Macroeconomics 10e

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Macroeconomics, 10e (Parkin)
Chapter 2 The Economic Problem

1 Production Possibilities and Opportunity Cost

1) The production possibilities frontier is the boundary between A) those combinations of goods and services that can be produced and those that can be consumed. B) those resources that are limited and those that are unlimited. C) those combinations of goods and services that can be produced and those that cannot. D) those wants that are limited and those that are unlimited. Answer: C

Topic: Production Possibilities Frontier
Skill: Recognition
Question history: Previous edition, Chapter 2
AACSB: Reflective Thinking

2) The production possibilities frontier is
A) upward sloping and reflects unlimited choices.
B) upward sloping and reflects tradeoffs in choices.
C) downward sloping and reflects unlimited choices.
D) downward sloping and reflects tradeoffs in choices.
Answer: D
Topic: Production Possibilities Frontier
Skill: Recognition
Question history: Previous edition, Chapter 2
AACSB: Reflective Thinking

3) The production possibilities frontier
A) depicts the boundary between those combinations of goods and services that can be produced and those that cannot given resources and the current state of technology. B) shows how many goods and services are consumed by each person in a country. C) is a model that assumes there is no scarcity and no opportunity cost. D) is a graph with price on the vertical axis and income on the horizontal axis. Answer: A

Topic: Production Possibilities Frontier
Skill: Recognition
Question history: Previous edition, Chapter 2
AACSB: Reflective Thinking

4) The production possibilities frontier itself illustrates
A) all goods that can be produced by an economy
B) the combination of goods and services that can be produced efficiently C) all goods and services that are desired but cannot be produced due to scarce resources. D) all possible production of capital goods

Answer: B
Topic: Production Possibilities Frontier
Skill: Recognition
Question history: Previous edition, Chapter 1
AACSB: Reflective Thinking

5) The production possibilities frontier is the boundary between those combination of goods and services that can be A) produced and those that can be consumed.
B) consumed domestically and those that can be consumed by foreigners. C) produced and those that cannot be produced.
D) consumed and those that cannot be produced.
Answer: C
Topic: Production Possibilities Frontier
Skill: Conceptual
Question history: Previous edition, Chapter 2
AACSB: Reflective Thinking

6) The production possibilities frontier itself shows
A) the maximum amount of resources available at any given time. B) combinations of goods and services that do not fully use available resources. C) the maximum rate of growth of output possible for an economy. D) the maximum levels of production that can be attained.

Answer: D
Topic: Production Possibilities Frontier
Skill: Recognition
Question history: Previous edition, Chapter 2
AACSB: Reflective Thinking

7) The production possibilities frontier represents
A) the maximum amount of labor and capital available to society. B) combinations of goods and services among which consumers are indifferent. C) the maximum levels of production that can be attained.

D) the maximum rate of growth of capital and labor in a country. Answer: C
Topic: Production Possibilities Frontier
Skill: Recognition
Question history: Previous edition, Chapter 2
AACSB: Reflective Thinking

8) Which of the following is NOT true concerning a society's production possibilities frontier (PPF)? A) It reveals the maximum amount of any two goods that can be produced from a given quantity of resources. B) Tradeoffs occur when moving along a PPF.

C) Production efficiency occurs when production is on the frontier itself. D) Consumers will receive equal benefits from the two goods illustrated in the PPF. Answer: D...
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