Economics 101Spring 2000Section 4 - HallamQuiz 21. Which of the following is a reasonable method to construct the production possibility frontier which is theefficient boundary of the production possibility set?a. pick a level of the two outputs and then find all levels of inputs that are able to produce thisspecific output combination.b. set a level for all inputs, pick a level of one of the two outputs, find the maximum level of theother output for this level of the first output, and then repeat for other levels of the first output.c. set a level for all inputs, pick a level of one of the two outputs, find all feasible levels of the otheroutput for this level of the first output, and then repeat for other levels of the first output.d. pick a level of the two outputs and hold this fixed, pick a level of one of the two inputs and thenfind the minimum level of the other input that is required to produce the chosen outputcombination given the fixed level of the first input, and then repeat for other levels of the firstinput.2. Robinson Crusoe and Man Friday live on an island. The following table represents their output in a dayof work.Fish GrasshoppersRobinson Crusoe 4 20Man Friday 6 24Which of the following statements is true.a. Friday has an absolute advantage in both products and a comparative advantage in catchinggrasshoppers.b. Friday has an absolute advantage in both products and a comparative advantage in catching fish.c. Crusoe has an absolute advantage in both products and a comparative advantage in catchinggrasshoppers.d. Crusoe has a comparative advantage in fishing and a comparative advantage in catchinggrasshoppers.e. Crusoe has an absolute advantage in both products and a comparative advantage in catching fish.3. For the following supply and demand curves, find the equilibrium price and quantity.D ' 32 & 2P S ' 2P & 8a. P = 10, Q = 11b. P = 9, Q = 14c. P = 10, Q = 12d. P = 11, Q = 10e. P = 9, Q = 10Production Possibility SetShirts and Blouses0246810121416182022240 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5 6ShirtsBlousesABCDEP(x)The following graph should be used for questions 4 and 5.4. Which point is not feasible?A.B.C.D.E.5. When the firm is producing between 2 and 4 shirts, what is the opportunity cost of one more blouse?a. 3 shirtsb. 3.5 shirtsc. 4 shirtsd. 5 shirtse. 1/4 shirtConsider the diagrams on the following page for questions 6-8. In all cases the initial situation is at S0 and D0 .6. Consider panel A. This representsa. A decrease in demand and a decrease in supply.b. A decrease in price and an increase in supply.c. A decrease in demand and a decrease in the quantity supplied.d. A decrease in supply.e. A decrease in the quantity demanded and a decrease in supply.7. Consider panel D. This representsa. An increase in demand and a decrease in the quantity supplied.b. A decrease in the quantity supplied and an increase in price.c. An increase in the quantity demanded and a decrease in supply.d. A decrease in supply and an increase in demand.e. a and d.8. Which panel best represents the effect of a fire destroying a western forest used for lumber?a.b.c.d.Use the following table to answer questions 9 and 10.Cost per unit dataPer VCR Per ComputerU.S. $200 $1200Germany DM 500 DM 2,5009. What is the opportunity cost of producing one more computer in the United States?a. $200b. 6 VCRsc. 1 computerd. 1/6 VCRe. 6 computers10. Which of the following is true?a. Germany has a comparative advantage in producing computers.b. The U.S. has an absolute advantage in producing both goods and a comparative advantage incomputers.c. The U.S. has a comparative advantage in both computers and VCRs.d. The U.S. has a comparative advantage in producing computers.e. The U.S. has an absolute advantage in producing both goods and a comparative advantage inVCRs.PQP0Q0S0D0PQP0Q0S0D0PQP0Q0S0D0PQP0Q0S0D0ABCDD1S1S1D1S1Economics 101Spring 2000Section 4 - HallamQuiz 2Answers1. b2. b3. c4. b5. e6. c7. d8. c9. b10.
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