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Chapter 2

ECON 101 Chapter 2 practice #2_ans.doc

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ECON 101
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ECONOMICS 101 PROBLEM SET #2 I Multiple choices 1. _______ With increasing production of food, its marginal benefit a. increases and marginal cost increases. b. increases and marginal cost decreases. c. decreases and marginal cost increases. d. decreases and marginal cost decreases. e. decreases and marginal cost is constant. 2. _______On a diagram of a production possibility frontier, the concept of opportunity cost is illustrated by a. the distance from the origin to the boundary. b. the negative slope of the boundary. c. the boundary being concave to the origin. d. the unattainable points outside of the boundary. e. the area bounded by the two axes and the boundary. 3. ________ A straight-line production possibility frontier differs from a concave one in which of the following ways? a. The straight-line boundary illustrates constant opportunity costs, whereas the concave boundary illustrates increasing opportunity costs. b. The concave boundary illustrates constant opportunity costs, whereas the straight-line boundary illustrates decreasing opportunity costs. c. The straight-line boundary does not show scarcity, whereas the concave boundary does. d. The straight-line boundary shows physical outputs, whereas the concave boundary shows money values of outputs. e. A straight-line boundary is associated with a command economy, whereas a concave boundary is associated with a free-market economy. 4. _________ The PPF for Pizza and Cola will shift if there is a change in a. The price of resources. b. The unemployment rate. c. The quantity of resources. d. Preferences for Pizza and Cola. e. All of the above. 5. _________ If Harold can increase production
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