Question 1

The production possibilities frontier represents the boundary between attainable and unattainable prices of commodities.

Accepted Answer

A) True 
 B)False

Question 2

The law of comparative advantage states that the person who should produce a good is the person who

Accepted Answer

A) has the lowest opportunity cost of producing that good 
B) can produce that good using the fewest resources 
C) will produce that good using the most expensive resources 
D) has the most desire for that good 
E) has produced that good in the past 
A) has the lowest opportunity cost of producing that good 
B) can produce that good using the fewest resources 
C) will produce that good using the most expensive resources 
D) has the most desire for that good 
E) has produced that good in the past

Question 3

A production possibilities frontier will shift inward if there is more unemployment of labor.

Accepted Answer

A) True 
 B)False

Question 4

Exhibit 2-10        
-Refer to Exhibit 2-10.Which of the graphs best illustrates the impact on the production possibilities frontier of a dramatic increase in the rate of immigration into a country?

Accepted Answer

A) a 
B) b 
C) c 
D) d 
E) b and c 
A) a 
B) b 
C) c 
D) d 
E) b and c

Question 5

Helen gives up the opportunity to bake 40 cakes for each room she paints; Josh can paint one room in the time it takes him to bake 60 cakes.The opportunity cost of a cake for Josh is

Accepted Answer

A) painting one room 
B) painting 1/40 of a room 
C) painting 1/60 of a room 
D) painting 2/3 of a room 
E) painting 3/2 of a room 
A) painting one room 
B) painting 1/40 of a room 
C) painting 1/60 of a room 
D) painting 2/3 of a room 
E) painting 3/2 of a room

Question 6

Exhibit 2-8  
-Which of the following would cause the production possibilities frontier in Exhibit 2-8 to shift from AA to BA?

Accepted Answer

A) a drought that affected food production but had no effect on education 
B) a technological improvement in education that had no effect on food production 
C) a technological improvement in food production that had no effect on education 
D) a disease that affected students' ability to learn (and therefore education)but not food production 
E) an increase in the size of the labor force that affected both food production and education 
A) a drought that affected food production but had no effect on education 
B) a technological improvement in education that had no effect on food production 
C) a technological improvement in food production that had no effect on education 
D) a disease that affected students' ability to learn (and therefore education)but not food production 
E) an increase in the size of the labor force that affected both food production and education

Question 7

Fast food is faster and cheaper than a similar meal you could prepare for yourself.Which of the following does not explain that fact?

Accepted Answer

A) meal preparation has been divided into many separate tasks 
B) larger-scale production allows the introduction of more efficient machines 
C) workers gain productivity at a task over time 
D) there is less time lost moving from one task to another 
E) workers are more productive when they are being paid 
A) meal preparation has been divided into many separate tasks 
B) larger-scale production allows the introduction of more efficient machines 
C) workers gain productivity at a task over time 
D) there is less time lost moving from one task to another 
E) workers are more productive when they are being paid

Question 8

Suppose you have a choice of working full-time during the summer or going full-time to summer school.Summer tuition and books are $2,200.If you worked,you could make $7,000.Your rent is $1,000 for the summer,regardless of your choice.The opportunity cost of going to summer school is,therefore,

Accepted Answer

A) $2,200 
B) $7,000 
C) $8,000 
D) $9,200 
E) $10,200 
A) $2,200 
B) $7,000 
C) $8,000 
D) $9,200 
E) $10,200

Question 9

In one week,Mohammed can knit 5 sweaters or bake 240 cookies.The opportunity cost per cookie for Mohammed is

Accepted Answer

A) $5 
B) 5 sweaters 
C) 48 sweaters 
D) 1/48 of a sweater 
E) 48 cookies 
A) $5 
B) 5 sweaters 
C) 48 sweaters 
D) 1/48 of a sweater 
E) 48 cookies

Question 10

If Daniel produces one pair of shoes in 4 hours and Sarah produces one pair of shoes in 3 hours,then

Accepted Answer

A) Sarah has a comparative advantage in shoemaking 
B) Daniel has a comparative advantage in shoemaking 
C) Sarah has an absolute and a comparative advantage in shoemaking 
D) Daniel has an absolute and a comparative advantage in shoemaking 
E) Sarah has an absolute advantage in shoemaking 
A) Sarah has a comparative advantage in shoemaking 
B) Daniel has a comparative advantage in shoemaking 
C) Sarah has an absolute and a comparative advantage in shoemaking 
D) Daniel has an absolute and a comparative advantage in shoemaking 
E) Sarah has an absolute advantage in shoemaking

Question 11

A medium of exchange must be

Accepted Answer

A) approved by the government 
B) socially acceptable in exchange for goods and services 
C) easy to reproduce 
D) used to eliminate specialization and the division of labor 
E) used when a system of barter exists 
A) approved by the government 
B) socially acceptable in exchange for goods and services 
C) easy to reproduce 
D) used to eliminate specialization and the division of labor 
E) used when a system of barter exists

Question 12

The production possibilities frontier will shift if there is a change in

Accepted Answer

A) technology 
B) unemployment 
C) product prices 
D) society's preferences for commodities 
E) the quantities of the two goods being produced 
A) technology 
B) unemployment 
C) product prices 
D) society's preferences for commodities 
E) the quantities of the two goods being produced

Question 13

Eileen has a comparative advantage over Jan in piano tuning but not in shoe polishing.Therefore,

Accepted Answer

A) Jan must have an absolute advantage in piano tuning 
B) Eileen must have an absolute advantage in shoe polishing 
C) Jan must have a lower opportunity cost of shoe polishing 
D) Eileen must have an absolute advantage in shoe polishing and in piano tuning 
E) Eileen must have an absolute advantage in piano tuning 
A) Jan must have an absolute advantage in piano tuning 
B) Eileen must have an absolute advantage in shoe polishing 
C) Jan must have a lower opportunity cost of shoe polishing 
D) Eileen must have an absolute advantage in shoe polishing and in piano tuning 
E) Eileen must have an absolute advantage in piano tuning

Question 14

Exhibit 2-12 Maria and Hans Production Possibilities for Laundry and Typing  
-According to Exhibit 2-12,in any given amount of time,

Accepted Answer

A) Maria has an absolute and a comparative advantage in typing 
B) Maria has an absolute and a comparative advantage in doing laundry 
C) Maria has a comparative advantage in both typing and doing laundry 
D) Hans has an absolute and a comparative advantage in typing 
E) Hans has an absolute advantage in doing laundry 
A) Maria has an absolute and a comparative advantage in typing 
B) Maria has an absolute and a comparative advantage in doing laundry 
C) Maria has a comparative advantage in both typing and doing laundry 
D) Hans has an absolute and a comparative advantage in typing 
E) Hans has an absolute advantage in doing laundry

Question 15

The opportunity cost of college is the same for all students who are receiving full-tuition scholarships.

Accepted Answer

A) True 
 B)False

Question 16

A point outside the production possibilities frontier

Accepted Answer

A) represents unemployment of resources 
B) represents full employment of resources 
C) would not represent an efficient combination of goods 
D) cannot be reached using the available technology 
E) is less desirable than one that lies inside the frontier 
A) represents unemployment of resources 
B) represents full employment of resources 
C) would not represent an efficient combination of goods 
D) cannot be reached using the available technology 
E) is less desirable than one that lies inside the frontier

Question 17

Janis mows the lawn in 1 hour and types a paper in 1 hour.Kristen mows the lawn in 2 hours and types a paper in 2 hours.Which of the following statements is true?

Accepted Answer

A) Kristen has an absolute advantage in typing and a comparative advantage in mowing. 
B) Janis has an absolute advantage in both activities and a comparative advantage in typing. 
C) Janis has an absolute advantage in both activities and a comparative advantage in mowing. 
D) The opportunity cost of mowing the lawn is greater for Kristen than it is for Janis. 
E) Neither Janis nor Kristen would gain from specialization. 
A) Kristen has an absolute advantage in typing and a comparative advantage in mowing. 
B) Janis has an absolute advantage in both activities and a comparative advantage in typing. 
C) Janis has an absolute advantage in both activities and a comparative advantage in mowing. 
D) The opportunity cost of mowing the lawn is greater for Kristen than it is for Janis. 
E) Neither Janis nor Kristen would gain from specialization.

Question 18

Points inside the production possibilities frontier represent

Accepted Answer

A) full and efficient use of all resources 
B) inefficiency or unemployment (or both) 
C) currently unattainable combinations of outputs 
D) currently unattainable combinations of resources 
E) the most desirable combinations of outputs 
A) full and efficient use of all resources 
B) inefficiency or unemployment (or both) 
C) currently unattainable combinations of outputs 
D) currently unattainable combinations of resources 
E) the most desirable combinations of outputs

Question 19

A production possibilities frontier can shift inward if there is

Accepted Answer

A) an increase in the unemployment rate 
B) mandatory retirement at age 55 
C) an improvement in technology 
D) a larger work force 
E) a larger capital stock 
A) an increase in the unemployment rate 
B) mandatory retirement at age 55 
C) an improvement in technology 
D) a larger work force 
E) a larger capital stock

Question 20

If you and I agree to exchange four ginger snaps for one chocolate chip cookie,then it must be true that

Accepted Answer

A) we are both at least as well off as we were before 
B) I am better off than I was before,but you are not 
C) you are better off than you were before,but I am not 
D) we are both better off than before 
E) we are both worse off than before 
A) we are both at least as well off as we were before 
B) I am better off than I was before,but you are not 
C) you are better off than you were before,but I am not 
D) we are both better off than before 
E) we are both worse off than before

Exam 2: Economic Tools and Economics Systems

The production possibilities frontier represents the boundary between attainable and unattainable prices of commodities.

The law of comparative advantage states that the person who should produce a good is the person who

A production possibilities frontier will shift inward if there is more unemployment of labor.

Exhibit 2-10 -Refer to Exhibit 2-10.Which of the graphs best illustrates the impact on the production possibilities frontier of a dramatic increase in the rate of immigration into a country?

Helen gives up the opportunity to bake 40 cakes for each room she paints; Josh can paint one room in the time it takes him to bake 60 cakes.The opportunity cost of a cake for Josh is

Exhibit 2-8 -Which of the following would cause the production possibilities frontier in Exhibit 2-8 to shift from AA to BA?

Fast food is faster and cheaper than a similar meal you could prepare for yourself.Which of the following does not explain that fact?

Suppose you have a choice of working full-time during the summer or going full-time to summer school.Summer tuition and books are $2,200.If you worked,you could make $7,000.Your rent is $1,000 for the summer,regardless of your choice.The opportunity cost of going to summer school is,therefore,

In one week,Mohammed can knit 5 sweaters or bake 240 cookies.The opportunity cost per cookie for Mohammed is

If Daniel produces one pair of shoes in 4 hours and Sarah produces one pair of shoes in 3 hours,then

A medium of exchange must be

The production possibilities frontier will shift if there is a change in

Eileen has a comparative advantage over Jan in piano tuning but not in shoe polishing.Therefore,

Exhibit 2-12 Maria and Hans Production Possibilities for Laundry and Typing -According to Exhibit 2-12,in any given amount of time,

The opportunity cost of college is the same for all students who are receiving full-tuition scholarships.

A point outside the production possibilities frontier

Janis mows the lawn in 1 hour and types a paper in 1 hour.Kristen mows the lawn in 2 hours and types a paper in 2 hours.Which of the following statements is true?

Points inside the production possibilities frontier represent

A production possibilities frontier can shift inward if there is

If you and I agree to exchange four ginger snaps for one chocolate chip cookie,then it must be true that

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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