Question 1

The term "market" refers to

Accepted Answer

A)  physical structures only. 
B)  locations where buyers and sellers physically meet. 
C)  any arrangement that enables buyers and sellers to get information and trade with one another. 
D)  trading arrangements that have been approved by the government. 
A)  physical structures only. 
B)  locations where buyers and sellers physically meet. 
C)  any arrangement that enables buyers and sellers to get information and trade with one another. 
D)  trading arrangements that have been approved by the government.

Question 2

In markets, people's decisions are coordinated by

Accepted Answer

A)  specialization according to absolute advantage. 
B)  changes in property rights. 
C)  learning-by-doing. 
D)  adjustments in prices. 
A)  specialization according to absolute advantage. 
B)  changes in property rights. 
C)  learning-by-doing. 
D)  adjustments in prices.

Question 3

Capital accumulation definitely

Accepted Answer

A)  has no impact on the production possibilities frontier. 
B)  shifts the production possibilities frontier inward. 
C)  makes the production possibilities frontier steeper. 
D)  shifts the production possibilities frontier outward. 
A)  has no impact on the production possibilities frontier. 
B)  shifts the production possibilities frontier inward. 
C)  makes the production possibilities frontier steeper. 
D)  shifts the production possibilities frontier outward.

Question 4

The fact that individual productive resources are NOT equally useful in all activities

Accepted Answer

A)  implies that a production possibilities frontier will be bowed outward. 
B)  implies that gain from specialization and trade is unlikely. 
C)  follows from the law of demand. 
D)  implies a linear production possibilities frontier. 
A)  implies that a production possibilities frontier will be bowed outward. 
B)  implies that gain from specialization and trade is unlikely. 
C)  follows from the law of demand. 
D)  implies a linear production possibilities frontier.

Question 5

The production possibilities frontier itself illustrates

Accepted Answer

A)  all goods that can be produced by an economy. 
B)  the combination of goods and services that can be produced efficiently. 
C)  all goods and services that are desired but cannot be produced due to scarce resources. 
D)  all possible production of capital goods. 
A)  all goods that can be produced by an economy. 
B)  the combination of goods and services that can be produced efficiently. 
C)  all goods and services that are desired but cannot be produced due to scarce resources. 
D)  all possible production of capital goods.

Question 6

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 7

Country A Country B
  
-In the table above, country A is producing 4 units of X and 8 units of Y and country B is producing 4 units of X and 6 units of Y. Regarding the production of good X

Accepted Answer

A)  country A has an absolute advantage. 
B)  country B has an absolute advantage. 
C)  country A has a comparative advantage. 
D)  country B has a comparative advantage. 
A)  country A has an absolute advantage. 
B)  country B has an absolute advantage. 
C)  country A has a comparative advantage. 
D)  country B has a comparative advantage.

Question 8

The existence of the tradeoff along the PPF means that the PPF is

Accepted Answer

A)  bowed outward. 
B)  linear. 
C)  negatively sloped. 
D)  positively sloped. 
A)  bowed outward. 
B)  linear. 
C)  negatively sloped. 
D)  positively sloped.

Question 9

The marginal benefit from a good is the amount a person is willing to pay for

Accepted Answer

A)  all of the good the person consumes. 
B)  one more unit of the good. 
C)  all of the units of the good the person consumes divided by the number of units he or she purchases. 
D)  one more unit of the good divided by the number of units purchased. 
A)  all of the good the person consumes. 
B)  one more unit of the good. 
C)  all of the units of the good the person consumes divided by the number of units he or she purchases. 
D)  one more unit of the good divided by the number of units purchased.

Question 10

Production possibilities
  
-In the above table, the opportunity cost of the 2nd pizza is

Accepted Answer

A)  0 cases of soda per pizza. 
B)  15 cases of soda per pizza. 
C)  95 cases of soda per pizza. 
D)  80 cases of soda per pizza. 
A)  0 cases of soda per pizza. 
B)  15 cases of soda per pizza. 
C)  95 cases of soda per pizza. 
D)  80 cases of soda per pizza.

Question 11

-The table above lists six points on the production possibilities frontier for grain and cars. Given this information, which of the following combinations is unattainable?

Accepted Answer

A)  6 tons of grain and 18 cars 
B)  4 tons of grain and 26 cars 
C)  2 tons of grain and 27 cars 
D)  7 tons of grain and 10 cars 
A)  6 tons of grain and 18 cars 
B)  4 tons of grain and 26 cars 
C)  2 tons of grain and 27 cars 
D)  7 tons of grain and 10 cars

Question 12

Both Mergatroid and the Geebocks produce only gizmos and widgets. It is possible for Mergatroid to have

Accepted Answer

A)  an absolute and a comparative advantage in both products. 
B)  an absolute but not a comparative advantage in both products. 
C)  a comparative but not an absolute advantage in both products. 
D)  neither a comparative nor an absolute advantage in both products. 
A)  an absolute and a comparative advantage in both products. 
B)  an absolute but not a comparative advantage in both products. 
C)  a comparative but not an absolute advantage in both products. 
D)  neither a comparative nor an absolute advantage in both products.

Question 13

-Refer to the production possibilities frontier in the figure above. Production point ________ represents an ________ production point.

Accepted Answer

A)  b; unattainable 
B)  c; unattainable 
C)  e; inefficient 
D)  c; inefficient 
A)  b; unattainable 
B)  c; unattainable 
C)  e; inefficient 
D)  c; inefficient

Question 14

If property rights are NOT clearly defined and enforced, then

Accepted Answer

A)  incentives for specialization based on comparative advantage are weakened. 
B)  some potential gains from specialization and trade are lost. 
C)  resources are devoted to protecting possessions rather than to production. 
D)  All of the above answers are correct. 
A)  incentives for specialization based on comparative advantage are weakened. 
B)  some potential gains from specialization and trade are lost. 
C)  resources are devoted to protecting possessions rather than to production. 
D)  All of the above answers are correct.

Question 15

A tradeoff is illustrated by

Accepted Answer

A)  a point inside the PPF. 
B)  a point outside the PPF. 
C)  a change in the slope of the PPF. 
D)  the negative slope of the PPF. 
A)  a point inside the PPF. 
B)  a point outside the PPF. 
C)  a change in the slope of the PPF. 
D)  the negative slope of the PPF.

Question 16

The United States has an absolute advantage in producing sugar over all of the other sugar producing countries. Does this fact mean that we should not import any sugar from the other countries?

Accepted Answer

Having an absolute advantage doesn't mea

Question 17

-Refer to the production possibilities frontier figure above. Which of the following movements requires the largest opportunity cost, in terms of good X forgone, per extra unit of good Y?

Accepted Answer

A)  from point e to point d 
B)  from point d to point c 
C)  from point c to point b 
D)  from point b to point a 
A)  from point e to point d 
B)  from point d to point c 
C)  from point c to point b 
D)  from point b to point a

Question 18

-According to the diagram in the figure above, an allocatively efficient use of resources requires that production and consumption of gasoline be

Accepted Answer

A)  1 million gallons of gasoline per month. 
B)  2 million gallons of gasoline per month. 
C)  3 million gallons of gasoline per month. 
D)  4 million gallons of gasoline per month. 
A)  1 million gallons of gasoline per month. 
B)  2 million gallons of gasoline per month. 
C)  3 million gallons of gasoline per month. 
D)  4 million gallons of gasoline per month.

Question 19

Opportunity cost is best defined as

Accepted Answer

A)  the amount of money that an individual is willing to pay to purchase a good that means a great deal to that person. 
B)  the amount of money lost by one individual in an exchange process so that another individual might gain. 
C)  the highest-valued alternative that is forgone when choosing among various alternatives. 
D)  a situation in which one individual cannot have an absolute advantage over another individual in the production of all goods. 
A)  the amount of money that an individual is willing to pay to purchase a good that means a great deal to that person. 
B)  the amount of money lost by one individual in an exchange process so that another individual might gain. 
C)  the highest-valued alternative that is forgone when choosing among various alternatives. 
D)  a situation in which one individual cannot have an absolute advantage over another individual in the production of all goods.

Question 20

Suppose that the United States and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, ________ will gain from that trade because ________.

Accepted Answer

A)  both countries; consumption possibilities in both Cuba and the United States will lie outside their PPFs. 
B)  neither country; their consumption possibilities will not change. 
C)  only the United States; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change. 
D)  only Cuba; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change. 
A)  both countries; consumption possibilities in both Cuba and the United States will lie outside their PPFs. 
B)  neither country; their consumption possibilities will not change. 
C)  only the United States; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change. 
D)  only Cuba; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change.

The term "market" refers to

In markets, people's decisions are coordinated by

Capital accumulation definitely

The fact that individual productive resources are NOT equally useful in all activities

The production possibilities frontier itself illustrates

By specialization and trade, two individuals can

Country A Country B -In the table above, country A is producing 4 units of X and 8 units of Y and country B is producing 4 units of X and 6 units of Y. Regarding the production of good X

The existence of the tradeoff along the PPF means that the PPF is

The marginal benefit from a good is the amount a person is willing to pay for

Production possibilities -In the above table, the opportunity cost of the 2nd pizza is

-The table above lists six points on the production possibilities frontier for grain and cars. Given this information, which of the following combinations is unattainable?

Both Mergatroid and the Geebocks produce only gizmos and widgets. It is possible for Mergatroid to have

-Refer to the production possibilities frontier in the figure above. Production point represents an production point.

If property rights are NOT clearly defined and enforced, then

A tradeoff is illustrated by

The United States has an absolute advantage in producing sugar over all of the other sugar producing countries. Does this fact mean that we should not import any sugar from the other countries?

-Refer to the production possibilities frontier figure above. Which of the following movements requires the largest opportunity cost, in terms of good X forgone, per extra unit of good Y?

-According to the diagram in the figure above, an allocatively efficient use of resources requires that production and consumption of gasoline be

Opportunity cost is best defined as

Suppose that the United States and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, will gain from that trade because .

What Is Economics

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 2: The Economic Problem

The term "market" refers to

In markets, people's decisions are coordinated by

Capital accumulation definitely

The fact that individual productive resources are NOT equally useful in all activities

The production possibilities frontier itself illustrates

By specialization and trade, two individuals can

Country A Country B -In the table above, country A is producing 4 units of X and 8 units of Y and country B is producing 4 units of X and 6 units of Y. Regarding the production of good X

The existence of the tradeoff along the PPF means that the PPF is

The marginal benefit from a good is the amount a person is willing to pay for

Production possibilities -In the above table, the opportunity cost of the 2nd pizza is

-The table above lists six points on the production possibilities frontier for grain and cars. Given this information, which of the following combinations is unattainable?

Both Mergatroid and the Geebocks produce only gizmos and widgets. It is possible for Mergatroid to have

-Refer to the production possibilities frontier in the figure above. Production point ________ represents an ________ production point.

If property rights are NOT clearly defined and enforced, then

A tradeoff is illustrated by

The United States has an absolute advantage in producing sugar over all of the other sugar producing countries. Does this fact mean that we should not import any sugar from the other countries?

-Refer to the production possibilities frontier figure above. Which of the following movements requires the largest opportunity cost, in terms of good X forgone, per extra unit of good Y?

-According to the diagram in the figure above, an allocatively efficient use of resources requires that production and consumption of gasoline be

Opportunity cost is best defined as

Suppose that the United States and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, ________ will gain from that trade because ________.

What Is Economics

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

-Refer to the production possibilities frontier in the figure above. Production point represents an production point.

Suppose that the United States and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, will gain from that trade because .