Question 1

Which of the following would be most likely to increase your opportunity cost of attending college?

Accepted Answer

A)  a recession in the economy that made finding a job more difficult 
B)  receiving a very attractive offer to start a job today that would permit you to earn about 50 percent more than you expected to make after graduation 
C)  the retirement of your favorite professor under whom you hoped to study during the next semester 
D)  information indicating that salaries were declining and that there were very few openings for college graduates in your field 
A)  a recession in the economy that made finding a job more difficult 
B)  receiving a very attractive offer to start a job today that would permit you to earn about 50 percent more than you expected to make after graduation 
C)  the retirement of your favorite professor under whom you hoped to study during the next semester 
D)  information indicating that salaries were declining and that there were very few openings for college graduates in your field

Question 2

Private property rights involve

Accepted Answer

A)  the right to exclusive use of the property. 
B)  legal protection against those who would seek to use or abuse the property without the owner's permission. 
C)  the right to transfer, sell, exchange, or mortgage the property. 
D)  all of the above. 
A)  the right to exclusive use of the property. 
B)  legal protection against those who would seek to use or abuse the property without the owner's permission. 
C)  the right to transfer, sell, exchange, or mortgage the property. 
D)  all of the above.

Question 3

Figure 2-3  
Points A and B in Figure 2-3 indicate consumption and investment for two economies. Other things constant, which of the economies is likely to grow more rapidly in the future?

Accepted Answer

A)  economy A 
B)  economy B 
C)  They can be expected to grow at the same rate. 
D)  This is uncertain since growth is not influenced by the factors indicated in this example. 
A)  economy A 
B)  economy B 
C)  They can be expected to grow at the same rate. 
D)  This is uncertain since growth is not influenced by the factors indicated in this example.

Question 4

Which of the following activities describes the opportunity cost of attending an economics class?

Accepted Answer

A)  the value of the time it takes to get to campus every day 
B)  the cost of the gasoline needed to drive a car to campus 
C)  the value of the highest valued alternative that must be forgone because of attending the class 
D)  transportation costs plus the cost of tuition and textbooks for the course 
A)  the value of the time it takes to get to campus every day 
B)  the cost of the gasoline needed to drive a car to campus 
C)  the value of the highest valued alternative that must be forgone because of attending the class 
D)  transportation costs plus the cost of tuition and textbooks for the course

Question 5

Mr. Peters can drive or fly from Tallahassee, Florida to Savannah, Georgia, for a one-day business trip. If he drives, he will be able to work three hours once he arrives in Savannah, whereas traveling by plane will enable him to work eight hours. His expected income from each hour of work in Savannah is $30. If Mr. Peters is a rational decision maker, he will fly if and only if the price differential (air cost minus driving cost) is less than

Accepted Answer

A)  $30. 
B)  $90. 
C)  $150. 
D)  $240. 
A)  $30. 
B)  $90. 
C)  $150. 
D)  $240.

Question 6

If Matt trades two candy bars to Andy in exchange for one baseball card,

Accepted Answer

A)  Matt must have valued the baseball card more than the two candy bars. 
B)  Andy must have valued the two candy bars more than the baseball card. 
C)  Matt must lose an equal amount if Andy gains. 
D)  Both a and b are correct, c is incorrect. 
A)  Matt must have valued the baseball card more than the two candy bars. 
B)  Andy must have valued the two candy bars more than the baseball card. 
C)  Matt must lose an equal amount if Andy gains. 
D)  Both a and b are correct, c is incorrect.

Question 7

The economic principle that states that individuals or nations can gain by specializing in the production of goods that they produce cheaply and exchanging for other desired goods that they could only produce at a higher cost is

Accepted Answer

A)  the law of absolute advantage. 
B)  the law of comparative advantage. 
C)  the law of production possibilities. 
D)  the exchange maximum principle. 
A)  the law of absolute advantage. 
B)  the law of comparative advantage. 
C)  the law of production possibilities. 
D)  the exchange maximum principle.

Question 8

Which of the following most accurately indicates the implications of an economy's production possibilities curve?

Accepted Answer

A)  If all the resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced. 
B)  If all the resources of an economy are being used efficiently, it is generally possible to produce more of one good without having to sacrifice the production of other goods. 
C)  Over time, it is generally impossible for a country to expand its production of goods. 
D)  An economy will automatically move toward a point that lies outside of the production possibilities curve unless proper government policy constrains production. 
A)  If all the resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced. 
B)  If all the resources of an economy are being used efficiently, it is generally possible to produce more of one good without having to sacrifice the production of other goods. 
C)  Over time, it is generally impossible for a country to expand its production of goods. 
D)  An economy will automatically move toward a point that lies outside of the production possibilities curve unless proper government policy constrains production.

Question 9

The opportunity cost of choosing an alternative

Accepted Answer

A)  is the value of the highest valued alternative forgone as the result of the choice. 
B)  includes only the amount of time spent on whatever is chosen. 
C)  includes only the money cost of the option. 
D)  is irrelevant for most choices individuals face. 
A)  is the value of the highest valued alternative forgone as the result of the choice. 
B)  includes only the amount of time spent on whatever is chosen. 
C)  includes only the money cost of the option. 
D)  is irrelevant for most choices individuals face.

Question 10

Kim has two tickets to a concert tonight. She, however, has a headache and decides not to go. Which of the following would best fit Kim's needs?

Accepted Answer

A)  a ticket service that will buy the tickets from her and resell them 
B)  a change in attitude because missing a concert is always irrational 
C)  a general flu epidemic that causes many people to miss the concert 
D)  a poor performance by the band, so Kim does not feel badly about missing the concert 
A)  a ticket service that will buy the tickets from her and resell them 
B)  a change in attitude because missing a concert is always irrational 
C)  a general flu epidemic that causes many people to miss the concert 
D)  a poor performance by the band, so Kim does not feel badly about missing the concert

Question 11

Rebecca decides to buy a dress that Hillary has for sale; they agree on a price of $20. Which of the following best describes who gains and who loses from the transaction?

Accepted Answer

A)  If the dress originally costs more than $20, Rebecca gains and Hillary loses. 
B)  If the dress originally costs less than $20, Hillary gains and Rebecca loses. 
C)  Both parties expect to gain from this transaction. 
D)  If Hillary gains from the transaction, Rebecca must lose an equal amount. 
A)  If the dress originally costs more than $20, Rebecca gains and Hillary loses. 
B)  If the dress originally costs less than $20, Hillary gains and Rebecca loses. 
C)  Both parties expect to gain from this transaction. 
D)  If Hillary gains from the transaction, Rebecca must lose an equal amount.

Question 12

Steve values his Honda Accord at $10,000, and Jennifer values it at $14,000. If Jennifer buys it from Steve for $11,000, which of the following is true?

Accepted Answer

A)  Steve gains $1,000 of value, and Jennifer gains $3,000 of value. 
B)  Steve gains $11,000 of value, and Jennifer loses $11,000 of value. 
C)  Steve gains $10,000 of value, and Jennifer loses $14,000 of value. 
D)  Steve and Jennifer both gain $11,000 of value. 
A)  Steve gains $1,000 of value, and Jennifer gains $3,000 of value. 
B)  Steve gains $11,000 of value, and Jennifer loses $11,000 of value. 
C)  Steve gains $10,000 of value, and Jennifer loses $14,000 of value. 
D)  Steve and Jennifer both gain $11,000 of value.

Question 13

Which of the following is an implication of the law of comparative advantage?

Accepted Answer

A)  Countries with small amounts of labor relative to capital should specialize in producing labor-intensive commodities. 
B)  Since workers in high-income countries utilize larger amounts of capital than workers in less developed nations, trade between capital-rich and capital-poor nations results in the exploitation of labor in the less developed countries. 
C)  Countries that are high cost producers of agricultural products should trade those products for goods they can produce only at a low opportunity cost. 
D)  Countries that are low opportunity cost producers of timber products should trade those products for goods they can produce only at a high opportunity cost. 
A)  Countries with small amounts of labor relative to capital should specialize in producing labor-intensive commodities. 
B)  Since workers in high-income countries utilize larger amounts of capital than workers in less developed nations, trade between capital-rich and capital-poor nations results in the exploitation of labor in the less developed countries. 
C)  Countries that are high cost producers of agricultural products should trade those products for goods they can produce only at a low opportunity cost. 
D)  Countries that are low opportunity cost producers of timber products should trade those products for goods they can produce only at a high opportunity cost.

Question 14

Figure 2-7  
If an economy operates at point A on the production possibilities curve shown in Figure 2-7,

Accepted Answer

A)  to produce more food, it would have to reduce its production of clothing. 
B)  to produce more clothing, it would have to reduce the production of food. 
C)  it is operating efficiently. 
D)  all of the above would be correct. 
A)  to produce more food, it would have to reduce its production of clothing. 
B)  to produce more clothing, it would have to reduce the production of food. 
C)  it is operating efficiently. 
D)  all of the above would be correct.

Question 15

If an economy uses its resources inefficiently, this situation would be illustrated on a production possibilities diagram as

Accepted Answer

A)  an inward shift of the production possibilities curve. 
B)  an outward shift of the production possibilities curve. 
C)  operating at a point outside the production possibilities curve. 
D)  operating at a point inside the production possibilities curve. 
A)  an inward shift of the production possibilities curve. 
B)  an outward shift of the production possibilities curve. 
C)  operating at a point outside the production possibilities curve. 
D)  operating at a point inside the production possibilities curve.

Question 16

Hutch Technology makes computer monitors, which sell for $500 each. What is the opportunity cost of producing ten monitors?

Accepted Answer

A)  $5,000 
B)  the other goods that could be produced with the resources that produce the ten monitors 
C)  the profits that Hutch earns when it sells the ten monitors 
D)  the profits that Hutch loses if it does not produce the monitors 
E)  All of the above are correct. 
A)  $5,000 
B)  the other goods that could be produced with the resources that produce the ten monitors 
C)  the profits that Hutch earns when it sells the ten monitors 
D)  the profits that Hutch loses if it does not produce the monitors 
E)  All of the above are correct.

Question 17

Other things constant, which of the following would you expect to increase the output growth rate of a country?

Accepted Answer

A)  an increase in the rate of taxation on personal income 
B)  an increase in the rate of investment as a share of total output 
C)  passage of regulations restricting international trade 
D)  passage of regulations restricting domestic trade 
A)  an increase in the rate of taxation on personal income 
B)  an increase in the rate of investment as a share of total output 
C)  passage of regulations restricting international trade 
D)  passage of regulations restricting domestic trade

Question 18

It can be said that, ultimately, consumers are the driving force in answering the three basic economic questions. Explain the consumer's role in providing these answers.

Accepted Answer

What will be produced is determined by b

Question 19

Two individuals engage in the same two productive activities. In which of the following circumstances would neither individual have a comparative advantage in either activity?

Accepted Answer

A)  One individual's production possibilities frontier is steeper than the other individual's production possibilities frontier. 
B)  One individual is faster at both activities than the other individual. 
C)  One individual's opportunity costs are the same as the other individual's opportunity costs. 
D)  None of the above is correct; one of the two individuals always will have a comparative advantage in at least one of the two activities. 
A)  One individual's production possibilities frontier is steeper than the other individual's production possibilities frontier. 
B)  One individual is faster at both activities than the other individual. 
C)  One individual's opportunity costs are the same as the other individual's opportunity costs. 
D)  None of the above is correct; one of the two individuals always will have a comparative advantage in at least one of the two activities.

Question 20

Market economies are often criticized for how they answer the basic question, "For whom are goods produced?" This criticism usually comes from people who believe that the distribution of income is not "fair." Is there some way to separate production from distribution so that we can leave production just as it is but make the distribution of income "fairer"?

Accepted Answer

Unfortunately, there is no way to totall

Which of the following would be most likely to increase your opportunity cost of attending college?

Private property rights involve

Figure 2-3 Points A and B in Figure 2-3 indicate consumption and investment for two economies. Other things constant, which of the economies is likely to grow more rapidly in the future?

Which of the following activities describes the opportunity cost of attending an economics class?

If Matt trades two candy bars to Andy in exchange for one baseball card,

The economic principle that states that individuals or nations can gain by specializing in the production of goods that they produce cheaply and exchanging for other desired goods that they could only produce at a higher cost is

Which of the following most accurately indicates the implications of an economy's production possibilities curve?

The opportunity cost of choosing an alternative

Kim has two tickets to a concert tonight. She, however, has a headache and decides not to go. Which of the following would best fit Kim's needs?

Rebecca decides to buy a dress that Hillary has for sale; they agree on a price of $20. Which of the following best describes who gains and who loses from the transaction?

Steve values his Honda Accord at $10,000, and Jennifer values it at $14,000. If Jennifer buys it from Steve for $11,000, which of the following is true?

Which of the following is an implication of the law of comparative advantage?

Figure 2-7 If an economy operates at point A on the production possibilities curve shown in Figure 2-7,

If an economy uses its resources inefficiently, this situation would be illustrated on a production possibilities diagram as

Hutch Technology makes computer monitors, which sell for $500 each. What is the opportunity cost of producing ten monitors?

Other things constant, which of the following would you expect to increase the output growth rate of a country?

It can be said that, ultimately, consumers are the driving force in answering the three basic economic questions. Explain the consumer's role in providing these answers.

Two individuals engage in the same two productive activities. In which of the following circumstances would neither individual have a comparative advantage in either activity?

The Economic Approach

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Applying the Basics: Special Topics in Economics

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Exam 2: Some Tools of the Economist

Which of the following would be most likely to increase your opportunity cost of attending college?

Private property rights involve

Figure 2-3 Points A and B in Figure 2-3 indicate consumption and investment for two economies. Other things constant, which of the economies is likely to grow more rapidly in the future?

Which of the following activities describes the opportunity cost of attending an economics class?

If Matt trades two candy bars to Andy in exchange for one baseball card,

The economic principle that states that individuals or nations can gain by specializing in the production of goods that they produce cheaply and exchanging for other desired goods that they could only produce at a higher cost is

Which of the following most accurately indicates the implications of an economy's production possibilities curve?

The opportunity cost of choosing an alternative

Kim has two tickets to a concert tonight. She, however, has a headache and decides not to go. Which of the following would best fit Kim's needs?

Rebecca decides to buy a dress that Hillary has for sale; they agree on a price of $20. Which of the following best describes who gains and who loses from the transaction?

Steve values his Honda Accord at $10,000, and Jennifer values it at $14,000. If Jennifer buys it from Steve for $11,000, which of the following is true?

Which of the following is an implication of the law of comparative advantage?

Figure 2-7 If an economy operates at point A on the production possibilities curve shown in Figure 2-7,

If an economy uses its resources inefficiently, this situation would be illustrated on a production possibilities diagram as

Hutch Technology makes computer monitors, which sell for $500 each. What is the opportunity cost of producing ten monitors?

Other things constant, which of the following would you expect to increase the output growth rate of a country?

It can be said that, ultimately, consumers are the driving force in answering the three basic economic questions. Explain the consumer's role in providing these answers.

Two individuals engage in the same two productive activities. In which of the following circumstances would neither individual have a comparative advantage in either activity?

The Economic Approach

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Applying the Basics: Special Topics in Economics

Filters