Macroland is currently operating at point a. the best explanation for this is that

Chapter 1

Table 2.1

1. Refer to Table 2.1. For Krystal, the opportunity cost of writing one TV commercial is
   1. 1/4 of a poem.
   2. 2 poems.
   3. 4 poems.
   4. 6 poems.

1. Refer to Table 2.1. For Mark, the opportunity cost of writing one TV commercial is
   1. 1/3 of a poem.
   2. 2 poems.
   3. 3 poems.
   4. 8 poems.

1. Refer to Table 2.1. Which of the following statements is true?
   1. Krystal has a comparative advantage in both writing TV commercials and writing poems.
   2. Mark has a comparative advantage in both writing TV commercials and writing poems.
   3. Krystal has a comparative advantage in writing TV commercials, and Mark has a comparative advantage in writing poems.
   4. Mark has a comparative advantage in writing TV commercials, and Krystal has a comparative advantage in writing poems.

1. Refer to Table 2.1. To maximize total production,
   1. Krystal should specialize in writing TV commercials, and Mark should specialize in writing poems.
   2. Mark should specialize in writing TV commercials, and Krystal should specialize in writing poems.
   3. Krystal and Mark should both split their time between writing poems and writing TV commercials.
   4. Krystal should write poems and write TV commercials, but Mark should only write poems.

1. Refer to Table 2.1. For Mark, the opportunity cost of writing six TV commercials is ________ poems made.
   1. 2
   2. 18
   3. 24
   4. an indeterminate number of

1. 15) Refer to Table 2.1. For Krystal, the opportunity cost of writing four TV commercials is ________ poems.

1. According to the theory of comparative advantage, ________ raise(s) productivity by lowering opportunity costs.
   1. trade and specialization
   2. investment in capital goods
   3. economic growth
   4. exchange and consumption

1. When two people trade,
   1. both of them expect to be made worse off by the exchange.
   2. they are trying to help out each other.
   3. they know one of them will get the better of the other.
   4. they both expect to be made better off by the exchange.

Figure 2.1

1. Refer to Figure 2.1. Macroland is currently operating at Point A. The best explanation for this is that
   1. the economy has very poor technology.
   2. the economy’s resources are being used inefficiently.
   3. the economy has very few resources.
   4. the economy operates as an efficient market.

1. Refer to Figure 2.1. Macroland’s production possibility frontier is bowed out from the origin due to
   1. decreasing opportunity costs.
   2. trade.
   3. unemployment.
   4. specialized resources.

1. Refer to Figure 2.1. The shape of Macroland’s production possibility frontier shows
   1. increasing opportunity costs.
   2. constant opportunity costs.
   3. decreasing opportunity costs.
   4. random opportunity costs.

1. The production possibility frontier is used to illustrate the concept of
   1. the laissez-faire economy.
   2. opportunity costs.
   3. equilibrium.
   4. aggregate demand

Figure 2.2

1. Refer to Figure 2.2. Point B represents a situation of
   1. full employment but production inefficiency.
   2. less than full employment but production efficiency.
   3. both full resource employment and production efficiency.
   4. less than full employment and production inefficiency.

1. Refer to Figure 2.2. Microland is currently operating at Point B. You correctly deduce that
   1. in Microland, all resources are fully employed and there are no production inefficiencies.
   2. Microland has achieved a position of inefficiency.
   3. Microland has recently experienced some type of technological breakthrough.
   4. Microland has overcome the problem of scarcity.

1. The production possibility frontier is used to illustrate the concept of

A) the laissez-faire economy.

B) opportunity costs.

C) equilibrium.

D) aggregate demand.

1. The production possibility frontier is a graph that shows

A) all the combinations of goods and services that are consumed over time if all of society’s resources are used efficiently.

B) the amount of goods and services consumed at various average price levels.

C) the rate at which an economy’s output will grow over time if all resources are used efficiently.

D) all the combinations of goods and services that can be produced if all of society’s resources are used efficiently

1. An economy that is producing on the production possibility frontier at some point other than the output of efficient allocation is

A) efficient, as it is on the production possibility frontier.

B) inefficient, as the combination of goods and services produced is not what people want.

C) efficient, as the economy is producing goods at the lowest possible cost.

D) inefficient, as that combination of goods could be produced at a lower cost if more efficient technology were employed.

Refer to the information provided in Figure 2.5 below to answer the questions that follow.

Figure 2.5

1. Refer to Figure 2.5. The economy is currently at Point A. The opportunity cost of moving from Point A to Point B is the

A) 90 LCD televisions that must be forgone to produce 20 additional plasma televisions.

B) 30 LCD televisions that must be forgone to produce 60 additional plasma televisions.

C) 120 LCD televisions that must be forgone to produce 40 additional plasma televisions.

D) 30 LCD televisions that must be forgone to produce 20 additional plasma televisions.

1. According to the theory of comparative advantage, ________ raise(s) productivity by lowering opportunity costs.

A) trade and specialization

B) investment in capital goods

C) economic growth

D) exchange and consumption

1. Someone has a comparative advantage in producing a good if they can produce that good

A) in greater quantities.

B) at a lower opportunity cost.

C) using more capital and less labor.

D) using more labor and less capital.

1. If someone has a comparative advantage in growing pineapples,

A) they can grow pineapples at a lower opportunity cost than other pineapple growers.

B) they also have an absolute advantage in growing pineapples.

C) they can grow more pineapples using the same resources than other pineapple growers.

D) pineapples are the only product they can grow.