Question 1

If all resources are used efficiently to produce goods and services, a nation will find itself producing _____

Accepted Answer

A)  inside its production possibilities frontier. 
B)  somewhere on its production possibilities frontier. 
C)  outside its production possibilities frontier. 
D)  only one type of commodity. 
E)  more of one product with no decrease in the production of any other product. 
A)  inside its production possibilities frontier. 
B)  somewhere on its production possibilities frontier. 
C)  outside its production possibilities frontier. 
D)  only one type of commodity. 
E)  more of one product with no decrease in the production of any other product.

Question 2

Which system is characterized by the private ownership of some resources and the public ownership of other resources and where some markets are regulated by government?

Accepted Answer

A)  a pure command system 
B)  a transitional system 
C)  a traditional system 
D)  a pure capitalist system 
E)  a mixed system 
A)  a pure command system 
B)  a transitional system 
C)  a traditional system 
D)  a pure capitalist system 
E)  a mixed system

Question 3

Bill trades a gingersnap for a chocolate chip cookie. This is an example of _____

Accepted Answer

A)  barter. 
B)  a credit transaction. 
C)  a monetary exchange. 
D)  privatization. 
E)  the division of labor. 
A)  barter. 
B)  a credit transaction. 
C)  a monetary exchange. 
D)  privatization. 
E)  the division of labor.

Question 4

An economy's production possibilities frontier _____

Accepted Answer

A)  helps explain the immense complexity of the real economy. 
B)  demonstrates that there is no problem of scarcity for society as a whole. 
C)  is based on unrealistic assumptions and has no value as an economic tool. 
D)  is based on simplifying assumptions, but is still useful for illustrating scarcity, opportunity cost, and economic growth. 
E)  is based on the assumption that technology is constantly changing. 
A)  helps explain the immense complexity of the real economy. 
B)  demonstrates that there is no problem of scarcity for society as a whole. 
C)  is based on unrealistic assumptions and has no value as an economic tool. 
D)  is based on simplifying assumptions, but is still useful for illustrating scarcity, opportunity cost, and economic growth. 
E)  is based on the assumption that technology is constantly changing.

Question 5

A cost that has already been incurred and cannot be recovered is known as a(n)_____

Accepted Answer

A)  sunk cost. 
B)  opportunity cost. 
C)  direct cost. 
D)  implicit cost. 
E)  explicit cost. 
A)  sunk cost. 
B)  opportunity cost. 
C)  direct cost. 
D)  implicit cost. 
E)  explicit cost.

Question 6

A curve showing alternative combinations of goods that can be produced when available resources are used efficiently is known as the _____

Accepted Answer

A)  circular-flow model. 
B)  IS-LM model. 
C)  production function. 
D)  productivity possibilities frontier. 
E)  production possibilities frontier. 
A)  circular-flow model. 
B)  IS-LM model. 
C)  production function. 
D)  productivity possibilities frontier. 
E)  production possibilities frontier.

Question 7

Exhibit 2.1
​
  
-Refer to Exhibit 2.1, which shows the production for rice and t-shirts for two countries: Costa Rica and the United States. Assume exactly country produces half of its total production in each good and they are the only producers of T-shirts and rice. What is the total production of T-shirts and rice?

Accepted Answer

A)  1500 T-shirts and 1500 tons of rice. 
B)  1000 T-shirts and 1500 tons of rice. 
C)  1000 T-shirts and 500 tons of rice. 
D)  750 T-shirts and 750 tons of rice. 
E)  500 T-shirts and 1000 tons of rice. 
A)  1500 T-shirts and 1500 tons of rice. 
B)  1000 T-shirts and 1500 tons of rice. 
C)  1000 T-shirts and 500 tons of rice. 
D)  750 T-shirts and 750 tons of rice. 
E)  500 T-shirts and 1000 tons of rice.

Question 8

The bowed-out shape of the production possibilities frontier indicates increasing opportunity costs.

Accepted Answer

A) True 
 B)False

Question 9

Janis mows a lawn in 1 hour and types a paper in 1 hour. Kristen mows a lawn in 2 hours and types a paper in 1 hour. Which of the following statements is true?

Accepted Answer

A)  Kristen has an absolute advantage in typing and a comparative advantage in mowing. 
B)  Janis has an absolute advantage in both the activities and a comparative advantage in typing. 
C)  Janis has an absolute advantage in both the activities and a comparative advantage in mowing. 
D)  The opportunity cost of mowing the lawn is greater for Kristen than it is for Janis. 
E)  Neither Janis nor Kristen would gain from specialization. 
A)  Kristen has an absolute advantage in typing and a comparative advantage in mowing. 
B)  Janis has an absolute advantage in both the activities and a comparative advantage in typing. 
C)  Janis has an absolute advantage in both the activities and a comparative advantage in mowing. 
D)  The opportunity cost of mowing the lawn is greater for Kristen than it is for Janis. 
E)  Neither Janis nor Kristen would gain from specialization.

Question 10

Comparative advantage refers to _____

Accepted Answer

A)  the ability of an individual to produce a greater amount of a good than another individual. 
B)  the ability of an individual to produce a lesser amount of a good than another individual. 
C)  the ability of an individual to produce a good at a lower opportunity cost than another individual. 
D)  the ability of an individual to produce a good at a lower dollar cost than another individual. 
E)  the ability of an individual to produce a good using fewer labor hours than other individuals. 
A)  the ability of an individual to produce a greater amount of a good than another individual. 
B)  the ability of an individual to produce a lesser amount of a good than another individual. 
C)  the ability of an individual to produce a good at a lower opportunity cost than another individual. 
D)  the ability of an individual to produce a good at a lower dollar cost than another individual. 
E)  the ability of an individual to produce a good using fewer labor hours than other individuals.

Question 11

Hans can do 4 loads of laundry and type 6 pages per hour. Heidi can do 12 loads of laundry and type 8 pages per hour. Heidi's opportunity cost of doing one load of laundry is _____

Accepted Answer

A)  equal to typing 4 pages. 
B)  equal to typing 6 pages. 
C)  equal to typing 2/3 of a page. 
D)  equal to typing 3/2 of a page. 
E)  impossible to compute without additional information. 
A)  equal to typing 4 pages. 
B)  equal to typing 6 pages. 
C)  equal to typing 2/3 of a page. 
D)  equal to typing 3/2 of a page. 
E)  impossible to compute without additional information.

Question 12

The specialization of labor _____

Accepted Answer

A)  increases productivity without creating any problems. 
B)  reduces productivity and is usually eliminated by business firms. 
C)  can create problems of boredom and repetitive motion injuries. 
D)  prevents the introduction of more sophisticated and efficient production techniques. 
E)  ignores individual preferences and natural abilities. 
A)  increases productivity without creating any problems. 
B)  reduces productivity and is usually eliminated by business firms. 
C)  can create problems of boredom and repetitive motion injuries. 
D)  prevents the introduction of more sophisticated and efficient production techniques. 
E)  ignores individual preferences and natural abilities.

Question 13

A system characterized by the private ownership of some resources and the public ownership of other resources and where some markets are regulated by government is known as a(n)_____.

Accepted Answer

A)  traditional system. 
B)  transitional system. 
C)  pure command system. 
D)  mixed system. 
E)  pure capitalism system. 
A)  traditional system. 
B)  transitional system. 
C)  pure command system. 
D)  mixed system. 
E)  pure capitalism system.

Question 14

Exhibit 2.2
​  
-Refer to Exhibit 2.2, which shows the production possibilities frontier for Good A and Good B. Point e represents _____

Accepted Answer

A)  an attainable combination of Good A and Good B. 
B)  an unattainable combination of Good A and Good B. 
C)  the combination of Good A and Good B that the economy will produce. 
D)  a possible efficient combination of Good A and Good B. 
E)  the combination of Good A and Good B that will maximize profits. 
A)  an attainable combination of Good A and Good B. 
B)  an unattainable combination of Good A and Good B. 
C)  the combination of Good A and Good B that the economy will produce. 
D)  a possible efficient combination of Good A and Good B. 
E)  the combination of Good A and Good B that will maximize profits.

Question 15

The law of comparative advantage says that a person should produce a good if he or she _____

Accepted Answer

A)  has the greatest desire to consume the good. 
B)  has the lowest opportunity cost of producing the good. 
C)  has an absolute advantage in producing the good. 
D)  receives the highest marginal benefit from the good. 
E)  can produce the good at the same cost as another producer can. 
A)  has the greatest desire to consume the good. 
B)  has the lowest opportunity cost of producing the good. 
C)  has an absolute advantage in producing the good. 
D)  receives the highest marginal benefit from the good. 
E)  can produce the good at the same cost as another producer can.

Question 16

Exhibit 2.4
​  
-Refer to Exhibit 2.4, which shows the production possibilities frontier for mufflers and socks. The opportunity cost of moving from point b to d is _____

Accepted Answer

A)  equal to 30 mufflers. 
B)  equal to 50 mufflers. 
C)  equal to 100 socks. 
D)  equal to 150 socks. 
E)  equal to 250 socks. 
A)  equal to 30 mufflers. 
B)  equal to 50 mufflers. 
C)  equal to 100 socks. 
D)  equal to 150 socks. 
E)  equal to 250 socks.

Question 17

Which of the following is an example of the division of labor?

Accepted Answer

A)  an author writing a book one chapter at a time 
B)  a firm trying to get rid of a labor union 
C)  separating resources into four categories: land, labor, capital, and entrepreneurial ability 
D)  allocating revenue among a firm's resource suppliers 
E)  dividing an assembly process into separate stages of production 
A)  an author writing a book one chapter at a time 
B)  a firm trying to get rid of a labor union 
C)  separating resources into four categories: land, labor, capital, and entrepreneurial ability 
D)  allocating revenue among a firm's resource suppliers 
E)  dividing an assembly process into separate stages of production

Question 18

The ability to make something using fewer resources than other producers use is known as _____

Accepted Answer

A)  specialization. 
B)  exchange. 
C)  arbitrage. 
D)  absolute advantage. 
E)  comparative advantage. 
A)  specialization. 
B)  exchange. 
C)  arbitrage. 
D)  absolute advantage. 
E)  comparative advantage.

Question 19

Absolute advantage is based on opportunity cost.

Accepted Answer

A) True 
 B)False

Question 20

If labor in the United States is more productive than England, then _____

Accepted Answer

A)  the United States is better off for trading with England. 
B)  England is worse off for trading with the United States. 
C)  neither country will benefit from trading. 
D)  both countries will benefit from trading. 
E)  England does not have a comparative advantage. 
A)  the United States is better off for trading with England. 
B)  England is worse off for trading with the United States. 
C)  neither country will benefit from trading. 
D)  both countries will benefit from trading. 
E)  England does not have a comparative advantage.

If all resources are used efficiently to produce goods and services, a nation will find itself producing _____

Which system is characterized by the private ownership of some resources and the public ownership of other resources and where some markets are regulated by government?

Bill trades a gingersnap for a chocolate chip cookie. This is an example of _____

An economy's production possibilities frontier _____

A cost that has already been incurred and cannot be recovered is known as a(n)_____

A curve showing alternative combinations of goods that can be produced when available resources are used efficiently is known as the _____

The bowed-out shape of the production possibilities frontier indicates increasing opportunity costs.

Janis mows a lawn in 1 hour and types a paper in 1 hour. Kristen mows a lawn in 2 hours and types a paper in 1 hour. Which of the following statements is true?

Comparative advantage refers to _____

Hans can do 4 loads of laundry and type 6 pages per hour. Heidi can do 12 loads of laundry and type 8 pages per hour. Heidi's opportunity cost of doing one load of laundry is _____

The specialization of labor _____

A system characterized by the private ownership of some resources and the public ownership of other resources and where some markets are regulated by government is known as a(n)_____.

Exhibit 2.2 -Refer to Exhibit 2.2, which shows the production possibilities frontier for Good A and Good B. Point e represents _____

The law of comparative advantage says that a person should produce a good if he or she _____

Exhibit 2.4 -Refer to Exhibit 2.4, which shows the production possibilities frontier for mufflers and socks. The opportunity cost of moving from point b to d is _____

Which of the following is an example of the division of labor?

The ability to make something using fewer resources than other producers use is known as _____

Absolute advantage is based on opportunity cost.

If labor in the United States is more productive than England, then _____

The Art and Science of Economic Analysis.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters

Exam 2: Economic Tools and Economic Systems.

If all resources are used efficiently to produce goods and services, a nation will find itself producing _____

Which system is characterized by the private ownership of some resources and the public ownership of other resources and where some markets are regulated by government?

Bill trades a gingersnap for a chocolate chip cookie. This is an example of _____

An economy's production possibilities frontier _____

A cost that has already been incurred and cannot be recovered is known as a(n)_____

A curve showing alternative combinations of goods that can be produced when available resources are used efficiently is known as the _____

The bowed-out shape of the production possibilities frontier indicates increasing opportunity costs.

Janis mows a lawn in 1 hour and types a paper in 1 hour. Kristen mows a lawn in 2 hours and types a paper in 1 hour. Which of the following statements is true?

Comparative advantage refers to _____

Hans can do 4 loads of laundry and type 6 pages per hour. Heidi can do 12 loads of laundry and type 8 pages per hour. Heidi's opportunity cost of doing one load of laundry is _____

The specialization of labor _____

A system characterized by the private ownership of some resources and the public ownership of other resources and where some markets are regulated by government is known as a(n)_____.

Exhibit 2.2 ​ -Refer to Exhibit 2.2, which shows the production possibilities frontier for Good A and Good B. Point e represents _____

The law of comparative advantage says that a person should produce a good if he or she _____

Exhibit 2.4 ​ -Refer to Exhibit 2.4, which shows the production possibilities frontier for mufflers and socks. The opportunity cost of moving from point b to d is _____

Which of the following is an example of the division of labor?

The ability to make something using fewer resources than other producers use is known as _____

Absolute advantage is based on opportunity cost.

If labor in the United States is more productive than England, then _____

The Art and Science of Economic Analysis.

Economic Decision Makers.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

Productivity and Growth.

Aggregate Demand.

Aggregate Supply.

Fiscal Policy.

Federal Budgets and Public Policy.

Money and the Financial System.

Banking and the Money Supply.

Monetary Theory and Policy.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters

Exhibit 2.2 -Refer to Exhibit 2.2, which shows the production possibilities frontier for Good A and Good B. Point e represents _____

Exhibit 2.4 -Refer to Exhibit 2.4, which shows the production possibilities frontier for mufflers and socks. The opportunity cost of moving from point b to d is _____