Question 1

To gain from comparative advantage,countries must not only trade,they must also

Accepted Answer

A) save. 
B) invest. 
C) engage in research and development. 
D) engage in capital accumulation. 
E) specialize. 
A) save. 
B) invest. 
C) engage in research and development. 
D) engage in capital accumulation. 
E) specialize. E

Question 2

The concept of opportunity cost

Accepted Answer

A) cannot be explained by using a production possibilites frontier. 
B) explains that goods are swapped for other goods. 
C) implies that when a person is more efficient in the production of one good, he should produce that good and exchange it for some good that he is relatively less efficient at producing. 
D) implies that a double coincidence of wants must be present for exchange to take place. 
E) implies that because productive resources are scarce, we must give up some of one good to acquire more of another. 
A) cannot be explained by using a production possibilites frontier. 
B) explains that goods are swapped for other goods. 
C) implies that when a person is more efficient in the production of one good, he should produce that good and exchange it for some good that he is relatively less efficient at producing. 
D) implies that a double coincidence of wants must be present for exchange to take place. 
E) implies that because productive resources are scarce, we must give up some of one good to acquire more of another. E

Question 3

If Sam is producing at a point on his production possibilities frontier,then he

Accepted Answer

A) cannot produce any more of either good. 
B) is unaffected by costs and technology. 
C) can produce more of both goods. 
D) is not subject to scarcity. 
E) can increase the production of one good only by decreasing the production of the other. 
A) cannot produce any more of either good. 
B) is unaffected by costs and technology. 
C) can produce more of both goods. 
D) is not subject to scarcity. 
E) can increase the production of one good only by decreasing the production of the other. E

Question 4

Use the table below to answer the following questions.
Table 2.1.1
The following table gives points on the production possibilities frontier for goods X and Y.
  
-The economy illustrated by the data in Table 2.1.1 exhibits

Accepted Answer

A) decreasing opportunity cost. 
B) constant opportunity cost in the production of X. 
C) constant opportunity cost in the production of Y. 
D) increasing opportunity cost. 
E) initially increasing, then decreasing opportunity cost. 
A) decreasing opportunity cost. 
B) constant opportunity cost in the production of X. 
C) constant opportunity cost in the production of Y. 
D) increasing opportunity cost. 
E) initially increasing, then decreasing opportunity cost.

Question 5

Use the figure below to answer the following questions.
   
Figure 2.1.2
-Refer to the production possibilities frontier in Figure 2.1.2.If 6 units of X are currently being produced,then

Accepted Answer

A) 40 units of Y cannot be produced unless production of X is decreased. 
B) 40 units of Y cannot be produced unless production of X is increased. 
C) 60 units of Y can be produced with some resources not fully used. 
D) 50 units of Y must be produced, regardless of resource utilization. 
E) 50 units of Y can be produced if all resources are used and assigned to the task for which they are the best match. 
A) 40 units of Y cannot be produced unless production of X is decreased. 
B) 40 units of Y cannot be produced unless production of X is increased. 
C) 60 units of Y can be produced with some resources not fully used. 
D) 50 units of Y must be produced, regardless of resource utilization. 
E) 50 units of Y can be produced if all resources are used and assigned to the task for which they are the best match.

Question 6

Use the figure below to answer the following questions.
   
Figure 2.1.3
-Figure 2.1.3 illustrates Mary's production possibilities frontier.If Mary wants to move from point B to point C,

Accepted Answer

A) it will be necessary to improve technology. 
B) it will be necessary to increase the accumulation of capital. 
C) it will be necessary to give up some of good X to obtain more of good Y. 
D) it will be necessary to give up some of good Y to obtain more of good X. 
E) she can accomplish this without any opportunity cost. 
A) it will be necessary to improve technology. 
B) it will be necessary to increase the accumulation of capital. 
C) it will be necessary to give up some of good X to obtain more of good Y. 
D) it will be necessary to give up some of good Y to obtain more of good X. 
E) she can accomplish this without any opportunity cost.

Question 7

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.If Tom and Jerry specialize and trade eggs and sandwiches with each other ________.

Accepted Answer

A) Tom benefits but Jerry does not 
B) Jerry benefits but Tom does not 
C) neither Tom nor Jerry benefit 
D) either Tom or Jerry benefit but we don't have enough information to know which one benefits 
E) both of them benefit 
A) Tom benefits but Jerry does not 
B) Jerry benefits but Tom does not 
C) neither Tom nor Jerry benefit 
D) either Tom or Jerry benefit but we don't have enough information to know which one benefits 
E) both of them benefit

Question 8

Use the figure below to answer the following questions.
   
Figure 2.1.2
-Consider the production possibilities frontier in Figure 2.1.2,and assume that everything that is produced is also consumed.Which of the following statements is false?

Accepted Answer

A) Resources are not equally useful in all activities. 
B) Points inside the frontier indicate unused or misallocated resources. 
C) Starting at point A, an increase in the production of Y will shift the frontier outward. 
D) The opportunity cost of producing Y increases as production of Y increases. 
E) The opportunity cost of producing X increases as production of X increases. 
A) Resources are not equally useful in all activities. 
B) Points inside the frontier indicate unused or misallocated resources. 
C) Starting at point A, an increase in the production of Y will shift the frontier outward. 
D) The opportunity cost of producing Y increases as production of Y increases. 
E) The opportunity cost of producing X increases as production of X increases.

Question 9

Use the figure below to answer the following questions.
Table 2.4.1
The planets of Vulcan and Romulus each produce goods X and Y.
The following table gives points on their production possibilities frontiers.
  
-Refer to Table 2.4.1.For Vulcan,the opportunity cost of producing an additional unit of Y is

Accepted Answer

A) 2/3 units of X. 
B) 1/2 units of X. 
C) 2 units of X. 
D) 3 units of X. 
E) 4 units of X. 
A) 2/3 units of X. 
B) 1/2 units of X. 
C) 2 units of X. 
D) 3 units of X. 
E) 4 units of X.

Question 10

Use the figure below to answer the following questions.
Table 2.4.1
The planets of Vulcan and Romulus each produce goods X and Y.
The following table gives points on their production possibilities frontiers.
  
-Refer to Table 2.4.1.Which one of the following is true?

Accepted Answer

A) The opportunity cost of producing more of good X is the same for both planets. 
B) The opportunity cost of producing more of good Y is the same for both planets. 
C) The opportunity cost of producing more of good X is lower in Vulcan. 
D) The opportunity cost of producing more of good Y is lower in Vulcan. 
E) Vulcans are smarter than Romulans. 
A) The opportunity cost of producing more of good X is the same for both planets. 
B) The opportunity cost of producing more of good Y is the same for both planets. 
C) The opportunity cost of producing more of good X is lower in Vulcan. 
D) The opportunity cost of producing more of good Y is lower in Vulcan. 
E) Vulcans are smarter than Romulans.

Question 11

Use the figure below to answer the following question.
   
Figure 2.1.6
-The marginal benefit curve for a good

Accepted Answer

A) shows the benefit a firm receives from producing one more unit of that good. 
B) shows the most a consumer is willing to pay for one more unit of that good. 
C) is upward-sloping. 
D) is bowed outward. 
E) none of the above. 
A) shows the benefit a firm receives from producing one more unit of that good. 
B) shows the most a consumer is willing to pay for one more unit of that good. 
C) is upward-sloping. 
D) is bowed outward. 
E) none of the above.

Question 12

Which one of the following concepts is not illustrated by a production possibilities frontier?

Accepted Answer

A) scarcity 
B) monetary exchange 
C) opportunity cost 
D) attainable and unattainable points 
E) the tradeoff between producing one good versus another 
A) scarcity 
B) monetary exchange 
C) opportunity cost 
D) attainable and unattainable points 
E) the tradeoff between producing one good versus another

Question 13

Use the figure below to answer the following question.
   
Figure 2.1.6
-To describe preferences,economists use the concept of

Accepted Answer

A) opportunity cost. 
B) scarcity. 
C) marginal benefit. 
D) marginal cost. 
E) none of the above. 
A) opportunity cost. 
B) scarcity. 
C) marginal benefit. 
D) marginal cost. 
E) none of the above.

Question 14

Marginal benefit from a good or service is the benefit received from consuming ________.It is measured by the most that people are willing to pay for ________.

Accepted Answer

A) goods that you prefer;an additional unit of it 
B) goods that you prefer;more of it 
C) one more unit of it;an additional unit of it 
D) one more unit of it;more of it 
E) as much as is available;the total amount consumed 
A) goods that you prefer;an additional unit of it 
B) goods that you prefer;more of it 
C) one more unit of it;an additional unit of it 
D) one more unit of it;more of it 
E) as much as is available;the total amount consumed

Question 15

Use the information below to answer the following questions.
Fact 2.4.1
In an eight-hour day, Andy can produce either 24 loaves of bread or 8 kilograms of butter.In an eight-hour day, Rolfe can produce either 8 loaves of bread or 8 kilograms of butter.
-Consider Fact 2.4.1.After specialization,total consumption will

Accepted Answer

A) depend on the preferences of Andy and Rolfe. 
B) be 8 loaves of bread and 24 kilograms of butter. 
C) be 32 loaves of bread and 16 kilograms of butter. 
D) be 8 loaves of bread and 8 kilograms of butter. 
E) be 24 loaves of bread and 8 kilograms of butter. 
A) depend on the preferences of Andy and Rolfe. 
B) be 8 loaves of bread and 24 kilograms of butter. 
C) be 32 loaves of bread and 16 kilograms of butter. 
D) be 8 loaves of bread and 8 kilograms of butter. 
E) be 24 loaves of bread and 8 kilograms of butter.

Question 16

Which of the following quotations best illustrates a tradeoff?

Accepted Answer

A) "If the firm reorganized its production process, it could produce more widgets and more gadgets." 
B) "The firm should sell more gadgets, even if it means less widget sales." 
C) "The more and more gadgets the firm produces, the bigger the fall in widget production." 
D) "If the firm invests more in capital equipment, it can expand sales next year." 
E) "The firm has been able to lower costs due to its extensive experience in building widgets." 
A) "If the firm reorganized its production process, it could produce more widgets and more gadgets." 
B) "The firm should sell more gadgets, even if it means less widget sales." 
C) "The more and more gadgets the firm produces, the bigger the fall in widget production." 
D) "If the firm invests more in capital equipment, it can expand sales next year." 
E) "The firm has been able to lower costs due to its extensive experience in building widgets."

Question 17

In general,the higher the proportion of resources devoted to technological research in an economy,the

Accepted Answer

A) greater will be current consumption. 
B) faster the production possibilities frontier will shift outward. 
C) faster the production possibilities frontier will shift inward. 
D) closer it will come to having a comparative advantage in the production of all goods. 
E) more bowed out will be the shape of the production possibilities frontier. 
A) greater will be current consumption. 
B) faster the production possibilities frontier will shift outward. 
C) faster the production possibilities frontier will shift inward. 
D) closer it will come to having a comparative advantage in the production of all goods. 
E) more bowed out will be the shape of the production possibilities frontier.

Question 18

Use the figure below to answer the following questions.
Table 2.4.1
The planets of Vulcan and Romulus each produce goods X and Y.
The following table gives points on their production possibilities frontiers.
  
-Refer to Table 2.4.1.Each country will gain from trade if

Accepted Answer

A) Romulus specializes in both goods. 
B) Vulcan specializes in both goods. 
C) they both continue to produce both goods. 
D) Vulcan specializes in good X and Romulus specializes in good Y. 
E) Romulus specializes in good X and Vulcan specializes in good Y. 
A) Romulus specializes in both goods. 
B) Vulcan specializes in both goods. 
C) they both continue to produce both goods. 
D) Vulcan specializes in good X and Romulus specializes in good Y. 
E) Romulus specializes in good X and Vulcan specializes in good Y.

Question 19

Production efficiency is achieved when

Accepted Answer

A) the production possibilities frontier shifts outward at an even pace. 
B) there are no more tradeoffs. 
C) all resources are equally productive in all activities. 
D) resources are not equally productive in all activities. 
E) we produce goods and services at the lowest possible cost. 
A) the production possibilities frontier shifts outward at an even pace. 
B) there are no more tradeoffs. 
C) all resources are equally productive in all activities. 
D) resources are not equally productive in all activities. 
E) we produce goods and services at the lowest possible cost.

Question 20

The bowed-out (concave)shape of a production possibilities frontier

Accepted Answer

A) is due to the equal usefulness of resources in all activities. 
B) is due to capital accumulation. 
C) is due to technological change. 
D) reflects the existence of increasing opportunity cost. 
E) reflects the existence of decreasing opportunity cost. 
A) is due to the equal usefulness of resources in all activities. 
B) is due to capital accumulation. 
C) is due to technological change. 
D) reflects the existence of increasing opportunity cost. 
E) reflects the existence of decreasing opportunity cost.

Exam 2: The Economic Problem

To gain from comparative advantage,countries must not only trade,they must also

The concept of opportunity cost

If Sam is producing at a point on his production possibilities frontier,then he

Use the table below to answer the following questions. Table 2.1.1 The following table gives points on the production possibilities frontier for goods X and Y. -The economy illustrated by the data in Table 2.1.1 exhibits

Use the figure below to answer the following questions. Figure 2.1.2 -Refer to the production possibilities frontier in Figure 2.1.2.If 6 units of X are currently being produced,then

Use the figure below to answer the following questions. Figure 2.1.3 -Figure 2.1.3 illustrates Mary's production possibilities frontier.If Mary wants to move from point B to point C,

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.If Tom and Jerry specialize and trade eggs and sandwiches with each other ________.

Use the figure below to answer the following questions. Figure 2.1.2 -Consider the production possibilities frontier in Figure 2.1.2,and assume that everything that is produced is also consumed.Which of the following statements is false?

Use the figure below to answer the following questions. Table 2.4.1 The planets of Vulcan and Romulus each produce goods X and Y. The following table gives points on their production possibilities frontiers. -Refer to Table 2.4.1.Which one of the following is true?

Use the figure below to answer the following question. Figure 2.1.6 -The marginal benefit curve for a good

Which one of the following concepts is not illustrated by a production possibilities frontier?

Use the figure below to answer the following question. Figure 2.1.6 -To describe preferences,economists use the concept of

Marginal benefit from a good or service is the benefit received from consuming ________.It is measured by the most that people are willing to pay for ________.

Which of the following quotations best illustrates a tradeoff?

In general,the higher the proportion of resources devoted to technological research in an economy,the

Use the figure below to answer the following questions. Table 2.4.1 The planets of Vulcan and Romulus each produce goods X and Y. The following table gives points on their production possibilities frontiers. -Refer to Table 2.4.1.Each country will gain from trade if

Production efficiency is achieved when

The bowed-out (concave)shape of a production possibilities frontier

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

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: The Keynesian Model

Canadian Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Marginal benefit from a good or service is the benefit received from consuming .It is measured by the most that people are willing to pay for .