Mods 3 and 4 practice problems
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____
1. Economists define an efficient use of resources as a situation where:
A. all persons are guaranteed a fair share of the economic resources.
B. all persons can be made better off, without making anyone worse off.
C. all persons receive an equal share of the resources.
D. all persons are made worse off when one person is made better off.
E. one person can be made better off, but only by making another person worse off.
Alternatives
Consumer
goods per
period
Capital goods
per period
A
0
B
1
C
2
D
3
E
4
F
5
30
28
24
18
10
0
Table 3-1: Production Possibilities Schedule I
____
2. Based on Table 3-1, if the economy produces 10 units of capital goods per period, it also can produce at most
________ units of consumer goods per period.
A. 5
B. 4
C. 3
D. 2
E. 1
Production
alternatives
Capital goods
per period
Consumer
goods per
period
V
W
X
Y
Z
0
1
2
3
4
20
18
14
8
0
Table 3-2: Production Possibilities Schedule II
____
3. Based on Table 3-2, if an economy is producing at alternative W, the opportunity cost of producing at X is
________ unit(s) of consumer goods per period.
A. 0
B. 1
C. 4
D. 18
E. 2
Figure 3-7: Bicycles and Radishes
____
4. Use the “Bicycles and Radishes” Figure 3-7. The country depicted in this figure is currently operating at
point M. It could produce at point I only if it:
A. used its resources more efficiently.
B. devoted more resources to radish production.
C. devoted more resources to bicycle production.
D. increased the quantities of capital, natural resources, or labor available or improved its
technology.
E. traded bicycles and radishes with other nations.
Figure 3-9: Strawberries and Submarines II
____
5. Use the “Strawberries and Submarines II” Figure 3-9. Point F:
A. it is unattainable, all other things unchanged.
B. is attainable if the quantity and/or quality of factors decreases.
C. is attainable if the economy is able to reach full employment.
D. is feasible, but not efficient.
E. it is unattainable until the production possibility curve shifts inward.
Combination
A
B
C
Good Z
0
5
10
Good X
75
70
60
D
E
F
15
20
25
Table 3-5: Production of Good Z and Good X in Urbanville
45
25
0
____
6. Use Table 3-5. Suppose Urbanville is currently producing 15Z and 45X. This combination is:
A. both allocatively and productively efficient.
B. productively efficient.
C. allocatively efficient.
D. neither productively nor allocatively efficient.
E. not feasible.
____
7. If they spend all night writing computer programs, Laurence can write 10 programs while Carrie Anne can
write 5. If they spend all night making sunglasses, Laurence can make 6 while Carrie Anne can make 4. We
know that:
A. Laurence's opportunity cost of writing programs is less than that of Carrie Anne.
B. Laurence's opportunity cost of writing programs and of making sunglasses is less than that
of Carrie Anne.
C. Carrie Anne's opportunity cost of writing programs and of making sunglasses is less than
that of Laurence.
D. Carrie Anne's opportunity cost of writing programs is less than that of Laurence.
E. Laurence’s opportunity cost of making sunglasses is less than that of Carrie Anne.
____
8. If the opportunity cost of manufacturing machinery is higher in the United States than in Britain and the
opportunity cost of manufacturing sweaters is lower in the United States than in Britain, then the United
States will:
A. export both sweaters and machinery to Britain.
B. import both sweaters and machinery from Britain.
C. export sweaters to Britain and import machinery from Britain.
D. import sweaters from Britain and export machinery to Britain.
E. neither import, nor export goods with Britain.
Sweden and Finland produce only two goods, herring and cell phones, and this table shows the
maximum amount that each nation can produce of the two goods.
Sweden
Finland
Herring
100,000
50,000
Cell phones
10,000
10,000
Table 4-3: Comparative Advantage I
____
9. Use Table 4-3. The opportunity cost of producing 1 unit of cell phones for Sweden is:
A. 10 units of herring.
B. 1/5 unit of herring.
C. 5 units of herring.
D. 1/10 unit of herring.
E. 10 units of cell phones.
The table shows the maximum amounts of machinery and petroleum that the United States and Mexico can
produce if they only produce one good. Both nations face constant costs of production.
Countries
Machinery (units)
Petroleum (units)
United States
80
40
Mexico
60
180
Table 4-5: Production Possibilities for Machinery and Petroleum
____ 10. Use Table 4-5. The United States has a comparative advantage in ________ and Mexico has a comparative
advantage in ________.
A. both goods; neither good
B. neither good; both goods
C. machinery; neither good
D. petroleum; machinery
E. machinery; petroleum
Figure 4-4: Alphaland and Omegaland
____ 11. Use the “Alphaland and Omegaland” Figure 4-4. If Alphaland specializes in the production of the good of
its comparative advantage, it will produce:
A. 600 radios.
B. 800 radios.
C. 800 tires.
D. 600 tires.
E. 1,200 tires.
____ 12. A tariff ________ the price received by domestic producers and ________ the price paid by domestic
consumers.
A. increases; increases
B. increases; decreases
C. decreases; decreases
D. decreases; increases
E. increases; has no impact on
____ 13. If Japan levies tariffs on U.S. goods entering Japan, this will tend in the short run to:
A. benefit both Japanese and U.S. producers.
B. damage U.S. producers and benefit Japanese producers.
C. benefit U.S producers and damage Japanese producers.
D. damage both Japanese and U.S. producers.
E. benefit U.S. consumers and penalize Japanese producers.
____ 14. A tax on imports of foreign goods is called:
A. a quota.
B. a subsidy.
C. a tariff.
D. an export restriction.
E. economic growth
____ 15. A direct restriction on the quantity of an import is called a(n):
A. quota.
B. tariff.
C. import subsidy.
D. import restriction.
E. export tax.
Mods 3 and 4 practice problems
Answer Section
MULTIPLE CHOICE
1. ANS:
SKL:
2. ANS:
SKL:
3. ANS:
SKL:
4. ANS:
SKL:
5. ANS:
SKL:
6. ANS:
SKL:
7. ANS:
SKL:
8. ANS:
SKL:
9. ANS:
SKL:
10. ANS:
SKL:
11. ANS:
SKL:
12. ANS:
SKL:
13. ANS:
SKL:
14. ANS:
SKL:
15. ANS:
SKL:
E
PTS:
Definitional
B
PTS:
Concept-Based
C
PTS:
Critical Thinking
D
PTS:
Concept-Based
A
PTS:
Concept-Based
B
PTS:
Critical Thinking
A
PTS:
Analytical Thinking
C
PTS:
Critical Thinking
A
PTS:
Critical Thinking
E
PTS:
Analytical Thinking
E
PTS:
Analytical Thinking
A
PTS:
Concept-Based
B
PTS:
Concept-Based
C
PTS:
Definitional
A
PTS:
Definitional
1
DIF: E
REF: Module 3
1
DIF: E
REF: Module 3
1
DIF: M
REF: Module 3
1
DIF: M
REF: Module 3
1
DIF: M
REF: Module 3
1
DIF: M
REF: Module 3
1
DIF: M
REF: Module 4
1
DIF: M
REF: Module 4
1
DIF: M
REF: Module 4
1
DIF: M
REF: Module 4
1
DIF: M
REF: Module 4
1
DIF: E
REF: Module 4
1
DIF: M
REF: Module 4
1
DIF: E
REF: Module 4
1
DIF: E
REF: Module 4