{"id":2275,"date":"2017-10-08T20:42:27","date_gmt":"2017-10-09T00:42:27","guid":{"rendered":"https:\/\/pressbooks.bccampus.ca\/uvicecon103\/?post_type=chapter&p=2275"},"modified":"2017-10-08T20:49:32","modified_gmt":"2017-10-09T00:49:32","slug":"topic-2-multiple-choice-questions","status":"publish","type":"chapter","link":"https:\/\/pressbooks.bccampus.ca\/uvicecon103\/chapter\/topic-2-multiple-choice-questions\/","title":{"raw":"Topic 2 Multiple Choice Questions","rendered":"Topic 2 Multiple Choice Questions"},"content":{"raw":"
All the following questions are from previous exams for Economics 103. They are duplicates of the questions found in the Topic sub-sections.<\/div>\r\n

Exercises 2.2<\/h3>\r\n1.<\/strong>\u00a0Consider the PPF diagram below.\r\n\r\n\"screen-shot-2016-12-28-at-7-30-08-pm\"\r\n\r\nGiven the PPF illustrated, what is the opportunity cost of moving from B to A?\r\n\r\na) 5 coconuts.\r\nb) 10 fish.\r\nc) 5\/10 fish\r\nd) 10\/5 coconuts.\r\n\r\n \r\n

The following TWO questions refer the diagram below, which illustrates the PPF for a producer of two goods, x and y.<\/span><\/p>\r\n

\"screen-shot-2016-12-28-at-7-29-35-pm\"<\/p>\r\n2.<\/strong>\u00a0Which of the following statements is TRUE?\r\n\r\nI. \u00a0 \u00a0The marginal cost of producing x is higher at high levels of x than it is at low levels of x.\r\nII. \u00a0 The marginal cost of producing y is higher at high levels of y than it is at low levels of y.\r\nIII. \u00a0The marginal cost of producing both x and y is constant in the level of production.\r\n\r\na) I only.\r\nb) II only.\r\nc) III only.\r\nd) I and II only.\r\n\r\n3.\u00a0<\/strong>If this economy is operating at point A, which of the following statements is TRUE?\r\n\r\nI. \u00a0 The opportunity cost of producing more x is zero.\r\nII. \u00a0The opportunity cost of producing more y is zero.\r\nIII. Point A is inefficient.\r\n\r\na) III only.\r\nb) I and II only.\r\nc) I and III only.\r\nd) I, II, and III.\r\n\r\nThe following TWO questions refer to the PPF diagram below.\r\n\r\n\"screen-shot-2016-12-28-at-7-33-38-pm\"\r\n\r\n4.<\/strong>\u00a0What is the MARGINAL cost of producing good y<\/strong>?\r\n\r\na) 1\/4 of a unit of x<\/strong>.\r\nb) 1\/4 of a unit of y<\/strong>.\r\nc) 4 units of x<\/strong>.\r\nd) 4 units of y<\/strong>.\r\n\r\n \r\n\r\n5.<\/strong>\u00a0What is the cost of producing FOUR units of good y<\/strong>?\r\n\r\na) 16 units of x<\/strong>.\r\nb) 4 units of x<\/strong>.\r\nc) 1\/4 of a unit of x<\/strong>.\r\nd) 40 units of x.<\/strong>\r\n\r\n \r\n\r\n6.<\/strong>\u00a0Consider a PPF drawn with x on the horizontal axis and y on the vertical axis. Which of the following concepts can be used to explain why this production possibility frontier could be flat at relatively lows levels of x and steep at relatively high levels of x?\r\n\r\na) Increasing marginal costs.\r\nb) Scarcity\r\nc) Sunk costs.\r\nd) Trade\r\n\r\n7.<\/strong>\u00a0Which of the following concepts can be used to explain why production possibility frontiers slope downwards.\r\n\r\na) Scarcity\r\nb) Sunk costs.\r\nc) Trade\r\nd) Increasing marginal costs.\r\n

Exercises 2.3<\/h3>\r\n1.<\/strong>\u00a0The following question refers to the table below, which shows the maximum number of goods X and Y that producers A and B can produce in one day.\r\n\r\n\"screen-shot-2016-12-28-at-6-17-39-pm\"\r\n\r\nWhich of the following statements in TRUE?\r\n\r\na) Producer A has the comparative advantage in producing X.\r\nb) Producer A has the comparative advantage in producing Y.\r\nc) Producer B has the absolute advantage in producing X and Y.\r\nd) No producer has the comparative advantage in producing either X or Y.\r\n\r\n2.<\/strong>\u00a0Consider the PPF diagram drawn below, for two countries that are free to trade with one another.\r\n\r\n\"screen-shot-2016-12-28-at-6-23-21-pm\"\r\n\r\nWhich of the following production combinations is\/are INEFFICIENT<\/strong>?\r\n\r\nI. \u00a0 Country 1 produces at point C and country 2 produces at point D.\r\nII. \u00a0Country 1 produces at point E and country 2 produces point at B.\r\nIII. Country 1 produces at point E and country 2 produces at point A.\r\n\r\na) II only.\r\nb) I only.\r\nc) I and II only.\r\nd) I, II and III.\r\n\r\n \r\n\r\n3.<\/strong>\u00a0The diagram below illustrates the PPFs for two countries that produce wine and cheese. With no trade, country 1 produces at point A on its PPF and country 2 produces at point B.\r\n\r\n\"screen-shot-2016-12-28-at-6-51-55-pm\"\r\n\r\nAssume that the two countries now begin to trade with one another. Which of the following will NOT<\/strong> occur (relative to the case with no trade).\r\n\r\na) Country 1 will produce less cheese.\r\nb) Country 2 will export wine.\r\nc) Country 1 will import cheese.\r\nd) Country 2 will produce more cheese.\r\n\r\n \r\n\r\n4.<\/strong>\u00a0Which of the following statements about production and trade is FALSE?\r\n\r\nI. \u00a0If a country has an absolute advantage in producing a good, then it also has the comparative advantage in the production of that good.\r\nII. Rich countries will generally have the comparative advantage in the production of all goods.\r\nIII. If a country has the absolute advantage in the production of a good, then this country will be made better off by specializing in the production of that good.a) I only.\r\nb) I and II only.\r\nc) I, II and III.\r\nd) III only.\r\n\r\n \r\n\r\nThe following THREE questions refer to the diagram below, which illustrates the PPFs for two countries who are free to trade.\r\n\r\n\"screen-shot-2016-12-28-at-7-01-00-pm\"\r\n\r\n5.<\/strong>\u00a0What is the marginal opportunity cost (MC) of producing good x<\/strong> in each country?\r\n\r\na) 2 units of good y<\/strong> in country 1 and 4 units of good y<\/strong> in country 2.\r\nb) 1\/2 a unit of good y<\/strong> in country 1 and 1\/4 of a unit of good y<\/strong> in country 2.\r\nc) 2 units of good y<\/strong> in country 1 and 1\/4 of a unit of good y<\/strong> in country 2.\r\nd) 1\/2 a unit of good y<\/strong> in country 1 and 4 units of good y<\/strong> in country 2.\r\n\r\n \r\n\r\n6.<\/b>\u00a0What is the marginal opportunity cost (MC) of producing good y<\/strong> in each country?\u00a0<\/strong>\r\n\r\na) 2 units of good x<\/strong> in country 1 and 4 units of good x<\/strong> in country 2.\r\nb) 1\/2 a unit of good x<\/strong> in country 1 and 1\/4 of a unit of good x<\/strong> in country 2.\r\nc) 2 units of good x<\/strong> in country 1 and 1\/4 of a unit of good x<\/strong> in country 2.\r\nd) 1\/2 a unit of good x<\/strong> in country 1 and 4 units of good x<\/strong> in country 2.\r\n\r\n \r\n\r\n7.<\/strong>\u00a0Suppose that aggregate production of x<\/strong> across the two countries is equal to 100 (that is, country one\u2019s production of x<\/strong> plus country two\u2019s production of x<\/strong> equals 100 units). If these 100 units of x<\/strong> are being produced efficiently, then aggregate production of y<\/strong> will equal:\u00a0<\/strong>\r\n\r\na) 200 units of y.\r\nb) 400 units of y.\r\nc) 600 units of y.\r\nd) 800 units of y.\r\n\r\n \r\n\r\n8.<\/strong>\u00a0The diagram below illustrates the identical PPFs of two countries.\r\n\r\n\"screen-shot-2016-12-28-at-7-47-16-pm\"\r\n\r\nInitially, there is no trade allowed between the two countries, and each country produces at point A. If trade is opened up, which of the following will occur?\r\n\r\nI. \u00a0 Country 1 will export coal to country 2.\r\nII. \u00a0Country 2 will produce more clothing.\r\nIII. Country 1 will produce less coal.\r\n\r\na) I and II only.\r\nb) III only.\r\nc) II and III only.\r\nd) None of the above.\r\n\r\n \r\n\r\n9.<\/strong>\u00a0The table below shows the maximum amounts of coffee and salmon that Brazil and British Colombia can produce if they just produce one good.\r\n\r\n\"screen-shot-2016-12-28-at-7-48-07-pm\"\r\n\r\nAssuming constant marginal costs:\r\n\r\na) Brazil has a comparative advantage in coffee production\r\nb) In Brazil, the marginal cost of salmon production is 2 units of coffee.\r\nc) In BC, the marginal cost of coffee production is 1\u00bd units of salmon.\r\nd) All of the above are correct.\r\n\r\n \r\n\r\n10.<\/strong>\u00a0The diagram below illustrates the PPFs for two countries that produce two goods. The two countries are free to trade with one another.\r\n\r\n\"screen-shot-2016-12-28-at-7-49-30-pm\"\r\n\r\nWhich of the following production combinations are efficient?\r\n\r\na) Country 1 is at point C; country 2 is at point D.\r\nb) Country 1 is at point A; country 2 is at point B.\r\nc) Country 1 is at point C; country 2 is at point A.\r\nd) All of the above are efficient.","rendered":"
All the following questions are from previous exams for Economics 103. They are duplicates of the questions found in the Topic sub-sections.<\/div>\n

Exercises 2.2<\/h3>\n

1.<\/strong>\u00a0Consider the PPF diagram below.<\/p>\n

\"screen-shot-2016-12-28-at-7-30-08-pm\"<\/p>\n

Given the PPF illustrated, what is the opportunity cost of moving from B to A?<\/p>\n

a) 5 coconuts.
\nb) 10 fish.
\nc) 5\/10 fish
\nd) 10\/5 coconuts.<\/p>\n

 <\/p>\n

The following TWO questions refer the diagram below, which illustrates the PPF for a producer of two goods, x and y.<\/span><\/p>\n

\"screen-shot-2016-12-28-at-7-29-35-pm\"<\/p>\n

2.<\/strong>\u00a0Which of the following statements is TRUE?<\/p>\n

I. \u00a0 \u00a0The marginal cost of producing x is higher at high levels of x than it is at low levels of x.
\nII. \u00a0 The marginal cost of producing y is higher at high levels of y than it is at low levels of y.
\nIII. \u00a0The marginal cost of producing both x and y is constant in the level of production.<\/p>\n

a) I only.
\nb) II only.
\nc) III only.
\nd) I and II only.<\/p>\n

3.\u00a0<\/strong>If this economy is operating at point A, which of the following statements is TRUE?<\/p>\n

I. \u00a0 The opportunity cost of producing more x is zero.
\nII. \u00a0The opportunity cost of producing more y is zero.
\nIII. Point A is inefficient.<\/p>\n

a) III only.
\nb) I and II only.
\nc) I and III only.
\nd) I, II, and III.<\/p>\n

The following TWO questions refer to the PPF diagram below.<\/p>\n

\"screen-shot-2016-12-28-at-7-33-38-pm\"<\/p>\n

4.<\/strong>\u00a0What is the MARGINAL cost of producing good y<\/strong>?<\/p>\n

a) 1\/4 of a unit of x<\/strong>.
\nb) 1\/4 of a unit of y<\/strong>.
\nc) 4 units of x<\/strong>.
\nd) 4 units of y<\/strong>.<\/p>\n

 <\/p>\n

5.<\/strong>\u00a0What is the cost of producing FOUR units of good y<\/strong>?<\/p>\n

a) 16 units of x<\/strong>.
\nb) 4 units of x<\/strong>.
\nc) 1\/4 of a unit of x<\/strong>.
\nd) 40 units of x.<\/strong><\/p>\n

 <\/p>\n

6.<\/strong>\u00a0Consider a PPF drawn with x on the horizontal axis and y on the vertical axis. Which of the following concepts can be used to explain why this production possibility frontier could be flat at relatively lows levels of x and steep at relatively high levels of x?<\/p>\n

a) Increasing marginal costs.
\nb) Scarcity
\nc) Sunk costs.
\nd) Trade<\/p>\n

7.<\/strong>\u00a0Which of the following concepts can be used to explain why production possibility frontiers slope downwards.<\/p>\n

a) Scarcity
\nb) Sunk costs.
\nc) Trade
\nd) Increasing marginal costs.<\/p>\n

Exercises 2.3<\/h3>\n

1.<\/strong>\u00a0The following question refers to the table below, which shows the maximum number of goods X and Y that producers A and B can produce in one day.<\/p>\n

\"screen-shot-2016-12-28-at-6-17-39-pm\"<\/p>\n

Which of the following statements in TRUE?<\/p>\n

a) Producer A has the comparative advantage in producing X.
\nb) Producer A has the comparative advantage in producing Y.
\nc) Producer B has the absolute advantage in producing X and Y.
\nd) No producer has the comparative advantage in producing either X or Y.<\/p>\n

2.<\/strong>\u00a0Consider the PPF diagram drawn below, for two countries that are free to trade with one another.<\/p>\n

\"screen-shot-2016-12-28-at-6-23-21-pm\"<\/p>\n

Which of the following production combinations is\/are INEFFICIENT<\/strong>?<\/p>\n

I. \u00a0 Country 1 produces at point C and country 2 produces at point D.
\nII. \u00a0Country 1 produces at point E and country 2 produces point at B.
\nIII. Country 1 produces at point E and country 2 produces at point A.<\/p>\n

a) II only.
\nb) I only.
\nc) I and II only.
\nd) I, II and III.<\/p>\n

 <\/p>\n

3.<\/strong>\u00a0The diagram below illustrates the PPFs for two countries that produce wine and cheese. With no trade, country 1 produces at point A on its PPF and country 2 produces at point B.<\/p>\n

\"screen-shot-2016-12-28-at-6-51-55-pm\"<\/p>\n

Assume that the two countries now begin to trade with one another. Which of the following will NOT<\/strong> occur (relative to the case with no trade).<\/p>\n

a) Country 1 will produce less cheese.
\nb) Country 2 will export wine.
\nc) Country 1 will import cheese.
\nd) Country 2 will produce more cheese.<\/p>\n

 <\/p>\n

4.<\/strong>\u00a0Which of the following statements about production and trade is FALSE?<\/p>\n

I. \u00a0If a country has an absolute advantage in producing a good, then it also has the comparative advantage in the production of that good.
\nII. Rich countries will generally have the comparative advantage in the production of all goods.
\nIII. If a country has the absolute advantage in the production of a good, then this country will be made better off by specializing in the production of that good.a) I only.
\nb) I and II only.
\nc) I, II and III.
\nd) III only.<\/p>\n

 <\/p>\n

The following THREE questions refer to the diagram below, which illustrates the PPFs for two countries who are free to trade.<\/p>\n

\"screen-shot-2016-12-28-at-7-01-00-pm\"<\/p>\n

5.<\/strong>\u00a0What is the marginal opportunity cost (MC) of producing good x<\/strong> in each country?<\/p>\n

a) 2 units of good y<\/strong> in country 1 and 4 units of good y<\/strong> in country 2.
\nb) 1\/2 a unit of good y<\/strong> in country 1 and 1\/4 of a unit of good y<\/strong> in country 2.
\nc) 2 units of good y<\/strong> in country 1 and 1\/4 of a unit of good y<\/strong> in country 2.
\nd) 1\/2 a unit of good y<\/strong> in country 1 and 4 units of good y<\/strong> in country 2.<\/p>\n

 <\/p>\n

6.<\/b>\u00a0What is the marginal opportunity cost (MC) of producing good y<\/strong> in each country?\u00a0<\/strong><\/p>\n

a) 2 units of good x<\/strong> in country 1 and 4 units of good x<\/strong> in country 2.
\nb) 1\/2 a unit of good x<\/strong> in country 1 and 1\/4 of a unit of good x<\/strong> in country 2.
\nc) 2 units of good x<\/strong> in country 1 and 1\/4 of a unit of good x<\/strong> in country 2.
\nd) 1\/2 a unit of good x<\/strong> in country 1 and 4 units of good x<\/strong> in country 2.<\/p>\n

 <\/p>\n

7.<\/strong>\u00a0Suppose that aggregate production of x<\/strong> across the two countries is equal to 100 (that is, country one\u2019s production of x<\/strong> plus country two\u2019s production of x<\/strong> equals 100 units). If these 100 units of x<\/strong> are being produced efficiently, then aggregate production of y<\/strong> will equal:\u00a0<\/strong><\/p>\n

a) 200 units of y.
\nb) 400 units of y.
\nc) 600 units of y.
\nd) 800 units of y.<\/p>\n

 <\/p>\n

8.<\/strong>\u00a0The diagram below illustrates the identical PPFs of two countries.<\/p>\n

\"screen-shot-2016-12-28-at-7-47-16-pm\"<\/p>\n

Initially, there is no trade allowed between the two countries, and each country produces at point A. If trade is opened up, which of the following will occur?<\/p>\n

I. \u00a0 Country 1 will export coal to country 2.
\nII. \u00a0Country 2 will produce more clothing.
\nIII. Country 1 will produce less coal.<\/p>\n

a) I and II only.
\nb) III only.
\nc) II and III only.
\nd) None of the above.<\/p>\n

 <\/p>\n

9.<\/strong>\u00a0The table below shows the maximum amounts of coffee and salmon that Brazil and British Colombia can produce if they just produce one good.<\/p>\n

\"screen-shot-2016-12-28-at-7-48-07-pm\"<\/p>\n

Assuming constant marginal costs:<\/p>\n

a) Brazil has a comparative advantage in coffee production
\nb) In Brazil, the marginal cost of salmon production is 2 units of coffee.
\nc) In BC, the marginal cost of coffee production is 1\u00bd units of salmon.
\nd) All of the above are correct.<\/p>\n

 <\/p>\n

10.<\/strong>\u00a0The diagram below illustrates the PPFs for two countries that produce two goods. The two countries are free to trade with one another.<\/p>\n

\"screen-shot-2016-12-28-at-7-49-30-pm\"<\/p>\n

Which of the following production combinations are efficient?<\/p>\n

a) Country 1 is at point C; country 2 is at point D.
\nb) Country 1 is at point A; country 2 is at point B.
\nc) Country 1 is at point C; country 2 is at point A.
\nd) All of the above are efficient.<\/p>\n","protected":false},"author":58,"menu_order":7,"comment_status":"closed","ping_status":"closed","template":"","meta":{"pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-2275","chapter","type-chapter","status-publish","hentry"],"part":25,"_links":{"self":[{"href":"https:\/\/pressbooks.bccampus.ca\/uvicecon103\/wp-json\/pressbooks\/v2\/chapters\/2275","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pressbooks.bccampus.ca\/uvicecon103\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/pressbooks.bccampus.ca\/uvicecon103\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/pressbooks.bccampus.ca\/uvicecon103\/wp-json\/wp\/v2\/users\/58"}],"replies":[{"embeddable":true,"href":"https:\/\/pressbooks.bccampus.ca\/uvicecon103\/wp-json\/wp\/v2\/comments?post=2275"}],"version-history":[{"count":2,"href":"https:\/\/pressbooks.bccampus.ca\/uvicecon103\/wp-json\/pressbooks\/v2\/chapters\/2275\/revisions"}],"predecessor-version":[{"id":2285,"href":"https:\/\/pressbooks.bccampus.ca\/uvicecon103\/wp-json\/pressbooks\/v2\/chapters\/2275\/revisions\/2285"}],"part":[{"href":"https:\/\/pressbooks.bccampus.ca\/uvicecon103\/wp-json\/pressbooks\/v2\/parts\/25"}],"metadata":[{"href":"https:\/\/pressbooks.bccampus.ca\/uvicecon103\/wp-json\/pressbooks\/v2\/chapters\/2275\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/pressbooks.bccampus.ca\/uvicecon103\/wp-json\/wp\/v2\/media?parent=2275"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/pressbooks.bccampus.ca\/uvicecon103\/wp-json\/pressbooks\/v2\/chapter-type?post=2275"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/pressbooks.bccampus.ca\/uvicecon103\/wp-json\/wp\/v2\/contributor?post=2275"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/pressbooks.bccampus.ca\/uvicecon103\/wp-json\/wp\/v2\/license?post=2275"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}