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ECON 1000 Study Guide - Quiz Guide: Pearson Education, Opportunity Cost, Allocative Efficiency


Department
Economics
Course Code
ECON 1000
Professor
Sadia Mariam Malik
Study Guide
Quiz

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Parkin/Bade, Economics: Canada in the Global Environment, 8e
Chapter 2 The Economic Problem
2.1 Production Possibilities and Opportunity Cost
1) The production possibilities frontier
A) is the boundary between attainable and unattainable levels of production.
B) is the boundary between what we want to consume and what we want to produce.
C) shows how production increases as prices rise.
D) shows prices at which production is possible and impossible.
E) illustrates why there need not be any scarcity in the world.
Answer: A
Diff: 1 Type: MC
Topic: Production Possibilities and Opportunity Cost
2) Which one of the following concepts is not illustrated by a production possibilities frontier?
A) scarcity
B) monetary exchange
C) opportunity cost
D) attainable and unattainable points
E) the tradeoff between producing one good versus another
Answer: B
Diff: 2 Type: MC
Topic: Production Possibilities and Opportunity Cost
3) A point inside a production possibilities frontier
A) indicates some unused or misallocated resources.
B) is unattainable.
C) is preferred to a point on the production possibilities frontier.
D) indicates a point of production efficiency.
E) illustrates the idea of opportunity cost.
Answer: A
Diff: 1 Type: MC
Topic: Production Possibilities and Opportunity Cost
4) Which one of the following concepts is illustrated by a production possibilities frontier?
A) profit
B) consumption
C) investment
D) monetary exchange
E) the tradeoff between producing one good versus another
Answer: E
Diff: 1 Type: MC
Topic: Production Possibilities and Opportunity Cost
Copyright © 2013 Pearson Canada Inc. 77

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Parkin/Bade, Economics: Canada in the Global Environment, 8e
5) If Sam is producing at a point inside his production possibilities frontier, then he
A) can increase production of both goods with zero opportunity cost.
B) is fully using all his resources and allocating his resources to their best use.
C) must be doing the best he can with limited resources.
D) is unaffected by costs and technology.
E) has a high opportunity cost of moving from this point.
Answer: A
Diff: 2 Type: MC
Topic: Production Possibilities and Opportunity Cost
6) If Sam is producing at a point on his production possibilities frontier, then he
A) cannot produce any more of either good.
B) is unaffected by costs and technology.
C) can produce more of both goods.
D) is not subject to scarcity.
E) can increase the production of one good only by decreasing the production of the other.
Answer: E
Diff: 2 Type: MC
Topic: Production Possibilities and Opportunity Cost
Copyright © 2013 Pearson Canada Inc. 78

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Parkin/Bade, Economics: Canada in the Global Environment, 8e
Use the figure below to answer the following questions.
Figure 2.1.1
7) Refer to the production possibilities frontier in Figure 2.1.1. Which one of the following is
true about point A?
A) It is unattainable.
B) While no more of good Y can be produced, more of good X can be produced.
C) It is preferred to point B.
D) Resources are either unused or misallocated or both.
E) It is attainable only if the amount of capital goods is increased.
Answer: D
Diff: 1 Type: MC
Topic: Production Possibilities and Opportunity Cost
8) Complete the following sentence. In Figure 2.1.1,
A) movement from A to B would require a technological advance.
B) point B is a point of production efficiency.
C) some resources must be unused at point C.
D) the concept of decreasing opportunity cost is illustrated.
E) movement from C to B would require a technological improvement.
Answer: B
Diff: 2 Type: MC
Topic: Production Possibilities and Opportunity Cost
Copyright © 2013 Pearson Canada Inc. 79
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