Question 1

The following figure depicts a nonlinear production possibilities curve.
  
-Refer to the figure above.With currently available resources,point F represents a situation that ________.

Accepted Answer

A)  results if resources are not fully employed 
B)  can be achieved if consumers demand fewer Web sites than at point C 
C)  is currently attainable, given available resources 
D)  is currently unattainable, given available resources 
A)  results if resources are not fully employed 
B)  can be achieved if consumers demand fewer Web sites than at point C 
C)  is currently attainable, given available resources 
D)  is currently unattainable, given available resources

Question 2

The following figure shows the demand curve, D, and the supply curve, S, for calculators in Barylia in four different scenarios. Barylia is open to free trade.
  
-Refer to the figure above.At a world price of $6,in which scenario(s)does Barylia see its domestic quantity demanded decrease?

Accepted Answer

A)  (1) 
B)  (2) 
C)  (1) and (2) 
D)  (4) 
A)  (1) 
B)  (2) 
C)  (1) and (2) 
D)  (4)

Question 3

Which of the following statements is true?

Accepted Answer

A)  The production possibilities curve of a nation is fixed in the long run. 
B)  The production possibilities curve can only shift to the right. 
C)  The production possibilities curve of an economy is concave. 
D)  The slope of the production possibilities curve represents the ratio of the marginal cost of producing goods. 
A)  The production possibilities curve of a nation is fixed in the long run. 
B)  The production possibilities curve can only shift to the right. 
C)  The production possibilities curve of an economy is concave. 
D)  The slope of the production possibilities curve represents the ratio of the marginal cost of producing goods.

Question 4

The following figure depicts four different scenarios in which the blue line represents California's production possibilities curve (PPC) and the red line represents Texas' PPC. These two states trade wine and cloth.
  
-Refer to the figure above.In what scenario would the terms of trade of wine for cloth be between 0.67 and 0.75?

Accepted Answer

A)  (1) 
B)  (2) 
C)  (3) 
D)  (4) 
A)  (1) 
B)  (2) 
C)  (3) 
D)  (4)

Question 5

Which of the following statements is true?

Accepted Answer

A)  The principle of comparative advantage provides a basis for trade when two nations have the same opportunity cost of producing a good. 
B)  The principle of absolute advantage provides a basis for the determination of the terms of trade between two trading nations. 
C)  The principle of absolute advantage forms the basis of trade when a nation can produce more goods and services compared to other nations. 
D)  The principle of comparative advantage provides a range of prices within which trade will occur. 
A)  The principle of comparative advantage provides a basis for trade when two nations have the same opportunity cost of producing a good. 
B)  The principle of absolute advantage provides a basis for the determination of the terms of trade between two trading nations. 
C)  The principle of absolute advantage forms the basis of trade when a nation can produce more goods and services compared to other nations. 
D)  The principle of comparative advantage provides a range of prices within which trade will occur.

Question 6

The following figure shows the demand curve, D, and supply curve, S, of ballpoint pens in Lithasia. The world price of pens is $2.
  
-Refer to the figure above.Which of the following methods is the best way to compensate the losers from opening Lithasia to international trade?

Accepted Answer

A)  The sellers in Lithasia could be taxed and the revenue could be used to compensate buyers. 
B)  The buyers in Lithasia could be taxed and the revenue could be used to compensate sellers. 
C)  Both buyers and sellers could be taxed and the revenue could be retained by the government. 
D)  The sellers in Lithasia could sell the pens at a price above the equilibrium price in the domestic market. 
A)  The sellers in Lithasia could be taxed and the revenue could be used to compensate buyers. 
B)  The buyers in Lithasia could be taxed and the revenue could be used to compensate sellers. 
C)  Both buyers and sellers could be taxed and the revenue could be retained by the government. 
D)  The sellers in Lithasia could sell the pens at a price above the equilibrium price in the domestic market.

Question 7

The slope of a production possibilities curve represents the ________.

Accepted Answer

A)  marginal cost of producing the good measured on the x-axis 
B)  marginal cost of producing the good measured on the y-axis 
C)  opportunity cost of producing the goods 
D)  ratio of the average cost of producing both goods 
A)  marginal cost of producing the good measured on the x-axis 
B)  marginal cost of producing the good measured on the y-axis 
C)  opportunity cost of producing the goods 
D)  ratio of the average cost of producing both goods

Question 8

Which of the following correctly identifies an argument against free trade?

Accepted Answer

A)  Free trade reduces world production. 
B)  Free trade hampers technology transfers. 
C)  Free trade increases the wages in importing countries. 
D)  Free trade may result in job loss in some specific industries in the domestic economy. 
A)  Free trade reduces world production. 
B)  Free trade hampers technology transfers. 
C)  Free trade increases the wages in importing countries. 
D)  Free trade may result in job loss in some specific industries in the domestic economy.

Question 9

What are the infant industry arguments against free trade?

Accepted Answer

Infant industries are fledgling domestic

Question 10

The following figure shows the production possibilities curve for a software engineer who has to divide her available time between producing computer programs and Web sites.
  
-Refer to the figure above.Which of the following combinations is unattainable?

Accepted Answer

A)  A 
B)  B 
C)  D 
D)  E 
A)  A 
B)  B 
C)  D 
D)  E

Question 11

Scenario: The following production possibilities schedules and curves represent the amount of corn and alfalfa that can be produced on an acre of land in Idaho and Iowa.
   
These production possibilities schedules are shown in the following figure.
  
-Refer to the scenario above.The opportunity cost of a bushel of corn in Iowa is ________.

Accepted Answer

A)    of a ton of alfalfa 
B)  1 ton of alfalfa 
C)  6 tons of alfalfa 
D)  40 tons of alfalfa 
A)    of a ton of alfalfa 
B)  1 ton of alfalfa 
C)  6 tons of alfalfa 
D)  40 tons of alfalfa

Question 12

The U.S.wheat market is represented by the demand and supply curves shown in the figure below.
 
Initially,suppose there is no trade in wheat between the United States and the rest of the world.In this case,consumer surplus is represented by the area ________ and producer surplus is represented by the area ________ in the figure below.

Accepted Answer

A)  A; B 
B)  A + B + C; 0 
C)  A; B + C 
D)  0; A + B + C 
A)  A; B 
B)  A + B + C; 0 
C)  A; B + C 
D)  0; A + B + C

Question 13

The following figure shows the demand curve, D, and the supply curve, S, for calculators in Barylia. The world price of calculators is $40.
  
-Refer to the figure above.What is the consumer surplus after Barylia opens up to free trade?

Accepted Answer

A)  $75 
B)  $90 
C)  $100 
D)  $125 
A)  $75 
B)  $90 
C)  $100 
D)  $125

Question 14

Scenario: The following figure shows the demand curve, D, and the supply curve, S, of chairs in Barylia. Barylia is open to free trade. The world price of chairs is $3, and the government of Barylia decides to impose a $1 tariff on the import of chairs.
  
-Refer to the scenario above.How many chairs were imported by Barylia before the tariff was imposed by the government?

Accepted Answer

A)  25 units 
B)  50 units 
C)  55 units 
D)  60 units 
A)  25 units 
B)  50 units 
C)  55 units 
D)  60 units

Question 15

Suppose a nation opens up to free trade and becomes an exporter of goods.Which of the following is then true?

Accepted Answer

A)  The nation as a whole suffers losses. 
B)  Sellers lose. 
C)  Buyers lose. 
D)  Buyers gain. 
A)  The nation as a whole suffers losses. 
B)  Sellers lose. 
C)  Buyers lose. 
D)  Buyers gain.

Question 16

Scenario: Yasmin and Zeek are lawyers working at V, W, and X LLP. Yasmin works 48 hours a week, and Zeek also works 48 hours a week. They handle two types of cases, intellectual property (IP) cases and corporate fraud (CF) cases. It takes Yasmin 6 hours to handle each IP case and 4 hours to handle each CF case. Zeek can finish an IP case in 3 hours and a CF case in 6 hours.
-Refer to the scenario above.Suppose that the two lawyers' boss wants the total number of IP cases worked on by them to equal the total number of CF cases worked on by them.So long as the total number of IP cases equals the total number of CF cases,their boss does not care which lawyer works on how many of which type of case.So Yasmin and Zeek decide to take advantage of their comparative advantages.How would they divide the tasks?

Accepted Answer

A)  Yasmin specializes in IP cases, while Zeek specializes in CF cases. 
B)  Yasmin specializes in CF cases, while Zeek specializes in IP cases. 
C)  Yasmin specializes in IP cases, while Zeek works on both types of cases. 
D)  Yasmin specializes in CF cases, while Zeek works on both types of cases. 
A)  Yasmin specializes in IP cases, while Zeek specializes in CF cases. 
B)  Yasmin specializes in CF cases, while Zeek specializes in IP cases. 
C)  Yasmin specializes in IP cases, while Zeek works on both types of cases. 
D)  Yasmin specializes in CF cases, while Zeek works on both types of cases.

Question 17

The following figure depicts a nonlinear production possibilities curve.
  
-Refer to the figure above.Assuming that the initial situation is point B,which one of the following represents a reallocation of resources away from Web sites to computer programs production?

Accepted Answer

A)  Point A 
B)  Point C 
C)  Point D 
D)  Point E 
A)  Point A 
B)  Point C 
C)  Point D 
D)  Point E

Question 18

The following figure shows the production possibilities curves (PPCs) of two individuals, Ryan and Tom.
  
-Refer to the figure above.Which of the following statements is true?

Accepted Answer

A)  Ryan has a comparative advantage in the production of Good 1, whereas Tom has a comparative advantage in the production of Good 2. 
B)  Ryan has a comparative advantage in the production of Good 2, whereas Tom has a comparative advantage in the production of Good 1. 
C)  Ryan has a comparative advantage in the production of both goods. 
D)  Tom has a comparative advantage in the production of both goods. 
A)  Ryan has a comparative advantage in the production of Good 1, whereas Tom has a comparative advantage in the production of Good 2. 
B)  Ryan has a comparative advantage in the production of Good 2, whereas Tom has a comparative advantage in the production of Good 1. 
C)  Ryan has a comparative advantage in the production of both goods. 
D)  Tom has a comparative advantage in the production of both goods.

Question 19

A curve that shows the various combinations of goods and services that are possible for an economy to produce with a given amount of resources is referred to as a(n)________.

Accepted Answer

A)  supply curve 
B)  indifference curve 
C)  budget constraint 
D)  production possibilities curve 
A)  supply curve 
B)  indifference curve 
C)  budget constraint 
D)  production possibilities curve

Question 20

Points inside a production possibilities curve are ________.

Accepted Answer

A)  inefficient, because more goods can be produced with the available resources 
B)  inefficient, because they represent the production of only one good 
C)  efficient, because the combinations represented by those points are attainable 
D)  efficient, because production is maximum at those points with the available resources 
A)  inefficient, because more goods can be produced with the available resources 
B)  inefficient, because they represent the production of only one good 
C)  efficient, because the combinations represented by those points are attainable 
D)  efficient, because production is maximum at those points with the available resources

The following figure depicts a nonlinear production possibilities curve. -Refer to the figure above.With currently available resources,point F represents a situation that ________.

The following figure shows the demand curve, D, and the supply curve, S, for calculators in Barylia in four different scenarios. Barylia is open to free trade. -Refer to the figure above.At a world price of $6,in which scenario(s)does Barylia see its domestic quantity demanded decrease?

Which of the following statements is true?

Which of the following statements is true?

The following figure shows the demand curve, D, and supply curve, S, of ballpoint pens in Lithasia. The world price of pens is $2. -Refer to the figure above.Which of the following methods is the best way to compensate the losers from opening Lithasia to international trade?

The slope of a production possibilities curve represents the ________.

Which of the following correctly identifies an argument against free trade?

What are the infant industry arguments against free trade?

The following figure shows the production possibilities curve for a software engineer who has to divide her available time between producing computer programs and Web sites. -Refer to the figure above.Which of the following combinations is unattainable?

The following figure shows the demand curve, D, and the supply curve, S, for calculators in Barylia. The world price of calculators is $40. -Refer to the figure above.What is the consumer surplus after Barylia opens up to free trade?

Suppose a nation opens up to free trade and becomes an exporter of goods.Which of the following is then true?

The following figure depicts a nonlinear production possibilities curve. -Refer to the figure above.Assuming that the initial situation is point B,which one of the following represents a reallocation of resources away from Web sites to computer programs production?

The following figure shows the production possibilities curves (PPCs) of two individuals, Ryan and Tom. -Refer to the figure above.Which of the following statements is true?

A curve that shows the various combinations of goods and services that are possible for an economy to produce with a given amount of resources is referred to as a(n)________.

Points inside a production possibilities curve are ________.

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, supply, and Equilibrium

Consumers and Incentives

Sellers and Incentives

Perfect Competition and the Invisible Hand

Externalities and Public Goods

The Government in the Economy: Taxation and Regulation

Markets for Factors of Production

Monopoly

Game Theory and Strategic Play

Oligopoly and Monopolistic Competition

Trade-Offs Involving Time and Risk

The Economics of Information

Auctions and Bargaining

Social Economics

Filters

Exam 8: Trade

The following figure depicts a nonlinear production possibilities curve. -Refer to the figure above.With currently available resources,point F represents a situation that ________.

The following figure shows the demand curve, D, and the supply curve, S, for calculators in Barylia in four different scenarios. Barylia is open to free trade. -Refer to the figure above.At a world price of $6,in which scenario(s)does Barylia see its domestic quantity demanded decrease?

Which of the following statements is true?

Which of the following statements is true?

The following figure shows the demand curve, D, and supply curve, S, of ballpoint pens in Lithasia. The world price of pens is $2. -Refer to the figure above.Which of the following methods is the best way to compensate the losers from opening Lithasia to international trade?

The slope of a production possibilities curve represents the ________.

Which of the following correctly identifies an argument against free trade?

What are the infant industry arguments against free trade?

The following figure shows the production possibilities curve for a software engineer who has to divide her available time between producing computer programs and Web sites. -Refer to the figure above.Which of the following combinations is unattainable?

The following figure shows the demand curve, D, and the supply curve, S, for calculators in Barylia. The world price of calculators is $40. -Refer to the figure above.What is the consumer surplus after Barylia opens up to free trade?

Suppose a nation opens up to free trade and becomes an exporter of goods.Which of the following is then true?

The following figure depicts a nonlinear production possibilities curve. -Refer to the figure above.Assuming that the initial situation is point B,which one of the following represents a reallocation of resources away from Web sites to computer programs production?

The following figure shows the production possibilities curves (PPCs) of two individuals, Ryan and Tom. -Refer to the figure above.Which of the following statements is true?

A curve that shows the various combinations of goods and services that are possible for an economy to produce with a given amount of resources is referred to as a(n)________.

Points inside a production possibilities curve are ________.

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, supply, and Equilibrium

Consumers and Incentives

Sellers and Incentives

Perfect Competition and the Invisible Hand

Externalities and Public Goods

The Government in the Economy: Taxation and Regulation

Markets for Factors of Production

Monopoly

Game Theory and Strategic Play

Oligopoly and Monopolistic Competition

Trade-Offs Involving Time and Risk

The Economics of Information

Auctions and Bargaining

Social Economics

Filters