Selecting Main Ideas

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Sample Exam 1 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. Unemployment would cause an economy to a. | produce inside its production possibilities frontier. | b. | produce on its production possibilities frontier. | c. | produce outside its production possibilities frontier. | d. | experience an inward shift of its production possibilities frontier. | ____ 2. Suppose an economy produces two goods, food and machines. This economy always operates on its production possibilities frontier. Last year, it produced 1000 units of food and 47 machines. This year, it is producing 1050 units of food and 52 machines. Which of the following events could not explain the increase in output? a. | a reduction in unemployment | b. | an increase in available labor | c. | an improvement in technology | d. | Any of these events could explain the increase in output. | Figure 2-4 ____ 3. Refer to Figure 2-4. Suppose this economy is producing at point W. Which of the following statements would best explain this situation? a. | The economy lacks the resources to produce at a more desirable point. | b. | The economy’s available technology prevents it from producing at a more desirable point. | c. | There is widespread unemployment in the economy. | d. | Any of the above statements would be a legitimate explanation for this situation. | ____ 4. Refer to Figure 2-4. The opportunity cost of obtaining 20 additional lamps by moving from point W to point V is a. | 0 notepads. | b. | 10 notepads. | c. | 50 notepads. | d. | None of the above; the economy cannot move from point W to point V. | Figure 3-6 Maxine’s Production Possibilities Frontier | Daisy’s Production Possibilities Frontier | ____ 5. Refer to Figure 3-6. If Daisy must work 2.5 hours to make each pie,

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