Question 1

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 tend to abuse resources and use them selfishly. 
B) Resource owners will conserve vital resources for the future, particularly if they expect the resource to increase in value. 
C) Resource owners will ignore the wishes of others, including those who would like to use the resource that is privately owned. 
D) Resource owners ignore the wishes of others since there is little incentive to employ privately owned resources in ways that are beneficial to others. 
A) Resource owners will tend to abuse resources and use them selfishly. 
B) Resource owners will conserve vital resources for the future, particularly if they expect the resource to increase in value. 
C) Resource owners will ignore the wishes of others, including those who would like to use the resource that is privately owned. 
D) Resource owners ignore the wishes of others since there is little incentive to employ privately owned resources in ways that are beneficial to others.

Question 2

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 3

The opportunity cost of an alternative

Accepted Answer

A) includes only the direct monetary cost of whatever is chosen. 
B) is subjective and can only be determined by the person who chooses the alternative. 
C) is the value of all alternatives that must be forgone as the result of the choice. 
D) is relevant only in cases where the choice involves alternatives that would be considered undesirable. 
A) includes only the direct monetary cost of whatever is chosen. 
B) is subjective and can only be determined by the person who chooses the alternative. 
C) is the value of all alternatives that must be forgone as the result of the choice. 
D) is relevant only in cases where the choice involves alternatives that would be considered undesirable.

Question 4

Opportunity cost is defined

Accepted Answer

A) only in terms of money spent 
B) as the value of all alternatives not chosen 
C) as the value of the best alternative not chosen 
D) as the difference between the benefits from a choice and the benefits from the next best alternative 
E) as the difference between the benefits from a choice and the costs of that choice 
A) only in terms of money spent 
B) as the value of all alternatives not chosen 
C) as the value of the best alternative not chosen 
D) as the difference between the benefits from a choice and the benefits from the next best alternative 
E) as the difference between the benefits from a choice and the costs of that choice

Question 5

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 6

According to the law of comparative advantage,

Accepted Answer

A) individuals and nations gain when they specialize in producing those goods they consume. 
B) individuals and nations gain when they specialize in producing goods they can produce at a high opportunity cost and can exchange for other desired goods they can produce cheaply. 
C) individuals and nations gain when they specialize in producing those items for which they are the low opportunity cost producers and exchange for other desired goods they can't produce as cheaply. 
D) all of the above are true. 
A) individuals and nations gain when they specialize in producing those goods they consume. 
B) individuals and nations gain when they specialize in producing goods they can produce at a high opportunity cost and can exchange for other desired goods they can produce cheaply. 
C) individuals and nations gain when they specialize in producing those items for which they are the low opportunity cost producers and exchange for other desired goods they can't produce as cheaply. 
D) all of the above are true.

Question 7

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

Accepted Answer

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

Question 8

Table 2-3
  
-Refer to Table 2-3. The opportunity cost of 1 pound of meat for the farmer is

Accepted Answer

A) 1/4 hour of labor. 
B) 4 hours of labor. 
C) 4 pounds of potatoes. 
D) 1/4 pound of potatoes. 
A) 1/4 hour of labor. 
B) 4 hours of labor. 
C) 4 pounds of potatoes. 
D) 1/4 pound of potatoes.

Question 9

The opportunity cost of building a park in your hometown would be the

Accepted Answer

A) money cost of constructing the park. 
B) highest valued bundle of other goods and services that must be forgone because of the park construction. 
C) necessary increase in tax revenues to finance the construction. 
D) amount of time spent in leisure activities in the park once it is constructed. 
A) money cost of constructing the park. 
B) highest valued bundle of other goods and services that must be forgone because of the park construction. 
C) necessary increase in tax revenues to finance the construction. 
D) amount of time spent in leisure activities in the park once it is constructed.

Question 10

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 11

Rebecca decides to buy a dress that Hillary has for sale; they agree on a price of $20. Which of the following best describes who gains and who loses from the transaction?

Accepted Answer

A) If the dress originally costs more than $20, Rebecca gains and Hillary loses. 
B) If the dress originally costs less than $20, Hillary gains and Rebecca loses. 
C) Both parties expect to gain from this transaction. 
D) If Hillary gains from the transaction, Rebecca must lose an equal amount. 
A) If the dress originally costs more than $20, Rebecca gains and Hillary loses. 
B) If the dress originally costs less than $20, Hillary gains and Rebecca loses. 
C) Both parties expect to gain from this transaction. 
D) If Hillary gains from the transaction, Rebecca must lose an equal amount.

Question 12

The opportunity cost of an activity

Accepted Answer

A) depends on the individual's subjective values and opinions 
B) is the same for everyone 
C) must be calculated and known before undertaking that activity 
D) is irrelevant to decision making 
E) is not influenced by time costs 
A) depends on the individual's subjective values and opinions 
B) is the same for everyone 
C) must be calculated and known before undertaking that activity 
D) is irrelevant to decision making 
E) is not influenced by time costs

Question 13

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 14

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.

Question 15

Why is trade an important source of economic progress?

Accepted Answer

A) It allows the trading partners to produce a larger joint output through specialization in the areas where they have a comparative advantage. 
B) It allows the trading partners to produce a larger joint output as the result of greater realization of cost reductions that accompany the adoption of mass production methods. 
C) It makes it possible to realize gains from the discovery and dissemination of innovative products and production processes. 
D) All of the above are correct. 
A) It allows the trading partners to produce a larger joint output through specialization in the areas where they have a comparative advantage. 
B) It allows the trading partners to produce a larger joint output as the result of greater realization of cost reductions that accompany the adoption of mass production methods. 
C) It makes it possible to realize gains from the discovery and dissemination of innovative products and production processes. 
D) All of the above are correct.

Question 16

Richer economies often have more middlemen. Economic thinking indicates that such economies

Accepted Answer

A) suffer losses from these activities. 
B) gain since the opportunity costs of arranging trades would be higher without middlemen. 
C) become progressively more wasteful, and middlemen are one sign of the waste. 
D) are unable to employ middlemen in any other way. 
A) suffer losses from these activities. 
B) gain since the opportunity costs of arranging trades would be higher without middlemen. 
C) become progressively more wasteful, and middlemen are one sign of the waste. 
D) are unable to employ middlemen in any other way.

Question 17

The primary benefit that results when a nation employs its resources in accordance with the principle of comparative advantage is

Accepted Answer

A) an expansion in investment resulting from a reallocation of resources away from consumption. 
B) a larger output resulting from a more efficient use of resources. 
C) greater equality of income resulting from an increase in the number of workers. 
D) an increase in the profitability of business enterprises resulting from an increase in investment. 
A) an expansion in investment resulting from a reallocation of resources away from consumption. 
B) a larger output resulting from a more efficient use of resources. 
C) greater equality of income resulting from an increase in the number of workers. 
D) an increase in the profitability of business enterprises resulting from an increase in investment.

Question 18

An airline ticket from Seattle to Miami costs $760. A bus ticket costs $360. Traveling by plane will take 6 hours, compared with 26 hours by bus. Other things constant, the minimum value of one's time that would induce a rational individual to fly rather than drive would be

Accepted Answer

A) $18 per hour. 
B) $20 per hour. 
C) $38 per hour. 
D) $44 per hour. 
A) $18 per hour. 
B) $20 per hour. 
C) $38 per hour. 
D) $44 per hour.

Question 19

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 20

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?

Exam 2: A: Some Tools of the Economist

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

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

The opportunity cost of an alternative

Opportunity cost is defined

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

According to the law of comparative advantage,

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

Table 2-3 -Refer to Table 2-3. The opportunity cost of 1 pound of meat for the farmer is

The opportunity cost of building a park in your hometown would be the

The law of comparative advantage suggests that

Rebecca decides to buy a dress that Hillary has for sale; they agree on a price of $20. Which of the following best describes who gains and who loses from the transaction?

The opportunity cost of an activity

When the production possibilities curve is bowed out, resources are

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

Why is trade an important source of economic progress?

Richer economies often have more middlemen. Economic thinking indicates that such economies

The primary benefit that results when a nation employs its resources in accordance with the principle of comparative advantage is

An airline ticket from Seattle to Miami costs $760. A bus ticket costs $360. Traveling by plane will take 6 hours, compared with 26 hours by bus. Other things constant, the minimum value of one's time that would induce a rational individual to fly rather than drive would be

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

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

The Economic Approach

B: Some Tools of the Economist

A: Supply, Demand, and the Market Process

B: Supply, Demand, and the Market Process

A: Supply and Demand: Applications and Extensions

B: Supply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Consumer Choice and Elasticity

A: Costs and the Supply of Goods

B: Costs and the Supply of Goods

A: Price Takers and the Competitive Process

B: Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

A: Price-Searcher Markets With High Entry Barriers

B: Price-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

Appendix: Government Spending and Taxation

Appendix: the Economics of Social Security

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

Appendix: Great Debates in Economics: Keynes Versus Hayek

Appendix: the Crisis of 2008: Causes and Lessons for the Future

Appendix: Lessons From the Great Depression

Appendix: the Economics of Healthcare

Appendix:education: Problems and Performance

Appendix: Earnings Differences Between Men and Women

Appendix: the Question of Resource Exhaustion

Appendix: Do Labor Unions Increase the Wages of Workers

Appendix: Difficult Environmental Cases and the Role of Government

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