SOLVED

41) If the production possibilities frontier between two goods were a straight line, then the opportunity cost of one good in terms of another would be A) constant. B) increasing. C) decreasing. D) zero. E) either constant, increasing, or decreasing but more information is needed to determine which. 42) If the production possibilities frontier between two goods is a straight line, then the A) opportunity cost is not a ratio. B) resources are equally productive in both goods. C) line does not qualify as a production possibilities frontier because the unattainable production points are too close to the inefficient production points. D) Both answers A and C are correct. E) Both answers A and B are correct. 43) As an economy moves down along a straight line production possibilities frontier, what happens to the opportunity cost of producing the good on the horizontal axis? A) It remains constant. B) It decreases. C) It increases. D) Above the midpoint it decreases until it equals 1 at the midpoint and then it increases. E) None of these depict what happens to opportunity cost. 44) If the production possibilities frontier between bottled water and water in a jug is a straight line, which of the following statements would be correct? A) A large amount of unemployment must exist. B) Resources are equally productive at producing either product. C) There is no tradeoff between the two goods. D) There is no decrease in the production of one good when the production of the other is increased. E) Producing more of one good gives the economy a free lunch. 45) The table above shows the production possibilities for an economy. Drawing a PPF with books on the vertical axis and bread on the horizontal axis, a movement from possibility B to possibility C to possibility D shows the opportunity cost of ________ moving down along the PPF. A) books decreasing B) bread decreasing C) bread increases D) books is constant E) books and bread are both increasing 46) The table above shows the production possibilities for an economy. The opportunity cost of a loaf of bread is ________ when moving from possibility B to possibility C. A) 1/2 of a book B) 2 books C) 200 books D) 100 loaves of bread E) 1 loaf of bread 47) The table above presents the production possibilities frontier for a nation. Using the information in the table, moving from possibility C to B means that A) 4 units of capital goods are given up to get 55 units of consumption goods. B) 2 units of capital goods are given up to get 55 additional units of consumption goods. C) 4 units of capital goods are given up to get 10 additional units of consumption goods. D) 4 units of capital goods are given up to get 45 units of consumption goods. E) 2 units of capital goods are given up to get 10 additional units of consumption goods. 48) The table above presents the production possibilities frontier for a nation. Using the information in the table, when moving from possibility C to D, the cost of 1 unit of a capital good in terms of the consumption goods forgone is ________ consumption goods per capital good. A) 25 B) 15 C) 20 D) 10 E) an undefined amount of 49) The table above presents the production possibilities frontier for a nation. Using the information in the table, when moving from possibility A to B to C to ultimately E, the cost of a unit of capital goods in terms of consumption goods A) increases. B) decreases. C) remains the same. D) decreases from possibility A to C, and then increases from possibility C to D. E) cannot be calculated. 50) The figure above illustrates a small country’s production possibilities frontier. Based on the figure, we can tell that the nation’s resources are A) equally productive in all tasks because the slope is negative. B) equally productive in all tasks because the production possibilities frontier is bowed out. C) not equally productive in all tasks because the slope is negative. D) not equally productive in all tasks because the production possibilities frontier is bowed out. E) unlimited because the slope is negative and the PPF is bowed out.