Exam 2: Some Tools of the Economist

The opportunity cost of an option

Use the production possibilities data below for Austria and Italy to answer the following question(s). Table 2-1 -Refer to Table 2-1. According to the law of comparative advantage, both Austria and Italy could gain if

Figure 2-10 -Refer to Figure 2-10. A movement from point C to point D could be caused by

When the current Social Security surpluses end and the bonds in the trust funds are reduced in order to make payments to retirees, the financing for the redemption of the trust fund bonds will come from

Mark and John are 10-year-old twins who do not get along. They have opened separate lemonade stands and are competing with each other, selling lemonade on their block. Their mother observes that Mark is very good at making lemonade and John is an excellent young salesman. She suggests they both could make more money if they worked together. John counters that two stands will always make more money than one. Who is right? Why?

Persons who die before age 65 or soon thereafter, receive little or nothing from their Social Security payroll tax payments. Which of the following groups is harmed the most by this attribute of the Social Security retirement system?

Which of the following tends to increase the attractiveness of a retirement system based on savings and investment rather than pay-as-you-go principles?

Which of the following groups derive the highest rate of return from the taxes they pay into the Social Security retirement system?

In Zimbabwe and Botswana, elephants can be owned by local tribes and trade in ivory is legal, while in countries such as Kenya, it is illegal to trade in ivory and elephants cannot be privately owned but are protected by the government. Which of the following is true regarding the change in the elephant populations since 1979 in these countries?

Figure 2-9 -Refer to Figure 2-9. The opportunity cost of obtaining 10 additional toasters by moving from point B to point A is

Which of the following is true of a production possibilities curve?

If Xavier can produce sandwiches at a lower opportunity cost than Kimani, then

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

The law of comparative advantage implies that a nation, individual, or region should produce those economic goods for which it

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 is correct?

When the Social Security system begins running a deficit, the bonds in the trust fund will be drawn down. The funds to redeem these bonds will have to come from

By 2030, the number of workers per Social Security beneficiary will be approximately

The law of comparative advantage applies to exchange between

The most important source of gain from the division of labor is

The primary benefit that results when a nation employs its resources in accordance with the principle of comparative advantage is