Question 1

Division of labor increases productivity because

Accepted Answer

A) tasks can be assigned according to individual tastes and abilities 
B) workers who repeatedly perform the same tasks become bored 
C) each worker must learn each of the numerous tasks in the total production process 
D) specialization of labor allows for the introduction of cheaper,less sophisticated production techniques 
E) managers can force workers to produce goods that are valued more highly than the costs of producing them. 
A) tasks can be assigned according to individual tastes and abilities 
B) workers who repeatedly perform the same tasks become bored 
C) each worker must learn each of the numerous tasks in the total production process 
D) specialization of labor allows for the introduction of cheaper,less sophisticated production techniques 
E) managers can force workers to produce goods that are valued more highly than the costs of producing them.

Question 2

The typical concave (i.e.,bowed-out)shape of the production possibilities frontier reflects the law of increasing opportunity cost.

Accepted Answer

A) True 
 B)False

Question 3

The cost of attending college

Accepted Answer

A) is entirely monetary and consists of expenditures on tuition,books,transportation,and meals 
B) is not monetary,but consists solely of forgone income 
C) is the most valued alternative given up to attend college 
D) is negligible for most people,because they really have no choice but to attend college 
E) is the same whether you attend a public or a private college 
A) is entirely monetary and consists of expenditures on tuition,books,transportation,and meals 
B) is not monetary,but consists solely of forgone income 
C) is the most valued alternative given up to attend college 
D) is negligible for most people,because they really have no choice but to attend college 
E) is the same whether you attend a public or a private college

Question 4

It is possible for one person to have an absolute advantage in two tasks and a comparative advantage in only one.

Accepted Answer

A) True 
 B)False

Question 5

The opportunity cost of going to college is best measured by the

Accepted Answer

A) cost of room and board 
B) cost of tuition 
C) cost of room and board plus tuition 
D) income forgone by not working,plus tuition 
E) income forgone by not working,plus tuition and room and board 
A) cost of room and board 
B) cost of tuition 
C) cost of room and board plus tuition 
D) income forgone by not working,plus tuition 
E) income forgone by not working,plus tuition and room and board

Question 6

Exhibit 2-7  
-In Exhibit 2-7,the opportunity cost of moving from point b to d is

Accepted Answer

A) 30 mufflers 
B) 50 mufflers 
C) 100 socks 
D) 150 socks 
E) 250 socks 
A) 30 mufflers 
B) 50 mufflers 
C) 100 socks 
D) 150 socks 
E) 250 socks

Question 7

In one week,Mohammed can knit 5 sweaters or bake 240 cookies.In one week,Tetah can knit 15 sweaters or bake 480 cookies.Mohammed and Tetah would produce the maximum quantities of cookies and sweaters if

Accepted Answer

A) Mohammed knitted and baked and Tetah did nothing 
B) Tetah knitted and baked and Mohammed did nothing 
C) Mohammed knitted and Tetah baked 
D) Tetah knitted and Mohammed baked 
E) Mohammed knitted and baked and Tetah just knitted 
A) Mohammed knitted and baked and Tetah did nothing 
B) Tetah knitted and baked and Mohammed did nothing 
C) Mohammed knitted and Tetah baked 
D) Tetah knitted and Mohammed baked 
E) Mohammed knitted and baked and Tetah just knitted

Question 8

The law of comparative advantage says that

Accepted Answer

A) the individual with the lowest opportunity cost of producing a particular good should produce it 
B) comparative advantage exists only when one person has an absolute advantage in the production of two goods 
C) whoever has a comparative advantage in producing a good also has an absolute advantage in producing that good 
D) whoever has an absolute advantage in producing a good also has a comparative advantage in producing that good 
E) gains from trade are possible only when one person has the comparative advantage in producing both goods 
A) the individual with the lowest opportunity cost of producing a particular good should produce it 
B) comparative advantage exists only when one person has an absolute advantage in the production of two goods 
C) whoever has a comparative advantage in producing a good also has an absolute advantage in producing that good 
D) whoever has an absolute advantage in producing a good also has a comparative advantage in producing that good 
E) gains from trade are possible only when one person has the comparative advantage in producing both goods

Question 9

If an economy is operating at a point inside the production possibilities frontier,then

Accepted Answer

A) some of the nation's resources are unemployed 
B) the production decisions are made by the government 
C) unlimited resources must satisfy scarce desires 
D) there is a scarcity of human resources relative to human wants therefore society must have some mechanism for making choices 
E) society is paying too much for wages 
A) some of the nation's resources are unemployed 
B) the production decisions are made by the government 
C) unlimited resources must satisfy scarce desires 
D) there is a scarcity of human resources relative to human wants therefore society must have some mechanism for making choices 
E) society is paying too much for wages

Question 10

If Monica has a comparative advantage in baking and George has a comparative advantage in sewing,then

Accepted Answer

A) Monica must have an absolute advantage in baking 
B) Monica must have an absolute advantage in sewing 
C) George must have an absolute advantage in baking 
D) George must have an absolute advantage in sewing 
E) we can conclude nothing about absolute advantage 
A) Monica must have an absolute advantage in baking 
B) Monica must have an absolute advantage in sewing 
C) George must have an absolute advantage in baking 
D) George must have an absolute advantage in sewing 
E) we can conclude nothing about absolute advantage

Question 11

Opportunity cost is defined

Accepted Answer

A) only in terms of money spent 
B) as the value of all alternatives not chosen 
C) as the value of the best alternative not chosen 
D) as the difference between the benefits from a choice and the benefits from the next best alternative 
E) as the difference between the benefits from a choice and the costs of that choice 
A) only in terms of money spent 
B) as the value of all alternatives not chosen 
C) as the value of the best alternative not chosen 
D) as the difference between the benefits from a choice and the benefits from the next best alternative 
E) as the difference between the benefits from a choice and the costs of that choice

Question 12

The concave shape of a production possibilities frontier showing possible output levels of good A and good B indicates that if the economy produces more and more of good B,

Accepted Answer

A) larger and larger amounts of good A must be sacrificed 
B) smaller and smaller amounts of good A must be sacrificed 
C) more of good A will be produced 
D) the amount of resources available in the economy must be increased 
E) there must be an improvement in technology 
A) larger and larger amounts of good A must be sacrificed 
B) smaller and smaller amounts of good A must be sacrificed 
C) more of good A will be produced 
D) the amount of resources available in the economy must be increased 
E) there must be an improvement in technology

Question 13

Absolute advantage is based on opportunity cost.

Accepted Answer

A) True 
 B)False

Question 14

Exhibit 2-11    
-Refer to exhibit 2-11.The United States has an absolute advantage in bothe the production of T-shirts and rice.

Accepted Answer

A) True 
 B)False

Question 15

Comparative advantage is based on opportunity costs.

Accepted Answer

A) True 
 B)False

Question 16

Expenses for room and board

Accepted Answer

A) are opportunity costs of attending college,because they are subsidized by the government or by the college 
B) are opportunity costs of attending college since they involve cash expenditures 
C) are opportunity costs of attending college if you are on scholarship,but not otherwise 
D) are not usually part of the opportunity cost of attending college,because you would have to live somewhere and eat something even if you didn't attend college 
E) are not usually part of the opportunity cost of attending college,because they are already included in room and board charges,and we wish to avoid double counting 
A) are opportunity costs of attending college,because they are subsidized by the government or by the college 
B) are opportunity costs of attending college since they involve cash expenditures 
C) are opportunity costs of attending college if you are on scholarship,but not otherwise 
D) are not usually part of the opportunity cost of attending college,because you would have to live somewhere and eat something even if you didn't attend college 
E) are not usually part of the opportunity cost of attending college,because they are already included in room and board charges,and we wish to avoid double counting

Question 17

The "invisible hand" described by Adam Smith refers to the

Accepted Answer

A) allocative role of markets and market forces 
B) importance of government intervention and central planning 
C) actions of successful entrepreneurs in directing the economy 
D) role of monopolized industries in leading the nation 
E) value of religious belief in creating an ideal economy 
A) allocative role of markets and market forces 
B) importance of government intervention and central planning 
C) actions of successful entrepreneurs in directing the economy 
D) role of monopolized industries in leading the nation 
E) value of religious belief in creating an ideal economy

Question 18

In one week,Tetah can knit 15 sweaters or bake 480 cookies.The opportunity cost per cookie for Tetah is

Accepted Answer

A) $15 
B) 15 sweaters 
C) 32 sweaters 
D) 1/32 of a sweater 
E) 480 sweaters 
A) $15 
B) 15 sweaters 
C) 32 sweaters 
D) 1/32 of a sweater 
E) 480 sweaters

Exam 2: Economic Tools and Economics Systems

Division of labor increases productivity because

The typical concave (i.e.,bowed-out)shape of the production possibilities frontier reflects the law of increasing opportunity cost.

The cost of attending college

It is possible for one person to have an absolute advantage in two tasks and a comparative advantage in only one.

The opportunity cost of going to college is best measured by the

Exhibit 2-7 -In Exhibit 2-7,the opportunity cost of moving from point b to d is

In one week,Mohammed can knit 5 sweaters or bake 240 cookies.In one week,Tetah can knit 15 sweaters or bake 480 cookies.Mohammed and Tetah would produce the maximum quantities of cookies and sweaters if

The law of comparative advantage says that

If an economy is operating at a point inside the production possibilities frontier,then

If Monica has a comparative advantage in baking and George has a comparative advantage in sewing,then

Opportunity cost is defined

The concave shape of a production possibilities frontier showing possible output levels of good A and good B indicates that if the economy produces more and more of good B,

Absolute advantage is based on opportunity cost.

Exhibit 2-11 -Refer to exhibit 2-11.The United States has an absolute advantage in bothe the production of T-shirts and rice.

Comparative advantage is based on opportunity costs.

Expenses for room and board

The "invisible hand" described by Adam Smith refers to the

In one week,Tetah can knit 15 sweaters or bake 480 cookies.The opportunity cost per cookie for Tetah is

The Art and Science of Economic Analysis

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

Externalities and the Environment

International Finance

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

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