Exam (elaborations)
Chapter 1 Economic Issues and Concepts (Ragan)
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Chapter 1 Economic Issues and Concepts
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83) Suppose drought destroys many millions of acres of valuable Canadian farmland. The effect on theCanadian economy would be to move
A) it along its production possibilities boundary.
B) its production possibilities boundary inward.
C) it beyond its production possibilities boundary.
D) its production possibilities boundary outward.
E) None of the above. There would be no change in Canada's production possibilities boundary.
Answer: B
Diff: 2
Topic: 1.1d. production possibilities boundary
Skill: Applied
Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the
production possibilities boundary.
User2: Qualitative
84) Suppose there are only two goods produced in our economy—snowplows and helicopters. If there is
always a two-for-one tradeoff between the production of these two goods (in terms of opportunity cost),
then the production possibilities boundary between snowplows and helicopters is
A) a downward-sloping curve convex to the origin.
B) circular.
C) a downward-sloping straight line.
D) a downward-sloping straight line with slope equal to -1.
E) a downward-sloping curve concave to the origin.
Answer: C
Diff: 2
Topic: 1.1d. production possibilities boundary
Skill: Applied
Learning Obj.: 1-1 Explain the importance of scarcity, choice, and opportunity cost, and how each is illustrated by the
production possibilities boundary.
User2: Qualitative
, Figure 1-7 shows the production possibilities boundary for an economy that produces two goods - cotton and
bananas.
FIGURE 1-7
85) Refer to Figure 1-7. A production possibilities boundary is shown for an economy that produces two
goods - cotton and bananas, both measured in tonnes produced per year. Suppose the economy is
currently producing at point A. What is the opportunity cost to this economy of increasing production of
bananas by 100 tonnes?
A) there is no opportunity cost
B) 60 tonnes of cotton
C) 100 tonnes of cotton
D) 1440 tonnes of bananas
E) 1500 tonnes of bananas
Answer: B
Diff: 1
Topic: 1.1d. production possibilities boundary
Skill: Applied
User1: Graph
User2: Quantitative
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