Production Possibility Frontier & Scientific Models Multiple Choice Questions i need help for four practice test make sure answer in Microsoft word and the
Production Possibility Frontier & Scientific Models Multiple Choice Questions i need help for four practice test make sure answer in Microsoft word and then tell me explain each question Name
___________________________________
Part I: Multiple Choice Questions (2.5 points each)
Clearly mark your final answer the area left of each question.
____ 1. The ability to produce a product at a lower opportunity cost implies the firm has a:
A. an absolute advantage.
B. a comparative advantage.
____ 2. Microeconomics is the concerned with large-scale factors such as interest rates, unemployment,
inflation, and national productivity.
A. This statement is normative and false.
B. This statement is normative and true.
C. This statement is positive and false.
D. This statement is positive and true.
____ 3. Taste and preferences change such that the product price increases. Everything else held constant, a
change in the quantity supplied is due to:
A. a shift in the supply curve.
B. a movement along the supply curve.
____ 4. Economic models help us understand reality only when the models include all details of the economy.
A. True
B. False
Use the Production Possibility Frontier in Figure 1 that describes the number of Movies reviewed and hours
Studying to answer the next three questions.
Figure 1
____ 5. Which point is inefficient?
Studying
A. Point A
B. Point B
20
A
C. Point C
B
D. Point D
____ 6. What is the opportunity cost of reviewing one movie?
A. ½ Hour Studying
B. 2 Hours Studying
C. 10 hours Studying
D. 20 Hours Studying
C
D
10 Movies
____ 7. Which statement(s) accurately describe the PPF?
A. This PPF exhibits the law of increasing opportunity cost.
B. The more hours spent reviewing movies the more hours available for studying.
C. The trade-off between the two goods does not depend on the current level of production.
D. All of the above A-C statements accurately describe the PPF.
E. None of the above A-C statements accurately describe the PPF.
____ 8. Assume that Paella and Pilaf are substitutes. If the price of Paella increases, then what do you predict
will happen to the market price for Pilaf?
A. Decrease
B. Increase
____ 9. A rational individual deciding how to allocate limited time is considering opportunity costs, dealing
with scarcity, and dealing and trade-offs.
A. True
B. False.
____ 10. The opportunity cost of an item is:
A. the number of hours needed to earn money to buy the item.
B. what you give up to get that item.
C. usually less than the dollar value of the item.
D. the dollar value of the item.
____ 11. Which of the following does not affect supply for movies?
A. The salary paid to actors.
B. The trend away from movie theaters and toward on-demand streaming.
C. The available technology of capturing the film.
D. The number of film studios.
____ 12. Economist assume that rational people make decisions on the margin by:
A. following long-lasting traditions.
B. evaluating how easily a decision can be reversed if problems arise.
C. comparing marginal costs and marginal benefits.
____ 13. In a competitive market, who determines the price and quantity of a product?
A. Buyers determine the price and sellers determine the quantity.
B. Sellers determine the price and buyers determine the quantity.
C. Sellers determine the price and quantity.
D. None of the above A through C are correct.
____ 14. The scientific method is:
A. the use of modern technology to understand the way the world works.
B. the use of controlled laboratory experiments to understand the way the world works.
C. the dispassionate development and testing of theories about how the world works.
D. the search for evidence to support preconceived theories about how the world works.
Page 2 of 6
____ 15. Which question is not answered by an Economic System?
A. How will the good be produced?
B. What determines consumer preferences?
C. What goods will be produced?
D. Who will consume the goods?
____ 16. If natural disasters destroy the local crops, then what does the market predict will happen to the price
of remaining crops?
A. Decreases
B. Increases
C. Remains the same
D. The change is indeterminate
____ 17. If the current market price is such that the quantity supplied exceeds quantity demanded, then a:
A. shortage exists and the market price will fall in response to market pressures.
B. shortage exists and the market price will rise in response to market pressures.
C. surplus exists and the market price will fall in response to market pressures.
D. surplus exists and the market price will rise in response to market pressures.
Use the following table to answer the next three questions.
(1)
(2)
(3)
(4)
(5)
Price
QD
QD
QS
QS
6
100
80
30
40
7
90
70
40
50
8
80
60
50
60
9
60
50
60
70
10
50
40
70
80
____ 18. In the above table, a change from column (5) to column (4) represents a(n):
A. decrease in supply.
B. increase in supply.
C. decrease in demand.
D. increase in demand.
____ 19. Which of the following could explain a market change from column (2) to column (3)?
A. Increase in the technological production process.
B. Increase in the price of the product.
C. Increase in the number of sellers.
D. Increase in the number of buyers.
E. Increase in income if the product is an inferior good.
____ 20. Assume the market is described by columns (2) and (4) in the table. Which of the following could
cause a long-run market price of $7?
A. A price ceiling
B. A price floor
Page 3 of 6
Part II: Short Response Questions
Write your answer legibly below each question.
21. (3 points) Define economics
22. (5 points) List or describe 5 demand determinants.
23. (6 points) Pick two of the following questions to answer. All questions can be accurately answered in a
couple of words or a short sentence. If more than two are answered the first two will be graded.
a. From the video on equilibrium, what market was used as an example to understand market forces?
b. From the Chapter 2 discussion and Stanford press release, which topic did that model examine?
c. From the article from the second assignment, what might increase the supply of organs?
d. What are three attributes of private property rights?
Page 4 of 6
24. (6 points) The circular flow diagram describes the two general markets and three sectors of the economy.
Identify these two markets and describe one difference in these markets beyond their names.
25. Assume England and Scotland can produce scones and sweaters along a linear PPF and that they have the
same number of workers. Suppose that a worker in England can produce 60 scones per hour or 3 sweaters
per hour. Suppose that a worker in Scotland can produce 80 scones per hour or 2 sweaters per hour.
a. (5 points) Which country has the absolute advantage for each good? (Hint: Two answers!)
b. (4 points) Which country has the comparative advantage in the production of scones? Calculate the
opportunity costs of one scone in each country to support your answers.
c. (4 points) For what prices of a sweater would England and Scotland be willing to specialize and trade
with each other?
Page 5 of 6
26. (6 points) What are two economic systems other than a traditional barter economy? Describe one difference
between them other than their names.
27. Assume a market is described by the following supply and demand equations:
Supply:
Demand:
QS = 6P 6
QD = 18 2P
a. (4 points) Solve for the equilibrium quantity and price in this market.
b. (5 points) If the number of buyers and the number of sellers increase in the market, then what are your
qualitative predictions to the change in equilibrium quantity and price?
Double check your answers, make sure you name is on the exam (2 points), and turn in career interests if you have not done so yet!
Name
___________________________________
Part I: Multiple Choice Questions (2.5 points each)
Clearly mark your final answer the area left of each question.
____ 1. Which of the following statements correctly describes scientific models?
A. The more details a model includes, the better the model.
B. Models assume away irrelevant details.
C. Models cannot be used to explain how the economy functions.
D. Models cannot be used to make predictions.
____ 2. Microeconomics is the study of:
A. how government affects the economy.
B. how individual households and firms make decisions.
C. how money affects the economy.
D. how the economy is performing.
____ 3. A construction worker has a linear production possibility frontier (PPF) and can construct the frame
of a shed in 1 day or roof the same shed in half a day. The contractor has 20 days to work the next
month and is planning to construct 12 frames and roofing the same 12 sheds. The combination of 12
sheds (framed and roofed) is:
A. feasible and efficient.
B. feasible and inefficient.
C. Infeasible.
____ 4. Which of the following is an assumption of a market based economy?
A. Free choice.
B. Limited government intervention.
C. Many buyers and sellers competing with each other.
D. Private enterprise.
E. All of the above A through D are assumptions of a market based economy.
F. None of the above A through D are assumptions of a market based economy.
Figure 1
Use the market depicted in Figure 1 to answer questions 5 and 6.
Price
____ 5. Which market price would result in a shortage?
A. P1
B. P2
C. P3
P1
Supply
P2
____ 6. Which price level would be a non-binding price ceiling?
A. P1
B. P3
P3
Demand
Quantity
____ 7. Which describes a positive, or direct, relationship between price and quantity?
A. Law of Demand
B. Law of Supply
____ 8. When computing the opportunity cost of attending a concert you should include:
A. the price you pay for the ticket and the value of your time.
B. the price you pay for the ticket, but not the value of your time.
C. the value of your time, but not the price you pay for the ticket.
D. neither the price of the ticket nor the value of your time.
____ 9. Which of the following will increase the demand for movies?
A. The number of firms decreases.
B. The technological cost of making movies falls.
C. Taste and preferences for movies fall in favor of online streaming.
D. Income increases and movies are a normal good.
____ 10. In the circular-flow diagram, in the markets for
A. goods and services, households and firms are both sellers.
B. goods and services, households are sellers and firms are buyers.
C. the factors of production, households are sellers and firms are buyers.
D. the factors of production, households and firms are both buyers.
____ 11. Good assumptions simplify a problem without substantially affecting the answer.
A. True
B. False
____ 12. Which of the following is an example of a positive, as opposed to normative, statement?
A. Higher gasoline prices will reduce gasoline consumption.
B. Income taxes should be reduced.
C. The social security system is a good system and it deserves to be preserved as it is.
D. All of the above A through C are positive statements.
E. None of the above A through C are positive statements.
____ 13. Recent news coverage announces that future prices of a product will be lower than previously
expected. Which set of market changes and outcome is likely to occur based on this news? Assume
the market previously expected prices to remain flat and believes the news coverage.
A. Demand decreases, Supply decreases, and market price decreases
B. Demand decreases, Supply increases, and market price decreases
C. Demand increases, Supply decreases, and market price increases
D. Demand increases, Supply increases, and market price increases
Page 2 of 6
____ 14. A rational decision maker:
A. ignores marginal changes and focuses instead on the big picture.
B. ignores the big picture and focuses instead on total cost.
C. takes an action only if the marginal benefit exceeds the marginal cost.
D. takes an action only if the total cost is spread across multiple uses.
____ 15. If the number of buyers decreases in rural locations due to migration changes, then the market predicts
the price of rural housing will:
A. decrease.
B. increase.
C. remain the same.
____ 16. Kay and Jay create New-York style Pizzas and Pretzels with linear PPFs. Kay can produce 16 pizzas
or 20 pretzels in one hour. Jay can produce 10 pizzas or 15 pretzels in an hour. Are Kay and Jay
willing to conduct mutually beneficial trade if the price for 1 pretzel is 1.4 pizzas?
A. Yes
B. No
____ 17. A change in which of the following will not shift the supply curve for telephones?
A. Number of sellers
B. Price of inputs
C. Price of telephones
D. Technology
____ 18. Assume a market is described by Table 1. If all price levels are possible,
the Law of Demand holds, and the Law of Supply holds, then the
equilibrium price:
A. is between 7 and 8.
B. is between 8 and 9.
C. is between 9 and 10.
D. cannot be determined with this information.
Price
7
8
9
10
Table 1
QD
85
70
55
40
QS
40
50
60
70
____ 19. Scarcity is:
A. a small incremental adjustment to a plan of action.
B. something that induces a person to act.
C. the limited nature of resources.
D. the property of getting the most out of the resources.
____ 20. Trade can make everyone better off except in the case where one person is better at doing everything.
A. True
B. False
Page 3 of 6
Part II: Short Response Questions
Write your answer legibly below each question.
21. (6 points) Solve for the equilibrium quantity and equilibrium price in this market assuming the market is
described by the following equations:
Supply:
Demand:
P = 10 + 2QS
P = 143 5QD
22. (6 points) Define the equilibrium of a market and describe the forces that move a market toward its
equilibrium.
23. (5 points) Pick one of the following questions to answer. All questions can be accurately answered in a
couple of words or a short sentence. If more than one is answered the first will be graded.
a. From the Chapter 2 discussion on the scientific process, which problem was being examined?
b. From the videos, which economic system was Americas top enemy after WWII ended?
c. From the assignment, what proposed legal reform in California will likely affect markets?
d. From the classroom lecture, list or describe the three private property rights attributes.
Page 4 of 6
24. Assume Batman and Robin no long fight criminals and instead spend their time filing Tax Returns and
processing Warranty claims. It takes Batman 2 hours to complete a Tax Return and 30 minutes to process
a Warranty claim. Robin requires 20 minutes to complete a Tax Return and 2 hours to process a Warranty
claim. Assume a linear PPF for both caped crusaders.
a. (2 points) Who has the absolute advantage in filing Tax Returns?
b. (2 points) Who has the absolute advantage in processing Warranty Claims?
c. (6 points) Draw the Joint Production Possibility Frontier for Batman and Robin. Assume each
individual has 8 hours and that they specialize in the good that they have the comparative advantage
in. Make sure to label the axis for each good {Tax Returns or Warranty Claims} and include the number
for both axis intercepts as well as the complete-specialization point. Hint: The joint PPF represents
how much of the two goods Batman and Robin can produce working together and is similar to the
example in class.
d. (5 points) Describe why Production Possibility Frontiers are generally bowed out from the origin. A
full description could include a description of the scientific law, the reasoning behind that scientific
law, or a carefully described explanation using the above example.
Page 5 of 6
25. Assume Holmes and Watson spend their time solving crime or performing surgeries. In addition, assume
in a month that Holmes could solve 20 crimes, perform 12 surgeries, or any linear combination of these
two. Watson can solve 30 crimes in a month, perform 90 surgeries, or any linear combination of these two.
a. (5 points) Who has the comparative advantage in solving crime? Support your answer by comparing
the opportunity costs of solving one crime for both individuals.
b. (5 points) Who has the comparative advantage in performing surgeries? Support your answer by
comparing the opportunity costs of performing one surgery for both individuals.
26. (6 points) Define economics by describing the questions included in the economic problem.
Double check your answers, make sure you name is on the exam (2 points), and turn in career interests if you have not done so yet!
Name
___________________________________
Part I: Multiple Choice Questions (2.5 points each)
Clearly mark your final answer the area left of each question.
____ 1. Microeconomics is best described as the study of:
A. economy-wide phenomena.
B. how households and firms make decisions and interact.
C. markets for land, labor, and capital.
D. the flows of dollars between households and firms.
____ 2. Red Stripe, a popular beer in Jamaica, announced they would provide a sled for the Womens Bobsled
team. This decision is expected to increase preferences for this drink. Using this logic and the market
model, we would expect the quantity of Red Stripe to increase from this action.
A. True
B. False
____ 3. In a market based society, resources are allocated by:
A. a single central planner.
B. a small number of central planners.
C. those firms that use resources to provide goods and services.
D. the combined actions of millions of households and firms.
____ 4. Michaela receives $100 as a birthday gift. In deciding how to spend the money, she narrows the
options down to three choices: Option A, Option B, and Option C. Each option costs $100. Michaela
decides on Option B. The opportunity cost of this decision is:
A. $100.
B. $300.
C. the value to Michaela of the option she would have chosen had Option B not been available.
D. the value to Michaela of Options A and C combined.
Use the market characterized in Figure 1 for the next two questions. Assume the Law of Demand and Law of
Supply hold in this market.
____ 5. The government is considering a binding price ceiling. Which price are they considering?
A. P1
Price
Figure 1
B. P2
C. P3
Curve A
____ 6. What accurately characterizes Curve A?
A. This is a Demand curve with a direct
relationship between price and quantity.
B. This is a Demand curve with an inverse
relationship between price and quantity.
C. This is a Supply curve with a direct
relationship between price and quantity.
D. This is a Supply curve with an inverse
relationship between price and quantity.
P1
P2
P3
Curve B
Quantity
Page 2 of 6
____ 7. Economists view positive statements as:
A. affirmative, justifying existing economic policy.
B. optimistic, putting the best possible interpretation on things.
C. descriptive, making a claim about how the world is.
D. prescriptive, making a claim about how the world ought to be.
____ 8. The overriding reason as to why households and societies face many decisions is that:
A. resources are scarce.
B. goods and services are not scarce.
C. incomes fluctuate with business cycles.
D. people, by nature, tend to disagree.
____ 9. Specialization according to comparative advantage is desirable because it allows for everyone to
enjoy a greater quantity and variety of goods and services.
A. True
B. False
____ 10. Suppose that Tom can produce either 10 baseball gloves or 30 baseball bats in a week along a linear
production possibility frontier. How would you classify Toms production combination of 7 baseball
gloves and 9 baseball bats?
A. Efficient
B. Inefficient
C. Infeasible
____ 11. Which of the following statements accurately describe the circular-flow diagram?
A. The participants are households, firms, and government.
B. The markets are the product market and the factor market.
C. It helps to explain how participants in the economy interact with one another.
D. All of the above A through C statements are correct.
E. None of the above A through C statements are correct.
Use Table 1 to answer the next two question.
____ 12. Using demand QD and supply QS what market price
would result in a surplus?
A. 8
B. 10
Price
8
9
10
QD
80
60
50
Table 1
QS QDNew QSNew
50
40
60
60
30
75
70
20
90
____ 13. Comparing …
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