2) Suppose you have a choice of working full-time during the summer or attending
ID: 1252801 • Letter: 2
Question
2) Suppose you have a choice of working full-time during the summer or attending summer school full-time. Summer tuition and books are $3,000. If you worked, you could make $5,000. Your rent is $1,000 for summer, regardless of your choice. The opportunity cost of going to summer school is
A) $9,000.
B) $8,000.
C) $5,000.
D) $3,000.
E) None Of The Above
3. A production possibilities frontier shows the
A) the maximum attainable combinations of two goods that can be produced with the available resources.
B) combinations of two goods that consumers desire most.
C) maximum output of two goods that can be produced with an unlimited quantity of resources.
D) demand for two goods.
4. Being on the production possibilities frontier implies that more of one good can be produced only by
A) decreasing the quantity of the other good produced.
B) increasing the quantity of the other good produced.
C) lowering the price of the good.
D) raising the price of the good.
E) None Of The Above
5. Refer to Figure 1-1. You own a small avocado orchard. Currently, you employ one worker. You've had an exceptional season this year and you're considering hiring an additional worker. Figure 1-1 shows the relationship between labor and total output of avocados. What is the change in output by hiring a second worker?
A) 250 pounds
B) 150 pounds
C) 125 pounds
D) 350 pounds
E) None Of The Above
6. An output combination is technically efficient if
A) it is possible to produce more of all goods.
B) it is possible to produce more of one good without producing less of another.
C) it is not possible to produce more of one good without producing less of another.
D) it is not possible to produce more of one good at any cost.
7. Suppose in an economy some resources are not utilized in their most productive use. If society decides that it wants more of one good,
A) it will have to increase the quantity of resources in the economy.
B) it will have to give up production and consumption of some other good.
C) it can only do so if technology advances.
D) it can achieve this without giving up another good by employing the under-utilized resources. E) None Of The Above
8. In the production possibilities frontier framework, unemployment is represented by
A) an inward shift of the curve.
B) a point located inside the curve.
C) a point located outside the curve.
D) a point located on the curve
9. Which of the following would not shift a nation's production possibilities frontier?
A) a liberal immigration policy that welcomes foreign labor
B) an increase in a nation's capital stock
C) discovery of oil, a vital input in the production process
D) an increase in the general price level.
10
. If the price of SUVs were to increase, we would expect:
A) the demand for gasoline to increase.
B) the demand for gasoline to decrease.
C) the supply of gasoline to increase.
D) the supply of gasoline to decrease.
E) both B and D to occur.
E) None Of The Above
2) Suppose you have a choice of working full-time during the summer or attending summer school full-time. Summer tuition and books are $3,000. If you worked, you could make $5,000. Your rent is $1,000 for summer, regardless of your choice. The opportunity cost of going to summer school is A) $9,000. B) $8,000. C) $5,000. D) $3,000. E) None Of The Above 3. A production possibilities frontier shows the A) the maximum attainable combinations of two goods that can be produced with the available resources. B) combinations of two goods that consumers desire most. C) maximum output of two goods that can be produced with an unlimited quantity of resources. D) demand for two goods. 4. Being on the production possibilities frontier implies that more of one good can be produced only by A) decreasing the quantity of the other good produced. B) increasing the quantity of the other good produced. C) lowering the price of the good. D) raising the price of the good. E) None Of The Above uploaded image 5. Refer to Figure 1-1. You own a small avocado orchard. Currently, you employ one worker. You've had an exceptional season this year and you're considering hiring an additional worker. Figure 1-1 shows the relationship between labor and total output of avocados. What is the change in output by hiring a second worker? A) 250 pounds B) 150 pounds C) 125 pounds D) 350 pounds E) None Of The Above 6. An output combination is technically efficient if A) it is possible to produce more of all goods. B) it is possible to produce more of one good without producing less of another. C) it is not possible to produce more of one good without producing less of another. D) it is not possible to produce more of one good at any cost. 7. Suppose in an economy some resources are not utilized in their most productive use. If society decides that it wants more of one good, A) it will have to increase the quantity of resources in the economy. B) it will have to give up production and consumption of some other good. C) it can only do so if technology advances. D) it can achieve this without giving up another good by employing the under-utilized resources. E) None Of The Above 8. In the production possibilities frontier framework, unemployment is represented by A) an inward shift of the curve. B) a point located inside the curve. C) a point located outside the curve. D) a point located on the curve 9. Which of the following would not shift a nation's production possibilities frontier? A) a liberal immigration policy that welcomes foreign labor B) an increase in a nation's capital stock C) discovery of oil, a vital input in the production process D) an increase in the general price level. 10 . If the price of SUVs were to increase, we would expect: A) the demand for gasoline to increase. B) the demand for gasoline to decrease. C) the supply of gasoline to increase. D) the supply of gasoline to decrease. E) both B and D to occur. E) None Of The Above
Explanation / Answer
2. Incorrect. The correct answer is B. 5000+3000 = 8000. You pay rent either way. 3. Correct. 4. Correct 5. Correct 6. Incorrect. The correct answer is C. This is just a definition. 7. Correct. 8. Incorrect. The correct answer is B. Points on the inside of the PPF represent underutilized resources. If the curve shifted inward, the outward edge would still represent full employment. 9. Correct 10. This depends. If the demand for SUVs increases and causes the price of SUVs to increase, then there will be more SUVs and this will increase the demand for gasoline (Your answer). However, if the supply for SUVs decreases, this would also cause the price of SUVs to increase. But there would be fewer SUVs. So, the demand for gasoline would decrease. The correct answer is either A or B, but that is not an option. Your professor seems to have made a mistake. Since SUVs and gasoline are complimentary goods, your professor probably wants you to answer B. But you should bring this mistake to his or her attention.
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