Question 1

The idea of comparative advantage is related to

Accepted Answer

A)  the idea of opportunity cost. 
B)  the idea of absolute advantage. 
C)  using the worker with the most diverse sets of skills. 
D)  engineering efficiency. 
A)  the idea of opportunity cost. 
B)  the idea of absolute advantage. 
C)  using the worker with the most diverse sets of skills. 
D)  engineering efficiency.

Question 2

Generally, if a nation produces more consumer goods than capital goods

Accepted Answer

A)  more of all goods may be produced in the future. 
B)  less of all goods may be produced in the future. 
C)  about the same amount of capital goods may be produced in the future as are being produced today. 
D)  society will have to forego future consumption of capital goods . 
A)  more of all goods may be produced in the future. 
B)  less of all goods may be produced in the future. 
C)  about the same amount of capital goods may be produced in the future as are being produced today. 
D)  society will have to forego future consumption of capital goods .

Question 3

Comparative advantage is

Accepted Answer

A)  when a country can produce a good at a lower opportunity cost compared to other countries. 
B)  when a country can produce all goods more quickly than any other country. 
C)  when the production possibilities curve shifts outward to the right. 
D)  only for individuals and not countries. 
A)  when a country can produce a good at a lower opportunity cost compared to other countries. 
B)  when a country can produce all goods more quickly than any other country. 
C)  when the production possibilities curve shifts outward to the right. 
D)  only for individuals and not countries.

Question 4

Opportunity cost can best be defined as

Accepted Answer

A)  the interest cost of financing a business loan at the bank. 
B)  the value of all of the alternatives sacrificed. 
C)  the value of the next-highest-ranked alternative. 
D)  There is no real definition for opportunity cost. 
A)  the interest cost of financing a business loan at the bank. 
B)  the value of all of the alternatives sacrificed. 
C)  the value of the next-highest-ranked alternative. 
D)  There is no real definition for opportunity cost.

Question 5

The use of goods and services for personal satisfaction is known as

Accepted Answer

A)  the law of increasing relative cost. 
B)  specialization. 
C)  comparative advantage. 
D)  consumption. 
A)  the law of increasing relative cost. 
B)  specialization. 
C)  comparative advantage. 
D)  consumption.

Question 6

To an economist, the term "needs"

Accepted Answer

A)  means the purchase of necessary goods. 
B)  is objectively undefinable. 
C)  identifies the purchases of basic goods and services. 
D)  refers to the purchase of goods by the poor. 
A)  means the purchase of necessary goods. 
B)  is objectively undefinable. 
C)  identifies the purchases of basic goods and services. 
D)  refers to the purchase of goods by the poor.

Question 7

Which of the following statements indicates the idea of trade-offs?

Accepted Answer

A)  "I chose the road less traveled." 
B)  "The devil made me do it." 
C)  "You've got me under your spell." 
D)  "Always give it the best that you can." 
A)  "I chose the road less traveled." 
B)  "The devil made me do it." 
C)  "You've got me under your spell." 
D)  "Always give it the best that you can."

Question 8

A point on a production possibilities curve indicates

Accepted Answer

A)  resources are not being used efficiently. 
B)  resources are being used efficiently. 
C)  opportunity costs are constant. 
D)  an output combination that can be attained only if society gets more resources or there is technological change. 
A)  resources are not being used efficiently. 
B)  resources are being used efficiently. 
C)  opportunity costs are constant. 
D)  an output combination that can be attained only if society gets more resources or there is technological change.

Question 9

"Economics is the study of how people eliminate scarcity." Do you agree or disagree? Why?

Accepted Answer

Disagree. Economics is the study of how

Question 10

Scarcity arises because

Accepted Answer

A)  resources are finite and are inadequate to meet all human wants and needs. 
B)  import taxes depress the rate of growth of goods and services production. 
C)  international companies are slow to explore for new resources. 
D)  many countries waste goods because of inefficient political systems. 
A)  resources are finite and are inadequate to meet all human wants and needs. 
B)  import taxes depress the rate of growth of goods and services production. 
C)  international companies are slow to explore for new resources. 
D)  many countries waste goods because of inefficient political systems.

Question 11

Which of the following is the best example of scarcity?

Accepted Answer

A)  The Talking Teddy is a surprise holiday hit, resulting in long lines of consumers trying to purchase the limited number of available Teddies. 
B)  Fred only gets a 10-hour lunch break and each day must decide between working out at the gym or socializing with his colleagues. 
C)  The local market's buy-one-get-one-free sale on strawberries results in more people wanting the berries than producers are able and willing to supply. 
D)  There is a bumper crop of strawberries, and stores have more berries than they can sell. 
A)  The Talking Teddy is a surprise holiday hit, resulting in long lines of consumers trying to purchase the limited number of available Teddies. 
B)  Fred only gets a 10-hour lunch break and each day must decide between working out at the gym or socializing with his colleagues. 
C)  The local market's buy-one-get-one-free sale on strawberries results in more people wanting the berries than producers are able and willing to supply. 
D)  There is a bumper crop of strawberries, and stores have more berries than they can sell.

Question 12

Other things being equal, you can make $20,000 a year teaching, $25,000 a year typing, $30,000 a year driving a cab, and $40,000 a year as a chef. You have a comparative advantage in

Accepted Answer

A)  teaching. 
B)  driving a cab. 
C)  being a chef. 
D)  one of them but we need more information to know which. 
A)  teaching. 
B)  driving a cab. 
C)  being a chef. 
D)  one of them but we need more information to know which.

Question 13

Opportunity cost is

Accepted Answer

A)  the intrinsic value of an economic good. 
B)  the total value of all the alternatives given up when a choice is made. 
C)  the value of the opportunity selected when a need is satisfied. 
D)  the value of the next highest ranked alternative that must be sacrificed to obtain a want. 
A)  the intrinsic value of an economic good. 
B)  the total value of all the alternatives given up when a choice is made. 
C)  the value of the opportunity selected when a need is satisfied. 
D)  the value of the next highest ranked alternative that must be sacrificed to obtain a want.

Question 14

The conversion of resources into consumer goods or services is called

Accepted Answer

A)  human capital. 
B)  production. 
C)  opportunity cost. 
D)  absolute advantage. 
A)  human capital. 
B)  production. 
C)  opportunity cost. 
D)  absolute advantage.

Question 15

Specialization can occur because

Accepted Answer

A)  governments pass laws that require it. 
B)  varying skills differentiate workers. 
C)  absolute advantage creates specialization among laborers. 
D)  managers and laborers share job tasks. 
A)  governments pass laws that require it. 
B)  varying skills differentiate workers. 
C)  absolute advantage creates specialization among laborers. 
D)  managers and laborers share job tasks.

Question 16

The making and selling of a pencil for ten cents would likely NOT be possible, but for

Accepted Answer

A)  relative advantage. 
B)  the production possibilities curve. 
C)  absolute advantage. 
D)  the division of labor. 
A)  relative advantage. 
B)  the production possibilities curve. 
C)  absolute advantage. 
D)  the division of labor.

Question 17

A point outside a society's production possibilities curve is one that is

Accepted Answer

A)  unattainable given the resources of the society. 
B)  technologically inefficient. 
C)  undesirable given the implied underemployment of resources. 
D)  desirable since it satisfies the desires of the population. 
A)  unattainable given the resources of the society. 
B)  technologically inefficient. 
C)  undesirable given the implied underemployment of resources. 
D)  desirable since it satisfies the desires of the population.

Question 18

Physical capital is distinguished from human capital because

Accepted Answer

A)  physical capital refers to trained people. 
B)  physical capital refers to equipment and machinery, whereas human capital refers to trained people. 
C)  human capital refers only to day laborers. 
D)  physical capital refers to trained people, whereas human capital refers to equipment and machinery. 
A)  physical capital refers to trained people. 
B)  physical capital refers to equipment and machinery, whereas human capital refers to trained people. 
C)  human capital refers only to day laborers. 
D)  physical capital refers to trained people, whereas human capital refers to equipment and machinery.

Question 19

The production possibilities curve represents

Accepted Answer

A)  the maximum amount of labor and capital available to society. 
B)  the combinations of goods and services among which consumers are indifferent. 
C)  the maximum combination of goods and services that can be produced with fixed resources and technology, given efficient use of the resources. 
D)  the maximum rate of growth of capital and labor in a country. 
A)  the maximum amount of labor and capital available to society. 
B)  the combinations of goods and services among which consumers are indifferent. 
C)  the maximum combination of goods and services that can be produced with fixed resources and technology, given efficient use of the resources. 
D)  the maximum rate of growth of capital and labor in a country.

Question 20

You should specialize in the production of a good if you have

Accepted Answer

A)  an absolute advantage. 
B)  more capital resources than your trading partner. 
C)  more human resources than your trading partner. 
D)  a comparative advantage. 
A)  an absolute advantage. 
B)  more capital resources than your trading partner. 
C)  more human resources than your trading partner. 
D)  a comparative advantage.

Exam 2: Scarcity and the World of Trade-Offs

The idea of comparative advantage is related to

Generally, if a nation produces more consumer goods than capital goods

Comparative advantage is

Opportunity cost can best be defined as

The use of goods and services for personal satisfaction is known as

To an economist, the term "needs"

Which of the following statements indicates the idea of trade-offs?

A point on a production possibilities curve indicates

"Economics is the study of how people eliminate scarcity." Do you agree or disagree? Why?

Scarcity arises because

Which of the following is the best example of scarcity?

Other things being equal, you can make $20,000 a year teaching, $25,000 a year typing, $30,000 a year driving a cab, and $40,000 a year as a chef. You have a comparative advantage in

Opportunity cost is

The conversion of resources into consumer goods or services is called

Specialization can occur because

The making and selling of a pencil for ten cents would likely NOT be possible, but for

A point outside a society's production possibilities curve is one that is

Physical capital is distinguished from human capital because

The production possibilities curve represents

You should specialize in the production of a good if you have

The Nature of Economics

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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