Question 1

For most students attending state universities,the largest cost component of going to college is

Accepted Answer

A) the cost of books and supplies. 
B) the cost of room and board. 
C) tuition. 
D) the opportunity cost in terms of forgone current income from the time spent attending college. 
A) the cost of books and supplies. 
B) the cost of room and board. 
C) tuition. 
D) the opportunity cost in terms of forgone current income from the time spent attending college. D

Question 2

A production possibilities curve graphically represents the maximum quantities of two products produced when all resources in the economy are efficiently utilized.An economy that operates inside this production possibilities curve

Accepted Answer

A) is using its resources inefficiently. 
B) lacks the necessary technology to produce efficiently. 
C) lacks the resources to produce goods efficiently. 
D) is utilizing its available resources as efficiently as possible. 
A) is using its resources inefficiently. 
B) lacks the necessary technology to produce efficiently. 
C) lacks the resources to produce goods efficiently. 
D) is utilizing its available resources as efficiently as possible. A

Question 3

In a market economy,

Accepted Answer

A) a larger income for one person means a smaller one for another. 
B) the government answers all the basic economic questions. 
C) a larger income for one person means it is possible for others to earn more too. 
D) economic output shrinks as we discover better ways of doing things. 
A) a larger income for one person means a smaller one for another. 
B) the government answers all the basic economic questions. 
C) a larger income for one person means it is possible for others to earn more too. 
D) economic output shrinks as we discover better ways of doing things. C

Question 4

Retired persons travel by bus and automobile more frequently than do business executives,who more commonly use air travel.An economic explanation for this would be that

Accepted Answer

A) business executives have more time to travel. 
B) it is more important for retired persons to save time. 
C) business executives value their time more highly. 
D) retired persons have more money than do business executives. 
A) business executives have more time to travel. 
B) it is more important for retired persons to save time. 
C) business executives value their time more highly. 
D) retired persons have more money than do business executives.

Question 5

Which of the following best describes the implications of the law of comparative advantage? If each person sells goods for which he or she has the greatest comparative advantage in production and buys those for which his or her comparative advantage is least,the

Accepted Answer

A) total output available to each person can be expanded by specialization and exchange. 
B) total output will fall. 
C) buyers of goods will gain at the expense of sellers. 
D) sellers of goods will gain at the expense of buyers. 
A) total output available to each person can be expanded by specialization and exchange. 
B) total output will fall. 
C) buyers of goods will gain at the expense of sellers. 
D) sellers of goods will gain at the expense of buyers.

Question 6

Use the production possibilities data below to answer the following question.
Table 2-3
  
-Refer to Table 2-3.The rancher has a comparative advantage in

Accepted Answer

A) neither good,and the farmer has a comparative advantage in both goods. 
B) both goods,and the farmer has a comparative advantage in neither good. 
C) potatoes,and the farmer has a comparative advantage in meat. 
D) meat,and the farmer has a comparative advantage in potatoes. 
A) neither good,and the farmer has a comparative advantage in both goods. 
B) both goods,and the farmer has a comparative advantage in neither good. 
C) potatoes,and the farmer has a comparative advantage in meat. 
D) meat,and the farmer has a comparative advantage in potatoes.

Question 7

The president of a large public university proclaims,"If we can get the state government to fund our new football stadium,it will not cost us anything." Evaluate this view from an economic perspective.

Accepted Answer

While it may not directly affect the uni

Question 8

A production possibilities curve graphically represents the maximum quantities of two products produced when all resources in the economy are being used efficiently.If an economy operates at a point inside its production possibilities curve,

Accepted Answer

A) it lacks the resources necessary to produce at full employment. 
B) it is utilizing some resources inefficiently. 
C) it does not confront the problem of scarce goods relative to unlimited wants. 
D) it does not exist in the real world since it is impossible for an economy to operate inside its production possibilities curve. 
A) it lacks the resources necessary to produce at full employment. 
B) it is utilizing some resources inefficiently. 
C) it does not confront the problem of scarce goods relative to unlimited wants. 
D) it does not exist in the real world since it is impossible for an economy to operate inside its production possibilities curve.

Question 9

According to the law of comparative advantage,both individuals and nations will be able to produce a larger joint output if each productive activity is undertaken by

Accepted Answer

A) the high opportunity cost producer. 
B) the low opportunity cost producer. 
C) the producer who is able to hire workers at the lowest wage. 
D) the party that can complete the productive activity most rapidly. 
A) the high opportunity cost producer. 
B) the low opportunity cost producer. 
C) the producer who is able to hire workers at the lowest wage. 
D) the party that can complete the productive activity most rapidly.

Question 10

Private property rights exist when property rights are

Accepted Answer

A) exclusively controlled by the owner or owners. 
B) transferable to others. 
C) protected by legal enforcement. 
D) all of the above. 
A) exclusively controlled by the owner or owners. 
B) transferable to others. 
C) protected by legal enforcement. 
D) all of the above.

Question 11

The process by which new products and methods of production are continuously replacing old ones is known as

Accepted Answer

A) the invisible hand principle. 
B) the production possibilities frontier. 
C) creative destruction. 
D) the fallacy of composition. 
A) the invisible hand principle. 
B) the production possibilities frontier. 
C) creative destruction. 
D) the fallacy of composition.

Question 12

When Benjamin Franklin wrote,"Remember that time is money!" he understood

Accepted Answer

A) the incentives created by property rights. 
B) the law of comparative advantage. 
C) the concept of opportunity cost. 
D) that watches cost money. 
A) the incentives created by property rights. 
B) the law of comparative advantage. 
C) the concept of opportunity cost. 
D) that watches cost money.

Question 13

Trade creates value by

Accepted Answer

A) moving goods from people who value the goods less to people who value the goods more. 
B) permitting trading partners to expand output through specialization in areas where they each have a comparative advantage. 
C) permitting trading partners to expand output through the adoption of mass production methods. 
D) all of the above. 
A) moving goods from people who value the goods less to people who value the goods more. 
B) permitting trading partners to expand output through specialization in areas where they each have a comparative advantage. 
C) permitting trading partners to expand output through the adoption of mass production methods. 
D) all of the above.

Question 14

Figure 2-9
  
-Refer to Figure 2-9.The opportunity cost of obtaining 15 additional toasters by moving from point D to point C is

Accepted Answer

A) 10 toothbrushes. 
B) 20 toothbrushes. 
C) 30 toothbrushes. 
D) none of the above;the economy cannot move from point D to point C. 
A) 10 toothbrushes. 
B) 20 toothbrushes. 
C) 30 toothbrushes. 
D) none of the above;the economy cannot move from point D to point C.

Question 15

A point outside the production possibilities curve represents a combination of goods that is

Accepted Answer

A) inefficient. 
B) efficient. 
C) unattainable. 
D) attainable. 
A) inefficient. 
B) efficient. 
C) unattainable. 
D) attainable.

Question 16

The opportunity cost of an option

Accepted Answer

A) measures the undesirable aspects of the option. 
B) includes only the monetary cost of the option. 
C) is the highest-valued alternative that must be given up as the result of choosing the option. 
D) is objective,and it will be the same for all individuals. 
A) measures the undesirable aspects of the option. 
B) includes only the monetary cost of the option. 
C) is the highest-valued alternative that must be given up as the result of choosing the option. 
D) is objective,and it will be the same for all individuals.

Question 17

Use the table below to choose the correct answer.The table outlines the production possibilities of Robinson Crusoe and Joe Friday.
 
If Crusoe and Friday want to maximize their consumption possibilities,

Accepted Answer

A) Crusoe should specialize in producing good X and Friday in producing good Y,but no trade should be allowed. 
B) Crusoe should specialize in producing good X and Friday in producing good Y;trade should occur to maximize joint consumption. 
C) Crusoe should specialize in producing good Y and Friday in producing good X;trade should occur to maximize joint consumption. 
D) both individuals should strive for self-sufficiency,which always maximizes output. 
A) Crusoe should specialize in producing good X and Friday in producing good Y,but no trade should be allowed. 
B) Crusoe should specialize in producing good X and Friday in producing good Y;trade should occur to maximize joint consumption. 
C) Crusoe should specialize in producing good Y and Friday in producing good X;trade should occur to maximize joint consumption. 
D) both individuals should strive for self-sufficiency,which always maximizes output.

Question 18

Suppose a country attempts to be self-sufficient and doesn't trade with any other countries.From an economic perspective,citizens of this nation can be expected to

Accepted Answer

A) gain materially from this policy because they can consume more goods over time than if they engaged in trade with foreigners. 
B) produce less total value than they could if they specialized and engaged in trade with other nations. 
C) gain from more rapid growth since home markets are reserved for home producers. 
D) be just as well off without trade since the value of what is sent to other nations in trade just equals the value of what is received in trade. 
A) gain materially from this policy because they can consume more goods over time than if they engaged in trade with foreigners. 
B) produce less total value than they could if they specialized and engaged in trade with other nations. 
C) gain from more rapid growth since home markets are reserved for home producers. 
D) be just as well off without trade since the value of what is sent to other nations in trade just equals the value of what is received in trade.

Question 19

A point on the production possibilities curve represents a combination of goods that is

Accepted Answer

A) inefficient. 
B) efficient. 
C) unattainable. 
D) attainable. 
A) inefficient. 
B) efficient. 
C) unattainable. 
D) attainable.

Question 20

When resources are being used wastefully or inefficiently,the

Accepted Answer

A) production possibilities curve shifts inward. 
B) production possibilities curve shifts outward. 
C) economy is operating at a point inside its production possibilities constraint. 
D) economy is operating at a point outside its production possibilities constraint. 
A) production possibilities curve shifts inward. 
B) production possibilities curve shifts outward. 
C) economy is operating at a point inside its production possibilities constraint. 
D) economy is operating at a point outside its production possibilities constraint.

Exam 2: Asome Tools of the Economist

For most students attending state universities,the largest cost component of going to college is

A production possibilities curve graphically represents the maximum quantities of two products produced when all resources in the economy are efficiently utilized.An economy that operates inside this production possibilities curve

In a market economy,

Retired persons travel by bus and automobile more frequently than do business executives,who more commonly use air travel.An economic explanation for this would be that

Which of the following best describes the implications of the law of comparative advantage? If each person sells goods for which he or she has the greatest comparative advantage in production and buys those for which his or her comparative advantage is least,the

Use the production possibilities data below to answer the following question. Table 2-3 -Refer to Table 2-3.The rancher has a comparative advantage in

The president of a large public university proclaims,"If we can get the state government to fund our new football stadium,it will not cost us anything." Evaluate this view from an economic perspective.

A production possibilities curve graphically represents the maximum quantities of two products produced when all resources in the economy are being used efficiently.If an economy operates at a point inside its production possibilities curve,

According to the law of comparative advantage,both individuals and nations will be able to produce a larger joint output if each productive activity is undertaken by

Private property rights exist when property rights are

The process by which new products and methods of production are continuously replacing old ones is known as

When Benjamin Franklin wrote,"Remember that time is money!" he understood

Trade creates value by

Figure 2-9 -Refer to Figure 2-9.The opportunity cost of obtaining 15 additional toasters by moving from point D to point C is

A point outside the production possibilities curve represents a combination of goods that is

The opportunity cost of an option

Use the table below to choose the correct answer.The table outlines the production possibilities of Robinson Crusoe and Joe Friday. If Crusoe and Friday want to maximize their consumption possibilities,

Suppose a country attempts to be self-sufficient and doesn't trade with any other countries.From an economic perspective,citizens of this nation can be expected to

A point on the production possibilities curve represents a combination of goods that is

When resources are being used wastefully or inefficiently,the

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Ataking the Nations Economic Pulse

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Dynamic Change, economic Fluctuations, and the Ad-As Model

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Fiscal Policy, incentives, and Secondary Effects

Amoney and the Banking System

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Investment, the Capital Market, and the Wealth of Nations

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The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

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Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

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The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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