Question 1

When the production possibilities curve is bowed out,resources are

Accepted Answer

A) equally well-suited to production of both goods. 
B) not being used efficiently. 
C) not equally suited to the production of both goods. 
D) available in larger and larger quantities as more of one good is produced. 
A) equally well-suited to production of both goods. 
B) not being used efficiently. 
C) not equally suited to the production of both goods. 
D) available in larger and larger quantities as more of one good is produced.

Question 2

In economics,the term for a person who reduces transaction costs by arranging trades for buyers and sellers is

Accepted Answer

A) an exchange broker. 
B) a middleman. 
C) a transactions specialist. 
D) an opportunity finder. 
A) an exchange broker. 
B) a middleman. 
C) a transactions specialist. 
D) an opportunity finder.

Question 3

Compared to a situation where transaction costs are zero,the existence of transaction costs

Accepted Answer

A) will reduce the volume of trade. 
B) will reduce the gains from trade. 
C) may lead some buyers and sellers to employ middlemen. 
D) All of the above are correct. 
A) will reduce the volume of trade. 
B) will reduce the gains from trade. 
C) may lead some buyers and sellers to employ middlemen. 
D) All of the above are correct.

Question 4

A middleman

Accepted Answer

A) attempts to prevent buyers from finding sellers. 
B) promotes trade by lowering the transaction costs of buyers and sellers. 
C) acts as a liaison between top management and the hourly employees. 
D) adds to the seller's expense and the buyer's price without providing a service to either. 
A) attempts to prevent buyers from finding sellers. 
B) promotes trade by lowering the transaction costs of buyers and sellers. 
C) acts as a liaison between top management and the hourly employees. 
D) adds to the seller's expense and the buyer's price without providing a service to either.

Question 5

Which of the following would allow the production possibilities curve for an economy to shift outward?

Accepted Answer

A) a better social organization of economic activity,such as conversion from socialism to capitalism 
B) an increase in the labor force or resource base 
C) more investment leading to better technology and more innovation 
D) all of the above 
A) a better social organization of economic activity,such as conversion from socialism to capitalism 
B) an increase in the labor force or resource base 
C) more investment leading to better technology and more innovation 
D) all of the above

Question 6

Use the production possibilities data below to answer the following question.
Table 2-3
  
-Refer to Table 2-3.The opportunity cost of 1 pound of meat for the rancher is

Accepted Answer

A) 4 hours of labor. 
B) 5 hours of labor. 
C) 4/5 pounds of potatoes. 
D) 5/4 pounds of potatoes. 
A) 4 hours of labor. 
B) 5 hours of labor. 
C) 4/5 pounds of potatoes. 
D) 5/4 pounds of potatoes.

Question 7

Explain the idea of capital investment by using the story of Robinson Crusoe.What is sacrificed,and what is gained?

Accepted Answer

For Robinson Crusoe,engaging in capital

Question 8

When property rights are clearly defined and enforced,private owners will

Accepted Answer

A) use their property for selfish ends because they have little or no incentive to consider the desires of others. 
B) develop and direct their property toward uses that others value highly because the market will generally reward them for doing so. 
C) have little or no incentive to take care of their property or conserve it for the future. 
D) be unable to derive personal gain if they are sensitive to the desires of others when deciding how to use their property. 
A) use their property for selfish ends because they have little or no incentive to consider the desires of others. 
B) develop and direct their property toward uses that others value highly because the market will generally reward them for doing so. 
C) have little or no incentive to take care of their property or conserve it for the future. 
D) be unable to derive personal gain if they are sensitive to the desires of others when deciding how to use their property.

Question 9

Which of the following most accurately states the economic significance of exchange?

Accepted Answer

A) Physical goods have value because they exist;exchange can neither increase nor decrease their value. 
B) Exchange creates value by permitting trading partners to expand total output as the result of specialization in areas where they have a comparative advantage. 
C) Exchange creates value by moving goods from people who value the goods less to people who value the goods more. 
D) Both b and c are true. 
A) Physical goods have value because they exist;exchange can neither increase nor decrease their value. 
B) Exchange creates value by permitting trading partners to expand total output as the result of specialization in areas where they have a comparative advantage. 
C) Exchange creates value by moving goods from people who value the goods less to people who value the goods more. 
D) Both b and c are true.

Question 10

A nation that protects its workers from unemployment by limiting the use (by employers)of technological improvements will

Accepted Answer

A) grow more rapidly because the rate of unemployment will be lower. 
B) grow more rapidly because investors prefer a stable business environment rather than the uncertainties that accompany technological change. 
C) grow less rapidly because technological change is an important factor contributing to the growth of output. 
D) grow just as much as nations that adopt more rapidly technological improvements. 
A) grow more rapidly because the rate of unemployment will be lower. 
B) grow more rapidly because investors prefer a stable business environment rather than the uncertainties that accompany technological change. 
C) grow less rapidly because technological change is an important factor contributing to the growth of output. 
D) grow just as much as nations that adopt more rapidly technological improvements.

Question 11

Figure 2-6
  
-Which of the following will most likely shift the production possibilities curve for breadfruit and fish outward from AA to BB in Figure 2-6?

Accepted Answer

A) an improvement in the form of economic organization 
B) lower investment and a reduction in the country's capital stock 
C) an increase in the price of breadfruit 
D) a decrease in the average number of hours worked 
A) an improvement in the form of economic organization 
B) lower investment and a reduction in the country's capital stock 
C) an increase in the price of breadfruit 
D) a decrease in the average number of hours worked

Question 12

The following question(s)relate(s)to the material in the addendum to Chapter 2.Use the production possibilities data for Lebos and Slavia below to answer the question(s).
Table 2-4
  
-Refer to Table 2-4.Which of the following is correct?

Accepted Answer

A) In Lebos,the opportunity cost of producing one unit of food is equal to one unit of clothing. 
B) In Slavia,the opportunity cost of producing one unit of food is equal to two units of clothing. 
C) The opportunity cost of producing food in Lebos is less than the opportunity cost of producing food in Slavia. 
D) All of the above are correct. 
A) In Lebos,the opportunity cost of producing one unit of food is equal to one unit of clothing. 
B) In Slavia,the opportunity cost of producing one unit of food is equal to two units of clothing. 
C) The opportunity cost of producing food in Lebos is less than the opportunity cost of producing food in Slavia. 
D) All of the above are correct.

Question 13

Kim has two tickets to a concert tonight.She,however,has a headache and decides not to go.Which of the following would best fit Kim's needs?

Accepted Answer

A) a ticket service that will buy the tickets from her and resell them 
B) a change in attitude because missing a concert is always irrational 
C) a general flu epidemic that causes many people to miss the concert 
D) a poor performance by the band,so Kim does not feel badly about missing the concert 
A) a ticket service that will buy the tickets from her and resell them 
B) a change in attitude because missing a concert is always irrational 
C) a general flu epidemic that causes many people to miss the concert 
D) a poor performance by the band,so Kim does not feel badly about missing the concert

Question 14

Economic thinking suggests that a nation in which middlemen are considered to be unproductive seekers of profit,and where their activities are heavily restricted by law,will

Accepted Answer

A) gain by channeling people's efforts away from unproductive middleman activity toward physical output. 
B) lose the potential gains from trade that would result from lower transaction costs emanating from middleman activities. 
C) find that it is richer because the added transaction costs normally imposed by middlemen will be reduced. 
D) gain because the value of total output will rise. 
A) gain by channeling people's efforts away from unproductive middleman activity toward physical output. 
B) lose the potential gains from trade that would result from lower transaction costs emanating from middleman activities. 
C) find that it is richer because the added transaction costs normally imposed by middlemen will be reduced. 
D) gain because the value of total output will rise.

Question 15

The law of comparative advantage indicates that

Accepted Answer

A) a group of people will reduce their output when each good or service is supplied by the low opportunity cost producer. 
B) trading partners lose when they can acquire a good through trade cheaper than they can produce it. 
C) trade is most effective when people trade only among those in their own nation. 
D) a group of people can increase their output when each good or service is supplied by the low opportunity cost producer. 
A) a group of people will reduce their output when each good or service is supplied by the low opportunity cost producer. 
B) trading partners lose when they can acquire a good through trade cheaper than they can produce it. 
C) trade is most effective when people trade only among those in their own nation. 
D) a group of people can increase their output when each good or service is supplied by the low opportunity cost producer.

Question 16

Which of the following statements about exchange is true?

Accepted Answer

A) If everyone starts off with the same quantities of each good,it would be impossible to realize gains from trade. 
B) Exchange tends to move each good toward those individuals who value the good more highly. 
C) Exchange always results in one party being made better off and the other being made worse off. 
D) For trade to occur,everyone must start off with the same value of the good that is traded. 
A) If everyone starts off with the same quantities of each good,it would be impossible to realize gains from trade. 
B) Exchange tends to move each good toward those individuals who value the good more highly. 
C) Exchange always results in one party being made better off and the other being made worse off. 
D) For trade to occur,everyone must start off with the same value of the good that is traded.

Question 17

Keri decided to sleep in today rather than attend her 9

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 18

Production possibilities curve are usually bowed outward.This is because

Accepted Answer

A) the more resources a society uses to produce one good,the fewer resources it has available to produce another good. 
B) it reflects the fact that the opportunity cost of producing a good decreases as more and more of that good is produced. 
C) of the effects of technological change. 
D) resources are specialized,that is,some are better at producing particular goods rather than other goods. 
A) the more resources a society uses to produce one good,the fewer resources it has available to produce another good. 
B) it reflects the fact that the opportunity cost of producing a good decreases as more and more of that good is produced. 
C) of the effects of technological change. 
D) resources are specialized,that is,some are better at producing particular goods rather than other goods.

Question 19

The creation of a new product or process,often facilitated by the knowledge of engineering and scientific relationships,is known as

Accepted Answer

A) invention. 
B) innovation. 
C) application. 
D) sublimation. 
A) invention. 
B) innovation. 
C) application. 
D) sublimation.

Question 20

Suppose an economy produces only two goods,computers and TVs.If the economy operates at a point on its production possibilities curve,it can produce more computers only if

Accepted Answer

A) it also produces more TVs. 
B) it charges more for TVs. 
C) it shifts to a point inside its production possibilities curve. 
D) it produces fewer TVs. 
A) it also produces more TVs. 
B) it charges more for TVs. 
C) it shifts to a point inside its production possibilities curve. 
D) it produces fewer TVs.

Exam 2: Asome Tools of the Economist

When the production possibilities curve is bowed out,resources are

In economics,the term for a person who reduces transaction costs by arranging trades for buyers and sellers is

Compared to a situation where transaction costs are zero,the existence of transaction costs

A middleman

Which of the following would allow the production possibilities curve for an economy to shift outward?

Use the production possibilities data below to answer the following question. Table 2-3 -Refer to Table 2-3.The opportunity cost of 1 pound of meat for the rancher is

Explain the idea of capital investment by using the story of Robinson Crusoe.What is sacrificed,and what is gained?

When property rights are clearly defined and enforced,private owners will

Which of the following most accurately states the economic significance of exchange?

A nation that protects its workers from unemployment by limiting the use (by employers)of technological improvements will

Figure 2-6 -Which of the following will most likely shift the production possibilities curve for breadfruit and fish outward from AA to BB in Figure 2-6?

The following question(s)relate(s)to the material in the addendum to Chapter 2.Use the production possibilities data for Lebos and Slavia below to answer the question(s). Table 2-4 -Refer to Table 2-4.Which of the following is correct?

Kim has two tickets to a concert tonight.She,however,has a headache and decides not to go.Which of the following would best fit Kim's needs?

Economic thinking suggests that a nation in which middlemen are considered to be unproductive seekers of profit,and where their activities are heavily restricted by law,will

The law of comparative advantage indicates that

Which of the following statements about exchange is true?

Keri decided to sleep in today rather than attend her 9

Production possibilities curve are usually bowed outward.This is because

The creation of a new product or process,often facilitated by the knowledge of engineering and scientific relationships,is known as

Suppose an economy produces only two goods,computers and TVs.If the economy operates at a point on its production possibilities curve,it can produce more computers only if

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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