ECON 101 Lecture Notes - Lecture 10: Opportunity Cost, W. M. Keck Observatory

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amaranthweasel363

2 May 2020

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We listed six combinations of computers and television sets that can be manufactured in our economy in exhibit 1(a) Combination a, for example, is 50,000 computers and 0 tv sets, combination b is 40,000 computers and 10,000 tv sets, and so forth. In exhibit 1(b) we plotted these six combinations of computers and tv sets. Each combination represents another point shown in exhibit 1(b) Point a represents a combination of 50,000 computers and 0 television sets. The line connecting points a f is the frontier of output possibilities. A frontier of production possibilities (ppf) represents the combination of two goods which can be produced under the conditions of a given state of technology and fully employed resources within a certain period of time. In this case, the frontier of production possibilities is a straight line because the opportunity cost of manufacturing computers and television sets is constant.

Related Questions

The opportunity cost of one more slice of pizza in terms of sodas is the

		the total number of pizza slices that we have divided by the total number of sodas that we have.
		the number of sodas we have to give up to get one extra pizza slice.
		the number of pizza slices we have to give up to get one extra soda.
		the total number of sodas that we have divided by the total number of pizza slices that we have.

1 point

QUESTION 2

A production possibilities frontier shows

		how money can be allocated among two kinds of goods.
		the limits to the future growth of a nation.
		the various combinations of output a nation can produce at a certain time, given its available resources and technology.
		that if the price of one good decreases, the price of the other has to increase.

1 point

QUESTION 3

When a production possibilities frontier is bowed outward, as more of one good is produced, its opportunity cost

		remains constant.
		might increase, decrease, or remain constant depending on how much people value the additional units of the good.
		increases.
		decreases.

1 point

QUESTION 4

When all of the available factors of production are being efficiently employed, the

		the economy is producing at a point within its PPF.
		PPF disappears.
		the economy is producing at a point beyond its PPF.
		the economy is producing at a point on its PPF.

1 point

QUESTION 5

If a nation devotes a larger share of its current production to consumer goods, then

		its PPF will shift inward.
		its economic growth will slow down.
		its PPF will shift outward.
		some productive factors will become unemployed.

1 point

QUESTION 6

A point on the production possibilities frontier reflects an

		the attainable point with full employment of all resources.
		attainable point without full employment of all resources.
		unattainable point without full employment of all resources.
		the unattainable point with full employment of all resources.

1 point

QUESTION 7

When drawing a production possibilities frontier, which of the following is held constant?

		the available factors of production and the state of technology
		the amount of money in the economy
		the prices of goods and services
		the quantity of the goods and services that are produced

1 point

QUESTION 8

As we move along the production possibilities frontier,

		more of both goods can be produced.
		the possibilities of tradeoffs diminish.
		a tradeoff is not possible because nations need all goods.
		the production of one good increases as the production of the other good decreases.

1 point

QUESTION 9

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.

		I and iii
		ii only
		I, ii, and iii
		I only

1 point

QUESTION 10

To achieve gains from trade, a country

		needs to have an absolute advantage in the production of all goods.
		specializes in producing a good in which it has a lower opportunity cost.
		must produce at a point beyond its PPF.
		should produce at the midpoint of its PPF.

1 point

QUESTION 11

Relative to Al, Joe has ________ if Joe can produce a good at a lower opportunity cost than Al.

		a comparative advantage
		more production efficiency
		a marginal benefit
		a comparative benefit

1 point

QUESTION 12

Does economic growth depend upon which of the following?

i.Improving the quality of labor

ii. Technological advancement

iii. Increasing the amount of capital

		iii only
		ii only
		I only
		I, ii, and iii

1 point

QUESTION 13

In one hour John can produce 20 loaves of bread or 18 cakes. In one hour Phyllis can produce 30 loaves of bread or 15 cakes. Which of the following statements is true?

		John has a comparative advantage in producing cakes.
		Phyllis has an absolute advantage in both goods.
		Phyllis has a comparative advantage in producing cakes.
		John has an absolute advantage in both goods.

1 point

QUESTION 14

As an economy produces more of one of the goods on a bowed out production possibilities frontier, what happens to the opportunity cost of producing the good?

		It decreases.
		It might increase, decrease, or remain constant depending on how much people value the additional units of the good.
		It remains constant.
		It increases.

1 point

QUESTION 15

The production possibilities frontier illustrates the

		goods and services that people want.
		maximum combinations of goods and services that can be produced.
		resources the economy possesses, but not it is the level of technology.
		limits to people's wants.

1 point

QUESTION 16

The United States produced approximately ________ worth of goods and services in 2007.

		$14 billion
		$14 trillion
		$140 billion
		$140 trillion

1 point

QUESTION 17

The fact of increasing opportunity cost when moving on the PPF means that

		to increase the production of one product requires smaller and smaller sacrifices of the other good.
		to decrease the production of one product requires smaller and smaller sacrifices of the other good.
		to increase the production of one product requires larger and larger sacrifices of the other good.
		when the government forces a movement from one point on the PPF to another point, no production is lost.

1 point

QUESTION 18

Other things equal, if India devotes more resources to educate its population than China,

		China will grow faster than India.
		India will be able to eliminate scarcity faster than China.
		India will be able to eliminate opportunity cost faster than China.
		India will grow faster than China.

1 point

QUESTION 19

For Ireland to grow more potatoes, wool production must decrease. This situation is an example of

		zero opportunity cost.
		producing at a point that lies beyond the PPF.
		opportunity benefit.
		a tradeoff.

1 point

QUESTION 20

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

		increasing the production of both goods.
		increasing the production of one good and decreasing the production of another.
		holding the production levels of both goods constant.
		decreasing the production of both goods.

1 point

QUESTION 21

The United States is one of the richest nations in the world,

		but it can still benefit from specialization and trade.
		so does not need to trade with poor nations to achieve any gains from trade.
		so might not have a comparative advantage in producing any goods.
		so it must have a comparative advantage in the production of all goods.

1 point

QUESTION 22

"Comparative advantage" is defined as a situation in which one person can produce

		more of all goods than another person.
		a good for a lower opportunity cost than another person.
		a good for a lower dollar cost than another person.
		more of a good than another person.

1 point

QUESTION 23

The idea of increasing opportunity cost is reflected in the

		the linear shape of the production possibilities frontier.
		bowed in the shape of the production possibilities frontier.
		bowed out the shape of the production possibilities frontier.
		the positive slope of the production possibilities frontier.

1 point

QUESTION 24

Suppose that after specializing according to comparative advantage, a country is trading with another nation that also specializes according to its comparative advantage. Which of the following statements are true for the first country?

i)It enjoys gains from trade.

ii)It must have an absolute advantage in the production of the good it produces.

iii)It is producing at a point beyond its PPF.

		I only.
		I and ii.
		I and iii.
		ii and iii.

1 point

QUESTION 25

If society moves from a period of time with significant unemployment to a time with full employment, its production possibilities frontier will

		shift rightward.
		not shift because the society moves from one point on the frontier to a point inside the frontier.
		not shift because the society moves from a point inside the frontier to a point on the frontier.
		shift leftward.

1 point

ochresea-lion6

figure: Production Possibilities

Reference: Ref 2-1

__(Figure: Production Possibilities) Which of the following is NOT correct regarding combination X?

The combination is productively efficient.

		The combination is productively efficient.
		Society might judge other combinations on the line to be preferable to X.
		Because it is on the line, combination X has no opportunity cost.
		The combination might not be allocatively efficient.

My instructor told me the right answer and told me to explain why is the B is the right answer? If u explain I would really appreciate it!!

11.	Between 1990 and 2010, the number of people in the world living in poverty has:
stayed roughly the same.
		been cut in half.
		doubled.
		increased by 50%.

My instructor told me the right answer and told me to explain why is the A is the right answer? If u explain I would really appreciate it!!

12.

	2012	2013	2014
Nominal GDP (billions of $)	7,280		8,000
Real GDP (billions of $)	7,280	7,425
GDP deflator		103.6	106.1

According to the table, the nominal GDP for 2013 is approximate:

		$7,292 billion.
		$7,492 billion.
		$7,692 billion.
		$7,892 billion.

My instructor told me the right answer and told me to explain why is the C is the right answer? If u explain I would really appreciate it!!

26.

If the cost of a typical market basket is 400 in 2018, 410 in 2019, and 405 in 2020, then during this period the economy is undergoing:

		inflation.
		disinflation.
		deflation.
		hyperinflation.

My instructor told me the right answer and told me to explain why is the B is the right answer? If u explain I would really appreciate it!!

Population	500
Number employed	300
Number unemployed	50

(Table) According to the table, what is the unemployment rate of this economy?

		10%
		14.3%
		16.67%
		25%

My instructor told me the right answer and told me to explain why is the B is the right answer? If u explain I would really appreciate it!!

29.

The inflation rate is 4%. Social Security payments automatically rise by 4%. This adjustment is authorized by an:

		inflation rate.
		escalator clause.
		elevator clause.
		insanity clause.

Score: 0 of 1

34.

We are least likely to be heading into a recession when the National Activity Index equals:

	â0.33.
		0.55.
		â0.98.
		0.81.

Score: 0 of

My instructor told me the right answer and told me to explain why is D is the right answer? If u explain I would really appreciate it!!

ochreguinea-pig172

Q1. The following table shows the relationship between outside temperature (T) and number of hot drinks sold (Q).

Outside temperature (T)	Number of hot drinks sold(Q)
0 ⁰F	1000 cups
20	900
40	800
60	700
80	600

a. Graph and briefly explain the relationship. Put the number of hot drinks sold (Q) on the vertical axis and outside temperature (T) on the horizontal axis.

b. Compute the slope of the line? Y-intercept? Show your work.

c. Construct the equation that represents this line. Predict the number of hot drinks sold (Q) at 26 ⁰F. Show your work.

Q2. Discuss the opportunity costs of the following cases, respectively.

a .Go to the movie theater and watch a movie instead of studying for a midterm exam.

b .Suppose that an economyâs PPF is a straight line, rather than a concave curve. What would this say about the nature of marginal opportunity cost as production is shifted from one good to the other?

Q3. Dreamlandâs production possibilities schedule is as follows:

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

POINT	Capital Goods	Consumption Goods
A	0	30
B	2	27
C	4	21
D	6	12
E	8	0

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

a. Draw the production possibilities frontier. Put Capital Goods on the horizontal axis and Consumption Goods on the vertical axis.

b. If this economy is at point C, what is the opportunity cost of one more capital good (i.e., marginal opportunity cost)?

c. Can Dreamland produce 6 capital goods and 21 consumption goods? Explain.

d. Suppose that Dreamland has two possible choices in the future: it devotes only 5% of its resources to producing capital goods over each of the next 10 years, whereas it devotes 20%. In which case is Dreamland likely to experience more rapid economic growth in the future? Explain your reasoning.

ECON 101 Lecture Notes - Lecture 10: Opportunity Cost, W. M. Keck Observatory

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