Question 1

An economy's PPC illustrates the extent to which the economy consumes what it produces.

Accepted Answer

A) True 
 B)False

Question 2

The tradeoffs facing a society can be illustrated in a graph known as the:

Accepted Answer

A)  production operations curve. 
B)  production cost curve. 
C)  production cost model. 
D)  production cost forecast curve. 
E)  production possibilities curve. 
A)  production operations curve. 
B)  production cost curve. 
C)  production cost model. 
D)  production cost forecast curve. 
E)  production possibilities curve.

Question 3

Archie can paint 5 backyard fences or repair 2 cars in 8 hours, while Austin can paint 4 backyard fences or repair 2 cars in 8 hours. Identify the correct statement.

Accepted Answer

A)  Archie is relatively better in repairing cars. 
B)  Archie is relatively better in painting fences. 
C)  Austin is relatively better in painting fences. 
D)  Archie and Austin are equally good in painting fences. 
E)  Neither Archie not Austin are good in repairing cars. 
A)  Archie is relatively better in repairing cars. 
B)  Archie is relatively better in painting fences. 
C)  Austin is relatively better in painting fences. 
D)  Archie and Austin are equally good in painting fences. 
E)  Neither Archie not Austin are good in repairing cars.

Question 4

In economics, the concept of opportunity cost is:

Accepted Answer

A)  negated by ensuring that the government has a role in a capitalist society. 
B)  defined to be the highest-valued alternative that must be forgone when a choice is made. 
C)  best illustrated by knowing why consumers choose one good over another. 
D)  quantifiable only if you know the real dollar prices of the goods and services you are giving up to consume something. 
E)  the methodology that government economists use to determine the total amount of the national debt. 
A)  negated by ensuring that the government has a role in a capitalist society. 
B)  defined to be the highest-valued alternative that must be forgone when a choice is made. 
C)  best illustrated by knowing why consumers choose one good over another. 
D)  quantifiable only if you know the real dollar prices of the goods and services you are giving up to consume something. 
E)  the methodology that government economists use to determine the total amount of the national debt.

Question 5

Gains from trade can be realized if each country specializes in its comparative advantage good.

Accepted Answer

A) True 
 B)False

Question 6

Consider a PPC with automobiles on the vertical axis and cotton on the horizontal axis. The discovery of a new fertilizer that improves crop yield will shift:

Accepted Answer

A)  the vertical intercept up but will not shift the horizontal intercept. 
B)  the horizontal intercept to the right but will not shift the vertical intercept. 
C)  the horizontal intercept to the left and the vertical intercept upward. 
D)  the vertical intercept downward and the horizontal intercept to the right. 
E)  neither the horizontal intercept nor the vertical intercept. 
A)  the vertical intercept up but will not shift the horizontal intercept. 
B)  the horizontal intercept to the right but will not shift the vertical intercept. 
C)  the horizontal intercept to the left and the vertical intercept upward. 
D)  the vertical intercept downward and the horizontal intercept to the right. 
E)  neither the horizontal intercept nor the vertical intercept.

Question 7

The figure given below represents the production possibilities curves [PPC] of a country producing wine and cars.
Figure 2.1
  
-Refer to Figure 2.1. If the country has curve I as its PPC, _____ would most likely cause the curve to shift to curve II.

Accepted Answer

A)  more farmland 
B)  an increase in the work force 
C)  the discovery of new metal resources 
D)  a labor movement 
E)  a consumer boycott 
A)  more farmland 
B)  an increase in the work force 
C)  the discovery of new metal resources 
D)  a labor movement 
E)  a consumer boycott

Question 8

The table given below represents the output per hour of cookies and chilies in Ohio and Iowa.
Table 2.4
 $\begin{array}{|ccc|}
\hline &\text { Output per Hour }\
\text { Iowa } &\text { Cookies } & \text { Chilies } \
\hline  \text { Ohid } & 6 & 24 \
\hline \text { Iowa } & 12 & 96\
\hline 
\end{array}$
-Refer to Table 2.4. If trade were to occur, what would be the least amount Ohio would be willing to accept for 1 cookie?

Accepted Answer

A)  8 chilies 
B) $1 / 4 \text { of a chili }$ 
C)  $1 / 8 \text { of a chili }$ 
D)  4 chilies 
E)  12 chilies 
A)  8 chilies 
B) $1 / 4 \text { of a chili }$ 
C)  $1 / 8 \text { of a chili }$ 
D)  4 chilies 
E)  12 chilies

Question 9

One of the reasons for China's real per capita GDP being far lower than that of Taiwan in 2000 was the lack of private property rights in the former nation.

Accepted Answer

A) True 
 B)False

Question 10

Consider the production possibilities curve for an economy producing only two commodities wheat (represented on the X axis) and wine (represented on the Y axis). A movement up along the production possibilities curve [PPC] will imply:

Accepted Answer

A)  an increase in wheat production. 
B)  an increase in both wheat and wine production. 
C)  a decline in both wheat and wine production. 
D)  an increase in wine production. 
E)  no change in either wheat or wine production. 
A)  an increase in wheat production. 
B)  an increase in both wheat and wine production. 
C)  a decline in both wheat and wine production. 
D)  an increase in wine production. 
E)  no change in either wheat or wine production.

Question 11

The table given below represents butter and ham production by two countries Norway and Sweden.
Table 2.5
 $$\begin{array} { | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Tirne Spent } \
\text { Making Eutter }
\end{array} & & \text { Namay } & \text { Sweden } \
\hline 100 \% & \text { Butter } & 5 & 100 \
\hline 0 \% & \text { Ham } & 10 & 100 \
\hline
\end{array}$$
-According to Table 2.5, Norway has a comparative advantage in _____ and an absolute advantage in _____.

Accepted Answer

A)  butter and ham; butter 
B)  ham; butter 
C)  nothing; butter 
D)  ham; nothing 
E)  butter; ham 
A)  butter and ham; butter 
B)  ham; butter 
C)  nothing; butter 
D)  ham; nothing 
E)  butter; ham

Question 12

Bob and Bill can make 16 toys each if they devote 8 working hours in a day. Further, Bob can repair 4 cars and Bill can repair 2 cars, if they devote 8 working hours in a day. What is the opportunity cost of repairing one car to Bob?

Accepted Answer

A)  10 toys 
B)  8 toys 
C)  16 toys 
D)  12 toys 
E)  4 toys 
A)  10 toys 
B)  8 toys 
C)  16 toys 
D)  12 toys 
E)  4 toys

Question 13

A nation's production possibilities curve [PPC] will shift outward if its workers receive better training.

Accepted Answer

A) True 
 B)False

Question 14

People (and all resources):

Accepted Answer

A)  tend to specialize in those activities in which their opportunity costs are minimized. 
B)  tend to specialize in those activities in which their opportunity costs are maximized. 
C)  never consider opportunity costs before specializing in a particular activity. 
D)  consider only direct costs while choosing to specialize in a particular activity. 
E)  do not act in their own self-interest but specialize in those activities which benefit others. 
A)  tend to specialize in those activities in which their opportunity costs are minimized. 
B)  tend to specialize in those activities in which their opportunity costs are maximized. 
C)  never consider opportunity costs before specializing in a particular activity. 
D)  consider only direct costs while choosing to specialize in a particular activity. 
E)  do not act in their own self-interest but specialize in those activities which benefit others.

Question 15

Jane wins $100,000 in the lottery and immediately uses her winnings to open up a donut shop. Her direct costs are $50,000, and she puts the remaining money in a savings account earning 10 percent annual interest. Alternatively, Jane could have placed all her lottery winnings in the 10 percent savings account. Jane's total cost is:

Accepted Answer

A)  $60,000. 
B)  $50,000. 
C)  $160,000. 
D)  $45,000. 
E)  $55,000. 
A)  $60,000. 
B)  $50,000. 
C)  $160,000. 
D)  $45,000. 
E)  $55,000.

Question 16

Following is the production possibilities schedule for an economy producing two goods Good A and Good B.
Table 2.1
 $\begin{array}{ccc}
\text { Production Possibilities Schedule } \
\begin{array}{ccc}
&\text { Good A }&\text { Good B }\

\text { Choice 1 } & 100 & 0 \
\text { Choice 2 } & 90 & 20 \
\text { Choice 3 } & 70 & 40 \
\text { Choice 4 } & 40 & 60 \
\text { Choice 5 } & 0 & 80
\end{array}\end{array}$
-Refer to Table 2.1. According to the production possibilities schedule in the table above, which of the following statements is true?

Accepted Answer

A)  Moving from choice 2 to choice 3, the opportunity cost of 20 more B is 20 units of A. 
B)  There are increasing opportunity costs associated with getting more B. 
C)  Moving from choice 3 to choice 4, the opportunity cost of 20 more B is 30 units of A. 
D)  Moving from choice 1 to choice 2, the opportunity cost of 20 more B is 10 units of A. 
E)  All of these statements are true. 
A)  Moving from choice 2 to choice 3, the opportunity cost of 20 more B is 20 units of A. 
B)  There are increasing opportunity costs associated with getting more B. 
C)  Moving from choice 3 to choice 4, the opportunity cost of 20 more B is 30 units of A. 
D)  Moving from choice 1 to choice 2, the opportunity cost of 20 more B is 10 units of A. 
E)  All of these statements are true.

Question 17

Which of the following ideas is illustrated by the production possibilities curve [PPC]?

Accepted Answer

A)  There are no limits on the total feasible production attainable in an economy. 
B)  An economy need not decrease the production of one commodity to increase the production of another. 
C)  It is possible to satisfy unlimited wants in an economy through proper investment in research and development. 
D)  When an economy chooses to produce a combination of goods and services, other combinations of goods and services are sacrificed. 
E)  An economy can specialize in the production of only one good. 
A)  There are no limits on the total feasible production attainable in an economy. 
B)  An economy need not decrease the production of one commodity to increase the production of another. 
C)  It is possible to satisfy unlimited wants in an economy through proper investment in research and development. 
D)  When an economy chooses to produce a combination of goods and services, other combinations of goods and services are sacrificed. 
E)  An economy can specialize in the production of only one good.

Question 18

The difference between what can be produced and consumed without specialization and trade and with specialization and trade is called:

Accepted Answer

A)  comparative advantage. 
B)  a tradeoff. 
C)  marginal cost. 
D)  opportunity cost. 
E)  gains from trade. 
A)  comparative advantage. 
B)  a tradeoff. 
C)  marginal cost. 
D)  opportunity cost. 
E)  gains from trade.

An economy's PPC illustrates the extent to which the economy consumes what it produces.

The tradeoffs facing a society can be illustrated in a graph known as the:

Archie can paint 5 backyard fences or repair 2 cars in 8 hours, while Austin can paint 4 backyard fences or repair 2 cars in 8 hours. Identify the correct statement.

In economics, the concept of opportunity cost is:

Gains from trade can be realized if each country specializes in its comparative advantage good.

Consider a PPC with automobiles on the vertical axis and cotton on the horizontal axis. The discovery of a new fertilizer that improves crop yield will shift:

The figure given below represents the production possibilities curves [PPC] of a country producing wine and cars. Figure 2.1 -Refer to Figure 2.1. If the country has curve I as its PPC, _____ would most likely cause the curve to shift to curve II.

The table given below represents the output per hour of cookies and chilies in Ohio and Iowa. Table 2.4 Output per Hour Iowa Cookies Chilies Ohid 6 24 Iowa 12 96 -Refer to Table 2.4. If trade were to occur, what would be the least amount Ohio would be willing to accept for 1 cookie?

One of the reasons for China's real per capita GDP being far lower than that of Taiwan in 2000 was the lack of private property rights in the former nation.

Consider the production possibilities curve for an economy producing only two commodities wheat (represented on the X axis) and wine (represented on the Y axis). A movement up along the production possibilities curve [PPC] will imply:

The table given below represents butter and ham production by two countries Norway and Sweden. Table 2.5 Tirne Spent Making Eutter Namay Sweden 100\% Butter 5 100 0\% Ham 10 100 -According to Table 2.5, Norway has a comparative advantage in _ and an absolute advantage in _.

Bob and Bill can make 16 toys each if they devote 8 working hours in a day. Further, Bob can repair 4 cars and Bill can repair 2 cars, if they devote 8 working hours in a day. What is the opportunity cost of repairing one car to Bob?

A nation's production possibilities curve [PPC] will shift outward if its workers receive better training.

People (and all resources):

Which of the following ideas is illustrated by the production possibilities curve [PPC]?

The difference between what can be produced and consumed without specialization and trade and with specialization and trade is called:

Economics: the World Around You

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

National Income Accounting

An Introduction to the Foreign Exchange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

Exam 2: Choice, Opportunity Costs, and Specialization

An economy's PPC illustrates the extent to which the economy consumes what it produces.

The tradeoffs facing a society can be illustrated in a graph known as the:

Archie can paint 5 backyard fences or repair 2 cars in 8 hours, while Austin can paint 4 backyard fences or repair 2 cars in 8 hours. Identify the correct statement.

In economics, the concept of opportunity cost is:

Gains from trade can be realized if each country specializes in its comparative advantage good.

Consider a PPC with automobiles on the vertical axis and cotton on the horizontal axis. The discovery of a new fertilizer that improves crop yield will shift:

The figure given below represents the production possibilities curves [PPC] of a country producing wine and cars. Figure 2.1 -Refer to Figure 2.1. If the country has curve I as its PPC, _____ would most likely cause the curve to shift to curve II.

The table given below represents the output per hour of cookies and chilies in Ohio and Iowa. Table 2.4 Output per Hour Iowa Cookies Chilies Ohid 6 24 Iowa 12 96 -Refer to Table 2.4. If trade were to occur, what would be the least amount Ohio would be willing to accept for 1 cookie?

One of the reasons for China's real per capita GDP being far lower than that of Taiwan in 2000 was the lack of private property rights in the former nation.

Consider the production possibilities curve for an economy producing only two commodities wheat (represented on the X axis) and wine (represented on the Y axis). A movement up along the production possibilities curve [PPC] will imply:

The table given below represents butter and ham production by two countries Norway and Sweden. Table 2.5 Tirne Spent Making Eutter Namay Sweden 100\% Butter 5 100 0\% Ham 10 100 -According to Table 2.5, Norway has a comparative advantage in _____ and an absolute advantage in _____.

Bob and Bill can make 16 toys each if they devote 8 working hours in a day. Further, Bob can repair 4 cars and Bill can repair 2 cars, if they devote 8 working hours in a day. What is the opportunity cost of repairing one car to Bob?

A nation's production possibilities curve [PPC] will shift outward if its workers receive better training.

People (and all resources):

Which of the following ideas is illustrated by the production possibilities curve [PPC]?

The difference between what can be produced and consumed without specialization and trade and with specialization and trade is called:

Economics: the World Around You

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

National Income Accounting

An Introduction to the Foreign Exchange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

The table given below represents butter and ham production by two countries Norway and Sweden. Table 2.5 Tirne Spent Making Eutter Namay Sweden 100\% Butter 5 100 0\% Ham 10 100 -According to Table 2.5, Norway has a comparative advantage in _ and an absolute advantage in _.