Question 1

An economy's PPC illustrates the extent to which the economy consumes what it produces.

Accepted Answer

A) True 
 B)False

Question 2

Consider a nation with an endowment of iron ore and petroleum.If the nation specializes in the production of aluminum and gasoline instead of steel we can say that it is operating:

Accepted Answer

A) on its production possibilities curve. 
B) outside its production possibilities curve. 
C) inside its production possibilities curve. 
D) on the highest achievable production possibilities curve. 
E) on the lowest production possibilities curve. 
A) on its production possibilities curve. 
B) outside its production possibilities curve. 
C) inside its production possibilities curve. 
D) on the highest achievable production possibilities curve. 
E) on the lowest production possibilities curve.

Question 3

The difference between what can be produced and consumed without specialization and trade and with specialization and trade is called:

Accepted Answer

A) comparative advantage. 
B) a tradeoff. 
C) marginal cost. 
D) opportunity cost. 
E) gains from trade. 
A) comparative advantage. 
B) a tradeoff. 
C) marginal cost. 
D) opportunity cost. 
E) gains from trade.

Question 4

In economics,the concept of opportunity cost is:

Accepted Answer

A) negated by ensuring that the government has a role in a capitalist society. 
B) defined to be the highest-valued alternative that must be forgone when a choice is made. 
C) best illustrated by knowing why consumers choose one good over another. 
D) quantifiable only if you know the real dollar prices of the goods and services you are giving up to consume something. 
E) the methodology that government economists use to determine the total amount of the national debt. 
A) negated by ensuring that the government has a role in a capitalist society. 
B) defined to be the highest-valued alternative that must be forgone when a choice is made. 
C) best illustrated by knowing why consumers choose one good over another. 
D) quantifiable only if you know the real dollar prices of the goods and services you are giving up to consume something. 
E) the methodology that government economists use to determine the total amount of the national debt.

Question 5

Voluntary free trade results in:

Accepted Answer

A) population growth. 
B) inflation. 
C) higher living standards. 
D) income disparity. 
E) unemployment. 
A) population growth. 
B) inflation. 
C) higher living standards. 
D) income disparity. 
E) unemployment.

Question 6

A point outside the production possibilities curve [PPC]:

Accepted Answer

A) represents inefficient use of resources. 
B) may be due to unemployment. 
C) is attainable if all resources are used efficiently. 
D) represents more resources than are currently available. 
E) will never be attainable,even if the quantity of resources increases. 
A) represents inefficient use of resources. 
B) may be due to unemployment. 
C) is attainable if all resources are used efficiently. 
D) represents more resources than are currently available. 
E) will never be attainable,even if the quantity of resources increases.

Question 7

Which of the following exemplifies a private property right?

Accepted Answer

A) A tenant repairing his apartment without the owner's consent 
B) Free entrance for morning walkers at the town park 
C) Tickets purchased for entering the town museum 
D) A patent right received by a software developer for her latest invention 
E) A toll-free expressway used by drivers 
A) A tenant repairing his apartment without the owner's consent 
B) Free entrance for morning walkers at the town park 
C) Tickets purchased for entering the town museum 
D) A patent right received by a software developer for her latest invention 
E) A toll-free expressway used by drivers

Question 8

If a nation specializes in activities in which opportunity costs are the lowest and then trades with other nations,it is most likely to:

Accepted Answer

A) have a higher standard of living for its citizens than it would it if did not specialize and then trade. 
B) have a lower standard of living for its citizens than it would if it did not specialize and then trade. 
C) create as much wealth for its citizens as it could if it did not specialize and then trade. 
D) benefit in the short run but incur heavy loss in the long run. 
E) incur heavy loss in the short run and eventually cease production in the long run. 
A) have a higher standard of living for its citizens than it would it if did not specialize and then trade. 
B) have a lower standard of living for its citizens than it would if it did not specialize and then trade. 
C) create as much wealth for its citizens as it could if it did not specialize and then trade. 
D) benefit in the short run but incur heavy loss in the long run. 
E) incur heavy loss in the short run and eventually cease production in the long run.

Question 9

According to economists,human activity is unresponsive to changes in costs.

Accepted Answer

A) True 
 B)False

Question 10

A point lying inside the production possibilities curve [PPC] is not an attainable combination.

Accepted Answer

A) True 
 B)False

Question 11

Which economic concept is the closest parallel to the saying "There's no free lunch"?

Accepted Answer

A) Specialization 
B) Unlimited wants 
C) Underutilization of resources 
D) Opportunity costs 
E) Overutilization of resources 
A) Specialization 
B) Unlimited wants 
C) Underutilization of resources 
D) Opportunity costs 
E) Overutilization of resources

Question 12

If using the same resources,the U.S.workers can produce more of any good than Mexican workers,then the United States should produce every good.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is related to the concept of trade-off used in economics?

Accepted Answer

A) The tuition you pay to attend college 
B) Paying a high price for a movie ticket on the first day of screening 
C) Not having enough information available to make a rational decision 
D) Giving up one good or activity in order to obtain some other good or activity 
E) Having your cake and eating it too 
A) The tuition you pay to attend college 
B) Paying a high price for a movie ticket on the first day of screening 
C) Not having enough information available to make a rational decision 
D) Giving up one good or activity in order to obtain some other good or activity 
E) Having your cake and eating it too

Question 14

Jane wins $100,000 in the lottery and immediately uses her winnings to open up a donut shop.Her direct costs are $50,000,and she puts the remaining money in a savings account earning 10 percent annual interest.Alternatively,Jane could have placed all her lottery winnings in the 10 percent savings account.Jane's total cost is:

Accepted Answer

A) $60,000. 
B) $50,000. 
C) $160,000. 
D) $45,000. 
E) $55,000. 
A) $60,000. 
B) $50,000. 
C) $160,000. 
D) $45,000. 
E) $55,000.

Question 15

Opportunity cost is best defined as:

Accepted Answer

A) the sum of all alternatives given up when a choice is made. 
B) the money spent once a choice is made. 
C) the highest-valued alternative given up when a choice is made. 
D) the difference between the cost price and the selling price of a good. 
E) the cost of capital resources used in the production of additional capital. 
A) the sum of all alternatives given up when a choice is made. 
B) the money spent once a choice is made. 
C) the highest-valued alternative given up when a choice is made. 
D) the difference between the cost price and the selling price of a good. 
E) the cost of capital resources used in the production of additional capital.

Question 16

The table given below represents the output per hour of cookies and chilies in Ohio and Iowa. Table 2.4
 
-Refer to Table 2.4.Calculate the opportunity cost of a cookie in Iowa.

Accepted Answer

A) 8 chilies 
B) 4 chilies 
C) 96 chilies 
D) Less than in Ohio 
E) The same as in Ohio 
A) 8 chilies 
B) 4 chilies 
C) 96 chilies 
D) Less than in Ohio 
E) The same as in Ohio

Question 17

When there is a choice between the consumption of bundle X and bundle Y,the opportunity cost of consuming bundle X is bundle Y.

Accepted Answer

A) True 
 B)False

Question 18

Bob and Bill can make 16 toys each if they devote 8 working hours in a day.Further,Bob can repair 4 cars and Bill can repair 2 cars,if they devote 8 working hours in a day.What is the opportunity cost of repairing one car to Bill?

Accepted Answer

A) 10 toys 
B) 8 toys 
C) 16 toys 
D) 12 toys 
E) 4 toys 
A) 10 toys 
B) 8 toys 
C) 16 toys 
D) 12 toys 
E) 4 toys

Question 19

Julio makes wine and beer.Last year he made 20 bottles of wine and 20 cases of beer.If the price of grapes goes down (making wine cheaper to make),Julio will be able to make the same amount of wine and more beer.

Accepted Answer

A) True 
 B)False

Question 20

Bob and Bill can make 16 toys each if they devote 8 working hours in a day.Further,Bob can repair 4 cars and Bill can repair 2 cars,if they devote 8 working hours in a day.When these two individuals engage in trade,it would be advantageous for both if:

Accepted Answer

A) Bob specializes in the production of toys and Bill specializes in car repairing. 
B) Bob specializes in car repairing and Bill specializes in the production of toys. 
C) they specialize only in car repairing. 
D) they specialize only in the production of toys. 
E) they distribute their working hours evenly between the production of two goods. 
A) Bob specializes in the production of toys and Bill specializes in car repairing. 
B) Bob specializes in car repairing and Bill specializes in the production of toys. 
C) they specialize only in car repairing. 
D) they specialize only in the production of toys. 
E) they distribute their working hours evenly between the production of two goods.

Exam 2: Choice, opportunity Costs, and Specialization

An economy's PPC illustrates the extent to which the economy consumes what it produces.

Consider a nation with an endowment of iron ore and petroleum.If the nation specializes in the production of aluminum and gasoline instead of steel we can say that it is operating:

The difference between what can be produced and consumed without specialization and trade and with specialization and trade is called:

In economics,the concept of opportunity cost is:

Voluntary free trade results in:

A point outside the production possibilities curve [PPC]:

Which of the following exemplifies a private property right?

If a nation specializes in activities in which opportunity costs are the lowest and then trades with other nations,it is most likely to:

According to economists,human activity is unresponsive to changes in costs.

A point lying inside the production possibilities curve [PPC] is not an attainable combination.

Which economic concept is the closest parallel to the saying "There's no free lunch"?

If using the same resources,the U.S.workers can produce more of any good than Mexican workers,then the United States should produce every good.

Which of the following is related to the concept of trade-off used in economics?

Opportunity cost is best defined as:

The table given below represents the output per hour of cookies and chilies in Ohio and Iowa. Table 2.4 -Refer to Table 2.4.Calculate the opportunity cost of a cookie in Iowa.

When there is a choice between the consumption of bundle X and bundle Y,the opportunity cost of consuming bundle X is bundle Y.

Bob and Bill can make 16 toys each if they devote 8 working hours in a day.Further,Bob can repair 4 cars and Bill can repair 2 cars,if they devote 8 working hours in a day.What is the opportunity cost of repairing one car to Bill?

Julio makes wine and beer.Last year he made 20 bottles of wine and 20 cases of beer.If the price of grapes goes down (making wine cheaper to make),Julio will be able to make the same amount of wine and more beer.

Bob and Bill can make 16 toys each if they devote 8 working hours in a day.Further,Bob can repair 4 cars and Bill can repair 2 cars,if they devote 8 working hours in a day.When these two individuals engage in trade,it would be advantageous for both if:

Economics: The World Around You

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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