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Homework answers / question archive / University of Waterloo MICROECONO AFM101 Chapter 2 1)The table provides information about the production possibilities of a firm that produces frozen dinnersfrozen dinners
University of Waterloo
MICROECONO AFM101
Chapter 2
1)The table provides information about the production possibilities of a firm that produces frozen dinnersfrozen dinners.
Possibility PizzasPizzas
(per hourper hour)
LasagnesLasagnes
(per hourper hour)
A 0 and 88
B 22 and 66
C 44 and 0
Draw points that show the three possibilities defined by the table. Label them A, B, and C.
Draw the firm's PPF by connecting the points. Label it. Along this PPF, the quantities of . A.all goods other than pizza and lasagne are decreasing
B. all goods other than pizza and lasagne remain constant
C. pizza and lasagne are either increasing or decreasing, so there is no scarcity
D. all goods other than pizza and lasagne are increasing
2) Complete the statement.
An economy that uses new technology .
A. does not eliminate scarcity
B. moves along its PPF and incurs an opportunity cost
C. experiences an outward shift of its PPF and eliminates scarcity
D. does not need to accumulate capital, so economic growth is free
3) Mario's, a pizza and pasta producer, experiences increasing opportunity cost. Draw a production possibilities frontier for Mario's that illustrates this fact. Label it
PPF.
Draw a point that is attainable. Label it Attainable.
Draw a point that is not attainable. Label it Unattainable. Unattainable points are .
A. both outside and on the PPF
B. outside the PPF
C. on the PPF but not inside the PPF
D. inside the PPF but not on the PPF
4) People are willing to give up 1010
tacos per pizza if only 1 pizza is available; 55
tacos per pizza if 3 pizzas are available; and 11
tacotaco
per pizza if 5 pizzas are available.
Draw three points on the marginal benefit curve for pizza.
Draw the marginal benefit curve for pizza through the points. Label the curve. Choose the correct statement.
a. The basic reason why marginal benefit decreases as we consume more of a good is that we like variety.
b. The more we have of any good comma the greater is its more we have of any good, the greater is its marginal benefit.
c. Marginal benefit is calculated as the slope of the PPF.
d. The marginal benefit curve illustrates decreasing opportunity cost.
5) Two countries, Alpha and Beta, have identical production possibilities frontiers. If Alpha produces at point A and Beta produces at point
B,
then .
A. Alpha's economic growth rate will exceed Beta's
B. Alpha's and Beta's economic growth rates will be the same
C. Alpha consumes more than Beta today, but it will grow slower than Beta
D. Beta's future consumption will be less than than Alpha's
6) The following statements are about economic coordination.
Choose the statement that is
false.
A. Today most previously planned economies are adopting a decentralized market system.
B. Money is any commodity or token that is generally acceptable as a means of payment.
C. The world oil market is not truly a market because it is not centralized in one place.
D. A market is any arrangement that enables buyers and sellers to get information and to do business with each other
7) Antje currently produces fish and fruit at point A in the graph.
Use the graph to complete the following sentence. Antje's marginal cost of producing an additional unit of fish is .
A. 54 units of fruit
B. 1/54 units of fruit
C. 2 units of fruit
D. 54/1units of fruit
8) figure shows the production possibilities frontier for Mario's, a pizza and pasta producer. Draw a point at which the firm achieves production efficiency. Label it Efficient.
Draw a point that is attainable but inefficient. Label it Inefficient. When production is efficient, .
A. there is no tradeoff between pizza and pasta
B. some resources are unused or misallocated
C. Mario's can produce more pasta without producing less pizza
D. Mario's can produce more pasta only by producing less pizza
9) Olivia and Helen produce afghans and quilts. The figure shows Olivia's production
possibilities frontier, PPFO, and Helen's production possibilities frontier, PPFH. Olivia and Helen can achieve gains from trade if .
A. Olivia sells both afghans and quilts to Helen in exchange for money
B. Helen sells both afghans and quilts to Olivia in exchange for money
C. Olivia sells afghans to Helen in exchange for some of the quilts that Helen produces
D. Helen sells afghans to Olivia in exchange for some of the quilts that Olivia produces
10) The opportunity cost of a cake is at point A than at point B.The opportunity cost of a loaf of bread is at point B than at pointA.
A. less; greater
B. less; less
C. greater; greater
D. greater; less
11) Claire and Doug are farmers who produce beef and corn. Use the question facts to answer the following question.
To maximize their total output of beef and corn .
a. Claire specializes in beef and Doug specializes in corn
b. Claire and Doug each spend half of their time producing beef and the other half producing corn
c. Claire specializes in beef and corn and Doug specializes in nothing
d. Doug specializes in beef and Claire specializes in corn
12) Choose the correct statements.
1. We measure the marginal benefit from a good or service by the least that people are willing to pay for all theunits they consume.
2. The marginal benefit from a good or service is the benefit received from consuming one more unit of it.
3. To describe preferences, economists use the concept of marginal benefit.
4. We measure the marginal benefit from a good or service by the least that people are willing to pay for an additional unit of it.
A. Statements 3 and 4 are correct.
B. Statements 1 and 4 are correct.
C. Statements 1 and 3 are correct.
D. Statements 2 and 3 are correct.
13) The graph shows the marginal cost of producing blue jeans and the marginal benefit from blue jeans in Oakdale.Oakdale achieves allocative efficiency if .
A. 6 pairs of blue jeans an hour are produced
B. people's marginal benefit from a pair of blue jeans exceeds the marginal cost of producing them
C. 15 pairs of blue jeans per hour an produced
D largest quantity of blue jeans possible is produced
14) Since 1966, economic growth in has been greater than in because .
A. Canada; Hong Kong; the ratio of production of capital goods to production of consumption goods is greater in Canada than in Hong Kong
B. Hong Kong; Canada; the ratio of production of consumption goods to production of capital goods is greaterin Canada than in Hong Kong
C.
Canada; Hong Kong; Canada has been able to access capital not available in Hong Kong Canada has been able to access capital not available in Hong Kong
D.
Hong Kong; Canada; Hong Kong has been able to access technology not available in CanadaHong Kong has been able to access technology not available in Canada
15) The graph shows the marginal cost curve of hot tubs. What is the marginal cost of producing the 3 millionth hot tub?
The marginal cost of producing the 3 millionth hot tub is 3 swimming pools.The marginal cost curve is upward sloping because .
A. opportunity cost is constant but marginal cost is increasing
B. the PPF, like the MC curve, has a constant slope
C. the price that people are willing to pay for a hot tub decreases as the quantity produced increases
16) An economy produces ceramic plates.
If the economy achieves allocative efficiency .
A. it does not necessarily also achieve production efficiency
B. marginal benefit is maximized
C. it produces the quantity on the PPF that is valued most highly
D. marginal cost is minimized
17) Complete the following sentence. Real flows are the flow of .
a. factors of production from households to firms and the flow of goods and services from firms to households
b. incomes from firms to households and the flow of factors of production from households to firms
c. incomes from firms to households and the flow of expenditure on goods and services from households to firms
d. factors of production from households to firms and the flow of expenditure on goods and services from households to firms
