Question 1

Increases in resources or improvements in technology will cause the production possibilities frontier to

Accepted Answer

A) shift outward 
B) shift inward 
C) become a straight line 
D) become horizontal 
E) become vertical 
A) shift outward 
B) shift inward 
C) become a straight line 
D) become horizontal 
E) become vertical

Question 2

The opportunity cost of going to college includes the costs of tuition,books,fees,and

Accepted Answer

A) nothing else 
B) housing 
C) housing and food 
D) earnings forgone by not working full-time 
E) housing,food,and earnings forgone by not working full-time 
A) nothing else 
B) housing 
C) housing and food 
D) earnings forgone by not working full-time 
E) housing,food,and earnings forgone by not working full-time

Question 3

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 1 hour.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 4

It is impossible for one person to have a comparative advantage in all tasks.

Accepted Answer

A) True 
 B)False

Question 5

Opportunity cost is objective; therefore,its value does not change as circumstances change.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following would shift the production possibilities frontier outward?

Accepted Answer

A) a reduction in inefficiency 
B) a reduction in the size of the labor force 
C) an improvement in technology 
D) a change in the combination of goods produced 
E) increasing opportunity costs 
A) a reduction in inefficiency 
B) a reduction in the size of the labor force 
C) an improvement in technology 
D) a change in the combination of goods produced 
E) increasing opportunity costs

Question 7

The primary differences in economic structure among different countries relate to ownership of resources and the manner in which economic activities are coordinated.

Accepted Answer

A) True 
 B)False

Question 8

The mixed economy is the dominant economic system in the world because

Accepted Answer

A) custom and religion have no influence on economic decisions in these systems 
B) pure capitalist economies have placed more control in the hands of individuals in recent years 
C) there is public (i.e.,governmental)ownership of resources but regulation of government by individuals reduces some of the flaws of pure capitalism 
D) there is private ownership of property but government regulation of individuals reduces some of the flaws of pure capitalism 
E) governments in pure command economies have increased their control over decision-making in recent years 
A) custom and religion have no influence on economic decisions in these systems 
B) pure capitalist economies have placed more control in the hands of individuals in recent years 
C) there is public (i.e.,governmental)ownership of resources but regulation of government by individuals reduces some of the flaws of pure capitalism 
D) there is private ownership of property but government regulation of individuals reduces some of the flaws of pure capitalism 
E) governments in pure command economies have increased their control over decision-making in recent years

Question 9

Division of labor allows people to do tasks for which they have greater natural ability.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following provide the best evidence of specialization?

Accepted Answer

A) a firm that produces a line of related products,such as eight kinds of breakfast cereal 
B) an architect who is willing to practice in only one geographic area 
C) a physician that practices in a specialty area such as cardiology or orthopedic surgery 
D) a family that eats at Wendy's every Thursday night 
E) a retailer that sells goods but provides no services 
A) a firm that produces a line of related products,such as eight kinds of breakfast cereal 
B) an architect who is willing to practice in only one geographic area 
C) a physician that practices in a specialty area such as cardiology or orthopedic surgery 
D) a family that eats at Wendy's every Thursday night 
E) a retailer that sells goods but provides no services

Question 11

Opportunity cost is always measured in dollar terms,rather than in terms of real goods and services.

Accepted Answer

A) True 
 B)False

Question 12

One flaw of pure capitalism is that a person who owns no resources could starve.

Accepted Answer

A) True 
 B)False

Question 13

Barter is

Accepted Answer

A) illegal in the United States 
B) an efficient system of exchange 
C) most useful when there is much specialization and international trade 
D) only possible if money is used as a medium of exchange 
E) the direct exchange of goods,without the use of money 
A) illegal in the United States 
B) an efficient system of exchange 
C) most useful when there is much specialization and international trade 
D) only possible if money is used as a medium of exchange 
E) the direct exchange of goods,without the use of money

Question 14

Which of the following is a characteristic of a pure command economy?

Accepted Answer

A) all resources are privately owned 
B) economic activity is coordinated by the price system 
C) competitive markets guide resources to their highest-valued uses 
D) centralized economic planning is used to answer the basic economic questions 
E) economic choices are voluntary and are based on rational self-interest 
A) all resources are privately owned 
B) economic activity is coordinated by the price system 
C) competitive markets guide resources to their highest-valued uses 
D) centralized economic planning is used to answer the basic economic questions 
E) economic choices are voluntary and are based on rational self-interest

Question 15

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

Accepted Answer

A) $480 
B) 480 cookies 
C) 32 cookies 
D) 1/32 of a cookie 
E) 15 cookies 
A) $480 
B) 480 cookies 
C) 32 cookies 
D) 1/32 of a cookie 
E) 15 cookies

Question 16

If Helen gives up the opportunity to bake 40 cakes for each room she paints and Josh can paint one room in the time it takes him to bake 60 cakes,which of the following is true?

Accepted Answer

A) The opportunity cost of painting is higher for Helen. 
B) The opportunity cost of baking cakes is lower for Josh. 
C) The opportunity cost of painting one room is 1/40 of a cake for Helen. 
D) The opportunity cost of baking one cake is 60 rooms painted for Josh. 
E) The opportunity cost of cakes cannot be computed. 
A) The opportunity cost of painting is higher for Helen. 
B) The opportunity cost of baking cakes is lower for Josh. 
C) The opportunity cost of painting one room is 1/40 of a cake for Helen. 
D) The opportunity cost of baking one cake is 60 rooms painted for Josh. 
E) The opportunity cost of cakes cannot be computed.

Question 17

At various points along the production possibilities frontier,

Accepted Answer

A) the greatest achievable output levels are illustrated 
B) resources are not fully employed 
C) more of one good can be obtained without giving up more of the other 
D) more efficient output levels are possible 
E) society is equally well off 
A) the greatest achievable output levels are illustrated 
B) resources are not fully employed 
C) more of one good can be obtained without giving up more of the other 
D) more efficient output levels are possible 
E) society is equally well off

Question 18

The U.S.economy is best characterized as

Accepted Answer

A) pure capitalism 
B) a command economy 
C) socialism 
D) a mixed capitalist economy 
E) market socialism 
A) pure capitalism 
B) a command economy 
C) socialism 
D) a mixed capitalist economy 
E) market socialism

Question 19

Exhibit 2-4
 
-Point g in Exhibit 2-4 is efficient because

Accepted Answer

A) the only way to increase production of A is by decreasing production of B 
B) the economy can increase production of both A and B from point b 
C) it is impossible to move to any other point along the production possibilities frontier 
D) it is impossible to move to any other point inside the production possibilities frontier 
E) no other production possibilities frontier exists 
A) the only way to increase production of A is by decreasing production of B 
B) the economy can increase production of both A and B from point b 
C) it is impossible to move to any other point along the production possibilities frontier 
D) it is impossible to move to any other point inside the production possibilities frontier 
E) no other production possibilities frontier exists

Question 20

Exhibit 2-4
 
-Point e in Exhibit 2-4 represents

Accepted Answer

A) an attainable combination of good A and good B 
B) an unattainable combination of good A and good B 
C) the combination of good A and good B that the economy will produce 
D) one possible efficient combination of good A and good B 
E) the only unattainable combination of good A and good B 
A) an attainable combination of good A and good B 
B) an unattainable combination of good A and good B 
C) the combination of good A and good B that the economy will produce 
D) one possible efficient combination of good A and good B 
E) the only unattainable combination of good A and good B

Exam 2: Economic Tools and Economics Systems

Increases in resources or improvements in technology will cause the production possibilities frontier to

The opportunity cost of going to college includes the costs of tuition,books,fees,and

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 1 hour.Which of the following statements is true?

It is impossible for one person to have a comparative advantage in all tasks.

Opportunity cost is objective; therefore,its value does not change as circumstances change.

Which of the following would shift the production possibilities frontier outward?

The primary differences in economic structure among different countries relate to ownership of resources and the manner in which economic activities are coordinated.

The mixed economy is the dominant economic system in the world because

Division of labor allows people to do tasks for which they have greater natural ability.

Which of the following provide the best evidence of specialization?

Opportunity cost is always measured in dollar terms,rather than in terms of real goods and services.

One flaw of pure capitalism is that a person who owns no resources could starve.

Barter is

Which of the following is a characteristic of a pure command economy?

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

If Helen gives up the opportunity to bake 40 cakes for each room she paints and Josh can paint one room in the time it takes him to bake 60 cakes,which of the following is true?

At various points along the production possibilities frontier,

The U.S.economy is best characterized as

Exhibit 2-4 -Point g in Exhibit 2-4 is efficient because

Exhibit 2-4 -Point e in Exhibit 2-4 represents

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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