Question 1

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 2

If property rights are not clearly defined and enforced, then

Accepted Answer

A)  incentives for specialization based on comparative advantage are weakened. 
B)  some potential gains from specialization and trade are lost. 
C)  resources are devoted to protecting possessions rather than to production. 
D)  All of the above answers are correct. 
A)  incentives for specialization based on comparative advantage are weakened. 
B)  some potential gains from specialization and trade are lost. 
C)  resources are devoted to protecting possessions rather than to production. 
D)  All of the above answers are correct.

Question 3

Draw a production possibilities frontier between beans and peas. Label the unattainable points, the attainable points with fully employed resources, and the attainable points with unemployed resources.

Accepted Answer

@#IMG-DLM& The production possibilities frontier,

Question 4

-A PPF, such as the one above, that bows outward illustrates

Accepted Answer

A)  decreasing opportunity cost. 
B)  increasing opportunity cost. 
C)  that technology is improving. 
D)  that productivity is falling. 
A)  decreasing opportunity cost. 
B)  increasing opportunity cost. 
C)  that technology is improving. 
D)  that productivity is falling.

Question 5

One of the opportunity costs of economic growth is

Accepted Answer

A)  capital accumulation. 
B)  technological change. 
C)  reduced current consumption. 
D)  the gain in future consumption. 
A)  capital accumulation. 
B)  technological change. 
C)  reduced current consumption. 
D)  the gain in future consumption.

Question 6

-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.

Accepted Answer

A)  Brenda has an absolute advantage in the production of X and Y. 
B)  Agnes has a comparative advantage in the production of Y. 
C)  Brenda has a comparative advantage in the production of X. 
D)  Brenda cannot gain from trade. 
A)  Brenda has an absolute advantage in the production of X and Y. 
B)  Agnes has a comparative advantage in the production of Y. 
C)  Brenda has a comparative advantage in the production of X. 
D)  Brenda cannot gain from trade.

Question 7

Property rights facilitate the development of trade.

Accepted Answer

A) True 
 B)False

Question 8

-The table above shows the marginal benefit from pizza and the marginal cost of pizza in cans of soda forgone. If ________ pizzas are produced, the quantity of soda that people are willing to give up to get an additional pizza is more than the quantity of soda that they must give up to get that additional pizza.

Accepted Answer

A)  any quantity other than 40 
B)  40 
C)  more than 40 
D)  fewer than 40 
A)  any quantity other than 40 
B)  40 
C)  more than 40 
D)  fewer than 40

Question 9

An increase in the production of capital goods

Accepted Answer

A)  must increase the current production of consumer goods. 
B)  must decrease the future production of consumer goods. 
C)  shifts the production possibilities frontier inward in the future. 
D)  shifts the production possibilities frontier outward in the future. 
A)  must increase the current production of consumer goods. 
B)  must decrease the future production of consumer goods. 
C)  shifts the production possibilities frontier inward in the future. 
D)  shifts the production possibilities frontier outward in the future.

Question 10

Individuals A and B both produce good X. A has a comparative advantage in the production of good X if A

Accepted Answer

A)  has a lower opportunity cost of producing good X than has B. 
B)  has a lower opportunity cost of producing good X than of producing good Y. 
C)  can produce more units of X in a given time period than can B. 
D)  can produce X using newer technology than can B. 
A)  has a lower opportunity cost of producing good X than has B. 
B)  has a lower opportunity cost of producing good X than of producing good Y. 
C)  can produce more units of X in a given time period than can B. 
D)  can produce X using newer technology than can B.

Question 11

Markets

Accepted Answer

A)  facilitate trade. 
B)  allow traders to enjoy gains from trade. 
C)  coordinate price information between buyers and sellers. 
D)  All of the above answers are correct. 
A)  facilitate trade. 
B)  allow traders to enjoy gains from trade. 
C)  coordinate price information between buyers and sellers. 
D)  All of the above answers are correct.

Question 12

The state of Georgia offers free college tuition to high school students with a "B" average. In 2007, the state raised the requirement so that fewer students qualified for the scholarship. At the same time, Georgia increased state spending on health care. Suppose that college education is on the vertical axis and health care is on the horizontal axis of a PPF. Georgia's change in spending would be shown as

Accepted Answer

A)  a movement up along the PPF. 
B)  a movement down along the PPF. 
C)  a shift out of the PPF. 
D)  a shift in of the PPF. 
A)  a movement up along the PPF. 
B)  a movement down along the PPF. 
C)  a shift out of the PPF. 
D)  a shift in of the PPF.

Question 13

Suppose that in an hour Joe can prepare 10 sandwiches or 5 pizzas. The opportunity cost of Joe producing one sandwich is

Accepted Answer

A)  2 pizzas. 
B)  1/2 pizza. 
C)  5 pizzas. 
D)  1 pizza. 
A)  2 pizzas. 
B)  1/2 pizza. 
C)  5 pizzas. 
D)  1 pizza.

Question 14

The principle of decreasing marginal benefit means that as the quantity of a good consumed

Accepted Answer

A)  decreases, its marginal benefit decreases. 
B)  increases, its marginal benefit decreases. 
C)  increases, its total benefit decreases. 
D)  None of the above answers is correct. 
A)  decreases, its marginal benefit decreases. 
B)  increases, its marginal benefit decreases. 
C)  increases, its total benefit decreases. 
D)  None of the above answers is correct.

Question 15

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 16

-The above table shows production combinations on a country's production possibilities frontier. The opportunity cost of increasing the production of Y from 16 to 28 units is ________ units of good X per unit of good Y.

Accepted Answer

A)  12 
B)  6 
C)  3 
D)  There is no opportunity cost when moving from one point to another along a production possibilities frontier so none of the above answers is correct. 
A)  12 
B)  6 
C)  3 
D)  There is no opportunity cost when moving from one point to another along a production possibilities frontier so none of the above answers is correct.

Question 17

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. What is the opportunity cost of one can of cola if Sweet-tooth Land moves from point C to point B?

Accepted Answer

A)  20 chocolate bars per can of cola 
B)  10 chocolate bars per can of cola 
C)  2 chocolate bars per can of cola 
D)  1/2 chocolate bars per can of cola 
A)  20 chocolate bars per can of cola 
B)  10 chocolate bars per can of cola 
C)  2 chocolate bars per can of cola 
D)  1/2 chocolate bars per can of cola

Question 18

Japan can use all of its resources to produce 100 videos or 400 shoes. China can use all of its resources to produce 25 videos or 200 shoes. Which nation has the comparative advantage in shoes and which nation has the comparative advantage in videos?

Accepted Answer

In Japan, the opportunity cost of produc

Question 19

The fact that individual productive resources are NOT equally useful in all activities

Accepted Answer

A)  implies that a production possibilities frontier will be bowed outward. 
B)  implies that gain from specialization and trade is unlikely. 
C)  follows from the law of demand. 
D)  implies a linear production possibilities frontier. 
A)  implies that a production possibilities frontier will be bowed outward. 
B)  implies that gain from specialization and trade is unlikely. 
C)  follows from the law of demand. 
D)  implies a linear production possibilities frontier.

Question 20

When resources are assigned to inappropriate tasks, that is, tasks for which they are not the best match, the result will be producing at a point

Accepted Answer

A)  where the slope of the PPF is positive. 
B)  where the slope of the PPF is zero. 
C)  inside the PPF. 
D)  outside the PPF. 
A)  where the slope of the PPF is positive. 
B)  where the slope of the PPF is zero. 
C)  inside the PPF. 
D)  outside the PPF.

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

If property rights are not clearly defined and enforced, then

Draw a production possibilities frontier between beans and peas. Label the unattainable points, the attainable points with fully employed resources, and the attainable points with unemployed resources.

-A PPF, such as the one above, that bows outward illustrates

One of the opportunity costs of economic growth is

-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.

Property rights facilitate the development of trade.

An increase in the production of capital goods

Individuals A and B both produce good X. A has a comparative advantage in the production of good X if A

Markets

Suppose that in an hour Joe can prepare 10 sandwiches or 5 pizzas. The opportunity cost of Joe producing one sandwich is

The principle of decreasing marginal benefit means that as the quantity of a good consumed

Which of the following does NOT help organize trade?

-The above table shows production combinations on a country's production possibilities frontier. The opportunity cost of increasing the production of Y from 16 to 28 units is ________ units of good X per unit of good Y.

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. What is the opportunity cost of one can of cola if Sweet-tooth Land moves from point C to point B?

Japan can use all of its resources to produce 100 videos or 400 shoes. China can use all of its resources to produce 25 videos or 200 shoes. Which nation has the comparative advantage in shoes and which nation has the comparative advantage in videos?

The fact that individual productive resources are NOT equally useful in all activities

When resources are assigned to inappropriate tasks, that is, tasks for which they are not the best match, the result will be producing at a point

What Is Economics?

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 2: The Economic Problem

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

If property rights are not clearly defined and enforced, then

Draw a production possibilities frontier between beans and peas. Label the unattainable points, the attainable points with fully employed resources, and the attainable points with unemployed resources.

-A PPF, such as the one above, that bows outward illustrates

One of the opportunity costs of economic growth is

-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.

Property rights facilitate the development of trade.

An increase in the production of capital goods

Individuals A and B both produce good X. A has a comparative advantage in the production of good X if A

Markets

Suppose that in an hour Joe can prepare 10 sandwiches or 5 pizzas. The opportunity cost of Joe producing one sandwich is

The principle of decreasing marginal benefit means that as the quantity of a good consumed

Which of the following does NOT help organize trade?

-The above table shows production combinations on a country's production possibilities frontier. The opportunity cost of increasing the production of Y from 16 to 28 units is ________ units of good X per unit of good Y.

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. What is the opportunity cost of one can of cola if Sweet-tooth Land moves from point C to point B?

Japan can use all of its resources to produce 100 videos or 400 shoes. China can use all of its resources to produce 25 videos or 200 shoes. Which nation has the comparative advantage in shoes and which nation has the comparative advantage in videos?

The fact that individual productive resources are NOT equally useful in all activities

When resources are assigned to inappropriate tasks, that is, tasks for which they are not the best match, the result will be producing at a point

What Is Economics?

Demand and Supply

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters