Question 1

"Teachers in northern New Hampshire should earn more money" is a normative statement.

Accepted Answer

A) True 
 B)False

Question 2

If two variables are negatively related:

Accepted Answer

A)  as one goes up in value, the other must go up in value, too. 
B)  as one goes up in value, the other must go down in value. 
C)  there can never be a trade-off between the two. 
D)  one variable is always the reciprocal of the other. 
A)  as one goes up in value, the other must go up in value, too. 
B)  as one goes up in value, the other must go down in value. 
C)  there can never be a trade-off between the two. 
D)  one variable is always the reciprocal of the other.

Question 3

In a single day, George can bake 10 cakes and Greta can bake 5 cakes. We know that _____ has a(n) _____ advantage in baking cakes.

Accepted Answer

A)  George; comparative 
B)  George; absolute 
C)  Greta; comparative 
D)  Greta; absolute 
A)  George; comparative 
B)  George; absolute 
C)  Greta; comparative 
D)  Greta; absolute

Question 4

An economy that has the lowest opportunity cost of producing a particular good is said to have:

Accepted Answer

A)  an absolute advantage in production of that good. 
B)  a comparative advantage in production of that good. 
C)  a production possibility frontier. 
D)  an increasing opportunity cost in production of that good. 
A)  an absolute advantage in production of that good. 
B)  a comparative advantage in production of that good. 
C)  a production possibility frontier. 
D)  an increasing opportunity cost in production of that good.

Question 5

Trade can be beneficial to an economy because:

Accepted Answer

A)  it results in a more efficient use of the combined resources of some of the trading countries, even though it reduces efficiency in others. 
B)  more goods and services can be obtained at lower opportunity cost. 
C)  it prevents specialization in activities in which countries have a comparative advantage. 
D)  it prevents unemployment. 
A)  it results in a more efficient use of the combined resources of some of the trading countries, even though it reduces efficiency in others. 
B)  more goods and services can be obtained at lower opportunity cost. 
C)  it prevents specialization in activities in which countries have a comparative advantage. 
D)  it prevents unemployment.

Question 6

Economists usually assume that production is subject to increasing opportunity costs because:

Accepted Answer

A)  higher production usually results in more inflation. 
B)  not all resources are equally suited to producing every good. 
C)  individuals desire constantly increasing opportunities to make themselves better off. 
D)  if production is efficient, it is not possible to increase the production of all goods simultaneously. 
A)  higher production usually results in more inflation. 
B)  not all resources are equally suited to producing every good. 
C)  individuals desire constantly increasing opportunities to make themselves better off. 
D)  if production is efficient, it is not possible to increase the production of all goods simultaneously.

Question 7

If they produce only hamburgers, in a single day Sarah can produce 10 hamburgers, and Abe can produce 5 hamburgers. If they make milkshakes only, in a single day Sarah can produce 10 milkshakes, and Abe can produce 4 milkshakes. Therefore, _____ has an absolute advantage and a comparative advantage in making _____.

Accepted Answer

A)  Sarah; hamburgers 
B)  Sarah; milkshakes 
C)  Abe; hamburgers 
D)  Abe; milkshakes 
A)  Sarah; hamburgers 
B)  Sarah; milkshakes 
C)  Abe; hamburgers 
D)  Abe; milkshakes

Question 8

Use the following to answer questions:  
-(Figure: Wine and Wheat) Look at the figure Wine and Wheat. If this economy is producing 12 tons of wheat and 9,000 bottles of wine, we know the economy:

Accepted Answer

A)  is using its resources efficiently. 
B)  is using its resources inefficiently. 
C)  is producing at an unattainable point. 
D)  has unemployment. 
A)  is using its resources efficiently. 
B)  is using its resources inefficiently. 
C)  is producing at an unattainable point. 
D)  has unemployment.

Question 9

Use the following to answer questions:
Figure: Production Possibilities and Circular-Flow Diagram  
-(Figure: Production Possibilities and Circular-Flow Diagram) Look at the figure Production Possibilities and Circular-Flow Diagram. Assume the two figures represent the same economy. Suppose that in the circular-flow diagram most firms undergo a significant increase in productivity. This results in a significant increase in the output of both coconuts and fish. If all other variables remain unchanged, then the adjustment in this economy would be best represented in the production possibilities figure by a movement from point A toward:

Accepted Answer

A)  point A (no movement). 
B)  point B (a decrease in coconut production and an increase in fish production). 
C)  point C (a decrease in coconut production). 
D)  point D (an outward shift of the entire curve). 
A)  point A (no movement). 
B)  point B (a decrease in coconut production and an increase in fish production). 
C)  point C (a decrease in coconut production). 
D)  point D (an outward shift of the entire curve).

Question 10

Use the following to answer questions:
Figure: Tom's Production Possibilities  
-(Figure: Tom's Production Possibilities) Look at the figure Tom's Production Possibilities. The opportunity cost for Tom to move from point C on the curve to point A is:

Accepted Answer

A)  10 coconuts. 
B)  30 fish. 
C)  5 coconuts. 
D)  There is no opportunity cost. 
A)  10 coconuts. 
B)  30 fish. 
C)  5 coconuts. 
D)  There is no opportunity cost.

Question 11

The effect of a natural disaster can be shown by _____ the production possibility frontier.

Accepted Answer

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

Question 12

Use the following to answer questions:
Figure: Production Possibility Frontier  
-(Figure: Production Possibility Frontier) Look at the figure Production Possibilities Frontier. Points A, B, E, and F:

Accepted Answer

A)  indicate combinations of cars and computers that society can produce using all of its resources efficiently. 
B)  show that the opportunity cost of cars increases as more cars are produced but that of more computers decreases as more computers are produced. 
C)  indicate that society wants computers more than cars. 
D)  indicate constant opportunity costs for cars and increasing opportunity costs for computers. 
A)  indicate combinations of cars and computers that society can produce using all of its resources efficiently. 
B)  show that the opportunity cost of cars increases as more cars are produced but that of more computers decreases as more computers are produced. 
C)  indicate that society wants computers more than cars. 
D)  indicate constant opportunity costs for cars and increasing opportunity costs for computers.

Question 13

Fertilizer, used to grow pumpkins, is a factor of production.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is a normative statement?

Accepted Answer

A)  Government has grown too large and should be reduced. 
B)  The rate of inflation has increased. 
C)  Government is subject to the same rules as all other institutions. 
D)  The money supply grew by 3% last year. 
A)  Government has grown too large and should be reduced. 
B)  The rate of inflation has increased. 
C)  Government is subject to the same rules as all other institutions. 
D)  The money supply grew by 3% last year.

Question 15

Explain how technological progress is a source of economic growth.

Accepted Answer

Suppose a nation's factors of production

Question 16

Use the following to answer questions:
Figure: Production Possibility Frontier  
-(Figure: Production Possibility Frontier) Look at the figure Production Possibilities Frontier. Which of the following is NOT an efficient rate of production per period?

Accepted Answer

A)  18 cars and no computers 
B)  no cars and 20 computers 
C)  16 cars and 12 computers 
D)  no cars and 18 computers 
A)  18 cars and no computers 
B)  no cars and 20 computers 
C)  16 cars and 12 computers 
D)  no cars and 18 computers

Question 17

"The rate of unemployment is 9%." This statement:

Accepted Answer

A)  is positive. 
B)  is normative. 
C)  involves a value judgment. 
D)  is a personal reflection and has no value in economics. 
A)  is positive. 
B)  is normative. 
C)  involves a value judgment. 
D)  is a personal reflection and has no value in economics.

Question 18

Use the following to answer questions:
Figure: Seasonally Adjusted Unemployment Rate  
-(Figure: Seasonally Adjusted Unemployment Rate) Look at the figure Seasonally Adjusted Unemployment Rate. The distance between each labeled point on the horizontal axis is one year. Unemployment was ______ between 1/2001 and 1/2002 and ______ between 1/1999 and 1/2000.

Accepted Answer

A)  increasing; decreasing 
B)  increasing; increasing 
C)  decreasing; increasing 
D)  decreasing; decreasing 
A)  increasing; decreasing 
B)  increasing; increasing 
C)  decreasing; increasing 
D)  decreasing; decreasing

Question 19

In the factor market, firms buy goods and services.

Accepted Answer

A) True 
 B)False

Question 20

Wall Street is:

Accepted Answer

A)  a district in New York City where all major investment companies have their headquarters. 
B)  a district in New York City where most fashion designers have their headquarters. 
C)  an area of San Francisco where imports are received from other countries and from which exports are shipped. 
D)  a street in Houston, Texas, where major oil companies have their headquarters. 
A)  a district in New York City where all major investment companies have their headquarters. 
B)  a district in New York City where most fashion designers have their headquarters. 
C)  an area of San Francisco where imports are received from other countries and from which exports are shipped. 
D)  a street in Houston, Texas, where major oil companies have their headquarters.

"Teachers in northern New Hampshire should earn more money" is a normative statement.

If two variables are negatively related:

In a single day, George can bake 10 cakes and Greta can bake 5 cakes. We know that _ has a(n) _ advantage in baking cakes.

An economy that has the lowest opportunity cost of producing a particular good is said to have:

Trade can be beneficial to an economy because:

Economists usually assume that production is subject to increasing opportunity costs because:

Use the following to answer questions: -(Figure: Wine and Wheat) Look at the figure Wine and Wheat. If this economy is producing 12 tons of wheat and 9,000 bottles of wine, we know the economy:

Use the following to answer questions: Figure: Tom's Production Possibilities -(Figure: Tom's Production Possibilities) Look at the figure Tom's Production Possibilities. The opportunity cost for Tom to move from point C on the curve to point A is:

The effect of a natural disaster can be shown by _____ the production possibility frontier.

Use the following to answer questions: Figure: Production Possibility Frontier -(Figure: Production Possibility Frontier) Look at the figure Production Possibilities Frontier. Points A, B, E, and F:

Fertilizer, used to grow pumpkins, is a factor of production.

Which of the following is a normative statement?

Explain how technological progress is a source of economic growth.

Use the following to answer questions: Figure: Production Possibility Frontier -(Figure: Production Possibility Frontier) Look at the figure Production Possibilities Frontier. Which of the following is NOT an efficient rate of production per period?

"The rate of unemployment is 9%." This statement:

In the factor market, firms buy goods and services.

Wall Street is:

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

"Teachers in northern New Hampshire should earn more money" is a normative statement.

If two variables are negatively related:

In a single day, George can bake 10 cakes and Greta can bake 5 cakes. We know that _____ has a(n) _____ advantage in baking cakes.

An economy that has the lowest opportunity cost of producing a particular good is said to have:

Trade can be beneficial to an economy because:

Economists usually assume that production is subject to increasing opportunity costs because:

Use the following to answer questions: -(Figure: Wine and Wheat) Look at the figure Wine and Wheat. If this economy is producing 12 tons of wheat and 9,000 bottles of wine, we know the economy:

Use the following to answer questions: Figure: Tom's Production Possibilities -(Figure: Tom's Production Possibilities) Look at the figure Tom's Production Possibilities. The opportunity cost for Tom to move from point C on the curve to point A is:

The effect of a natural disaster can be shown by _____ the production possibility frontier.

Use the following to answer questions: Figure: Production Possibility Frontier -(Figure: Production Possibility Frontier) Look at the figure Production Possibilities Frontier. Points A, B, E, and F:

Fertilizer, used to grow pumpkins, is a factor of production.

Which of the following is a normative statement?

Explain how technological progress is a source of economic growth.

Use the following to answer questions: Figure: Production Possibility Frontier -(Figure: Production Possibility Frontier) Look at the figure Production Possibilities Frontier. Which of the following is NOT an efficient rate of production per period?

"The rate of unemployment is 9%." This statement:

In the factor market, firms buy goods and services.

Wall Street is:

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

In a single day, George can bake 10 cakes and Greta can bake 5 cakes. We know that _ has a(n) _ advantage in baking cakes.