Question 1

Keri decided to sleep in today rather than attend her 9a.m.economics class.According to economic analysis,her choice was

Accepted Answer

A) irrational,because economic analysis suggests you should always attend classes that you have already paid for. 
B) irrational,because oversleeping is not in Keri's self-interest. 
C) rational if Keri has not missed any other classes. 
D) rational if Keri values sleep more highly than the benefit she expects to receive from attending the class. 
A) irrational,because economic analysis suggests you should always attend classes that you have already paid for. 
B) irrational,because oversleeping is not in Keri's self-interest. 
C) rational if Keri has not missed any other classes. 
D) rational if Keri values sleep more highly than the benefit she expects to receive from attending the class.

Question 2

When private ownership of a resource is clearly defined and enforced,the private owner

Accepted Answer

A) has little incentive to consider the wishes of others when deciding how to employ the resource. 
B) has little incentive to use the resource wisely. 
C) has a strong incentive to consume the resource during the period rather than conserving it for the future. 
D) has a strong incentive to use the resource wisely. 
A) has little incentive to consider the wishes of others when deciding how to employ the resource. 
B) has little incentive to use the resource wisely. 
C) has a strong incentive to consume the resource during the period rather than conserving it for the future. 
D) has a strong incentive to use the resource wisely.

Question 3

The size of a country's "economic pie" is thought of as the total dollar value of all goods and services produced during some period of time.The economic pie

Accepted Answer

A) is a fixed total waiting to be divided up among people. 
B) determines how much wealth an individual can obtain. 
C) is variable,not fixed,across time periods. 
D) depends solely upon the natural resources of a country. 
A) is a fixed total waiting to be divided up among people. 
B) determines how much wealth an individual can obtain. 
C) is variable,not fixed,across time periods. 
D) depends solely upon the natural resources of a country.

Question 4

(I)When individuals engage in a voluntary exchange,both parties are made better off.
(II)By channeling goods and resources to those who value them most,trade creates value and increases the wealth created by a society's resources.

Accepted Answer

A) I is true;II is false. 
B) I is false;II is true. 
C) Both I and II are true. 
D) Both I and II are false. 
A) I is true;II is false. 
B) I is false;II is true. 
C) Both I and II are true. 
D) Both I and II are false.

Question 5

Figure 2-10
  
-Refer to Figure 2-10.If the economy moves from point C to point B,then which of the following statements is correct?

Accepted Answer

A) The economy benefited from a technological advance in the production of baseballs. 
B) The opportunity cost of each additional baseball is 2 bananas. 
C) The opportunity cost of each additional banana is 2 baseballs. 
D) The move involves no opportunity cost;it simply reflects the desires of the economy's citizens. 
A) The economy benefited from a technological advance in the production of baseballs. 
B) The opportunity cost of each additional baseball is 2 bananas. 
C) The opportunity cost of each additional banana is 2 baseballs. 
D) The move involves no opportunity cost;it simply reflects the desires of the economy's citizens.

Question 6

Economic debates that focus on the distribution of a nation's income are generally associated with which basic economic question?

Accepted Answer

A) How is production going to be organized? 
B) What goods will be produced? 
C) What resources will be utilized in the productive process? 
D) For whom will the goods be produced? 
A) How is production going to be organized? 
B) What goods will be produced? 
C) What resources will be utilized in the productive process? 
D) For whom will the goods be produced?

Question 7

Use the production possibilities data below for Lebos and Slavia to answer the following question(s).
Table 2-1

-Refer to Table 2-1.Which of the following is true?

Accepted Answer

A) Lebos has the comparative advantage in both goods. 
B) Lebos has the comparative advantage in food. 
C) Slavia has the comparative advantage in food. 
D) It would be impossible for Lebos and Slavia to gain from trade. 
A) Lebos has the comparative advantage in both goods. 
B) Lebos has the comparative advantage in food. 
C) Slavia has the comparative advantage in food. 
D) It would be impossible for Lebos and Slavia to gain from trade.

Question 8

Figure 2-2
  
-Which of the following would most likely cause the production possibilities curve for breadfruit and fish to shift outward from AA to BB in Figure 2-2?

Accepted Answer

A) a decrease in the labor force of the country 
B) a sudden change in consumer preferences for more fish and less breadfruit 
C) a major technological advance 
D) a decrease in the capital stock 
A) a decrease in the labor force of the country 
B) a sudden change in consumer preferences for more fish and less breadfruit 
C) a major technological advance 
D) a decrease in the capital stock

Question 9

A production possibilities curve indicates that when resources are being used efficiently,

Accepted Answer

A) you can only produce more of one good only if you lower its price. 
B) you can only produce more of one good only if you produce more of another good. 
C) you can only produce more of one good only if you produce less of another good. 
D) it is impossible to expand the total output of goods over time. 
A) you can only produce more of one good only if you lower its price. 
B) you can only produce more of one good only if you produce more of another good. 
C) you can only produce more of one good only if you produce less of another good. 
D) it is impossible to expand the total output of goods over time.

Question 10

The price of an airline ticket from Denver to Washington,D.C.costs $600.A bus ticket costs $150.Traveling by plane takes 6 hours compared with 51 hours by bus.Other things constant,an individual would gain by choosing air travel if,and only if,his time were valued at more than

Accepted Answer

A) $6 per hour. 
B) $8 per hour. 
C) $10 per hour. 
D) $15 per hour. 
A) $6 per hour. 
B) $8 per hour. 
C) $10 per hour. 
D) $15 per hour.

Question 11

Three basic decisions must be made by all economies.What are they?

Accepted Answer

A) How much will be produced;when will it be produced;who will produce it? 
B) What goods will be produced;how will goods be produced;for whom will goods be produced? 
C) What will be consumed;how will goods be consumed;for whom will goods be consumed? 
D) How will the opportunity cost principle be applied;if the law of comparative advantage will be utilized,how will it be utilized;will the production possibilities constraint apply? 
A) How much will be produced;when will it be produced;who will produce it? 
B) What goods will be produced;how will goods be produced;for whom will goods be produced? 
C) What will be consumed;how will goods be consumed;for whom will goods be consumed? 
D) How will the opportunity cost principle be applied;if the law of comparative advantage will be utilized,how will it be utilized;will the production possibilities constraint apply?

Question 12

The opportunity cost to the United States of placing a man on the moon was

Accepted Answer

A) the loss of government revenues that were allocated to the mission. 
B) the cost of all production involved in the space program. 
C) the loss of utility from the highest valued bundle of products that had to be forgone because of the moon mission. 
D) less than zero,because the long-run benefit of the project will be greater than the cost. 
A) the loss of government revenues that were allocated to the mission. 
B) the cost of all production involved in the space program. 
C) the loss of utility from the highest valued bundle of products that had to be forgone because of the moon mission. 
D) less than zero,because the long-run benefit of the project will be greater than the cost.

Question 13

"If I didn't have a date tonight,I would save $10 and spend the evening playing tennis." The opportunity cost of the date is

Accepted Answer

A) the other things that could be purchased with the $10. 
B) the other things that could be purchased with the $10 plus the forgone value of a night of tennis. 
C) dependent upon how pleasant a time one has on the date. 
D) the forgone value of a night of tennis. 
A) the other things that could be purchased with the $10. 
B) the other things that could be purchased with the $10 plus the forgone value of a night of tennis. 
C) dependent upon how pleasant a time one has on the date. 
D) the forgone value of a night of tennis.

Question 14

According to the law of comparative advantage,if a firm or a nation desires to maximize its output,each productive assignment should be carried out by those who

Accepted Answer

A) have the highest opportunity cost. 
B) have the lowest opportunity cost. 
C) have an absolute advantage in the productive activity. 
D) can complete the productive activity most rapidly. 
A) have the highest opportunity cost. 
B) have the lowest opportunity cost. 
C) have an absolute advantage in the productive activity. 
D) can complete the productive activity most rapidly.

Question 15

If Kim can wash 10 cars or wax 2 cars during a day,and Susan can wash 8 cars or wax 2 cars during a day,then according to the law of comparative advantage,

Accepted Answer

A) Susan's opportunity cost of waxing a car is greater than Kim's. 
B) their total output can be expanded if Susan specializes in waxing and Kim in washing. 
C) their total output can be expanded if Susan specializes in washing and Kim in waxing. 
D) it is impossible to expand total output through specialization and mutual exchange in this case. 
A) Susan's opportunity cost of waxing a car is greater than Kim's. 
B) their total output can be expanded if Susan specializes in waxing and Kim in washing. 
C) their total output can be expanded if Susan specializes in washing and Kim in waxing. 
D) it is impossible to expand total output through specialization and mutual exchange in this case.

Question 16

"The economic wealth of this country was built primarily by some individuals profiting from a transaction,whereas others were harmed by that transaction." This statement indicates the speaker

Accepted Answer

A) fails to comprehend the idea that all voluntary trades benefit both parties involved. 
B) fails to comprehend the fallacy of composition. 
C) fails to understand the significance of the production possibilities curve. 
D) uses the economic way of thinking.The statement is essentially correct. 
A) fails to comprehend the idea that all voluntary trades benefit both parties involved. 
B) fails to comprehend the fallacy of composition. 
C) fails to understand the significance of the production possibilities curve. 
D) uses the economic way of thinking.The statement is essentially correct.

Question 17

A nation with cheap,efficient communications is likely to be

Accepted Answer

A) richer,ceteris paribus,because transaction costs will be lower and trade greater. 
B) richer only if production of goods is cheaper,too,since trade itself cannot create value. 
C) poorer since it spends so much on communication instead of true productivity. 
D) spending too much on communications,which adds nothing to the value of output. 
A) richer,ceteris paribus,because transaction costs will be lower and trade greater. 
B) richer only if production of goods is cheaper,too,since trade itself cannot create value. 
C) poorer since it spends so much on communication instead of true productivity. 
D) spending too much on communications,which adds nothing to the value of output.

Exam 2: Asome Tools of the Economist

Keri decided to sleep in today rather than attend her 9a.m.economics class.According to economic analysis,her choice was

When private ownership of a resource is clearly defined and enforced,the private owner

The size of a country's "economic pie" is thought of as the total dollar value of all goods and services produced during some period of time.The economic pie

(I)When individuals engage in a voluntary exchange,both parties are made better off. (II)By channeling goods and resources to those who value them most,trade creates value and increases the wealth created by a society's resources.

Figure 2-10 -Refer to Figure 2-10.If the economy moves from point C to point B,then which of the following statements is correct?

Economic debates that focus on the distribution of a nation's income are generally associated with which basic economic question?

Use the production possibilities data below for Lebos and Slavia to answer the following question(s). Table 2-1 -Refer to Table 2-1.Which of the following is true?

Figure 2-2 -Which of the following would most likely cause the production possibilities curve for breadfruit and fish to shift outward from AA to BB in Figure 2-2?

A production possibilities curve indicates that when resources are being used efficiently,

The price of an airline ticket from Denver to Washington,D.C.costs $600.A bus ticket costs $150.Traveling by plane takes 6 hours compared with 51 hours by bus.Other things constant,an individual would gain by choosing air travel if,and only if,his time were valued at more than

Three basic decisions must be made by all economies.What are they?

The opportunity cost to the United States of placing a man on the moon was

"If I didn't have a date tonight,I would save $10 and spend the evening playing tennis." The opportunity cost of the date is

According to the law of comparative advantage,if a firm or a nation desires to maximize its output,each productive assignment should be carried out by those who

If Kim can wash 10 cars or wax 2 cars during a day,and Susan can wash 8 cars or wax 2 cars during a day,then according to the law of comparative advantage,

"The economic wealth of this country was built primarily by some individuals profiting from a transaction,whereas others were harmed by that transaction." This statement indicates the speaker

A nation with cheap,efficient communications is likely to be

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