Question 1

Without trade,specialization is impractical.

Accepted Answer

A) True 
 B)False

Question 2

Use the following to answer questions 
Figure: PPF Mexico & United States  
-(Figure: PPF Mexico & United States)Use the figure in which both Mexico and the United States each have 24 units of labor.The opportunity costs of producing one shirt are:

Accepted Answer

A)  one computer for Mexico and 1/6 of a computer for the United States. 
B)  1/6 of a computer for Mexico and one computer for United States. 
C)  one computer for both Mexico and the United States. 
D)  1/6 of computer for both Mexico and the United States. 
A)  one computer for Mexico and 1/6 of a computer for the United States. 
B)  1/6 of a computer for Mexico and one computer for United States. 
C)  one computer for both Mexico and the United States. 
D)  1/6 of computer for both Mexico and the United States.

Question 3

Globalization is the advance of human cooperation across national boundaries.

Accepted Answer

A) True 
 B)False

Question 4

According to Adam Smith:

Accepted Answer

A)  trade is a way for rich people to exploit poor people. 
B)  trade within a nation benefits people but international trade does not. 
C)  trade does not benefit anyone. 
D)  people buy goods for which they have higher opportunity costs than others. 
A)  trade is a way for rich people to exploit poor people. 
B)  trade within a nation benefits people but international trade does not. 
C)  trade does not benefit anyone. 
D)  people buy goods for which they have higher opportunity costs than others.

Question 5

Anita is a wonderful baker and can bake 10 cakes in a day,but then has no time left to make cookies.If she bakes only cookies,she can make 200 cookies in a day.John can make equally delicious cakes and cookies but can only make seven cakes or 100 cookies in a day.Based on this information,which of the following statements is true?

Accepted Answer

A)  Anita should split her time between cakes and cookies.John should bake cakes. 
B)  Anita should bake cakes and John should bake cookies. 
C)  Anita and John should split their time equally between cakes and cookies. 
D)  Anita should bake cookies and John should bake cakes. 
A)  Anita should split her time between cakes and cookies.John should bake cakes. 
B)  Anita should bake cakes and John should bake cookies. 
C)  Anita and John should split their time equally between cakes and cookies. 
D)  Anita should bake cookies and John should bake cakes.

Question 6

Which of the following best describes the principle of comparative advantage?

Accepted Answer

A)  Some people can produce the same good better than other producers can. 
B)  Someone has the ability to produce the same good using fewer inputs than another producer. 
C)  Someone has the ability to produce the same good for the lowest opportunity cost. 
D)  To produce more of one good,people have to produce less of another good. 
A)  Some people can produce the same good better than other producers can. 
B)  Someone has the ability to produce the same good using fewer inputs than another producer. 
C)  Someone has the ability to produce the same good for the lowest opportunity cost. 
D)  To produce more of one good,people have to produce less of another good.

Question 7

In many universities,graduate students are employed to teach introductory undergraduate courses,even though the full professors at these universities have more experience and could potentially teach these courses better.Which of the following best explains why universities choose to hire graduate students instead of full professors to teach their introductory courses?

Accepted Answer

A)  Graduate students are cheaper. 
B)  The opportunity cost of teaching an introductory course is higher for full professors than for graduate students. 
C)  The opportunity cost of teaching an introductory course is higher for graduate students than for full professors. 
D)  Introductory classes are the best place for graduate students to build their teaching skills. 
A)  Graduate students are cheaper. 
B)  The opportunity cost of teaching an introductory course is higher for full professors than for graduate students. 
C)  The opportunity cost of teaching an introductory course is higher for graduate students than for full professors. 
D)  Introductory classes are the best place for graduate students to build their teaching skills.

Question 8

The production possibilities frontier's negative slope illustrates the notion of trade-offs-producing more units of one good reduces the amount of another good's production.

Accepted Answer

A) True 
 B)False

Question 9

Jim has an old (working)television that he would like to get rid of now that he has purchased a new high-definition,flat-screen television.The old television is no longer worth anything to him now that he has his new flat-screen TV.Veronica on the other hand has an even older television that has just broken down.She would pay up to $50 for any working TV.If Jim trades Veronica his old television for $50,both are better off but total value in society does not increase.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following best explains the term "specialization" with respect to trade?

Accepted Answer

A)  Specialization occurs when a people concentrate their productive resources on the goods and services they can produce most efficiently. 
B)  Specialization occurs when one person can produce more of a particular good than another person. 
C)  Specialization refers to the absolute advantage that a person enjoys in the production of goods and services. 
D)  Specialization refers to the ability of a person to produce more of a good than his or her trading partners. 
A)  Specialization occurs when a people concentrate their productive resources on the goods and services they can produce most efficiently. 
B)  Specialization occurs when one person can produce more of a particular good than another person. 
C)  Specialization refers to the absolute advantage that a person enjoys in the production of goods and services. 
D)  Specialization refers to the ability of a person to produce more of a good than his or her trading partners.

Question 11

Owen Wilson is an actor who has acted in many action comedy films.In contrast,Tom Cruise has acted in many serious action films.How might the theory of specialization be applied to them?

Accepted Answer

A)  Owen Wilson has fully specialized in action comedy movies while Tom Cruise has fully specialized in serious action movies. 
B)  Due to filmography protectionism,Owen Wilson is unable to secure serious action roles,and Tom Cruise is unable to secure action comedy roles. 
C)  Casting directors see Owen Wilson as relatively better at action comedy roles and Tom Cruise as relatively better at serious action roles and cast them accordingly. 
D)  Owen Wilson does not have the talent necessary to act in more serious films. 
A)  Owen Wilson has fully specialized in action comedy movies while Tom Cruise has fully specialized in serious action movies. 
B)  Due to filmography protectionism,Owen Wilson is unable to secure serious action roles,and Tom Cruise is unable to secure action comedy roles. 
C)  Casting directors see Owen Wilson as relatively better at action comedy roles and Tom Cruise as relatively better at serious action roles and cast them accordingly. 
D)  Owen Wilson does not have the talent necessary to act in more serious films.

Question 12

Roses grown in Kenya travel to Amsterdam and ultimately to your local flower shop because:

Accepted Answer

A)  the World Rose Commission coordinates the different elements of the rose industry. 
B)  markets coordinate the specialization and trade necessary for the flower industry to function. 
C)  of the trade agreement between the governments of Kenya and Amsterdam. 
D)  customers are willing to pay more for roses that pass through Amsterdam. 
A)  the World Rose Commission coordinates the different elements of the rose industry. 
B)  markets coordinate the specialization and trade necessary for the flower industry to function. 
C)  of the trade agreement between the governments of Kenya and Amsterdam. 
D)  customers are willing to pay more for roses that pass through Amsterdam.

Question 13

Use the following to answer questions 
Figure: PPF Goods X & Y  
-(Figure: PPF Goods X & Y)Refer to the figure.Which of the points representing various consumption possibilities for the country portrayed above is only attainable through foreign trade?

Accepted Answer

A)  Point A 
B)  Point B 
C)  Point C 
D)  Both points C and B 
A)  Point A 
B)  Point B 
C)  Point C 
D)  Both points C and B

Question 14

The main reason why specialization can raise productivity is that:

Accepted Answer

A)  knowledge in human brains is limited. 
B)  some persons have more knowledge than others. 
C)  it is always good to know less than more. 
D)  it is impossible to learn anything well. 
A)  knowledge in human brains is limited. 
B)  some persons have more knowledge than others. 
C)  it is always good to know less than more. 
D)  it is impossible to learn anything well.

Question 15

To benefit from trade,a country must have the absolute advantage in producing its traded good.

Accepted Answer

A) True 
 B)False

Question 16

Suppose France can produce four phones or three computers with one unit of labor,and Sweden can produce one phone or two computers with one unit of labor.If France can trade only with Sweden,then the theory of comparative advantage suggests that:

Accepted Answer

A)  France should specialize in producing phones and import computers from Sweden. 
B)  France should specialize in producing computers and import phones from Sweden. 
C)  France should produce both phones and computers,and import nothing from Sweden. 
D)  France should import both phones and computers from Sweden. 
A)  France should specialize in producing phones and import computers from Sweden. 
B)  France should specialize in producing computers and import phones from Sweden. 
C)  France should produce both phones and computers,and import nothing from Sweden. 
D)  France should import both phones and computers from Sweden.

Question 17

The production possibilities frontier shows all the combinations of goods that a country can produce given its productivity and supply of inputs.

Accepted Answer

A) True 
 B)False

Question 18

The points on the production possibilities frontier show the cost of the different goods that a country can produce.

Accepted Answer

A) True 
 B)False

Question 19

Gains from international trade are best characterized as potential gains from:

Accepted Answer

A)  importation. 
B)  exportation. 
C)  neither importation nor exportation. 
D)  both importation and exportation. 
A)  importation. 
B)  exportation. 
C)  neither importation nor exportation. 
D)  both importation and exportation.

Question 20

Trade creates value by moving goods from people that value them less to people that value them more.

Accepted Answer

A) True 
 B)False

Without trade,specialization is impractical.

Use the following to answer questions Figure: PPF Mexico & United States -(Figure: PPF Mexico & United States)Use the figure in which both Mexico and the United States each have 24 units of labor.The opportunity costs of producing one shirt are:

Globalization is the advance of human cooperation across national boundaries.

According to Adam Smith:

Which of the following best describes the principle of comparative advantage?

The production possibilities frontier's negative slope illustrates the notion of trade-offs-producing more units of one good reduces the amount of another good's production.

Which of the following best explains the term "specialization" with respect to trade?

Owen Wilson is an actor who has acted in many action comedy films.In contrast,Tom Cruise has acted in many serious action films.How might the theory of specialization be applied to them?

Roses grown in Kenya travel to Amsterdam and ultimately to your local flower shop because:

Use the following to answer questions Figure: PPF Goods X & Y -(Figure: PPF Goods X & Y)Refer to the figure.Which of the points representing various consumption possibilities for the country portrayed above is only attainable through foreign trade?

The main reason why specialization can raise productivity is that:

To benefit from trade,a country must have the absolute advantage in producing its traded good.

Suppose France can produce four phones or three computers with one unit of labor,and Sweden can produce one phone or two computers with one unit of labor.If France can trade only with Sweden,then the theory of comparative advantage suggests that:

The production possibilities frontier shows all the combinations of goods that a country can produce given its productivity and supply of inputs.

The points on the production possibilities frontier show the cost of the different goods that a country can produce.

Gains from international trade are best characterized as potential gains from:

Trade creates value by moving goods from people that value them less to people that value them more.

The Big Ideas

Supply and Demand

Equilibrium- How Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters

Exam 2: The Power of Trade

Without trade,specialization is impractical.

Use the following to answer questions Figure: PPF Mexico & United States -(Figure: PPF Mexico & United States)Use the figure in which both Mexico and the United States each have 24 units of labor.The opportunity costs of producing one shirt are:

Globalization is the advance of human cooperation across national boundaries.

According to Adam Smith:

Which of the following best describes the principle of comparative advantage?

The production possibilities frontier's negative slope illustrates the notion of trade-offs-producing more units of one good reduces the amount of another good's production.

Which of the following best explains the term "specialization" with respect to trade?

Owen Wilson is an actor who has acted in many action comedy films.In contrast,Tom Cruise has acted in many serious action films.How might the theory of specialization be applied to them?

Roses grown in Kenya travel to Amsterdam and ultimately to your local flower shop because:

Use the following to answer questions Figure: PPF Goods X & Y -(Figure: PPF Goods X & Y)Refer to the figure.Which of the points representing various consumption possibilities for the country portrayed above is only attainable through foreign trade?

The main reason why specialization can raise productivity is that:

To benefit from trade,a country must have the absolute advantage in producing its traded good.

Suppose France can produce four phones or three computers with one unit of labor,and Sweden can produce one phone or two computers with one unit of labor.If France can trade only with Sweden,then the theory of comparative advantage suggests that:

The production possibilities frontier shows all the combinations of goods that a country can produce given its productivity and supply of inputs.

The points on the production possibilities frontier show the cost of the different goods that a country can produce.

Gains from international trade are best characterized as potential gains from:

Trade creates value by moving goods from people that value them less to people that value them more.

The Big Ideas

Supply and Demand

Equilibrium- How Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Growth,capital Accumulation

Saving,investment,and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters