Question 1

As an economy's capital stock increases, the economy

Accepted Answer

A)  generally experiences increased unemployment of other resources, such as labor. 
B)  generally decides to engage in international trade. 
C)  experiences economic growth. 
D)  gains an absolute advantage in the production of capital goods. 
A)  generally experiences increased unemployment of other resources, such as labor. 
B)  generally decides to engage in international trade. 
C)  experiences economic growth. 
D)  gains an absolute advantage in the production of capital goods.

Question 2

-Japan can use all of its resources to produce 100 videos or 400 shoes. China can use all of its resources to produce 25 videos or 200 shoes. Which nation has the comparative advantage in shoes and which nation has the comparative advantage in videos?

Accepted Answer

In Japan, the opportunity cost of produc

Question 3

A factor market is a market in which

Accepted Answer

A)  households buy goods and services. 
B)  households sell the services of the factors of production they control. 
C)  firms sell the services of the factors of production. 
D)  firms sell goods and services. 
A)  households buy goods and services. 
B)  households sell the services of the factors of production they control. 
C)  firms sell the services of the factors of production. 
D)  firms sell goods and services.

Question 4

Suppose the United States discovers a way to produce clean nuclear fuel. The effect of this discovery would be to

Accepted Answer

A)  lead the United States to produce less nuclear fuel. 
B)  force the United States to produce at a point inside its PPF. 
C)  shift the U.S. PPF outward. 
D)  shift the U.S. PPF inward. 
A)  lead the United States to produce less nuclear fuel. 
B)  force the United States to produce at a point inside its PPF. 
C)  shift the U.S. PPF outward. 
D)  shift the U.S. PPF inward.

Question 5

George and Michael can gain from exchange

Accepted Answer

A)  unless one has an absolute advantage in all goods. 
B)  if each specializes in the production of the good for which he has the higher opportunity cost. 
C)  if each specializes in the production of the good for which he has the lower opportunity cost. 
D)  unless they have different opportunity costs. 
A)  unless one has an absolute advantage in all goods. 
B)  if each specializes in the production of the good for which he has the higher opportunity cost. 
C)  if each specializes in the production of the good for which he has the lower opportunity cost. 
D)  unless they have different opportunity costs.

Question 6

Which of the following is TRUE regarding markets? I. Economists define a market as a geographic location where trade occurs.
II) A market enables buyers and sellers to get information about each other and to buy and sell from each other.
III) Markets coordinate decisions through prices.

Accepted Answer

A)  I only 
B)  I and III 
C)  II and III 
D)  I, II and III 
A)  I only 
B)  I and III 
C)  II and III 
D)  I, II and III

Question 7

-Employees at Bank of America are good at providing banking services and workers at Ben & Jerry's are good at making ice cream. The figure above shows the marginal cost and marginal benefit curves for ice cream. Point b represents ________ of banking services and ice cream.

Accepted Answer

A)  allocation efficiency and possibly production efficiency 
B)  neither allocative nor production efficiency 
C)  allocative and production efficiency in the production 
D)  production efficiency and possibly allocative efficiency in the production 
A)  allocation efficiency and possibly production efficiency 
B)  neither allocative nor production efficiency 
C)  allocative and production efficiency in the production 
D)  production efficiency and possibly allocative efficiency in the production

Question 8

-In the above figure, when 2000 bicycles are produced each month, we can see that

Accepted Answer

A)  the marginal benefit from another bicycle is greater than the marginal cost of another bicycle. 
B)  more bicycles should be produced to reach the allocatively efficient level of output. 
C)  the economy is very efficient at the production of bicycles because the marginal benefit exceeds the marginal cost. 
D)  Both answers A and B are correct. 
A)  the marginal benefit from another bicycle is greater than the marginal cost of another bicycle. 
B)  more bicycles should be produced to reach the allocatively efficient level of output. 
C)  the economy is very efficient at the production of bicycles because the marginal benefit exceeds the marginal cost. 
D)  Both answers A and B are correct.

Question 9

If the United States can increase its production of automobiles without decreasing its production of any other good, the United States must have been producing at a point

Accepted Answer

A)  within its PPF. 
B)  on its PPF. 
C)  beyond its PPF. 
D)  None of the above is correct because increasing the production of one good without decreasing the production of another good is impossible. 
A)  within its PPF. 
B)  on its PPF. 
C)  beyond its PPF. 
D)  None of the above is correct because increasing the production of one good without decreasing the production of another good is impossible.

Question 10

-A nation can produce at a point outside its PPF

Accepted Answer

A)  when it trades with other nations. 
B)  when it produces inefficiently. 
C)  when its PPF is bowed out. 
D)  never. 
A)  when it trades with other nations. 
B)  when it produces inefficiently. 
C)  when its PPF is bowed out. 
D)  never.

Question 11

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. Which of the following is an example of a point that is inefficient?

Accepted Answer

A)  0 chocolate bars and 100 cans of cola 
B)  20 chocolate bars and 80 cans of cola 
C)  32 chocolate bars and 40 cans of cola 
D)  38 chocolate bars and 0 cans of cola 
A)  0 chocolate bars and 100 cans of cola 
B)  20 chocolate bars and 80 cans of cola 
C)  32 chocolate bars and 40 cans of cola 
D)  38 chocolate bars and 0 cans of cola

Question 12

-The table above lists six points on the production possibilities frontier for grain and cars. From this information you can conclude that production is inefficient if this economy produces

Accepted Answer

A)  6 tons of grain and 18 cars. 
B)  4 tons of grain and 26 cars. 
C)  2 tons of grain and 27 cars. 
D)  8 tons of grain and 10 cars. 
A)  6 tons of grain and 18 cars. 
B)  4 tons of grain and 26 cars. 
C)  2 tons of grain and 27 cars. 
D)  8 tons of grain and 10 cars.

Question 13

Why does the marginal benefit curve have a negative slope?

Accepted Answer

Each successive increase in the consumpt

Question 14

When we choose a particular option, we must give up alternative options. The highest-valued alternative forgone is the ________ of the option chosen.

Accepted Answer

A)  opportunity cost 
B)  comparative advantage 
C)  nonmonetary cost 
D)  absolute advantage 
A)  opportunity cost 
B)  comparative advantage 
C)  nonmonetary cost 
D)  absolute advantage

Question 15

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. Tom has a comparative advantage in ________ and Jerry has a comparative advantage in ________.

Accepted Answer

A)  cooking eggs; making sandwiches 
B)  making sandwiches; cooking eggs 
C)  neither of these activities; both activities 
D)  both activities; neither of these activities 
A)  cooking eggs; making sandwiches 
B)  making sandwiches; cooking eggs 
C)  neither of these activities; both activities 
D)  both activities; neither of these activities

Question 16

-The above figure illustrates that if this country wishes to move from its current production point (labeled "Current") and have 10 more tons of food, it can do this by producing

Accepted Answer

A)  10 more tons of clothing. 
B)  10 fewer tons of clothing. 
C)  5 more tons of clothing. 
D)  5 fewer tons of clothing. 
A)  10 more tons of clothing. 
B)  10 fewer tons of clothing. 
C)  5 more tons of clothing. 
D)  5 fewer tons of clothing.

Question 17

Explain the connection between opportunity cost and the PPF.

Accepted Answer

When moving along the production possibi

Question 18

-In the above figure, if 4000 bicycles are produced per month,

Accepted Answer

A)  marginal benefit is greater than marginal cost. 
B)  fewer bicycles should be produced to reach the allocatively efficient level of output. 
C)  the marginal cost of production is 2 bottles of soda per bicycle. 
D)  Both answers A and B are correct. 
A)  marginal benefit is greater than marginal cost. 
B)  fewer bicycles should be produced to reach the allocatively efficient level of output. 
C)  the marginal cost of production is 2 bottles of soda per bicycle. 
D)  Both answers A and B are correct.

Question 19

Marginal cost is the ________ one more unit of a good and ________ of the good increases.

Accepted Answer

A)  opportunity cost of producing; increases as production 
B)  opportunity cost of producing; decreases as production 
C)  price that must be paid to consume; increases as consumption 
D)  price that must be paid to consume; decreases as consumption 
A)  opportunity cost of producing; increases as production 
B)  opportunity cost of producing; decreases as production 
C)  price that must be paid to consume; increases as consumption 
D)  price that must be paid to consume; decreases as consumption

Question 20

-The table above represents different points along a production possibilities curve. What is the marginal cost of moving from 2 bushels to 3 bushels of beans?

Accepted Answer

A)  9 bushels of carrots per bushel of beans 
B)  12 bushels of carrots per bushel of beans 
C)  3 bushels of carrots per bushel of beans 
D)  21 bushels of carrots per bushel of beans 
A)  9 bushels of carrots per bushel of beans 
B)  12 bushels of carrots per bushel of beans 
C)  3 bushels of carrots per bushel of beans 
D)  21 bushels of carrots per bushel of beans

Exam 2: The Economic Problem

As an economy's capital stock increases, the economy

-Japan can use all of its resources to produce 100 videos or 400 shoes. China can use all of its resources to produce 25 videos or 200 shoes. Which nation has the comparative advantage in shoes and which nation has the comparative advantage in videos?

A factor market is a market in which

Suppose the United States discovers a way to produce clean nuclear fuel. The effect of this discovery would be to

George and Michael can gain from exchange

Which of the following is TRUE regarding markets? I. Economists define a market as a geographic location where trade occurs. II) A market enables buyers and sellers to get information about each other and to buy and sell from each other. III) Markets coordinate decisions through prices.

-Employees at Bank of America are good at providing banking services and workers at Ben & Jerry's are good at making ice cream. The figure above shows the marginal cost and marginal benefit curves for ice cream. Point b represents ________ of banking services and ice cream.

-In the above figure, when 2000 bicycles are produced each month, we can see that

If the United States can increase its production of automobiles without decreasing its production of any other good, the United States must have been producing at a point

-A nation can produce at a point outside its PPF

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. Which of the following is an example of a point that is inefficient?

-The table above lists six points on the production possibilities frontier for grain and cars. From this information you can conclude that production is inefficient if this economy produces

Why does the marginal benefit curve have a negative slope?

When we choose a particular option, we must give up alternative options. The highest-valued alternative forgone is the ________ of the option chosen.

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. Tom has a comparative advantage in ________ and Jerry has a comparative advantage in ________.

-The above figure illustrates that if this country wishes to move from its current production point (labeled "Current") and have 10 more tons of food, it can do this by producing

Explain the connection between opportunity cost and the PPF.

-In the above figure, if 4000 bicycles are produced per month,

Marginal cost is the ________ one more unit of a good and ________ of the good increases.

-The table above represents different points along a production possibilities curve. What is the marginal cost of moving from 2 bushels to 3 bushels of beans?

What Is Economics

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices and Public Goods

Externalities and the Environment

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

Filters

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. Tom has a comparative advantage in and Jerry has a comparative advantage in .

Marginal cost is the one more unit of a good and of the good increases.