Question 1

A high-school graduate who gets a college degree is adding to the economy's stock of:

Accepted Answer

A)  labor. 
B)  capital. 
C)  human capital. 
D)  financial capital. 
A)  labor. 
B)  capital. 
C)  human capital. 
D)  financial capital. C

Question 2

Economists who are asked to choose between two government policies may disagree because:

Accepted Answer

A)  they make the same value judgments about the desirability of the policies. 
B)  they base their conclusions on models that make different assumptions. 
C)  as a matter of course, economists often take opposing points of view so that all sides of a question may be discussed. 
D)  economists are trained ignore facts and focus on theory. 
A)  they make the same value judgments about the desirability of the policies. 
B)  they base their conclusions on models that make different assumptions. 
C)  as a matter of course, economists often take opposing points of view so that all sides of a question may be discussed. 
D)  economists are trained ignore facts and focus on theory. B

Question 3

In the graph of a curve, the vertical intercept is:

Accepted Answer

A)  the value of the y-variable when the value of the x-variable is equal to zero. 
B)  the change in the y-variable between two points divided by the change in the x-variable between those same two points. 
C)  the value of the y-variable when the value of the slope is equal to zero. 
D)  the value of the x-variable when the value of the y-variable is equal to zero. 
A)  the value of the y-variable when the value of the x-variable is equal to zero. 
B)  the change in the y-variable between two points divided by the change in the x-variable between those same two points. 
C)  the value of the y-variable when the value of the slope is equal to zero. 
D)  the value of the x-variable when the value of the y-variable is equal to zero. A

Question 4

Use the following to answer question:  
-(Table: Fish and Coconut Production Possibilities) The table shows the maximum amount of fish and coconuts that Tom and Hank can produce if they produce only one good. Tom produces and consumes nine fish and two coconuts, and Hank produces and consumes three fish and two coconuts. Now they decide to engage in trade. Which of the following statements is INCORRECT?

Accepted Answer

A)  For both to become better off, each should specialize in the production of some good. However, since Hank is equally productive in both goods, it doesn't matter which good each specializes in. 
B)  For both to become better off, each should specialize completely in the production of the good in which he has a comparative advantage. 
C)  After trade it is possible for Tom to consume 9 fish and 2.5 coconuts and for Hank to consume 3 fish and 2.5 coconuts. 
D)  For each individual, the consumption point after trade will lie outside that individual's production possibility frontier. 
A)  For both to become better off, each should specialize in the production of some good. However, since Hank is equally productive in both goods, it doesn't matter which good each specializes in. 
B)  For both to become better off, each should specialize completely in the production of the good in which he has a comparative advantage. 
C)  After trade it is possible for Tom to consume 9 fish and 2.5 coconuts and for Hank to consume 3 fish and 2.5 coconuts. 
D)  For each individual, the consumption point after trade will lie outside that individual's production possibility frontier.

Question 5

When building a model, economists:

Accepted Answer

A)  simplify reality to highlight what really matters. 
B)  attempt to duplicate reality in all of its complexity. 
C)  ignore the facts and instead try to determine what the facts should be. 
D)  are careful to avoid the scientific method. 
A)  simplify reality to highlight what really matters. 
B)  attempt to duplicate reality in all of its complexity. 
C)  ignore the facts and instead try to determine what the facts should be. 
D)  are careful to avoid the scientific method.

Question 6

Use the following to answer questions:
Figure: Consumption of Pizza and Tacos  
-(Figure: Consumption of Pizza and Tacos) Look at the figure Consumption of Pizza and Tacos. The figure shows the number of tacos and pizza slices Matt can eat in a day. The best estimate of the slope between point A and point B is -4.

Accepted Answer

A) True 
 B)False

Question 7

If the opportunity cost of manufacturing machinery is higher in the United States than in Britain and the opportunity cost of manufacturing sweaters is lower in the United States than in Britain, then the United States will:

Accepted Answer

A)  export both sweaters and machinery to Britain. 
B)  import both sweaters and machinery from Britain. 
C)  export sweaters to Britain and import machinery from Britain. 
D)  import sweaters from Britain and export machinery to Britain. 
A)  export both sweaters and machinery to Britain. 
B)  import both sweaters and machinery from Britain. 
C)  export sweaters to Britain and import machinery from Britain. 
D)  import sweaters from Britain and export machinery to Britain.

Question 8

Frances has a linear production possibility frontier when she produces tomatoes and green beans. If she uses all of her resources, she can produce 400 bushels of tomatoes or 800 bushels of green beans. Frances CANNOT efficiently produce _____ bushels of tomatoes and _____ bushels of green beans.

Accepted Answer

A)  400; 0 
B)  200; 400 
C)  200; 200 
D)  0; 800 
A)  400; 0 
B)  200; 400 
C)  200; 200 
D)  0; 800

Question 9

Use the following to answer questions:
Figure: Production Possibility Frontier  
-(Figure: Production Possibility Frontier) Look at the figure Production Possibilities Frontier. A movement from point C producing 12 cars and 16 computers per period to point B means a _____of _____ cars and a _____ of _____ computers per period.

Accepted Answer

A)  gain; 4; loss; 4 
B)  gain; 2; loss; 4 
C)  gain; 4; loss; 6 
D)  loss; 2; gain; 4 
A)  gain; 4; loss; 4 
B)  gain; 2; loss; 4 
C)  gain; 4; loss; 6 
D)  loss; 2; gain; 4

Question 10

In movement along a production possibility frontier, the opportunity cost to society of getting more of one good:

Accepted Answer

A)  is always constant. 
B)  is measured in dollar terms. 
C)  is measured by the amount of the other good that must be given up. 
D)  usually decreases. 
A)  is always constant. 
B)  is measured in dollar terms. 
C)  is measured by the amount of the other good that must be given up. 
D)  usually decreases.

Question 11

A simplified version of reality that is used to clarify economic situations is called a(n):

Accepted Answer

A)  economic fact. 
B)  current event. 
C)  model. 
D)  scarce resource. 
A)  economic fact. 
B)  current event. 
C)  model. 
D)  scarce resource.

Question 12

An economy is said to have a comparative advantage in the production of a good if it can produce that good:

Accepted Answer

A)  with more resources than another economy. 
B)  with a higher opportunity cost than another economy. 
C)  outside its production possibility frontier. 
D)  at a lower opportunity cost than another economy. 
A)  with more resources than another economy. 
B)  with a higher opportunity cost than another economy. 
C)  outside its production possibility frontier. 
D)  at a lower opportunity cost than another economy.

Question 13

The fact that a society's production possibility frontier is bowed out, or concave to the origin of a graph, demonstrates the law of _____ opportunity cost.

Accepted Answer

A)  increasing 
B)  decreasing 
C)  constant 
D)  concave 
A)  increasing 
B)  decreasing 
C)  constant 
D)  concave

Question 14

In the circular-flow diagram, the factor market is where:

Accepted Answer

A)  households buy factors of production. 
B)  households buy goods and services. 
C)  businesses buy goods and services. 
D)  businesses buy factors of production. 
A)  households buy factors of production. 
B)  households buy goods and services. 
C)  businesses buy goods and services. 
D)  businesses buy factors of production.

Question 15

Use the following to answer questions:  
-(Table: Trade-off of Study Time and Leisure Time) Look at the table Trade-off of Study Time and Leisure Time. A student sleeps 8 hours per day and divides the remaining time between study and leisure time. Suppose this student is studying 4 hours and spending 10 hours doing leisure activities. This point is:

Accepted Answer

A)  outside the production possibility frontier. 
B)  inside the production possibility frontier. 
C)  on the production possibility frontier. 
D)  both efficient and feasible. 
A)  outside the production possibility frontier. 
B)  inside the production possibility frontier. 
C)  on the production possibility frontier. 
D)  both efficient and feasible.

Question 16

Use the following to answer questions:
Figure: Strawberries and Submarines II  
-(Figure: Strawberries and Submarines II) Look at the figure Strawberries and Submarines II. Assume that the economy is operating at point A. The opportunity cost of moving to point C is equal to _____ million tons of strawberries:

Accepted Answer

A)  800 
B)  200 
C)  2 
D)  50 
A)  800 
B)  200 
C)  2 
D)  50

Question 17

If an economy is producing at a point on its production possibilities frontier, it is:

Accepted Answer

A)  efficient in production and allocation. 
B)  efficient in production but not necessarily in allocation. 
C)  efficient in allocation but not necessarily in production. 
D)  not necessarily efficient in production or allocation. 
A)  efficient in production and allocation. 
B)  efficient in production but not necessarily in allocation. 
C)  efficient in allocation but not necessarily in production. 
D)  not necessarily efficient in production or allocation.

Question 18

Use the following to answer questions:  
-(Table: Coffee and Salmon Production Possibilities II) Look at the table Coffee and Salmon Production Possibilities II. This table shows the maximum amounts of coffee and salmon, both measured in pounds, that Brazil and Alaska can produce if they just produce one good. Brazil has a comparative advantage in producing:

Accepted Answer

A)  coffee only. 
B)  salmon only. 
C)  both coffee and salmon. 
D)  neither coffee nor salmon 
A)  coffee only. 
B)  salmon only. 
C)  both coffee and salmon. 
D)  neither coffee nor salmon

Question 19

Use the following to answer questions:
Figure: Comparative Advantage
Eastland and Westland produce only two goods, boxes of peaches and boxes of oranges, and this figure shows each nation's production possibility frontier for the two goods.  
-(Figure: Comparative Advantage) Look at the figure Comparative Advantage. The opportunity cost of producing 1 box of oranges for Eastland is _____ box(es) of peaches.

Accepted Answer

A)  1 
B)  0.25 
C)  4 
D)  10 
A)  1 
B)  0.25 
C)  4 
D)  10

Question 20

Absolute advantage is the basis for gains from trade.

Accepted Answer

A) True 
 B)False

A high-school graduate who gets a college degree is adding to the economy's stock of:

Economists who are asked to choose between two government policies may disagree because:

In the graph of a curve, the vertical intercept is:

When building a model, economists:

If the opportunity cost of manufacturing machinery is higher in the United States than in Britain and the opportunity cost of manufacturing sweaters is lower in the United States than in Britain, then the United States will:

Frances has a linear production possibility frontier when she produces tomatoes and green beans. If she uses all of her resources, she can produce 400 bushels of tomatoes or 800 bushels of green beans. Frances CANNOT efficiently produce _ bushels of tomatoes and _ bushels of green beans.

In movement along a production possibility frontier, the opportunity cost to society of getting more of one good:

A simplified version of reality that is used to clarify economic situations is called a(n):

An economy is said to have a comparative advantage in the production of a good if it can produce that good:

The fact that a society's production possibility frontier is bowed out, or concave to the origin of a graph, demonstrates the law of _____ opportunity cost.

In the circular-flow diagram, the factor market is where:

If an economy is producing at a point on its production possibilities frontier, it is:

Absolute advantage is the basis for gains from trade.

First Principles

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Exam 2: Economic Models: Trade-Offs and Trade 25

A high-school graduate who gets a college degree is adding to the economy's stock of:

Economists who are asked to choose between two government policies may disagree because:

In the graph of a curve, the vertical intercept is:

When building a model, economists:

If the opportunity cost of manufacturing machinery is higher in the United States than in Britain and the opportunity cost of manufacturing sweaters is lower in the United States than in Britain, then the United States will:

Frances has a linear production possibility frontier when she produces tomatoes and green beans. If she uses all of her resources, she can produce 400 bushels of tomatoes or 800 bushels of green beans. Frances CANNOT efficiently produce _____ bushels of tomatoes and _____ bushels of green beans.

In movement along a production possibility frontier, the opportunity cost to society of getting more of one good:

A simplified version of reality that is used to clarify economic situations is called a(n):

An economy is said to have a comparative advantage in the production of a good if it can produce that good:

The fact that a society's production possibility frontier is bowed out, or concave to the origin of a graph, demonstrates the law of _____ opportunity cost.

In the circular-flow diagram, the factor market is where:

If an economy is producing at a point on its production possibilities frontier, it is:

Absolute advantage is the basis for gains from trade.

First Principles

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Frances has a linear production possibility frontier when she produces tomatoes and green beans. If she uses all of her resources, she can produce 400 bushels of tomatoes or 800 bushels of green beans. Frances CANNOT efficiently produce _ bushels of tomatoes and _ bushels of green beans.