. B) movement from G to J in Graph B. C) movement from L to K in Graph C. D) movement from J to H in Graph B. Points Earned: 1.0/1. 8. Which of the following statements is true?
One Digital Camera Wheat (per pound) China 100 hours 4 hours South Korea 60 hours 3 hours Table 2-4 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea. Refer to Table 2-4. What is South Korea's opportunity cost of producing one pound of wheat? A) 60 digital cameras B) 20 digital cameras C) 5 digital cameras D) 0.05 units of a digital camera Points Earned: 1.0/1. 11. Table 2- One Digital Camera Wheat (per pound) China 100 hours 4 hours South Korea 60 hours 3 hours Table 2-4 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea. Refer to Table 2-4. China has a comparative advantage in the production of A) wheat. B) digital cameras. C) both products. D) neither product. Points Earned: 1.0/1.
If the best surgeon in town is also the best at cleaning swimming pools, then according to economic reasoning, this person should A) should pursue the activity he enjoys more. B) specialize in cleaning swimming pools because it is more labor-intensive. C) split his time evenly between being a surgeon and cleaning swimming pools. D) specialize in being a surgeon because its opportunity cost is lower. Points Earned: 1.0/1. 13. An example of a factor of production is A) stock issued by Dell. B) the computers exported by Dell. C) a computer produced by an Dell. D) a worker hired by Dell. Points Earned: 1.0/1. 14. A successful market economy requires A) a government-controlled banking system and government price controls. B) well-defined property rights and an independent court system to adjudicate disputes based on the law. C) generous unemployment benefits and paid medical leave for everyone in the labor force. D) an equitable distribution of income and limits on immigration. Points Earned: 0.0/1.
