Question 1

Which of the following is not a gain from division of labor?

Accepted Answer

A) Workers' abilities are matched to tasks. 
B) Workers gain experience from the repetition of the tasks. 
C) Workers save time by not moving to different tasks. 
D) Workers' morale increases as tasks become more specialized. 
E) The introduction of labor-saving machinery is possible. 
A) Workers' abilities are matched to tasks. 
B) Workers gain experience from the repetition of the tasks. 
C) Workers save time by not moving to different tasks. 
D) Workers' morale increases as tasks become more specialized. 
E) The introduction of labor-saving machinery is possible.

Question 2

Each point on a production possibilities frontier requires full employment of resources.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is an example of division of labor?

Accepted Answer

A) an author writing a book one chapter at a time 
B) a firm trying to get rid of a labor union 
C) separating resources into four categories: land, labor, capital, and entrepreneurial ability 
D) allocating revenue among a firm's resource suppliers 
E) dividing an assembly process into separate steps 
A) an author writing a book one chapter at a time 
B) a firm trying to get rid of a labor union 
C) separating resources into four categories: land, labor, capital, and entrepreneurial ability 
D) allocating revenue among a firm's resource suppliers 
E) dividing an assembly process into separate steps

Question 4

Exhibit 2-4   Which of the following points in Exhibit 2-4 is unattainable, given the quantity of resources and level of technology?

Accepted Answer

A) h 
B) g 
C) f 
D) i 
E) e 
A) h 
B) g 
C) f 
D) i 
E) e

Question 5

Don can produce 10 pens or 20 pencils in one hour while Bob can produce 5 pencils or 15 pens in one hour.Which of the following statements is correct?

Accepted Answer

A) Don has an absolute advantage over Bob in the production of pencils and Bob in the production of pens 
B) Bob has an absolute advantage over Don in the production of pencils 
C) Bob has a comparative advantage over Don in the production of pens 
D) Don has a comparative advantage over Bob in the production of pens 
E) Don does not have a comparative advantage in the production of either good 
A) Don has an absolute advantage over Bob in the production of pencils and Bob in the production of pens 
B) Bob has an absolute advantage over Don in the production of pencils 
C) Bob has a comparative advantage over Don in the production of pens 
D) Don has a comparative advantage over Bob in the production of pens 
E) Don does not have a comparative advantage in the production of either good

Question 6

Because of specialization and comparative advantage, most people

Accepted Answer

A) consume only what they produce themselves 
B) consume the products produced by their family and friends 
C) consume the products of many other specialists 
D) do not use money as a medium of exchange 
E) share whatever they produce 
A) consume only what they produce themselves 
B) consume the products produced by their family and friends 
C) consume the products of many other specialists 
D) do not use money as a medium of exchange 
E) share whatever they produce

Question 7

If all resources are used efficiently to produce goods and services, a nation will find itself producing

Accepted Answer

A) inside its production possibilities frontier 
B) somewhere on its production possibilities frontier 
C) outside of its production possibilities frontier 
D) at one extreme end of its production possibilities frontier 
E) more of one product with no decrease in the production of any other product 
A) inside its production possibilities frontier 
B) somewhere on its production possibilities frontier 
C) outside of its production possibilities frontier 
D) at one extreme end of its production possibilities frontier 
E) more of one product with no decrease in the production of any other product

Question 8

Helen gives up the opportunity to bake 40 cakes for each room she paints; Josh can paint one room in the time it takes him to bake 60 cakes.The opportunity cost of a cake for Josh is

Accepted Answer

A) painting one room 
B) painting 1/40 of a room 
C) painting 1/60 of a room 
D) painting 2/3 of a room 
E) painting 3/2 of a room 
A) painting one room 
B) painting 1/40 of a room 
C) painting 1/60 of a room 
D) painting 2/3 of a room 
E) painting 3/2 of a room

Question 9

If the production possibilities frontier is a straight line,

Accepted Answer

A) its slope will equal -1 
B) resources must not be used efficiently 
C) resources must be unemployed 
D) society must not be using the latest technology 
E) resources must be equally adaptable at producing either product 
A) its slope will equal -1 
B) resources must not be used efficiently 
C) resources must be unemployed 
D) society must not be using the latest technology 
E) resources must be equally adaptable at producing either product

Question 10

A test was scheduled for Monday morning, but you went to a party on Saturday night.If you hadn't attended the party, you could have studied for the test or gone to a movie.Which of the following is true?

Accepted Answer

A) The opportunity cost of going to the movie is studying for the test. 
B) The opportunity cost of going to the party is the movie. 
C) The opportunity cost of going to the party is both the movie and the study time. 
D) Because you could go to the party only that night but could go to a movie any time, the opportunity cost of the party is the study time. 
E) From the above information, it's not possible to determine the opportunity cost of attending the party. 
A) The opportunity cost of going to the movie is studying for the test. 
B) The opportunity cost of going to the party is the movie. 
C) The opportunity cost of going to the party is both the movie and the study time. 
D) Because you could go to the party only that night but could go to a movie any time, the opportunity cost of the party is the study time. 
E) From the above information, it's not possible to determine the opportunity cost of attending the party.

Question 11

On a production possibilities frontier showing possible output levels of good A and good B, the opportunity cost of producing the first 10 units of A will usually be

Accepted Answer

A) the same as the opportunity cost of producing the second 10 units of A 
B) less than the opportunity cost of producing the second 10 units of A 
C) greater than the opportunity cost of making the second 10 units of A 
D) 10 units of A 
E) 10 units of B 
A) the same as the opportunity cost of producing the second 10 units of A 
B) less than the opportunity cost of producing the second 10 units of A 
C) greater than the opportunity cost of making the second 10 units of A 
D) 10 units of A 
E) 10 units of B

Question 12

Exhibit 2-9   Current production at which labeled point in Exhibit 2-9 would lead to the largest outward shift in the production possibilities frontier in a later year?

Accepted Answer

A) point a because this point represents a greater consumption level than point b 
B) point b because this point represents greater total production than the other two points 
C) point c because this point represents a greater consumption level than the other two points 
D) point b because this point represents greater production of capital than point c 
E) point c because this point represents greater production of capital than the other two points 
A) point a because this point represents a greater consumption level than point b 
B) point b because this point represents greater total production than the other two points 
C) point c because this point represents a greater consumption level than the other two points 
D) point b because this point represents greater production of capital than point c 
E) point c because this point represents greater production of capital than the other two points

Question 13

Exhibit 2-12 Maria and Hans Production Possibilities for Laundry and Typing   According to Exhibit 2-12, if Maria does one fewer load of laundry, how many pages can she type in the time saved on laundry?

Accepted Answer

A) 4 pages 
B) 6 pages 
C) 2/3 of a page 
D) 3/2 of a page 
E) it cannot be determined 
A) 4 pages 
B) 6 pages 
C) 2/3 of a page 
D) 3/2 of a page 
E) it cannot be determined

Question 14

Because resources are not perfectly adaptable to the production of both good A and good B,

Accepted Answer

A) the opportunity cost of A increases as production of A increases 
B) the opportunity cost of A decreases as production of A increases 
C) it is impossible for the economy to produce both A and B 
D) the opportunity cost of A is constant 
E) the opportunity cost of B is constant 
A) the opportunity cost of A increases as production of A increases 
B) the opportunity cost of A decreases as production of A increases 
C) it is impossible for the economy to produce both A and B 
D) the opportunity cost of A is constant 
E) the opportunity cost of B is constant

Question 15

If Evan has an absolute advantage in cleaning and bookkeeping when compared to Gloria, then

Accepted Answer

A) Evan must also have a comparative advantage in cleaning and bookkeeping 
B) Evan must have a comparative advantage in cleaning 
C) Evan must have a comparative advantage in bookkeeping 
D) Gloria has a comparative advantage in neither activity 
E) we can conclude nothing about comparative advantage 
A) Evan must also have a comparative advantage in cleaning and bookkeeping 
B) Evan must have a comparative advantage in cleaning 
C) Evan must have a comparative advantage in bookkeeping 
D) Gloria has a comparative advantage in neither activity 
E) we can conclude nothing about comparative advantage

Question 16

An improvement in technology would

Accepted Answer

A) enable the economy to produce outside its original production possibilities frontier 
B) enable the economy to move along its original production possibilities frontier 
C) eliminate scarcity; therefore, the production possibilities frontier would no longer exist 
D) have no effect on the production possibilities frontier 
E) change the production possibilities frontier to a line with a positive slope 
A) enable the economy to produce outside its original production possibilities frontier 
B) enable the economy to move along its original production possibilities frontier 
C) eliminate scarcity; therefore, the production possibilities frontier would no longer exist 
D) have no effect on the production possibilities frontier 
E) change the production possibilities frontier to a line with a positive slope

Question 17

Adam Smith believed that people's pursuit of their own self-interests

Accepted Answer

A) tended to promote the general welfare 
B) required the government's "invisible hand" to keep the economy running smoothly 
C) might cause aggregate demand to be greater than aggregate supply 
D) would increase the wealth of a nation, which was the quantity of gold and silver it owned 
E) would decrease the wealth of a nation, which was its ability to produce goods and services 
A) tended to promote the general welfare 
B) required the government's "invisible hand" to keep the economy running smoothly 
C) might cause aggregate demand to be greater than aggregate supply 
D) would increase the wealth of a nation, which was the quantity of gold and silver it owned 
E) would decrease the wealth of a nation, which was its ability to produce goods and services

Question 18

In a command economy

Accepted Answer

A) a dictator makes every economic decision 
B) owners can sell their resources to the highest bidder 
C) no individual or group coordinates the economy 
D) in theory, individual choices are reflected in collective decisions, and decisions are made by central planners 
E) public ownership of resources is combined with free markets to direct economic activity 
A) a dictator makes every economic decision 
B) owners can sell their resources to the highest bidder 
C) no individual or group coordinates the economy 
D) in theory, individual choices are reflected in collective decisions, and decisions are made by central planners 
E) public ownership of resources is combined with free markets to direct economic activity

Question 19

Which of the following provide the best evidence of specialization?

Accepted Answer

A) a firm that produces a line of related products, such as eight kinds of breakfast cereal 
B) an architect who is willing to practice in only one geographic area 
C) a physician that practices in a specialty area such as cardiology or orthopedic surgery 
D) a family that eats at Wendy's every Thursday night 
E) a retailer that sells goods but provides no services 
A) a firm that produces a line of related products, such as eight kinds of breakfast cereal 
B) an architect who is willing to practice in only one geographic area 
C) a physician that practices in a specialty area such as cardiology or orthopedic surgery 
D) a family that eats at Wendy's every Thursday night 
E) a retailer that sells goods but provides no services

Question 20

When drawing a production possibilities frontier, all of the following are usually assumed except one.Which is the exception?

Accepted Answer

A) The quantity of resources is rapidly growing. 
B) Technology is fixed. 
C) Resources can be shifted between production of the two goods. 
D) The production possibilities frontier is drawn for a particular time period. 
E) Resources are fully and efficiently employed. 
A) The quantity of resources is rapidly growing. 
B) Technology is fixed. 
C) Resources can be shifted between production of the two goods. 
D) The production possibilities frontier is drawn for a particular time period. 
E) Resources are fully and efficiently employed.

Exam 2: Economic Tools and Economics Systems

Which of the following is not a gain from division of labor?

Each point on a production possibilities frontier requires full employment of resources.

Which of the following is an example of division of labor?

Exhibit 2-4 Which of the following points in Exhibit 2-4 is unattainable, given the quantity of resources and level of technology?

Don can produce 10 pens or 20 pencils in one hour while Bob can produce 5 pencils or 15 pens in one hour.Which of the following statements is correct?

Because of specialization and comparative advantage, most people

If all resources are used efficiently to produce goods and services, a nation will find itself producing

Helen gives up the opportunity to bake 40 cakes for each room she paints; Josh can paint one room in the time it takes him to bake 60 cakes.The opportunity cost of a cake for Josh is

If the production possibilities frontier is a straight line,

A test was scheduled for Monday morning, but you went to a party on Saturday night.If you hadn't attended the party, you could have studied for the test or gone to a movie.Which of the following is true?

On a production possibilities frontier showing possible output levels of good A and good B, the opportunity cost of producing the first 10 units of A will usually be

Exhibit 2-9 Current production at which labeled point in Exhibit 2-9 would lead to the largest outward shift in the production possibilities frontier in a later year?

Exhibit 2-12 Maria and Hans Production Possibilities for Laundry and Typing According to Exhibit 2-12, if Maria does one fewer load of laundry, how many pages can she type in the time saved on laundry?

Because resources are not perfectly adaptable to the production of both good A and good B,

If Evan has an absolute advantage in cleaning and bookkeeping when compared to Gloria, then

An improvement in technology would

Adam Smith believed that people's pursuit of their own self-interests

In a command economy

Which of the following provide the best evidence of specialization?

When drawing a production possibilities frontier, all of the following are usually assumed except one.Which is the exception?

The Art and Science of Economic Analysis

Appendix--Understanding Graphs

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix--Price Elasticity and Tax Incidence

Consumer Choice and Demand

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

A--Perfect Competition

B--Perfect Competition

A--Monopoly

B--Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

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