Chapter 2—Production Possibilities Frontier Framework

93. If an economy can produce a maximum of 100 units of good X and the opportunity cost of 1X is always 5Y, then what is the maximum number of units of good Y the economy can produce?

a.	250
b.	100
c.	20
d.	500
e.	none of the above

94. If an economy can produce a maximum of 10 units of good X and the opportunity cost of 1X is always 2Y, then what is the maximum units of good Y the economy can produce?

a.	5
b.	200
c.	20
d.	500
e.	none of the above

95. An economy can produce either of these two combinations of goods X and Y: 1,000X and 0Y or 400Y and 0X. Furthermore, the opportunity cost between the two goods is always constant. Which of the following combinations of the two goods, X and Y, is it possible for the economy to produce?

a.	700X, 280Y
b.	600X, 250Y
c.	400X, 150Y
d.	100X, 600Y
e.	300X, 280Y

96. If there is always a 4-for-1 tradeoff between producing good X and good Y, it follows that the opportunity cost of X (in terms of Y) ____________________ and the PPF for these two goods is ______________________.

a.	decreases at low levels of X; a straight line
b.	rises at high levels of Y; bowed-outward
c.	decreases at high levels of X; bowed-outward
d.	is always the same; a straight line

97. The economy is currently on its production possibilities frontier (PPF). A politician says that it is possible to get more of everything---more infrastructure, more schools, more national defense, more spending on social programs, and so on. The politician is

a.	correct if he is assuming a rightward-shifting PPF.
b.	incorrect if he is assuming a rightward-shifting PPF.
c.	incorrect if he is assuming a PPF that does not change.
d.	correct if he is assuming a PPF that does not change.
e.	a and c

98. The law of increasing opportunity costs states that as

a.	less of a good is produced, the higher the opportunity costs of producing that good.
b.	more of a good is produced, the lower the opportunity costs of producing that good.
c.	more of a good is produced, the higher the opportunity costs of producing that good.
d.	more of a good is produced, the opportunity cost of producing the good remains the same.
e.	a and b

99. Currently an economy is producing (at a point on its production possibilities frontier) 100 units of good X and the opportunity cost of producing 1X is 3Y. If good X is produced at increasing opportunity costs, then when the economy produces 120 units of good X (on the same PPF) the opportunity cost of producing1Y (not 1X) could be

a.	1/4X.
b.	1/3X.
c.	1/2X.
d.	1X.
e.	none of the above

100. What is the reason for the law of increasing opportunity costs?

a.	There is no reason: it is just one of the laws of economics.
b.	Resources have varying abilities and those with lower opportunity costs of producing a good will be used to produce it before resources with higher opportunity costs produce it.
c.	The price of a good rises as more of it is demanded.
d.	As more of a good is produced, the taxes applied to the production of the good rise.
e.	c and d