Module 1.3 Quiz - Micro

True or false?
a. An increase in the amount of resources available to Alexis for use in producing coconuts and fish does not change her production possibilities curve. ​ (a)  
b. A technological change that allows Alexis to catch more fish relative to any amount of coconuts gathered results in a change in her production possibilities curve. ​ (b)  
c. Points inside a production possibilities curve are efficient, and points outside a production possibilities curve are inefficient. ​ (c)  

• True
• False

Which point(s) on the graph represent efficiency in production?

• B and C

• A and D

• A, B, C, and D

• A, B, C, D, and E

• A, B, C, D, E, and F

For this economy, an increase in the quantity of capital goods (such as hammers) without a corresponding decrease in the quantity of consumer goods (such as shirts)

• cannot happen because there is always an opportunity cost.

• is represented by a movement from point E to point A.

• is represented by a movement from point C to point B.

• is represented by a movement from point E to point B.

• is possible only with an increase in resources or technology.

An increase in unemployment could be represented by a movement from point

• D to point C.

• B to point A.

• C to point F.

• B to point E.

• E to point B.

Which of the following might allow economic growth and a movement from point B to point F?

• more workers

• discovery of new resources

• building new factories

• technological advances

• all of the above

This production possibilities curve shows the trade-off between consumer goods and capital goods. Since capital goods are a resource, an increase in the production of capital goods today will increase the economy’s production possibilities in the future. Therefore, all other things equal (ceteris paribus), producing at which point today will result in the largest outward shi of the PPC in the future?

• A

• B

• C

• D

• E

The production possibilities curve will certainly be straight if

• making more of one good means that less of the other good can be made.

• the opportunity cost of making each good increases as more is made.

• no resources are specialized for the production of either good.

• the opportunity cost of making the first unit of each good is the same.

• the economy experiences decreasing opportunity costs for the production of both goods.

The allocation of resources in the economy is inefficient

• at every point along a production possibilities curve.

• at every point above a production possibilities curve.

• at every point below a production possibilities curve.

• at the points on a production possibilities curve that intersect the axes.

• at points along a production possibilities curve that make consumers as well off as possible.

Which of the following could not be considered an economic model?

• a graph

• an equation

• a computer simulation

• the economy itself

• a real but simplified economy

The “other things equal” assumption allows economists to

• avoid making assumptions about reality.

• focus on the effects of only one change at a time.

• avoid making the ceteris paribus assumption.

• allow nothing to change in their model.

• reflect all aspects of the real world in their model.