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Figure 2.1.1
7) Refer to the production possibilities frontier in Figure 2.1.1. Which one of the following is true about
point A?
A) It is unattainable.
B) While no more of good Y can be produced, more of good X can be produced.
C) It is preferred to point B.
D) Resources are either unused or misallocated or both.
E) It is attainable only if the amount of capital goods is increased.
Answer: D
Diff: 1 Type: MC
Topic: Production Possibilities and Opportunity Cost
9) Refer to the production possibilities frontier in Figure 2.1.1. Which one of the following is true about
point C?
A) It is attainable only if we consume more of good X.
B) It is unattainable.
C) It is attainable only if we consume less of good Y.
D) It is attainable only if we consume less of good X.
E) It is attainable only if we consume more of good Y.
Answer: B
Diff: 2 Type: MC
Topic: Production Possibilities and Opportunity Cost
10) If Harold can increase production of good X without decreasing production of any other good, then
Harold
A) is producing on his production possibilities frontier.
B) is producing outside his production possibilities frontier.
C) is producing inside his production possibilities frontier.
D) must have a linear production possibilities frontier.
E) must prefer good X to any other good.
Answer: C
Diff: 2 Type: MC
Topic: Production Possibilities and Opportunity Cost
11) If Harold must decrease production of some other good to increase production of good X, then
Harold
A) is producing on his production possibilities frontier.
B) is producing outside his production possibilities frontier.
C) is producing inside his production possibilities frontier.
D) must prefer good X to any other good.
E) has too few capital goods.
Answer: A
Diff: 1 Type: MC
Topic: Production Possibilities and Opportunity Cost