Question 1

-In the above figure, the opportunity cost of moving from producing 75 guitars and 25 ukuleles to producing 25 guitars and 75 ukuleles is

Accepted Answer

A)  25 guitars. 
B)  75 ukuleles. 
C)  25 ukuleles. 
D)  50 guitars. 
A)  25 guitars. 
B)  75 ukuleles. 
C)  25 ukuleles. 
D)  50 guitars.

Question 2

From the economist's point of view,

Accepted Answer

A)  wants and needs are exactly the same. 
B)  a want is a lifesaving necessity. 
C)  needs are objectively undefinable. 
D)  we all have wants but only very poor people have needs. 
A)  wants and needs are exactly the same. 
B)  a want is a lifesaving necessity. 
C)  needs are objectively undefinable. 
D)  we all have wants but only very poor people have needs.

Question 3

A person has a comparative advantage in an activity whenever she

Accepted Answer

A)  has an absolute advantage in the activity. 
B)  can perform the activity at a lower opportunity cost than another person can. 
C)  can do the activity in less time than anyone else. 
D)  can do everything better than anyone else. 
A)  has an absolute advantage in the activity. 
B)  can perform the activity at a lower opportunity cost than another person can. 
C)  can do the activity in less time than anyone else. 
D)  can do everything better than anyone else.

Question 4

Briefly explain the difference between the concepts of scarcity and shortage.

Accepted Answer

Scarcity is not a shortage. Scarcity occ

Question 5

Politicians often argue that a country's standard of living is reduced when it allows imports into the country. Offer an economically sound counter-argument.

Accepted Answer

Specialization of labor is productive, s

Question 6

John has decided to view the solar eclipse tomorrow. The eclipse is an example of

Accepted Answer

A)  a good. 
B)  an economic good. 
C)  a service. 
D)  entrepreneurship. 
A)  a good. 
B)  an economic good. 
C)  a service. 
D)  entrepreneurship.

Question 7

Inefficient use of resources is shown on the production possibilities curve

Accepted Answer

A)  by an inward shifting of the curve. 
B)  by a point inside the curve. 
C)  by a point near the top of the curve. 
D)  by a point outside the curve. 
A)  by an inward shifting of the curve. 
B)  by a point inside the curve. 
C)  by a point near the top of the curve. 
D)  by a point outside the curve.

Question 8

If Irene can make either four chairs or one table in an hour and Greg can make either three chairs or two tables in an hour then

Accepted Answer

A)  Irene has the absolute advantage in the production of chairs. 
B)  Irene has the comparative advantage in the production of tables. 
C)  Greg has the absolute advantage in the production of chairs. 
D)  Greg has the comparative advantage in the production of chairs. 
A)  Irene has the absolute advantage in the production of chairs. 
B)  Irene has the comparative advantage in the production of tables. 
C)  Greg has the absolute advantage in the production of chairs. 
D)  Greg has the comparative advantage in the production of chairs.

Question 9

Opportunity cost is

Accepted Answer

A)  the cost of producing all goods and services in the United States. 
B)  the value of the next-best alternative that must be sacrificed to satisfy a want. 
C)  the fixed cost of production. 
D)  the value of the most useful alternative that must be sacrificed to obtain something or satisfy a want. 
A)  the cost of producing all goods and services in the United States. 
B)  the value of the next-best alternative that must be sacrificed to satisfy a want. 
C)  the fixed cost of production. 
D)  the value of the most useful alternative that must be sacrificed to obtain something or satisfy a want.

Question 10

Which of the following would be categorized as "land"?

Accepted Answer

A)  timber 
B)  human capital 
C)  buildings 
D)  entrepreneurship 
A)  timber 
B)  human capital 
C)  buildings 
D)  entrepreneurship

Question 11

List and explain three major factors that cause economic growth.

Accepted Answer

Three major factors of economic growth a

Question 12

If individual X has comparative advantage in painting and individual Y has comparative advantage in carpentry, then

Accepted Answer

A)  individual X must use fewer hours to paint a fence than individual Y. 
B)  individual Y will specialize in painting. 
C)  there is a lower opportunity cost (expressed in units of carpentry) for individual X to paint than for individual Y to paint. 
D)  specialization will not occur, since each does not have a clear absolute advantage. 
A)  individual X must use fewer hours to paint a fence than individual Y. 
B)  individual Y will specialize in painting. 
C)  there is a lower opportunity cost (expressed in units of carpentry) for individual X to paint than for individual Y to paint. 
D)  specialization will not occur, since each does not have a clear absolute advantage.

Question 13

Would a country with an absolute advantage in the production of all goods and services trade with other countries? Explain.

Accepted Answer

Yes. Trade is based on comparative advan

Question 14

If the production of capital goods is shown along the horizontal axis of a production possibilities curve, and the production of consumer goods is shown along the vertical axis of a production possibilities curve, and the economy desires to have a rapid rate of economic growth, then the economy should produce at a point

Accepted Answer

A)  near the middle of the curve dividing resources equally between the production of consumer and capital goods. 
B)  at a point near the vertical axis concentrating on the production of consumer goods. 
C)  at a point near the horizontal axis concentrating on the production of capital goods. 
D)  at a point inside the curve allowing the economy to adjust rapidly to changes in economic activity. 
A)  near the middle of the curve dividing resources equally between the production of consumer and capital goods. 
B)  at a point near the vertical axis concentrating on the production of consumer goods. 
C)  at a point near the horizontal axis concentrating on the production of capital goods. 
D)  at a point inside the curve allowing the economy to adjust rapidly to changes in economic activity.

Question 15

All points inside the production possibilities curve indicate

Accepted Answer

A)  a lack of sufficient supply. 
B)  inefficiency in production. 
C)  the law of increasing relative cost. 
D)  the law of decreasing relative cost. 
A)  a lack of sufficient supply. 
B)  inefficiency in production. 
C)  the law of increasing relative cost. 
D)  the law of decreasing relative cost.

Question 16

The above table shows the daily production possibilities for a bakery.
Currently the bakery bakes 60 pizzas and 180 loaves of bread, that is-it is at alternative C.
-Using the above table, what is the opportunity cost of moving from alternative C to alternative B?

Accepted Answer

A)  1/2 a pizza pie 
B)  60 pizza pies 
C)  90 pizza pies 
D)  30 pizza pies 
A)  1/2 a pizza pie 
B)  60 pizza pies 
C)  90 pizza pies 
D)  30 pizza pies

Question 17

"Wants" as an economic concept includes

Accepted Answer

A)  both material and nonmaterial desires. 
B)  only the purchase of necessary basic goods. 
C)  only the desire for luxury goods. 
D)  only those goods that can be purchased with one's paycheck. 
A)  both material and nonmaterial desires. 
B)  only the purchase of necessary basic goods. 
C)  only the desire for luxury goods. 
D)  only those goods that can be purchased with one's paycheck.

Question 18

Economic growth appears on a production possibilities curve as

Accepted Answer

A)  the curve shifting out away from the origin. 
B)  the curve shifting in toward the origin. 
C)  a change in the slope of the curve. 
D)  the points outside the production possibilities curve. 
A)  the curve shifting out away from the origin. 
B)  the curve shifting in toward the origin. 
C)  a change in the slope of the curve. 
D)  the points outside the production possibilities curve.

Question 19

The trade-off between current consumption and the production of capital goods is also a trade-off between

Accepted Answer

A)  the future cost for capital goods and future cost of consumption goods. 
B)  having fewer needs and more wants in the future. 
C)  satisfying the needs of the poor and the wants of the wealthy. 
D)  current consumption and future consumption. 
A)  the future cost for capital goods and future cost of consumption goods. 
B)  having fewer needs and more wants in the future. 
C)  satisfying the needs of the poor and the wants of the wealthy. 
D)  current consumption and future consumption.

Question 20

"My brother is better at cooking, better at cleaning, and better at fixing the car than I am." Relative to me, my brother has

Accepted Answer

A)  an absolute advantage in cooking, cleaning, and car repair. 
B)  a comparative advantage in cooking, cleaning, and car repair. 
C)  more intelligence than me. 
D)  more income than me. 
A)  an absolute advantage in cooking, cleaning, and car repair. 
B)  a comparative advantage in cooking, cleaning, and car repair. 
C)  more intelligence than me. 
D)  more income than me.

Exam 2: Scarcity and the World of Trade-Offs

-In the above figure, the opportunity cost of moving from producing 75 guitars and 25 ukuleles to producing 25 guitars and 75 ukuleles is

From the economist's point of view,

A person has a comparative advantage in an activity whenever she

Briefly explain the difference between the concepts of scarcity and shortage.

Politicians often argue that a country's standard of living is reduced when it allows imports into the country. Offer an economically sound counter-argument.

John has decided to view the solar eclipse tomorrow. The eclipse is an example of

Inefficient use of resources is shown on the production possibilities curve

If Irene can make either four chairs or one table in an hour and Greg can make either three chairs or two tables in an hour then

Opportunity cost is

Which of the following would be categorized as "land"?

List and explain three major factors that cause economic growth.

If individual X has comparative advantage in painting and individual Y has comparative advantage in carpentry, then

Would a country with an absolute advantage in the production of all goods and services trade with other countries? Explain.

All points inside the production possibilities curve indicate

The above table shows the daily production possibilities for a bakery. Currently the bakery bakes 60 pizzas and 180 loaves of bread, that is-it is at alternative C. -Using the above table, what is the opportunity cost of moving from alternative C to alternative B?

"Wants" as an economic concept includes

Economic growth appears on a production possibilities curve as

The trade-off between current consumption and the production of capital goods is also a trade-off between

"My brother is better at cooking, better at cleaning, and better at fixing the car than I am." Relative to me, my brother has

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

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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

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Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

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Regulation and Antitrust Policy in a Globalized Economy

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Unions and Labor Market Monopoly Power

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Environmental Economics

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