Question 1

By specialization and trade, two individuals can

Accepted Answer

A)  consume at a point beyond their individual production possibilities frontiers. 
B)  increase their comparative advantage. 
C)  increase their absolute advantage. 
D)  shift their individual production possibilities frontiers outward. 
A)  consume at a point beyond their individual production possibilities frontiers. 
B)  increase their comparative advantage. 
C)  increase their absolute advantage. 
D)  shift their individual production possibilities frontiers outward.

Question 2

-In the above figure, curve b shows the

Accepted Answer

A)  bottles of soda that people are willing to forgo to get another bicycle. 
B)  bottles of soda that people must forgo to get another bicycle. 
C)  benefits of producing more bicycles is greater than the benefits of producing more soda. 
D)  benefits of producing more soda is greater than the benefits of producing more bicycles. 
A)  bottles of soda that people are willing to forgo to get another bicycle. 
B)  bottles of soda that people must forgo to get another bicycle. 
C)  benefits of producing more bicycles is greater than the benefits of producing more soda. 
D)  benefits of producing more soda is greater than the benefits of producing more bicycles.

Question 3

An opportunity cost of economic growth is

Accepted Answer

A)  essentially zero because economic growth leads to such large gains in the long run. 
B)  the decrease in production of consumption goods in the present time period. 
C)  decreased by the creation of capital goods rather than consumption goods. 
D)  so high that places such as Hong Kong have had to do without it. 
A)  essentially zero because economic growth leads to such large gains in the long run. 
B)  the decrease in production of consumption goods in the present time period. 
C)  decreased by the creation of capital goods rather than consumption goods. 
D)  so high that places such as Hong Kong have had to do without it.

Question 4

A person who has an absolute advantage in the production of all goods will

Accepted Answer

A)  also have a comparative advantage in the production of all goods. 
B)  not be able to gain from specialization and exchange. 
C)  have a production possibilities frontier with a constant slope. 
D)  have a comparative advantage in the production of some goods but not in the production of others. 
A)  also have a comparative advantage in the production of all goods. 
B)  not be able to gain from specialization and exchange. 
C)  have a production possibilities frontier with a constant slope. 
D)  have a comparative advantage in the production of some goods but not in the production of others.

Question 5

An efficient allocation of resources occurs when we

Accepted Answer

A)  produce the goods and services that people need. 
B)  cannot produce more of a good or service without giving up some other good or service that we value more highly. 
C)  produce the goods and services that people want. 
D)  cannot produce more of a good or service without giving up some other good or service that we need. 
A)  produce the goods and services that people need. 
B)  cannot produce more of a good or service without giving up some other good or service that we value more highly. 
C)  produce the goods and services that people want. 
D)  cannot produce more of a good or service without giving up some other good or service that we need.

Question 6

A point inside a production possibilities frontier

Accepted Answer

A)  could indicate that resources are misallocated. 
B)  is more efficient than a point on the production possibilities frontier. 
C)  reflects the fact that more technology needs to be developed to fully employ all resources. 
D)  implies that too much labor and not enough capital is being used. 
A)  could indicate that resources are misallocated. 
B)  is more efficient than a point on the production possibilities frontier. 
C)  reflects the fact that more technology needs to be developed to fully employ all resources. 
D)  implies that too much labor and not enough capital is being used.

Question 7

Which of the following does NOT help organize trade?

Accepted Answer

A)  property rights 
B)  markets 
C)  the production possibilities frontier 
D)  None of the above because all these answers given help organize trade. 
A)  property rights 
B)  markets 
C)  the production possibilities frontier 
D)  None of the above because all these answers given help organize trade.

Question 8

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. Tom has a comparative advantage in ________ and Jerry has a comparative advantage in ________.

Accepted Answer

A)  cooking eggs; making sandwiches 
B)  making sandwiches; cooking eggs 
C)  neither of these activities; both activities 
D)  both activities; neither of these activities 
A)  cooking eggs; making sandwiches 
B)  making sandwiches; cooking eggs 
C)  neither of these activities; both activities 
D)  both activities; neither of these activities

Question 9

-The above table shows production combinations on a country's production possibilities frontier. What is the opportunity cost of increasing the production of X from 0 to 3 units?

Accepted Answer

A)  40 units of good Y per unit of good X 
B)  3 units of good Y per unit of good X 
C)  4/3 units of good Y per unit of good X 
D)  0 units of good Y per unit of good X 
A)  40 units of good Y per unit of good X 
B)  3 units of good Y per unit of good X 
C)  4/3 units of good Y per unit of good X 
D)  0 units of good Y per unit of good X

Question 10

-In the above figure, when 2000 bicycles are produced each month, we can see that

Accepted Answer

A)  the marginal benefit from another bicycle is greater than the marginal cost of another bicycle. 
B)  more bicycles should be produced to reach the allocatively efficient level of output. 
C)  the economy is very efficient at the production of bicycles because the marginal benefit exceeds the marginal cost. 
D)  Both answers A and B are correct. 
A)  the marginal benefit from another bicycle is greater than the marginal cost of another bicycle. 
B)  more bicycles should be produced to reach the allocatively efficient level of output. 
C)  the economy is very efficient at the production of bicycles because the marginal benefit exceeds the marginal cost. 
D)  Both answers A and B are correct.

Question 11

Suppose that a typical German factory can produce 20 cameras or 1 computer in an hour, and that a typical American factory can produce 10 cameras or one computer in an hour. Germany wishes to purchase computers from the United States in exchange for cameras. What is the maximum number of cameras per computer that Germany would be willing to pay the United States?

Accepted Answer

A)  10 cameras per computer 
B)  20 cameras per computer 
C)  1 camera per computer 
D)  2 cameras per computer 
A)  10 cameras per computer 
B)  20 cameras per computer 
C)  1 camera per computer 
D)  2 cameras per computer

Question 12

Production efficiency means that

Accepted Answer

A)  scarcity is no longer a problem. 
B)  producing more of one good is possible only if the production of some other good is decreased. 
C)  as few resources as possible are being used in production. 
D)  producing another unit of the good has no opportunity cost. 
A)  scarcity is no longer a problem. 
B)  producing more of one good is possible only if the production of some other good is decreased. 
C)  as few resources as possible are being used in production. 
D)  producing another unit of the good has no opportunity cost.

Question 13

A country possesses a comparative advantage in the production of a good if

Accepted Answer

A)  the opportunity cost in terms of forgone output of alternative goods is lower for this country than it is for its trading partners. 
B)  it possesses an absolute advantage in the production of this good. 
C)  it is able to produce more of this good per hour than can any other country. 
D)  all of the above. 
A)  the opportunity cost in terms of forgone output of alternative goods is lower for this country than it is for its trading partners. 
B)  it possesses an absolute advantage in the production of this good. 
C)  it is able to produce more of this good per hour than can any other country. 
D)  all of the above.

Question 14

-The table above gives the production possibilities frontier for a nation that produces wheat and soybeans. Use the information in that table to complete the table below, which has in it the opportunity costs of moving from one production point to another. Do not forget to note the units of the opportunity costs.

Accepted Answer

@#IMG-DLM& The table above gives the opp

Question 15

-In the above figure, if 2 million computers are produced per year then the ________ should be produced to achieve the allocatively efficient use of resources.

Accepted Answer

A)  marginal cost of a computer exceeds the marginal benefit of a computer, so more computers 
B)  marginal cost of a computer exceeds the marginal benefit of a computer, so fewer computers 
C)  marginal benefit of a computer exceeds the marginal cost of a computer, so more computers 
D)  marginal benefit of a computer exceeds the marginal cost of a computer, so fewer computers 
A)  marginal cost of a computer exceeds the marginal benefit of a computer, so more computers 
B)  marginal cost of a computer exceeds the marginal benefit of a computer, so fewer computers 
C)  marginal benefit of a computer exceeds the marginal cost of a computer, so more computers 
D)  marginal benefit of a computer exceeds the marginal cost of a computer, so fewer computers

Question 16

George and Michael can gain from exchange

Accepted Answer

A)  unless one has an absolute advantage in all goods. 
B)  if each specializes in the production of the good for which he has the higher opportunity cost. 
C)  if each specializes in the production of the good for which he has the lower opportunity cost. 
D)  unless they have different opportunity costs. 
A)  unless one has an absolute advantage in all goods. 
B)  if each specializes in the production of the good for which he has the higher opportunity cost. 
C)  if each specializes in the production of the good for which he has the lower opportunity cost. 
D)  unless they have different opportunity costs.

Question 17

President Obama has proposed a goal that everyone complete at least one year of formal education or training beyond high school. This policy would ________ the production of current consumption goods and services and ________ the future production of consumption goods and services.

Accepted Answer

A)  decrease; increase 
B)  increase; decrease 
C)  not change; increase 
D)  increase; increase 
A)  decrease; increase 
B)  increase; decrease 
C)  not change; increase 
D)  increase; increase

Question 18

-Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. There can be gains from exchange

Accepted Answer

A)  if Agnes specializes in the production of X and Brenda specializes in the production of Y. 
B)  if Agnes specializes in the production of Y and Brenda specializes in the production of X. 
C)  only if Agnes becomes faster at producing X. 
D)  only if Brenda becomes faster at producing X or Y. 
A)  if Agnes specializes in the production of X and Brenda specializes in the production of Y. 
B)  if Agnes specializes in the production of Y and Brenda specializes in the production of X. 
C)  only if Agnes becomes faster at producing X. 
D)  only if Brenda becomes faster at producing X or Y.

Question 19

The opportunity cost of more capital goods today is

Accepted Answer

A)  fewer capital goods in the future. 
B)  fewer consumer goods in the future. 
C)  fewer consumer goods today. 
D)  more unemployed resources in the future. 
A)  fewer capital goods in the future. 
B)  fewer consumer goods in the future. 
C)  fewer consumer goods today. 
D)  more unemployed resources in the future.

Question 20

-Refer to the production possibilities frontier in the figure above. More of good X must be given up per unit of good Y gained when moving from point b to point a than when moving from point c to point b. This fact

Accepted Answer

A)  illustrates decreasing opportunity cost. 
B)  illustrates increasing opportunity cost. 
C)  indicates that good X is more capital intensive than good Y. 
D)  indicates that good Y is more capital intensive than good X. 
A)  illustrates decreasing opportunity cost. 
B)  illustrates increasing opportunity cost. 
C)  indicates that good X is more capital intensive than good Y. 
D)  indicates that good Y is more capital intensive than good X.

By specialization and trade, two individuals can

-In the above figure, curve b shows the

An opportunity cost of economic growth is

A person who has an absolute advantage in the production of all goods will

An efficient allocation of resources occurs when we

A point inside a production possibilities frontier

Which of the following does NOT help organize trade?

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. Tom has a comparative advantage in and Jerry has a comparative advantage in .

-The above table shows production combinations on a country's production possibilities frontier. What is the opportunity cost of increasing the production of X from 0 to 3 units?

-In the above figure, when 2000 bicycles are produced each month, we can see that

Production efficiency means that

A country possesses a comparative advantage in the production of a good if

-In the above figure, if 2 million computers are produced per year then the ________ should be produced to achieve the allocatively efficient use of resources.

George and Michael can gain from exchange

President Obama has proposed a goal that everyone complete at least one year of formal education or training beyond high school. This policy would the production of current consumption goods and services and the future production of consumption goods and services.

-Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. There can be gains from exchange

The opportunity cost of more capital goods today is

-Refer to the production possibilities frontier in the figure above. More of good X must be given up per unit of good Y gained when moving from point b to point a than when moving from point c to point b. This fact

What Is Economics

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 2: The Economic Problem

By specialization and trade, two individuals can

-In the above figure, curve b shows the

An opportunity cost of economic growth is

A person who has an absolute advantage in the production of all goods will

An efficient allocation of resources occurs when we

A point inside a production possibilities frontier

Which of the following does NOT help organize trade?

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. Tom has a comparative advantage in ________ and Jerry has a comparative advantage in ________.

-The above table shows production combinations on a country's production possibilities frontier. What is the opportunity cost of increasing the production of X from 0 to 3 units?

-In the above figure, when 2000 bicycles are produced each month, we can see that

Production efficiency means that

A country possesses a comparative advantage in the production of a good if

-In the above figure, if 2 million computers are produced per year then the ________ should be produced to achieve the allocatively efficient use of resources.

George and Michael can gain from exchange

President Obama has proposed a goal that everyone complete at least one year of formal education or training beyond high school. This policy would ________ the production of current consumption goods and services and ________ the future production of consumption goods and services.

-Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. There can be gains from exchange

The opportunity cost of more capital goods today is

-Refer to the production possibilities frontier in the figure above. More of good X must be given up per unit of good Y gained when moving from point b to point a than when moving from point c to point b. This fact

What Is Economics

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. Tom has a comparative advantage in and Jerry has a comparative advantage in .

President Obama has proposed a goal that everyone complete at least one year of formal education or training beyond high school. This policy would the production of current consumption goods and services and the future production of consumption goods and services.