Econ 111 Summer 2007 Midterm Exam
Name___________________________________

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

Production Possibilities
Pizza
Soda
Possibility
(per hour)
(cases per hour)
A
0
100
B
1
95
C
2
80
D
3
60
E
4
35
F
5
0
1) In the above table, the production of 3 pizzas and 80 cases of soda is

1)

A) possible only if there is inflation.
B) impossible unless more resources become available or technology improves.
C) feasible but would involve unemployed or misallocated resources.
D) possible only if the economy produces with maximum efficiency.
2) Economic growth can be pictured in a production possibilities frontier diagram by

2)

A) shifting the production possibilities frontier outward.
B) making the production possibilities frontier less bowed out.
C) making the production possibilities frontier more bowed out.
D) shifting the production possibilities frontier inward.
3) A person has an absolute advantage in an activity if that person can

3)

A) perform that activity at a higher opportunity cost than anyone else.
B) perform the activity at a lower opportunity cost than anyone else.
C) produce fewer goods in a given amount of time than another person.
D) produce more goods in a given amount of time than another person.
4) Comparative advantage is

4)

A) the ability to perform an activity at a zero opportunity cost.
B) the ability to perform an activity at a lower opportunity cost than anyone else.
C) the ability to perform an activity at a higher opportunity cost than anyone else.
D) identical to absolute advantage.

1

5) The kitchen manager at an Italian restaurant is deciding what assignments he should give to his two cooks, John and David. John can make 25 pizzas or 40 servings of pasta per hour and David can make 20