Question 1

Which of the following is a private owner prohibited from doing?

Accepted Answer

A)  selling the property to another person 
B)  erecting a fence designed to keep others from using the property 
C)  painting the property a color that others do not like 
D)  using the property in a manner that invades or infringes on the property of another 
A)  selling the property to another person 
B)  erecting a fence designed to keep others from using the property 
C)  painting the property a color that others do not like 
D)  using the property in a manner that invades or infringes on the property of another

Question 2

Which of the following attributes of trade explain why it is important for economic prosperity?

Accepted Answer

A)  Trade moves goods from people who value them less to people who value them more. 
B)  Trade makes it possible to produce a larger output as a result of lower per unit costs that often accompany large-scale production. 
C)  Trade makes it possible to produce a larger output as a result of gains from division of labor and specialization. 
D)  All of the above. 
A)  Trade moves goods from people who value them less to people who value them more. 
B)  Trade makes it possible to produce a larger output as a result of lower per unit costs that often accompany large-scale production. 
C)  Trade makes it possible to produce a larger output as a result of gains from division of labor and specialization. 
D)  All of the above.

Question 3

Suppose you can type a paper in two hours or mow the lawn in four hours, while it takes your friend Gabriela eight hours to type a paper or two hours to mow the lawn. Which of the following is true?

Accepted Answer

A)  You have a comparative advantage in typing. 
B)  You have a comparative advantage in mowing the lawn. 
C)  You and Gabriela could save time if you mowed her lawn while she typed your paper. 
D)  You and Gabriela cannot gain from specialization and trade. 
A)  You have a comparative advantage in typing. 
B)  You have a comparative advantage in mowing the lawn. 
C)  You and Gabriela could save time if you mowed her lawn while she typed your paper. 
D)  You and Gabriela cannot gain from specialization and trade.

Question 4

The structure of the Social Security system is particularly advantageous to

Accepted Answer

A)  blacks. 
B)  those with life shortening diseases such as diabetes. 
C)  groups with below average earnings and above average life expectancy. 
D)  groups with above average earnings and below average life expectancy. 
A)  blacks. 
B)  those with life shortening diseases such as diabetes. 
C)  groups with below average earnings and above average life expectancy. 
D)  groups with above average earnings and below average life expectancy.

Question 5

Given your knowledge of the incentives created by private ownership, which of the following would you expect to be false?

Accepted Answer

A)  People will take better care of their own personal automobile than they will a rental car. 
B)  People will take better care of a home they own than they will of a home they rent. 
C)  Property owned privately will tend to be better conserved and kept than public property or property owned in common. 
D)  People will be more likely to throw trash out onto their own lawn than they will be to throw it out onto the side of an interstate highway. 
A)  People will take better care of their own personal automobile than they will a rental car. 
B)  People will take better care of a home they own than they will of a home they rent. 
C)  Property owned privately will tend to be better conserved and kept than public property or property owned in common. 
D)  People will be more likely to throw trash out onto their own lawn than they will be to throw it out onto the side of an interstate highway.

Question 6

Jim values his car at $2,000, and Kelly values it at $5,000. Can value be created in this situation? How? Suppose Jim refuses to sell for less than $6,000. Is value destroyed? Why or why not?

Accepted Answer

Value can be created in this situation.

Question 7

Suppose an airline ticket from Portland to Orlando costs $760. A bus ticket costs $360. Traveling by plane will take 6 hours, compared with 26 hours by bus. Other things constant, the minimum value of one's time that would induce a rational individual to fly rather than drive would be

Accepted Answer

A)  $18 per hour. 
B)  $20 per hour. 
C)  $38 per hour. 
D)  $44 per hour. 
A)  $18 per hour. 
B)  $20 per hour. 
C)  $38 per hour. 
D)  $44 per hour.

Question 8

The wages of house painters will tend to rise when

Accepted Answer

A)  more people recognize that house painters have very low incomes. 
B)  the alternative earning opportunities of house painters improve. 
C)  house painters can no longer find good paying alternatives for their labor. 
D)  unemployment in the economy is high and there are few alternative jobs available for house painters. 
A)  more people recognize that house painters have very low incomes. 
B)  the alternative earning opportunities of house painters improve. 
C)  house painters can no longer find good paying alternatives for their labor. 
D)  unemployment in the economy is high and there are few alternative jobs available for house painters.

Question 9

Which of the following is true of private ownership?

Accepted Answer

A)  Private ownership links responsibility with the right of control. 
B)  Private owners have little incentive to conserve natural resources for the future. 
C)  Private owners have little incentive to develop and use their assets in ways others value. 
D)  Private owners can do anything they want with the things they own regardless of the damage it does to the property of others. 
A)  Private ownership links responsibility with the right of control. 
B)  Private owners have little incentive to conserve natural resources for the future. 
C)  Private owners have little incentive to develop and use their assets in ways others value. 
D)  Private owners can do anything they want with the things they own regardless of the damage it does to the property of others.

Question 10

A nation that protects its workers from unemployment by limiting the use (by employers) of technological improvements will

Accepted Answer

A)  grow more rapidly because the rate of unemployment will be lower. 
B)  grow more rapidly because investors prefer a stable business environment rather than the uncertainties that accompany technological change. 
C)  grow less rapidly because technological change is an important factor contributing to the growth of output. 
D)  grow just as much as nations that adopt more rapidly technological improvements. 
A)  grow more rapidly because the rate of unemployment will be lower. 
B)  grow more rapidly because investors prefer a stable business environment rather than the uncertainties that accompany technological change. 
C)  grow less rapidly because technological change is an important factor contributing to the growth of output. 
D)  grow just as much as nations that adopt more rapidly technological improvements.

Question 11

During the last two decades, most of the surplus generated by the Social Security system was

Accepted Answer

A)  used to finance current government expenditures. 
B)  invested in government bonds that will make it possible for the federal government to pay future retirement benefits without an increase in federal taxes. 
C)  used to pay down the national debt. 
D)  invested in bonds offered by foreign governments and businesses that will provide a stream of future income for the finance of retirement benefits. 
A)  used to finance current government expenditures. 
B)  invested in government bonds that will make it possible for the federal government to pay future retirement benefits without an increase in federal taxes. 
C)  used to pay down the national debt. 
D)  invested in bonds offered by foreign governments and businesses that will provide a stream of future income for the finance of retirement benefits.

Question 12

Which of the following would be most likely to increase your opportunity cost of attending college?

Accepted Answer

A)  a recession in the economy that made finding a job more difficult 
B)  receiving a very attractive offer to start a job today that would permit you to earn about 50 percent more than you expected to make after graduation 
C)  the retirement of your favorite professor under whom you hoped to study during the next semester 
D)  information indicating that salaries were declining and that there were very few openings for college graduates in your field 
A)  a recession in the economy that made finding a job more difficult 
B)  receiving a very attractive offer to start a job today that would permit you to earn about 50 percent more than you expected to make after graduation 
C)  the retirement of your favorite professor under whom you hoped to study during the next semester 
D)  information indicating that salaries were declining and that there were very few openings for college graduates in your field

Question 13

Figure 2-3  
-Points A and B in Figure 2-3 indicate consumption and investment for two economies. Other things constant, which of the economies is likely to grow more rapidly in the future?

Accepted Answer

A)  economy A 
B)  economy B 
C)  They can be expected to grow at the same rate. 
D)  This is uncertain since growth is not influenced by the factors indicated in this example. 
A)  economy A 
B)  economy B 
C)  They can be expected to grow at the same rate. 
D)  This is uncertain since growth is not influenced by the factors indicated in this example.

Question 14

A profit-seeking decision maker who decides which business projects to undertake and how they should be undertaken is called

Accepted Answer

A)  a key man. 
B)  an entrepreneur. 
C)  a progressor. 
D)  a stakeholder. 
A)  a key man. 
B)  an entrepreneur. 
C)  a progressor. 
D)  a stakeholder.

Question 15

In a market economy,

Accepted Answer

A)  a larger income for one person means a smaller one for another. 
B)  the government answers all the basic economic questions. 
C)  a larger income for one person means it is possible for others to earn more too. 
D)  economic output shrinks as we discover better ways of doing things. 
A)  a larger income for one person means a smaller one for another. 
B)  the government answers all the basic economic questions. 
C)  a larger income for one person means it is possible for others to earn more too. 
D)  economic output shrinks as we discover better ways of doing things.

Question 16

Use the production possibilities data below for Honduras and Nicaragua to answer the following question(s).
Table 2-2
  
-Refer to Table 2-2. Which of the following would be a mutually agreeable rate of exchange?

Accepted Answer

A)  Nicaragua trades one orange to Honduras for every one apple. 
B)  Nicaragua trades one orange to Honduras for every two apples. 
C)  Nicaragua trades one orange to Honduras for every three apples. 
D)  Nicaragua trades one orange to Honduras for every four apples. 
A)  Nicaragua trades one orange to Honduras for every one apple. 
B)  Nicaragua trades one orange to Honduras for every two apples. 
C)  Nicaragua trades one orange to Honduras for every three apples. 
D)  Nicaragua trades one orange to Honduras for every four apples.

Question 17

In economics, the term that refers to the time, effort, and other resources needed to search out, negotiate, and consummate an exchange is

Accepted Answer

A)  transaction costs. 
B)  specialization costs. 
C)  pecuniary costs. 
D)  comparative costs. 
A)  transaction costs. 
B)  specialization costs. 
C)  pecuniary costs. 
D)  comparative costs.

Question 18

Which of the following statements about exchange is false?

Accepted Answer

A)  The expectation of gain motivates people to engage in trade. 
B)  If a party to a potential exchange does not believe that it will lead to personal gain, he or she can chose not to engage in the trade. 
C)  Voluntary exchange is generally mutually beneficial to the trading partners. 
D)  If one trading partner gains, the other must lose. 
A)  The expectation of gain motivates people to engage in trade. 
B)  If a party to a potential exchange does not believe that it will lead to personal gain, he or she can chose not to engage in the trade. 
C)  Voluntary exchange is generally mutually beneficial to the trading partners. 
D)  If one trading partner gains, the other must lose.

Question 19

Which of the following is true regarding value, transaction costs, and exchange?

Accepted Answer

A)  Middlemen can be viewed as agents who create value by reducing transaction costs and, thereby, facilitating gains from exchange. 
B)  Middlemen fail to create value since they do not expand the supply of physical goods. 
C)  A good or service has a given value regardless of who uses it or how it is used. 
D)  Voluntary exchange reduces value by channeling goods into the hands of people who value them least. 
A)  Middlemen can be viewed as agents who create value by reducing transaction costs and, thereby, facilitating gains from exchange. 
B)  Middlemen fail to create value since they do not expand the supply of physical goods. 
C)  A good or service has a given value regardless of who uses it or how it is used. 
D)  Voluntary exchange reduces value by channeling goods into the hands of people who value them least.

Question 20

Which of the following is true regarding value and exchange?

Accepted Answer

A)  Middlemen fail to create value since they do not expand the supply of physical goods. 
B)  A good or service has a given value regardless of who uses it or how it is used. 
C)  If it were not for middlemen, transaction costs would be zero. 
D)  Voluntary exchange creates value by channeling goods into the hands of people who value them most. 
A)  Middlemen fail to create value since they do not expand the supply of physical goods. 
B)  A good or service has a given value regardless of who uses it or how it is used. 
C)  If it were not for middlemen, transaction costs would be zero. 
D)  Voluntary exchange creates value by channeling goods into the hands of people who value them most.

Which of the following is a private owner prohibited from doing?

Which of the following attributes of trade explain why it is important for economic prosperity?

Suppose you can type a paper in two hours or mow the lawn in four hours, while it takes your friend Gabriela eight hours to type a paper or two hours to mow the lawn. Which of the following is true?

The structure of the Social Security system is particularly advantageous to

Given your knowledge of the incentives created by private ownership, which of the following would you expect to be false?

Jim values his car at $2,000, and Kelly values it at $5,000. Can value be created in this situation? How? Suppose Jim refuses to sell for less than $6,000. Is value destroyed? Why or why not?

Suppose an airline ticket from Portland to Orlando costs $760. A bus ticket costs $360. Traveling by plane will take 6 hours, compared with 26 hours by bus. Other things constant, the minimum value of one's time that would induce a rational individual to fly rather than drive would be

The wages of house painters will tend to rise when

Which of the following is true of private ownership?

A nation that protects its workers from unemployment by limiting the use (by employers) of technological improvements will

During the last two decades, most of the surplus generated by the Social Security system was

Which of the following would be most likely to increase your opportunity cost of attending college?

Figure 2-3 -Points A and B in Figure 2-3 indicate consumption and investment for two economies. Other things constant, which of the economies is likely to grow more rapidly in the future?

A profit-seeking decision maker who decides which business projects to undertake and how they should be undertaken is called

In a market economy,

Use the production possibilities data below for Honduras and Nicaragua to answer the following question(s). Table 2-2 -Refer to Table 2-2. Which of the following would be a mutually agreeable rate of exchange?

In economics, the term that refers to the time, effort, and other resources needed to search out, negotiate, and consummate an exchange is

Which of the following statements about exchange is false?

Which of the following is true regarding value, transaction costs, and exchange?

Which of the following is true regarding value and exchange?

The Economic Approach

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters

Exam 2: Some Tools of the Economist

Which of the following is a private owner prohibited from doing?

Which of the following attributes of trade explain why it is important for economic prosperity?

Suppose you can type a paper in two hours or mow the lawn in four hours, while it takes your friend Gabriela eight hours to type a paper or two hours to mow the lawn. Which of the following is true?

The structure of the Social Security system is particularly advantageous to

Given your knowledge of the incentives created by private ownership, which of the following would you expect to be false?

Jim values his car at $2,000, and Kelly values it at $5,000. Can value be created in this situation? How? Suppose Jim refuses to sell for less than $6,000. Is value destroyed? Why or why not?

Suppose an airline ticket from Portland to Orlando costs $760. A bus ticket costs $360. Traveling by plane will take 6 hours, compared with 26 hours by bus. Other things constant, the minimum value of one's time that would induce a rational individual to fly rather than drive would be

The wages of house painters will tend to rise when

Which of the following is true of private ownership?

A nation that protects its workers from unemployment by limiting the use (by employers) of technological improvements will

During the last two decades, most of the surplus generated by the Social Security system was

Which of the following would be most likely to increase your opportunity cost of attending college?

Figure 2-3 -Points A and B in Figure 2-3 indicate consumption and investment for two economies. Other things constant, which of the economies is likely to grow more rapidly in the future?

A profit-seeking decision maker who decides which business projects to undertake and how they should be undertaken is called

In a market economy,

Use the production possibilities data below for Honduras and Nicaragua to answer the following question(s). Table 2-2 -Refer to Table 2-2. Which of the following would be a mutually agreeable rate of exchange?

In economics, the term that refers to the time, effort, and other resources needed to search out, negotiate, and consummate an exchange is

Which of the following statements about exchange is false?

Which of the following is true regarding value, transaction costs, and exchange?

Which of the following is true regarding value and exchange?

The Economic Approach

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters