Which statement best describes the opportunity cost evident in the production possibilities frontier (PPF) for the accompanying figure?

65. Which statement best describes the opportunity cost evident in the production possibilities frontier (PPF) for the accompanying figure?

         a.  The law of increasing relative cost applies because the PPF is a straight line.

         b.  The law of increasing relative cost applies because the PPF is bowed outward.

         c.  The opportunity cost is constant because the PPF is a straight line.

         d.  The opportunity cost is constant because the PPF is bowed outward.

         e.  The opportunity cost decreases because the line has negative slope.

ANS: C     

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between making pizzas and making stromboli. Refer to these figures to answer the next three questions.

  69.  What is Jim’s opportunity cost of making 1 pizza?

         a.  50 stromboli

         b.  20 stromboli

         c.  2.5 stromboli

         d.  2 stromboli

         e.  1.5 stromboli

ANS: D     

  70.  What is Pam’s opportunity cost of making 1 stromboli?

         a.  30 pizzas

         b.  20 stromboli

         c.  2 pizzas

         d.  1.5 pizzas

         e.  2/3 pizza

ANS: D       

  71.  What is Jim’s opportunity cost of making 1 stromboli?

         a.  1/2 pizza

         b.  2/3 pizza

         c.  2 pizzas

         d.  2 stromboli

         e.  25 pizzas

ANS: A     

Refer to the following figure for the next two questions.

  75.  As you move from points N to M to L, the opportunity cost of additional apple pie:

         a.  decreases due to the law of increasing relative cost.

         b.  increases due to the law of increasing relative cost.

         c.  decreases due to the law of normative economics.

         d.  increases due to the law of marginal analysis.

         e.  decreases due to enhancements in technology.

ANS: B     

  76.  According to the figure, a new technology that makes it easier to peel, core, and prepare apples will cause:

         a.  the entire production possibilities frontier (PPF) to shift outward.

         b.  the entire PPF to shift inward.

         c.  the PPF to rotate outward to a larger maximum quantity of apple pies with no change in maximum blueberry pies.

         d.  the PPF to rotate outward to a larger maximum quantity of blueberry pies with no change in maximum apple pies.

         e.  the PPF to stay exactly the same because there is no change in resources.

ANS: C     

  77.  Economic growth can be depicted on a production possibilities frontier (PPF) as an:

         a.  inward shift of the PPF.

         b.  outward shift of the PPF.

         c.  inward rotation along the x axis.

         d.  inward rotation along the y axis.

         e.  increase in opportunity cost.

ANS: B    

  79.  Economic growth is represented on a production possibilities frontier (PPF) by the PPF:

         a.  getting steeper.

         b.  getting flatter.

         c.  shifting inward.

         d.  shifting outward.

         e.  rotating downward.

ANS: D     

  81.  A town on the Gulf Coast is battered by a massive hurricane that destroys most of its productive resources. The community’s production possibilities frontier (PPF) would show an:

         a.  inward shift of the PPF.

         b.  outward shift of the PPF.

         c.  outward rotation along the x axis.

         d.  outward rotation along the y axis.

         e.  increase in opportunity cost.

ANS: A    

Use these production possibilities frontier (PPF) curves, which compare the ancient production of agricultural products to art and literature, to answer the next four questions.

         a.  Graph A

         b.  Graph B

         c.  Graph C

         d.  Graph D

         e.  Graph E

  83.  Suppose a great plague wipes out half of the society’s population. Which of the following graphs best depicts how this would affect the PPF?

         a.  Graph A

         b.  Graph B

         c.  Graph C

         d.  Graph D

         e.  Graph E

ANS: D     

  84.  Suppose the plow is invented and agricultural productivity greatly increases. Which of the following graphs best depicts how this would affect the PPF?

         a.  Graph A

         b.  Graph B

         c.  Graph C

         d.  Graph D

         e.  Graph E

ANS: C     

  85.  Suppose the printing press is invented. Which graph best depicts how this would affect the PPF?

         a.  Graph A

         b.  Graph B

         c.  Graph C

         d.  Graph D

         e.  Graph E

ANS: B     

  86.  Suppose a new generation of baby boomers is entering the workforce. Which graph best depicts how this would affect the PPF?

         a.  Graph A

         b.  Graph B

         c.  Graph C

         d.  Graph D

         e.  Graph E

ANS: A     

  91.  Specialization and trade allow individuals to:

         a.  consume outside their own production possibilities frontier (PPF).

         b.  shift their PPF outward.

         c.  produce more goods with less technology.

         d.  eliminate scarcity.

         e.  produce fewer goods with less technology.

ANS: A