Question 1

In a world lacking property rights, it would be ________ to realize the gains from trade and there would be ________ specialization.

Accepted Answer

A)  easier; less 
B)  easier; more 
C)  harder; less 
D)  harder; more 
A)  easier; less 
B)  easier; more 
C)  harder; less 
D)  harder; more

Question 2

The production possibilities frontier bows outward because

Accepted Answer

A)  opportunity costs are decreasing as the production of a good increases. 
B)  opportunity costs are increasing as the production of a good increases. 
C)  opportunity costs are fixed as the production of a good increases. 
D)  resources are of uniform quality. 
A)  opportunity costs are decreasing as the production of a good increases. 
B)  opportunity costs are increasing as the production of a good increases. 
C)  opportunity costs are fixed as the production of a good increases. 
D)  resources are of uniform quality.

Question 3

By specialization and trade, two individuals can

Accepted Answer

A)  consume at a point beyond their individual production possibilities frontiers. 
B)  increase their comparative advantage. 
C)  increase their absolute advantage. 
D)  shift their individual production possibilities frontiers outward. 
A)  consume at a point beyond their individual production possibilities frontiers. 
B)  increase their comparative advantage. 
C)  increase their absolute advantage. 
D)  shift their individual production possibilities frontiers outward.

Question 4

The opportunity cost of more capital goods today is

Accepted Answer

A)  fewer capital goods in the future. 
B)  fewer consumer goods in the future. 
C)  fewer consumer goods today. 
D)  more unemployed resources in the future. 
A)  fewer capital goods in the future. 
B)  fewer consumer goods in the future. 
C)  fewer consumer goods today. 
D)  more unemployed resources in the future.

Question 5

A marginal benefit curve shows

Accepted Answer

A)  the efficient use of resources. 
B)  the quantity of one good that must be forgone to get more of another good. 
C)  the quantity of one good that people are willing to forgo to get another unit of another good. 
D)  there are increasing opportunity costs. 
A)  the efficient use of resources. 
B)  the quantity of one good that must be forgone to get more of another good. 
C)  the quantity of one good that people are willing to forgo to get another unit of another good. 
D)  there are increasing opportunity costs.

Question 6

The opportunity cost of economic growth is

Accepted Answer

A)  future consumption that a nation gets if it gives up some present consumption. 
B)  future consumption that a nation gives up to consume more today. 
C)  present consumption that a nation gives up to accumulate capital. 
D)  present investment that a nation gives up to increase its economic growth. 
A)  future consumption that a nation gets if it gives up some present consumption. 
B)  future consumption that a nation gives up to consume more today. 
C)  present consumption that a nation gives up to accumulate capital. 
D)  present investment that a nation gives up to increase its economic growth.

Question 7

As an economy experiences economic growth, increases in production shift from

Accepted Answer

A)  agriculture to industry and then eventually to services. 
B)  agriculture to services and then eventually to industry. 
C)  industry to agriculture and then eventually to services. 
D)  services to agriculture and then eventually to industry. 
A)  agriculture to industry and then eventually to services. 
B)  agriculture to services and then eventually to industry. 
C)  industry to agriculture and then eventually to services. 
D)  services to agriculture and then eventually to industry.

Question 8

Marginal benefit is the benefit

Accepted Answer

A)  that your activity provides to someone else. 
B)  of producing a good or service when the total benefit from the good or service exceeds its total cost. 
C)  that is received from consuming one more unit of a good or service. 
D)  of consuming another good or service divided by the total number of goods or services produced. 
A)  that your activity provides to someone else. 
B)  of producing a good or service when the total benefit from the good or service exceeds its total cost. 
C)  that is received from consuming one more unit of a good or service. 
D)  of consuming another good or service divided by the total number of goods or services produced.

Question 9

When the production possibilities frontier bows outward from the origin

Accepted Answer

A)  some of society's resources are unemployed. 
B)  opportunity costs are constant. 
C)  opportunity costs are increasing. 
D)  opportunity costs are decreasing. 
A)  some of society's resources are unemployed. 
B)  opportunity costs are constant. 
C)  opportunity costs are increasing. 
D)  opportunity costs are decreasing.

Question 10

Markets are best defined as

Accepted Answer

A)  arrangements where buyers and sellers get together to buy and sell. 
B)  specific geographic locations where people get together to buy and sell. 
C)  hypothetical constructs used to analyze how people form their tastes and preferences. 
D)  places where people can inspect goods and services carefully. 
A)  arrangements where buyers and sellers get together to buy and sell. 
B)  specific geographic locations where people get together to buy and sell. 
C)  hypothetical constructs used to analyze how people form their tastes and preferences. 
D)  places where people can inspect goods and services carefully.

Question 11

-In the table above, country B is producing 4 units of X and 6 units of Y. For country B, the opportunity cost of producing an additional unit of X is

Accepted Answer

A)  4 units of Y per unit of X. 
B)  2 units of Y per unit of X. 
C)  3/2 units of Y per unit of X. 
D)  1 unit of Y per unit of X. 
A)  4 units of Y per unit of X. 
B)  2 units of Y per unit of X. 
C)  3/2 units of Y per unit of X. 
D)  1 unit of Y per unit of X.

Question 12

-Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour.

Accepted Answer

A)  Brenda has an absolute advantage in the production of X and Y. 
B)  Agnes has a comparative advantage in the production of Y. 
C)  Brenda has a comparative advantage in the production of X. 
D)  Brenda cannot gain from trade. 
A)  Brenda has an absolute advantage in the production of X and Y. 
B)  Agnes has a comparative advantage in the production of Y. 
C)  Brenda has a comparative advantage in the production of X. 
D)  Brenda cannot gain from trade.

Question 13

-The figure above shows a nation's production possibilities frontier for apples and oranges.
a) What combination of goods is represented by point A?
b) What combination of goods is represented by point B?
c) Which point represents an unattainable combination of goods?

Accepted Answer

a) 3 million bushels of apples

Question 14

Tom and Di grow tomatoes and turnips. Tom has a comparative advantage in growing tomatoes if

Accepted Answer

A)  Tom can grow more tomatoes than Di can. 
B)  his opportunity cost of tomatoes is less than Di's opportunity cost of tomatoes. 
C)  his opportunity cost of tomatoes is less than his opportunity cost of turnips. 
D)  his marginal benefit from tomatoes is greater than Di's. 
A)  Tom can grow more tomatoes than Di can. 
B)  his opportunity cost of tomatoes is less than Di's opportunity cost of tomatoes. 
C)  his opportunity cost of tomatoes is less than his opportunity cost of turnips. 
D)  his marginal benefit from tomatoes is greater than Di's.

Question 15

-In the figure above, at the allocatively efficient level of computer production the marginal cost of producing a computer is

Accepted Answer

A)  0 televisions per computer. 
B)  between 0 and 3 televisions per computer. 
C)  3 televisions per computer. 
D)  more than 3 televisions per computer. 
A)  0 televisions per computer. 
B)  between 0 and 3 televisions per computer. 
C)  3 televisions per computer. 
D)  more than 3 televisions per computer.

Question 16

-The above figure illustrates that if this country wishes to move from its current production point (labeled "Current") and have 10 more tons of food, it can do this by producing

Accepted Answer

A)  10 more tons of clothing. 
B)  10 fewer tons of clothing. 
C)  5 more tons of clothing. 
D)  5 fewer tons of clothing. 
A)  10 more tons of clothing. 
B)  10 fewer tons of clothing. 
C)  5 more tons of clothing. 
D)  5 fewer tons of clothing.

Question 17

The bowed-outward shape of a PPF

Accepted Answer

A)  is due to capital accumulation. 
B)  reflects the unequal application of technology in production. 
C)  illustrates the fact that no opportunity cost is incurred for increasing the production of the good measured on the horizontal axis but it is incurred to increase production of the good measured along the vertical axis. 
D)  is due to the existence of increasing opportunity cost. 
A)  is due to capital accumulation. 
B)  reflects the unequal application of technology in production. 
C)  illustrates the fact that no opportunity cost is incurred for increasing the production of the good measured on the horizontal axis but it is incurred to increase production of the good measured along the vertical axis. 
D)  is due to the existence of increasing opportunity cost.

Question 18

Intellectual property

Accepted Answer

A)  is protected by common law rather than by written laws. 
B)  is protected by people's sense of decency rather than by written laws. 
C)  belongs to everyone with the necessary human capital to use it. 
D)  is often protected by copyrights and patents. 
A)  is protected by common law rather than by written laws. 
B)  is protected by people's sense of decency rather than by written laws. 
C)  belongs to everyone with the necessary human capital to use it. 
D)  is often protected by copyrights and patents.

Question 19

BAE, a British defense company, has the contract to produce Tornado aircraft for the Royal Air Force. The BBC produces high-quality mystery shows for the British government. Both produce at the lowest possible cost. On a PPF with aircraft and mystery shows on the axes

Accepted Answer

A)  BAE and the BBC do not face increasing opportunity costs. 
B)  BAE and the BBC are achieving production efficiency. 
C)  BAE and the BBC are producing at a point outside the PPF. 
D)  the British government is operating outside its PPF. 
A)  BAE and the BBC do not face increasing opportunity costs. 
B)  BAE and the BBC are achieving production efficiency. 
C)  BAE and the BBC are producing at a point outside the PPF. 
D)  the British government is operating outside its PPF.

Question 20

The state of Georgia offers free college tuition to high school students with a "B" average. In 2007, the state raised the requirement so that fewer students qualified for the scholarship. At the same time, Georgia increased state spending on health care. Suppose that college education is on the vertical axis and health care is on the horizontal axis of a PPF. These changes

Accepted Answer

A)  are example of a tradeoff. 
B)  are an example of incentives. 
C)  will cause a shift out of the PPF. 
D)  will cause a shift in the of the PPF. 
A)  are example of a tradeoff. 
B)  are an example of incentives. 
C)  will cause a shift out of the PPF. 
D)  will cause a shift in the of the PPF.

In a world lacking property rights, it would be to realize the gains from trade and there would be specialization.

The production possibilities frontier bows outward because

By specialization and trade, two individuals can

The opportunity cost of more capital goods today is

A marginal benefit curve shows

The opportunity cost of economic growth is

As an economy experiences economic growth, increases in production shift from

Marginal benefit is the benefit

When the production possibilities frontier bows outward from the origin

Markets are best defined as

-In the table above, country B is producing 4 units of X and 6 units of Y. For country B, the opportunity cost of producing an additional unit of X is

-Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour.

-The figure above shows a nation's production possibilities frontier for apples and oranges. a) What combination of goods is represented by point A? b) What combination of goods is represented by point B? c) Which point represents an unattainable combination of goods?

Tom and Di grow tomatoes and turnips. Tom has a comparative advantage in growing tomatoes if

-In the figure above, at the allocatively efficient level of computer production the marginal cost of producing a computer is

-The above figure illustrates that if this country wishes to move from its current production point (labeled "Current") and have 10 more tons of food, it can do this by producing

The bowed-outward shape of a PPF

Intellectual property

BAE, a British defense company, has the contract to produce Tornado aircraft for the Royal Air Force. The BBC produces high-quality mystery shows for the British government. Both produce at the lowest possible cost. On a PPF with aircraft and mystery shows on the axes

What Is Economics

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 2: The Economic Problem

In a world lacking property rights, it would be ________ to realize the gains from trade and there would be ________ specialization.

The production possibilities frontier bows outward because

By specialization and trade, two individuals can

The opportunity cost of more capital goods today is

A marginal benefit curve shows

The opportunity cost of economic growth is

As an economy experiences economic growth, increases in production shift from

Marginal benefit is the benefit

When the production possibilities frontier bows outward from the origin

Markets are best defined as

-In the table above, country B is producing 4 units of X and 6 units of Y. For country B, the opportunity cost of producing an additional unit of X is

-Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour.

-The figure above shows a nation's production possibilities frontier for apples and oranges. a) What combination of goods is represented by point A? b) What combination of goods is represented by point B? c) Which point represents an unattainable combination of goods?

Tom and Di grow tomatoes and turnips. Tom has a comparative advantage in growing tomatoes if

-In the figure above, at the allocatively efficient level of computer production the marginal cost of producing a computer is

-The above figure illustrates that if this country wishes to move from its current production point (labeled "Current") and have 10 more tons of food, it can do this by producing

The bowed-outward shape of a PPF

Intellectual property

BAE, a British defense company, has the contract to produce Tornado aircraft for the Royal Air Force. The BBC produces high-quality mystery shows for the British government. Both produce at the lowest possible cost. On a PPF with aircraft and mystery shows on the axes

What Is Economics

Demand and Supply

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

In a world lacking property rights, it would be to realize the gains from trade and there would be specialization.