Exam 1 Microeconomics

Front 1

A production possibilities frontier shows

Back 1

the various combinations of output a nation can produce a certain time, given its available resources and technology.

Front 2

The production possibilities frontier illustrates the

Back 2

maximum combinations of goods and services that can be produced.

Front 3

In the production possibilities model, the vertical axis measures ________ and the horizontal axis measures ________.

Back 3

the quantity of a good or service; the quantity of another good or service

Front 4

Which of the following is an assumption used when drawing a production possibilities frontier?i. Human wants and desires are limited to what is available.

ii. Only two goods are considered.

iii. The level of technology is fixed and unchanging.

Back 4

ii and iii

Front 5

The production possibilities frontier is the

Back 5

boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology.

Front 6

Moving from one point to another on a production possibilities frontier implies

Back 6

increasing the production of one good and decreasing the production of another.

Front 7

In a production possibilities frontier diagram, the attainable production points are shown as

Back 7

the points inside and the points on the production possibilities frontier.

Front 8

Production efficiency occurs

Back 8

at all points on the production possibilities frontier.

Front 9

If there is unemployment in an economy, then the

Back 9

economy is producing at a point inside the production possibilities frontier.

Front 10

Which of the following statements is correct?

1. If capital is idle, the economy is producing at its full potential.

2 A tradeoff is a limit that forces an exchange or a substitution of one thing for something else. 3None of the above answers is correct.

4 The production possibilities frontier shows that there are no limits to production.

Back 10

A tradeoff is a limit that forces an exchange or a substation of one thing for something else.

Front 11

The negative slope of the production possibilities frontier represents the idea

Back 11

of tradeoffs, that in order to produce more of one good, the nation must produce less of another.

Front 12

A free lunch (the absence of a tradeoff) when the production of a good is increased is possible for the entire economy only if

Back 12

resources are used inefficiently.

Front 13

A reason the production possibilities frontier exists is

Back 13

scarcity of resources.

Front 14

The production possibilities frontier illustrates which of the following economic ideas?

Back 14

tradeoffs, opportunity cost, efficiency