Question 1

When collective decision making is utilized to resolve economic questions regarding the allocation of resources,

Accepted Answer

A) the role of markets will be replaced by political decision making. 
B) centralized decision making in all areas is inevitable. 
C) the preferences of individuals are of no importance. 
D) economic efficiency will be assured. 
A) the role of markets will be replaced by political decision making. 
B) centralized decision making in all areas is inevitable. 
C) the preferences of individuals are of no importance. 
D) economic efficiency will be assured.

Question 2

When private ownership rights are well-defined and enforced,owners

Accepted Answer

A) can ignore the wishes of others,without bearing the cost. 
B) have little incentive to take care of things. 
C) can do anything they want with their property. 
D) can be held accountable for damage to others through misuse of their property. 
A) can ignore the wishes of others,without bearing the cost. 
B) have little incentive to take care of things. 
C) can do anything they want with their property. 
D) can be held accountable for damage to others through misuse of their property.

Question 3

According to the law of comparative advantage,a particular task is performed most efficiently by the individual with the lowest

Accepted Answer

A) wage rate. 
B) tax liability. 
C) net worth. 
D) opportunity cost. 
A) wage rate. 
B) tax liability. 
C) net worth. 
D) opportunity cost.

Question 4

Figure 2-8
  
-Points A,B,and C in Figure 2-8 indicate consumption and investment for three 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) economy C 
D) They would all be expected to grow at the same rate. 
A) economy A 
B) economy B 
C) economy C 
D) They would all be expected to grow at the same rate.

Question 5

If Sean sells Tom a tennis racket for $50,we would expect

Accepted Answer

A) both parties to gain from this transaction. 
B) Sean to gain from the transaction,while Tom loses. 
C) Tom to gain from the transaction,while Sean loses. 
D) the well-being of both parties to be unchanged. 
A) both parties to gain from this transaction. 
B) Sean to gain from the transaction,while Tom loses. 
C) Tom to gain from the transaction,while Sean loses. 
D) the well-being of both parties to be unchanged.

Question 6

In a market economy,what is produced is ultimately determined by

Accepted Answer

A) consumers. 
B) producers. 
C) the government. 
D) exporters. 
A) consumers. 
B) producers. 
C) the government. 
D) exporters.

Question 7

When collective decision making (the political process)is used to resolve economic questions regarding the allocation of resources,

Accepted Answer

A) decentralized decision making is present. 
B) central planning and political bargaining will replace market forces. 
C) individual preferences are of no importance. 
D) economic equality will result. 
A) decentralized decision making is present. 
B) central planning and political bargaining will replace market forces. 
C) individual preferences are of no importance. 
D) economic equality will result.

Question 8

Dr.Jones,a dentist,is choosing between driving and flying from Pittsburgh to New York City.If Jones drove,she would have to close her office four hours earlier than if she flew by airplane.Her expected income (after taxes)from her practice is $50 per hour.Assuming all other factors are equal,if Jones was a rational decision maker,she would drive if the price differential (air cost minus driving)was greater than

Accepted Answer

A) $50. 
B) $100. 
C) $150. 
D) $200. 
A) $50. 
B) $100. 
C) $150. 
D) $200.

Question 9

Specialization in production is beneficial because

Accepted Answer

A) it allows everyone to have a job that they like. 
B) it permits people to expand production and achieve rates of output that would otherwise be unattainable. 
C) it allows everyone to be self-sufficient. 
D) it eliminates the need for the division of labor. 
A) it allows everyone to have a job that they like. 
B) it permits people to expand production and achieve rates of output that would otherwise be unattainable. 
C) it allows everyone to be self-sufficient. 
D) it eliminates the need for the division of labor.

Question 10

Figure 2-4
  
-Which of the following is true of Figure 2-4?

Accepted Answer

A) If the economy operates at point A,it is impossible to produce more of both food and clothing. 
B) If the economy operates at point B,it is impossible to increase the output of clothing without giving up food production. 
C) If the economy operates at point A,resources are being used efficiently. 
D) If the economy operates at point B,resources are being used inefficiently. 
A) If the economy operates at point A,it is impossible to produce more of both food and clothing. 
B) If the economy operates at point B,it is impossible to increase the output of clothing without giving up food production. 
C) If the economy operates at point A,resources are being used efficiently. 
D) If the economy operates at point B,resources are being used inefficiently.

Question 11

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 12

Which of the following is true of the production possibilities curve?

Accepted Answer

A) It assumes a fixed quantity of resources. 
B) It assumes the prices of the products considered are equal. 
C) A point inside the curve is efficient. 
D) All of the above are correct. 
A) It assumes a fixed quantity of resources. 
B) It assumes the prices of the products considered are equal. 
C) A point inside the curve is efficient. 
D) All of the above are correct.

Question 13

Which of the following will most likely occur under a system of clearly defined and enforced private property rights?

Accepted Answer

A) Resource owners will fail to conserve vital resources,even if they expect their supply to be highly limited in the future. 
B) Resource owners will ignore the wishes of others,including others who would like to use the resource that is privately owned. 
C) Resource owners will fail to consider the wishes of potential future buyers when they decide how to employ privately owned resources. 
D) Resource owners will gain by discovering and employing their resources in ways that are highly valued by others. 
A) Resource owners will fail to conserve vital resources,even if they expect their supply to be highly limited in the future. 
B) Resource owners will ignore the wishes of others,including others who would like to use the resource that is privately owned. 
C) Resource owners will fail to consider the wishes of potential future buyers when they decide how to employ privately owned resources. 
D) Resource owners will gain by discovering and employing their resources in ways that are highly valued by others.

Question 14

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 15

The law of comparative advantage suggests that

Accepted Answer

A) curtailing U.S.trade with other countries would make U.S.consumers better off. 
B) everyone would be better off if they were self-sufficient. 
C) countries will tend to import commodities that they can produce at a relatively low opportunity cost. 
D) countries will tend to import commodities that they can produce at a relatively high opportunity cost. 
A) curtailing U.S.trade with other countries would make U.S.consumers better off. 
B) everyone would be better off if they were self-sufficient. 
C) countries will tend to import commodities that they can produce at a relatively low opportunity cost. 
D) countries will tend to import commodities that they can produce at a relatively high opportunity cost.

Question 16

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

Accepted Answer

A) how much will be produced,when it will be produced,and how much it will cost 
B) what the price of each good will be,who will produce each good,and who will consume each good 
C) what will be produced,how goods will be produced,and for whom goods will be produced 
D) how the opportunity cost principle will be applied,if and how the law of comparative advantage will be utilized,and whether the production possibilities constraint will apply 
A) how much will be produced,when it will be produced,and how much it will cost 
B) what the price of each good will be,who will produce each good,and who will consume each good 
C) what will be produced,how goods will be produced,and for whom goods will be produced 
D) how the opportunity cost principle will be applied,if and how the law of comparative advantage will be utilized,and whether the production possibilities constraint will apply

Question 17

Over time,an increase in a nation's stock of physical capital will

Accepted Answer

A) shift the production possibilities curve inward. 
B) cause an economy to operate inside its production possibilities curve. 
C) shift the production possibilities curve outward. 
D) eliminate the basic economic problem of scarcity. 
A) shift the production possibilities curve inward. 
B) cause an economy to operate inside its production possibilities curve. 
C) shift the production possibilities curve outward. 
D) eliminate the basic economic problem of scarcity.

Question 18

Which of the following is NOT true of opportunity cost?

Accepted Answer

A) Opportunity costs are subjective because they depend upon how the decision-maker values his or her options. 
B) Opportunity costs are only the monetary costs of lost options. 
C) Opportunity costs are the highest-valued alternative sacrificed in order to choose an option. 
D) Only the decision-maker can determine his or her opportunity costs for any particular action. 
A) Opportunity costs are subjective because they depend upon how the decision-maker values his or her options. 
B) Opportunity costs are only the monetary costs of lost options. 
C) Opportunity costs are the highest-valued alternative sacrificed in order to choose an option. 
D) Only the decision-maker can determine his or her opportunity costs for any particular action.

Question 19

The successful introduction and adoption of a new product or process is known as

Accepted Answer

A) invention. 
B) innovation. 
C) origination. 
D) adaptation. 
A) invention. 
B) innovation. 
C) origination. 
D) adaptation.

Question 20

The opportunity cost of an action is

Accepted Answer

A) objective and will be the same for all individuals. 
B) a measure of the undesirable aspects involved in the action. 
C) applicable only to choices involving material goods like commodities. 
D) the highest valued alternative forgone as the result of choosing an option. 
A) objective and will be the same for all individuals. 
B) a measure of the undesirable aspects involved in the action. 
C) applicable only to choices involving material goods like commodities. 
D) the highest valued alternative forgone as the result of choosing an option.

Exam 2: Asome Tools of the Economist

When collective decision making is utilized to resolve economic questions regarding the allocation of resources,

When private ownership rights are well-defined and enforced,owners

According to the law of comparative advantage,a particular task is performed most efficiently by the individual with the lowest

Figure 2-8 -Points A,B,and C in Figure 2-8 indicate consumption and investment for three economies.Other things constant,which of the economies is likely to grow more rapidly in the future?

If Sean sells Tom a tennis racket for $50,we would expect

In a market economy,what is produced is ultimately determined by

When collective decision making (the political process)is used to resolve economic questions regarding the allocation of resources,

Specialization in production is beneficial because

Figure 2-4 -Which of the following is true of Figure 2-4?

Which of the following is true of the production possibilities curve?

Which of the following will most likely occur under a system of clearly defined and enforced private property rights?

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?

The law of comparative advantage suggests that

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

Over time,an increase in a nation's stock of physical capital will

Which of the following is NOT true of opportunity cost?

The successful introduction and adoption of a new product or process is known as

The opportunity cost of an action is

The Economic Approach

Asupply,demand,and the Market Process

Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Ataking the Nations Economic Pulse

Economic Fluctuations, unemployment, and Inflation

Aan Introduction to Basic Macroeconomic Markets

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

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, output, and Employment

Creating an Environment for Growth and Prosperity

Institutions,policies,and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Aprice-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

Government Spending and Taxation

The Economics of Social Security

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

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

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

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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