Question 1

Figure 2-4  
-Which of the following is true of Figure 2-4?

Accepted Answer

A)  If the economy operates at point A, it is impossible to produce more of both food and clothing. 
B)  If the economy operates at point B, it is impossible to increase the output of clothing without giving up food production. 
C)  If the economy operates at point A, resources are being used efficiently. 
D)  If the economy operates at point B, resources are being used inefficiently. 
A)  If the economy operates at point A, it is impossible to produce more of both food and clothing. 
B)  If the economy operates at point B, it is impossible to increase the output of clothing without giving up food production. 
C)  If the economy operates at point A, resources are being used efficiently. 
D)  If the economy operates at point B, resources are being used inefficiently.

Question 2

If the citizens of a country were to work harder and take less leisure time, it would

Accepted Answer

A)  shift the production possibilities curve outward. 
B)  cause an economy to operate inside its production possibilities curve. 
C)  shift the production possibilities curve inward. 
D)  cause an economy to move from one point on the production possibilities curve to another point on the curve. 
A)  shift the production possibilities curve outward. 
B)  cause an economy to operate inside its production possibilities curve. 
C)  shift the production possibilities curve inward. 
D)  cause an economy to move from one point on the production possibilities curve to another point on the curve.

Question 3

Figure 2-10  
-Refer to Figure 2-10. If the economy moves from point C to point B, then which of the following statements is correct?

Accepted Answer

A)  The economy benefited from a technological advance in the production of baseballs. 
B)  The opportunity cost of each additional baseball is 2 bananas. 
C)  The opportunity cost of each additional banana is 2 baseballs. 
D)  The move involves no opportunity cost; it simply reflects the desires of the economy's citizens. 
A)  The economy benefited from a technological advance in the production of baseballs. 
B)  The opportunity cost of each additional baseball is 2 bananas. 
C)  The opportunity cost of each additional banana is 2 baseballs. 
D)  The move involves no opportunity cost; it simply reflects the desires of the economy's citizens.

Question 4

Use the production possibilities data below to answer the following question(s).
Table 2-3
  
-Refer to Table 2-3. The rancher has a comparative advantage in

Accepted Answer

A)  neither good, and the farmer has a comparative advantage in both goods. 
B)  both goods, and the farmer has a comparative advantage in neither good. 
C)  potatoes, and the farmer has a comparative advantage in meat. 
D)  meat, and the farmer has a comparative advantage in potatoes. 
A)  neither good, and the farmer has a comparative advantage in both goods. 
B)  both goods, and the farmer has a comparative advantage in neither good. 
C)  potatoes, and the farmer has a comparative advantage in meat. 
D)  meat, and the farmer has a comparative advantage in potatoes.

Question 5

The opportunity cost of an activity

Accepted Answer

A)  depends on the individual's subjective values and opinions 
B)  is the same for everyone 
C)  must be calculated and known before undertaking that activity 
D)  is irrelevant to decision making 
E)  is not influenced by time costs 
A)  depends on the individual's subjective values and opinions 
B)  is the same for everyone 
C)  must be calculated and known before undertaking that activity 
D)  is irrelevant to decision making 
E)  is not influenced by time costs

Question 6

Suppose an airline ticket from Charlotte to Dallas costs $525. A bus ticket is $325. Traveling by plane will take 5 hours, compared with 25 hours by bus. Thus, the plane costs $200 more but saves 20 hours of time (Hint: Note how we are "thinking at the margin" here by looking at the changes). Other things constant, an individual will gain by choosing air travel if, and only if, each hour of her time is valued at more than

Accepted Answer

A)  $10 per hour. 
B)  $13 per hour. 
C)  $20 per hour. 
D)  $105 per hour. 
A)  $10 per hour. 
B)  $13 per hour. 
C)  $20 per hour. 
D)  $105 per hour.

Question 7

Briefly explain why the Social Security system will face a "crisis" in the coming years.

Accepted Answer

The pay-as-you-go Social Security system

Question 8

Explain the idea of capital investment by using the story of Robinson Crusoe. What is sacrificed, and what is gained?

Accepted Answer

For Robinson Crusoe, engaging in capital

Question 9

Air travel from New York to Miami costs $300 and takes 6 hours. A bus ticket between the cities costs $150 and takes 56 hours. 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)  $1 per hour. 
B)  $3 per hour. 
C)  $5 per hour. 
D)  $50 per hour. 
A)  $1 per hour. 
B)  $3 per hour. 
C)  $5 per hour. 
D)  $50 per hour.

Question 10

Which of the following about Social Security is true?

Accepted Answer

A)  The regressive nature of the Social Security benefit formula works to the advantage of groups with below average earnings. 
B)  Groups with an below average life expectancy gain from Social Security because they will typically draw retirement benefits over a more lengthy period of time. 
C)  The life expectancy of Hispanics at age 20 is generally lower than the figures for whites and blacks. 
D)  Hispanics derive a higher return from their Social Security taxes than whites, and substantially higher than blacks. 
A)  The regressive nature of the Social Security benefit formula works to the advantage of groups with below average earnings. 
B)  Groups with an below average life expectancy gain from Social Security because they will typically draw retirement benefits over a more lengthy period of time. 
C)  The life expectancy of Hispanics at age 20 is generally lower than the figures for whites and blacks. 
D)  Hispanics derive a higher return from their Social Security taxes than whites, and substantially higher than blacks.

Question 11

The number of cattle slaughtered every year for meat far exceeds the number of elephants slaughtered every year for their ivory. Despite this, cows can be found everywhere while elephants are on the verge of extinction in some countries. Which of the following best explains this difference?

Accepted Answer

A)  Cows can be privately owned while in many countries elephants can not. 
B)  The demand for ivory far exceeds the demand for beef. 
C)  Animals slaughtered for their meat are generally better conserved by humans than animals slaughtered for nonfood uses. 
D)  People tend to protest more every year to prevent cow extinction than they do for elephant extinction. 
A)  Cows can be privately owned while in many countries elephants can not. 
B)  The demand for ivory far exceeds the demand for beef. 
C)  Animals slaughtered for their meat are generally better conserved by humans than animals slaughtered for nonfood uses. 
D)  People tend to protest more every year to prevent cow extinction than they do for elephant extinction.

Question 12

Using a production possibilities curve, a technological advance that increases the amount of output for the same amount of inputs would be illustrated as

Accepted Answer

A)  an inward shift of the curve. 
B)  a movement from one point to another point along the curve. 
C)  an outward shift of the curve. 
D)  a movement from a point on the curve to a point inside the curve. 
A)  an inward shift of the curve. 
B)  a movement from one point to another point along the curve. 
C)  an outward shift of the curve. 
D)  a movement from a point on the curve to a point inside the curve.

Question 13

The bonds held in the Social Security Trust Fund

Accepted Answer

A)  are a valuable asset of the federal government. 
B)  will generate a future stream of net income for the federal government. 
C)  are an IOU from one government agency (the U.S. Treasury) to another (the Social Security Administration). 
D)  are necessary to provide retirement benefits for future retirees. 
A)  are a valuable asset of the federal government. 
B)  will generate a future stream of net income for the federal government. 
C)  are an IOU from one government agency (the U.S. Treasury) to another (the Social Security Administration). 
D)  are necessary to provide retirement benefits for future retirees.

Question 14

Hutch Technology makes computer monitors, which sell for $500 each. What is the opportunity cost of producing ten monitors?

Accepted Answer

A)  $5,000 
B)  the other goods that could be produced with the resources that produce the ten monitors 
C)  the profits that Hutch earns when it sells the ten monitors 
D)  the profits that Hutch loses if it does not produce the monitors 
E)  All of the above are correct. 
A)  $5,000 
B)  the other goods that could be produced with the resources that produce the ten monitors 
C)  the profits that Hutch earns when it sells the ten monitors 
D)  the profits that Hutch loses if it does not produce the monitors 
E)  All of the above are correct.

Question 15

A middleman is a person who

Accepted Answer

A)  specializes in arranging trades and selling, guaranteeing, and servicing items traded. 
B)  acts as a middle person between the top management of a business firm and the hourly employees who actually produce the goods and services. 
C)  adds to the seller's expense and the buyer's buying price without providing a service to either. 
D)  levies a tax on private sector activity and uses the funds to support government activities. 
A)  specializes in arranging trades and selling, guaranteeing, and servicing items traded. 
B)  acts as a middle person between the top management of a business firm and the hourly employees who actually produce the goods and services. 
C)  adds to the seller's expense and the buyer's buying price without providing a service to either. 
D)  levies a tax on private sector activity and uses the funds to support government activities.

Question 16

Which of the following is NOT true of opportunity cost?

Accepted Answer

A)  Opportunity costs are subjective because they depend upon how the decision-maker values his or her options. 
B)  Opportunity costs are only the monetary costs of lost options. 
C)  Opportunity costs are the highest-valued alternative sacrificed in order to choose an option. 
D)  Only the decision-maker can determine his or her opportunity costs for any particular action. 
A)  Opportunity costs are subjective because they depend upon how the decision-maker values his or her options. 
B)  Opportunity costs are only the monetary costs of lost options. 
C)  Opportunity costs are the highest-valued alternative sacrificed in order to choose an option. 
D)  Only the decision-maker can determine his or her opportunity costs for any particular action.

Question 17

The successful introduction and adoption of a new product or process is known as

Accepted Answer

A)  invention. 
B)  innovation. 
C)  origination. 
D)  adaptation. 
A)  invention. 
B)  innovation. 
C)  origination. 
D)  adaptation.

Question 18

If an economy operates at a point within its production possibilities curve,

Accepted Answer

A)  it lacks the resources necessary to reach the curve. 
B)  it is utilizing all of its resources efficiently. 
C)  it does not confront the problem of scarce goods relative to unlimited wants. 
D)  it is not efficiently using all of its resources. 
A)  it lacks the resources necessary to reach the curve. 
B)  it is utilizing all of its resources efficiently. 
C)  it does not confront the problem of scarce goods relative to unlimited wants. 
D)  it is not efficiently using all of its resources.

Question 19

The production possibilities curve illustrates the basic principle that

Accepted Answer

A)  an economy's capacity to produce is unrelated to its population. 
B)  if all the resources of an economy are being used efficiently, more of one good can be produced only if more of another good is produced. 
C)  an economy will automatically move toward a point at which all of its resources are being used inefficiently. 
D)  if all the resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced. 
A)  an economy's capacity to produce is unrelated to its population. 
B)  if all the resources of an economy are being used efficiently, more of one good can be produced only if more of another good is produced. 
C)  an economy will automatically move toward a point at which all of its resources are being used inefficiently. 
D)  if all the resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced.

Question 20

The Social Security program is primarily a

Accepted Answer

A)  compulsory retirement income program set up on sound insurance principles. 
B)  forced-savings program where workers save during their working years and receive the principal and interest on these savings at retirement. 
C)  program designed to tax current workers in order to provide benefits for current retirees. 
D)  voluntary savings program run by the government. 
A)  compulsory retirement income program set up on sound insurance principles. 
B)  forced-savings program where workers save during their working years and receive the principal and interest on these savings at retirement. 
C)  program designed to tax current workers in order to provide benefits for current retirees. 
D)  voluntary savings program run by the government.

Figure 2-4 -Which of the following is true of Figure 2-4?

If the citizens of a country were to work harder and take less leisure time, it would

Figure 2-10 -Refer to Figure 2-10. If the economy moves from point C to point B, then which of the following statements is correct?

Use the production possibilities data below to answer the following question(s). Table 2-3 -Refer to Table 2-3. The rancher has a comparative advantage in

The opportunity cost of an activity

Briefly explain why the Social Security system will face a "crisis" in the coming years.

Explain the idea of capital investment by using the story of Robinson Crusoe. What is sacrificed, and what is gained?

Air travel from New York to Miami costs $300 and takes 6 hours. A bus ticket between the cities costs $150 and takes 56 hours. Other things constant, the minimum value of one's time that would induce a rational individual to fly rather than drive would be

Which of the following about Social Security is true?

The number of cattle slaughtered every year for meat far exceeds the number of elephants slaughtered every year for their ivory. Despite this, cows can be found everywhere while elephants are on the verge of extinction in some countries. Which of the following best explains this difference?

Using a production possibilities curve, a technological advance that increases the amount of output for the same amount of inputs would be illustrated as

The bonds held in the Social Security Trust Fund

Hutch Technology makes computer monitors, which sell for $500 each. What is the opportunity cost of producing ten monitors?

A middleman is a person who

Which of the following is NOT true of opportunity cost?

The successful introduction and adoption of a new product or process is known as

If an economy operates at a point within its production possibilities curve,

The production possibilities curve illustrates the basic principle that

The Social Security program is primarily a

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

Figure 2-4 -Which of the following is true of Figure 2-4?

If the citizens of a country were to work harder and take less leisure time, it would

Figure 2-10 -Refer to Figure 2-10. If the economy moves from point C to point B, then which of the following statements is correct?

Use the production possibilities data below to answer the following question(s). Table 2-3 -Refer to Table 2-3. The rancher has a comparative advantage in

The opportunity cost of an activity

Briefly explain why the Social Security system will face a "crisis" in the coming years.

Explain the idea of capital investment by using the story of Robinson Crusoe. What is sacrificed, and what is gained?

Air travel from New York to Miami costs $300 and takes 6 hours. A bus ticket between the cities costs $150 and takes 56 hours. Other things constant, the minimum value of one's time that would induce a rational individual to fly rather than drive would be

Which of the following about Social Security is true?

The number of cattle slaughtered every year for meat far exceeds the number of elephants slaughtered every year for their ivory. Despite this, cows can be found everywhere while elephants are on the verge of extinction in some countries. Which of the following best explains this difference?

Using a production possibilities curve, a technological advance that increases the amount of output for the same amount of inputs would be illustrated as

The bonds held in the Social Security Trust Fund

Hutch Technology makes computer monitors, which sell for $500 each. What is the opportunity cost of producing ten monitors?

A middleman is a person who

Which of the following is NOT true of opportunity cost?

The successful introduction and adoption of a new product or process is known as

If an economy operates at a point within its production possibilities curve,

The production possibilities curve illustrates the basic principle that

The Social Security program is primarily a

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