Question 1

The cost of attending college

Accepted Answer

A) is entirely monetary and consists of expenditures on tuition, books, transportation, and meals 
B) is not monetary, but consists solely of forgone income 
C) is the most valued alternative given up to attend college 
D) is negligible for most people, because they really have no choice but to attend college 
E) is the same whether you attend a public or a private college 
A) is entirely monetary and consists of expenditures on tuition, books, transportation, and meals 
B) is not monetary, but consists solely of forgone income 
C) is the most valued alternative given up to attend college 
D) is negligible for most people, because they really have no choice but to attend college 
E) is the same whether you attend a public or a private college

Question 2

The mixed economy is the dominant economic system in the world because

Accepted Answer

A) custom and religion have no influence on economic decisions in these systems 
B) pure capitalist economies have placed more control in the hands of individuals in recent years 
C) there is public (i.e., governmental)ownership of resources but regulation of government by individuals reduces some of the flaws of pure capitalism 
D) there is private ownership of property but government regulation of individuals reduces some of the flaws of pure capitalism 
E) governments in pure command economies have increased their control over decision-making in recent years 
A) custom and religion have no influence on economic decisions in these systems 
B) pure capitalist economies have placed more control in the hands of individuals in recent years 
C) there is public (i.e., governmental)ownership of resources but regulation of government by individuals reduces some of the flaws of pure capitalism 
D) there is private ownership of property but government regulation of individuals reduces some of the flaws of pure capitalism 
E) governments in pure command economies have increased their control over decision-making in recent years

Question 3

Exhibit 2-12 Maria and Hans Production Possibilities for Laundry and Typing   According to Exhibit 2-12, Maria's opportunity cost of doing a load of laundry is

Accepted Answer

A) 4 pages 
B) 6 pages 
C) 2/3 of a page 
D) 3/2 of a page 
E) impossible to compute 
A) 4 pages 
B) 6 pages 
C) 2/3 of a page 
D) 3/2 of a page 
E) impossible to compute

Question 4

The economic question of what will be produced is

Accepted Answer

A) primarily answered by the government in a system of pure capitalism 
B) primarily answered by markets in a command economy 
C) faced by all economies regardless of their wealth 
D) does not have to be answered by economies possessing great wealth 
E) cannot be illustrated by the economic concept of the production possibilities frontier 
A) primarily answered by the government in a system of pure capitalism 
B) primarily answered by markets in a command economy 
C) faced by all economies regardless of their wealth 
D) does not have to be answered by economies possessing great wealth 
E) cannot be illustrated by the economic concept of the production possibilities frontier

Question 5

The economic question of "what to produce" is often referred to as the distribution question.

Accepted Answer

A) True 
 B)False

Question 6

Points outside the production possibilities frontier represent

Accepted Answer

A) unemployment of resources 
B) inefficient use of resources 
C) combinations that are attainable only if all resources are used fully and efficiently 
D) currently unattainable combinations of outputs 
E) the only currently attainable combinations from which society must choose 
A) unemployment of resources 
B) inefficient use of resources 
C) combinations that are attainable only if all resources are used fully and efficiently 
D) currently unattainable combinations of outputs 
E) the only currently attainable combinations from which society must choose

Question 7

Which of the following is not a characteristic of pure capitalism?

Accepted Answer

A) private property rights 
B) competitive markets 
C) laissez-faire policies 
D) central planning 
E) a reliance on prices to direct resources to their best uses 
A) private property rights 
B) competitive markets 
C) laissez-faire policies 
D) central planning 
E) a reliance on prices to direct resources to their best uses

Question 8

If people specialize in producing those goods for which they possess a comparative advantage, then the economy as a whole can produce a greater quantity of goods.

Accepted Answer

A) True 
 B)False

Question 9

On a production possibilities frontier, the opportunity cost of one more unit of a commodity per time period is measured by the

Accepted Answer

A) monetary price of the commodity 
B) amount of the other commodity that must be sacrificed 
C) amount of unemployed resources that must be used 
D) amount of satisfaction it gives consumers 
E) amount of tax paid to government for production, sale, and use of the commodity 
A) monetary price of the commodity 
B) amount of the other commodity that must be sacrificed 
C) amount of unemployed resources that must be used 
D) amount of satisfaction it gives consumers 
E) amount of tax paid to government for production, sale, and use of the commodity

Question 10

The reason that the production possibilities frontier is usually a bow-shaped curve instead of a straight line is that

Accepted Answer

A) it makes it easier to illustrate the concepts of scarcity and prices with a bow-shaped curve than it is with a straight line 
B) early economists began drawing them in this way and the convention has continued throughout the years 
C) output eventually reaches a maximum and then declines 
D) resources are not perfectly adaptable to the production of all goods 
E) the frontier will shift outward over time 
A) it makes it easier to illustrate the concepts of scarcity and prices with a bow-shaped curve than it is with a straight line 
B) early economists began drawing them in this way and the convention has continued throughout the years 
C) output eventually reaches a maximum and then declines 
D) resources are not perfectly adaptable to the production of all goods 
E) the frontier will shift outward over time

Question 11

A production possibilities frontier can shift outward for all of the following reasons except one.Which is the exception?

Accepted Answer

A) a decrease in the unemployment rate 
B) an improvement in labor skills 
C) an improvement in technology 
D) a larger work force 
E) a larger capital stock 
A) a decrease in the unemployment rate 
B) an improvement in labor skills 
C) an improvement in technology 
D) a larger work force 
E) a larger capital stock

Question 12

An economic system

Accepted Answer

A) must answer the three economic questions to the satisfaction of everyone in society 
B) must not allow some members of society to gain an unfair advantage when answering the three economic questions 
C) must choose pure capitalism to adequately answer the three economic questions 
D) is a set of social institutions and mechanisms organized to answer the three economic questions 
E) can address problems of scarcity only by embracing the social institution of private property 
A) must answer the three economic questions to the satisfaction of everyone in society 
B) must not allow some members of society to gain an unfair advantage when answering the three economic questions 
C) must choose pure capitalism to adequately answer the three economic questions 
D) is a set of social institutions and mechanisms organized to answer the three economic questions 
E) can address problems of scarcity only by embracing the social institution of private property

Question 13

A major distinguishing feature between capitalist and socialist (or command)economies is that

Accepted Answer

A) under capitalism the average citizen is always wealthier than in socialist economies 
B) decision making is typically decentralized in socialist economies and is centralized in capitalist economies 
C) socialist countries all have red flags and capitalistic economies do not 
D) resources are publicly owned in capitalist economies 
E) decision making is typically decentralized under capitalism while it is centralized in command economies 
A) under capitalism the average citizen is always wealthier than in socialist economies 
B) decision making is typically decentralized in socialist economies and is centralized in capitalist economies 
C) socialist countries all have red flags and capitalistic economies do not 
D) resources are publicly owned in capitalist economies 
E) decision making is typically decentralized under capitalism while it is centralized in command economies

Question 14

Exhibit 2-8   Which of the following would cause the production possibilities frontier in Exhibit 2-8 to shift from AA to BA?

Accepted Answer

A) a drought that affected food production but had no effect on education 
B) a technological improvement in education that had no effect on food production 
C) a technological improvement in food production that had no effect on education 
D) a disease that affected students' ability to learn (and therefore education)but not food production 
E) an increase in the size of the labor force that affected both food production and education 
A) a drought that affected food production but had no effect on education 
B) a technological improvement in education that had no effect on food production 
C) a technological improvement in food production that had no effect on education 
D) a disease that affected students' ability to learn (and therefore education)but not food production 
E) an increase in the size of the labor force that affected both food production and education

Question 15

It is possible for one person to have an absolute advantage in two tasks and a comparative advantage in only one.

Accepted Answer

A) True 
 B)False

Question 16

Exhibit 2-2   According to Exhibit 2-2, if Maria types one fewer page, how many loads of laundry can she do in the time saved on typing?

Accepted Answer

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

Question 17

The U.S.economy is best characterized as

Accepted Answer

A) pure capitalism 
B) a command economy 
C) socialism 
D) a mixed capitalist economy 
E) market socialism 
A) pure capitalism 
B) a command economy 
C) socialism 
D) a mixed capitalist economy 
E) market socialism

Question 18

If Daniel produces one pair of shoes in 4 hours and Sarah produces one pair of shoes in 3 hours, then

Accepted Answer

A) Sarah has a comparative advantage in shoemaking 
B) Daniel has a comparative advantage in shoemaking 
C) Sarah has an absolute and a comparative advantage in shoemaking 
D) Daniel has an absolute and a comparative advantage in shoemaking 
E) Sarah has an absolute advantage in shoemaking 
A) Sarah has a comparative advantage in shoemaking 
B) Daniel has a comparative advantage in shoemaking 
C) Sarah has an absolute and a comparative advantage in shoemaking 
D) Daniel has an absolute and a comparative advantage in shoemaking 
E) Sarah has an absolute advantage in shoemaking

Question 19

One flaw of pure capitalism is that a person who owns no resources could starve.

Accepted Answer

A) True 
 B)False

Question 20

In one week, Tetah can knit 15 sweaters or bake 480 cookies.The opportunity cost per sweater for Tetah is

Accepted Answer

A) $480 
B) 480 cookies 
C) 32 cookies 
D) 1/32 of a cookie 
E) 15 cookies 
A) $480 
B) 480 cookies 
C) 32 cookies 
D) 1/32 of a cookie 
E) 15 cookies

Exam 2: Economic Tools and Economics Systems

The cost of attending college

The mixed economy is the dominant economic system in the world because

Exhibit 2-12 Maria and Hans Production Possibilities for Laundry and Typing According to Exhibit 2-12, Maria's opportunity cost of doing a load of laundry is

The economic question of what will be produced is

The economic question of "what to produce" is often referred to as the distribution question.

Points outside the production possibilities frontier represent

Which of the following is not a characteristic of pure capitalism?

If people specialize in producing those goods for which they possess a comparative advantage, then the economy as a whole can produce a greater quantity of goods.

On a production possibilities frontier, the opportunity cost of one more unit of a commodity per time period is measured by the

The reason that the production possibilities frontier is usually a bow-shaped curve instead of a straight line is that

A production possibilities frontier can shift outward for all of the following reasons except one.Which is the exception?

An economic system

A major distinguishing feature between capitalist and socialist (or command)economies is that

Exhibit 2-8 Which of the following would cause the production possibilities frontier in Exhibit 2-8 to shift from AA to BA?

It is possible for one person to have an absolute advantage in two tasks and a comparative advantage in only one.

Exhibit 2-2 According to Exhibit 2-2, if Maria types one fewer page, how many loads of laundry can she do in the time saved on typing?

The U.S.economy is best characterized as

If Daniel produces one pair of shoes in 4 hours and Sarah produces one pair of shoes in 3 hours, then

One flaw of pure capitalism is that a person who owns no resources could starve.

In one week, Tetah can knit 15 sweaters or bake 480 cookies.The opportunity cost per sweater for Tetah is

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

Filters