Question 1

An individual has a comparative advantage in production if that individual:

Accepted Answer

A)  can produce at the highest opportunity cost. 
B)  is more self-sufficient than others. 
C)  can produce at the lowest opportunity cost. 
D)  all of the above 
A)  can produce at the highest opportunity cost. 
B)  is more self-sufficient than others. 
C)  can produce at the lowest opportunity cost. 
D)  all of the above

Question 2

A student has a chance to see Taylor Swift in concert.The student also has a major economics exam in the morning.If the student goes to the concert:

Accepted Answer

A)  she may receive a lower grade on the economics exam. 
B)  the opportunity cost of the concert is the value of the time spent studying. 
C)  the decision involves a tradeoff. 
D)  all of the above are correct. 
A)  she may receive a lower grade on the economics exam. 
B)  the opportunity cost of the concert is the value of the time spent studying. 
C)  the decision involves a tradeoff. 
D)  all of the above are correct.

Question 3

How can market failure occur in the market for hybrid automobiles? What could the government try to do to improve the situation?

Accepted Answer

An unregulated market would be likely to

Question 4

Which of the following is true?

Accepted Answer

A)  People specialize by concentrating their energies on the activity to which they are best suited, because they incur lower opportunity costs as a result. 
B)  One advantage of specialization is that workers acquire greater skill from repetition. 
C)  If a person, a region, or a country can produce a good or service at a lower opportunity cost than others, we say that they have a comparative advantage in the production of that good or service. 
D)  All of the above are true. 
A)  People specialize by concentrating their energies on the activity to which they are best suited, because they incur lower opportunity costs as a result. 
B)  One advantage of specialization is that workers acquire greater skill from repetition. 
C)  If a person, a region, or a country can produce a good or service at a lower opportunity cost than others, we say that they have a comparative advantage in the production of that good or service. 
D)  All of the above are true.

Question 5

An example of an intangible good is:

Accepted Answer

A)  an automobile. 
B)  a new house. 
C)  a snowplow. 
D)  friendship. 
A)  an automobile. 
B)  a new house. 
C)  a snowplow. 
D)  friendship.

Question 6

Henry must choose between going to his psychology class this evening or going on a double date.If he chooses to go on the date,the expected value of the psychology lecture:

Accepted Answer

A)  is impossible to compare to the expected enjoyment from going on a date. 
B)  is likely greater than the expected marginal benefit from going on the date. 
C)  is likely less than the expected marginal benefit from going on the date. 
D)  is likely equal to the expected marginal benefit from going on the date. 
A)  is impossible to compare to the expected enjoyment from going on a date. 
B)  is likely greater than the expected marginal benefit from going on the date. 
C)  is likely less than the expected marginal benefit from going on the date. 
D)  is likely equal to the expected marginal benefit from going on the date.

Question 7

Market failure is a term used to describe what happens whenever governments intervene into markets (e.g.,the imposition of a price control).

Accepted Answer

A) True 
 B)False

Question 8

Which of the following explains why people tend to dedicate their resources to one primary activity?

Accepted Answer

A)  Opportunity costs 
B)  Negative incentives 
C)  Positive thinking 
D)  Fallacy of composition 
A)  Opportunity costs 
B)  Negative incentives 
C)  Positive thinking 
D)  Fallacy of composition

Question 9

Kelly is an attorney and also an excellent typist.She can type 120 words per minute,but she is pressed for time because she has all the legal work she can handle at $75 per hour.Kelly's friend Todd works as a waiter and would like some typing work (provided that he can make at least his wage as a waiter,which is $25 per hour).Todd can only type 60 words per minute.

Accepted Answer

A)  Kelly should do all the typing because she is faster. 
B)  Todd should do the typing as long as his earnings are more than $25 and less than $37.50 per hour. 
C)  Unless Todd can match Kelly's typing speed, he should remain a waiter. 
D)  Todd should do the typing, and Kelly should pay him $20 per hour. 
A)  Kelly should do all the typing because she is faster. 
B)  Todd should do the typing as long as his earnings are more than $25 and less than $37.50 per hour. 
C)  Unless Todd can match Kelly's typing speed, he should remain a waiter. 
D)  Todd should do the typing, and Kelly should pay him $20 per hour.

Question 10

Scarcity is a problem faced by all but the wealthiest of citizens.

Accepted Answer

A) True 
 B)False

Question 11

Additions to human capital can be made through:

Accepted Answer

A)  increases in pension benefits 
B)  monthly deposits into a savings account. 
C)  improved education and on-the-job training. 
D)  the purchase of tools and equipment by workers. 
A)  increases in pension benefits 
B)  monthly deposits into a savings account. 
C)  improved education and on-the-job training. 
D)  the purchase of tools and equipment by workers.

Question 12

Which of the following is not a resource?

Accepted Answer

A)  cash 
B)  entrepreneurship 
C)  land 
D)  labor 
A)  cash 
B)  entrepreneurship 
C)  land 
D)  labor

Question 13

Differentiate between positive and negative incentives.

Accepted Answer

Positive incentives either increase bene

Question 14

If Xavier gives up a job in which he earns $23,000 per year in order to go to college full time,his foregone income is part of the opportunity cost of going to college.

Accepted Answer

A) True 
 B)False

Question 15

Prices communicate information about the relative value of resources in the marketplace.Which of the following would cause the value and,hence,the price,of oranges to rise?
a.A freeze wipes out half of the Florida citrus groves.
b.Orange juice is shown to reduce blood cholesterol levels.
c.The price of grape,cranberry,and pineapple juice falls dramatically.

Accepted Answer

a.and b.would result in higher orange pr

Question 16

The marginal cost of a vacation in Jamaica is $3,500.The marginal benefit to Colby of a vacation in Jamaica is $3,000.

Accepted Answer

A)  According to the rule of rational choice, Colby should choose not to vacation in Jamaica at this time. 
B)  According to the rule of rational choice, Colby will experience a net gain of $500 if he vacations in Jamaica. 
C)  According to the rule of rational choice, Colby should borrow $500 and vacation in Jamaica. 
D)  According to the rule of rational choice, Colby will experience a net gain of $3,000 if he vacations in Jamaica. 
A)  According to the rule of rational choice, Colby should choose not to vacation in Jamaica at this time. 
B)  According to the rule of rational choice, Colby will experience a net gain of $500 if he vacations in Jamaica. 
C)  According to the rule of rational choice, Colby should borrow $500 and vacation in Jamaica. 
D)  According to the rule of rational choice, Colby will experience a net gain of $3,000 if he vacations in Jamaica.

Question 17

The following table shows the marginal benefit to a consumer of DVD rentals.   If the price of a DVD rental is $4,a consumer following the rule of rational choice will rent:

Accepted Answer

A)  2 DVDs per month. 
B)  3 DVDs per month. 
C)  4 DVDs per month. 
D)  5 DVDs per month. 
A)  2 DVDs per month. 
B)  3 DVDs per month. 
C)  4 DVDs per month. 
D)  5 DVDs per month.

Question 18

Scarcity applies to:

Accepted Answer

A)  only the poor. 
B)  the value of our time. 
C)  both the rich and poor. 
D)  both (b) and (c) 
A)  only the poor. 
B)  the value of our time. 
C)  both the rich and poor. 
D)  both (b) and (c)

Question 19

If people follow the rule of rational choice they will choose options that they think will:

Accepted Answer

A)  create more average benefits than average costs 
B)  create more additional costs than additional benefits 
C)  create equivalent additional benefits and additional costs 
D)  create more additional benefits than additional costs 
A)  create more average benefits than average costs 
B)  create more additional costs than additional benefits 
C)  create equivalent additional benefits and additional costs 
D)  create more additional benefits than additional costs

Question 20

The most essential economic problem is the existence of:

Accepted Answer

A)  both an increasing population and the depletion of natural resources. 
B)  both limited economic resources and unlimited desires. 
C)  both inflation and unemployment. 
D)  income inequality and economic freedom. 
A)  both an increasing population and the depletion of natural resources. 
B)  both limited economic resources and unlimited desires. 
C)  both inflation and unemployment. 
D)  income inequality and economic freedom.

Exam 2: Economics: Eight Powerful Ideas

An individual has a comparative advantage in production if that individual:

A student has a chance to see Taylor Swift in concert.The student also has a major economics exam in the morning.If the student goes to the concert:

How can market failure occur in the market for hybrid automobiles? What could the government try to do to improve the situation?

Which of the following is true?

An example of an intangible good is:

Henry must choose between going to his psychology class this evening or going on a double date.If he chooses to go on the date,the expected value of the psychology lecture:

Market failure is a term used to describe what happens whenever governments intervene into markets (e.g.,the imposition of a price control).

Which of the following explains why people tend to dedicate their resources to one primary activity?

Scarcity is a problem faced by all but the wealthiest of citizens.

Additions to human capital can be made through:

Which of the following is not a resource?

Differentiate between positive and negative incentives.

If Xavier gives up a job in which he earns $23,000 per year in order to go to college full time,his foregone income is part of the opportunity cost of going to college.

The marginal cost of a vacation in Jamaica is $3,500.The marginal benefit to Colby of a vacation in Jamaica is $3,000.

The following table shows the marginal benefit to a consumer of DVD rentals. If the price of a DVD rental is $4,a consumer following the rule of rational choice will rent:

Scarcity applies to:

If people follow the rule of rational choice they will choose options that they think will:

The most essential economic problem is the existence of:

The Role and Method of Economics

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Trade

International Finance

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