Question 1

The economic question of "what to produce" is often referred to as the distribution question.

Accepted Answer

A) True 
 B)False

Question 2

If Robin has an absolute advantage in both gardening and baking when compared to Robert,then

Accepted Answer

A) Robin cannot benefit by trading with Robert 
B) Robin can benefit by specializing in gardening if Robert specializes in baking 
C) Robin can benefit by specializing in baking if Robert specializes in gardening 
D) Robin and Robert may benefit from trading,but there is insufficient information to determine who should specialize in what 
E) neither Robin nor Robert can benefit from trading with the other 
A) Robin cannot benefit by trading with Robert 
B) Robin can benefit by specializing in gardening if Robert specializes in baking 
C) Robin can benefit by specializing in baking if Robert specializes in gardening 
D) Robin and Robert may benefit from trading,but there is insufficient information to determine who should specialize in what 
E) neither Robin nor Robert can benefit from trading with the other

Question 3

A production possibilities frontier will be bowed out if

Accepted Answer

A) there is scarcity 
B) resources are used efficiently 
C) production of one good involves an opportunity cost 
D) resources are not perfectly adaptable to making each good 
E) technology is improving 
A) there is scarcity 
B) resources are used efficiently 
C) production of one good involves an opportunity cost 
D) resources are not perfectly adaptable to making each good 
E) technology is improving

Question 4

Specialization of labor

Accepted Answer

A) increases productivity without creating any problems 
B) reduces productivity,and is usually eliminated by business firms 
C) can create problems of boredom and repetitive motion injuries 
D) prevents the introduction of more sophisticated and efficient production techniques 
E) ignores individual preferences and natural abilities 
A) increases productivity without creating any problems 
B) reduces productivity,and is usually eliminated by business firms 
C) can create problems of boredom and repetitive motion injuries 
D) prevents the introduction of more sophisticated and efficient production techniques 
E) ignores individual preferences and natural abilities

Question 5

On a straight-line production possibilities frontier,which of the following is true?

Accepted Answer

A) The problem of scarcity does not exist. 
B) Resources are imperfect substitutes. 
C) Opportunity costs are constant. 
D) Technology is rapidly expanding. 
E) Some resources are not being used efficiently. 
A) The problem of scarcity does not exist. 
B) Resources are imperfect substitutes. 
C) Opportunity costs are constant. 
D) Technology is rapidly expanding. 
E) Some resources are not being used efficiently.

Question 6

Exhibit 2-4  
-Which of the following points in Exhibit 2-4 is unattainable,given the quantity of resources and level of technology?

Accepted Answer

A) h 
B) g 
C) f 
D) i 
E) e 
A) h 
B) g 
C) f 
D) i 
E) e

Question 7

If Jason can wash a car in 20 minutes and wash a dog in 10 minutes,and Megan can wash a car in 15 minutes and wash a dog in 15 minutes,which of the following statements is true?

Accepted Answer

A) The opportunity cost of washing a car is greater for Megan. 
B) The opportunity cost of washing a car is one dog bath for Jason. 
C) Megan could wash two cars in the time it takes to wash a dog. 
D) Jason has both a comparative and an absolute advantage in washing a dog. 
E) The opportunity cost of washing a dog is greater for Jason. 
A) The opportunity cost of washing a car is greater for Megan. 
B) The opportunity cost of washing a car is one dog bath for Jason. 
C) Megan could wash two cars in the time it takes to wash a dog. 
D) Jason has both a comparative and an absolute advantage in washing a dog. 
E) The opportunity cost of washing a dog is greater for Jason.

Question 8

Each point along a nation's production possibilities frontier represents efficient use of all resources.

Accepted Answer

A) True 
 B)False

Question 9

The opportunity cost of an activity is best measured

Accepted Answer

A) only by the monetary costs 
B) by the number of alternative activities that were forgone 
C) by the cost difference between the chosen activity and the next best alternative 
D) by the value expected from the best alternative that is forgone 
E) as the time wasted choosing among various activities 
A) only by the monetary costs 
B) by the number of alternative activities that were forgone 
C) by the cost difference between the chosen activity and the next best alternative 
D) by the value expected from the best alternative that is forgone 
E) as the time wasted choosing among various activities

Question 10

Exhibit 2-9  
-Current production at which labeled point in Exhibit 2-9 would lead to the largest outward shift in the production possibilities frontier in a later year?

Accepted Answer

A) point a because this point represents a greater consumption level than point b 
B) point b because this point represents greater total production than the other two points 
C) point c because this point represents a greater consumption level than the other two points 
D) point b because this point represents greater production of capital than point c 
E) point c because this point represents greater production of capital than the other two points 
A) point a because this point represents a greater consumption level than point b 
B) point b because this point represents greater total production than the other two points 
C) point c because this point represents a greater consumption level than the other two points 
D) point b because this point represents greater production of capital than point c 
E) point c because this point represents greater production of capital than the other two points

Question 11

Because of specialization and comparative advantage,most people

Accepted Answer

A) consume only what they produce themselves 
B) consume the products produced by their family and friends 
C) consume the products of many other specialists 
D) do not use money as a medium of exchange 
E) share whatever they produce 
A) consume only what they produce themselves 
B) consume the products produced by their family and friends 
C) consume the products of many other specialists 
D) do not use money as a medium of exchange 
E) share whatever they produce

Question 12

John takes 10 minutes to iron a shirt and 20 minutes to type a paper.Harry takes 10 minutes to iron a shirt and 30 minutes to type a paper.Which of the following statements is correct?

Accepted Answer

A) Harry has a comparative advantage in ironing. 
B) Harry has a comparative advantage in typing. 
C) Harry has an absolute advantage in typing. 
D) Harry has an absolute advantage in ironing. 
E) Neither can gain from specialization and exchange. 
A) Harry has a comparative advantage in ironing. 
B) Harry has a comparative advantage in typing. 
C) Harry has an absolute advantage in typing. 
D) Harry has an absolute advantage in ironing. 
E) Neither can gain from specialization and exchange.

Question 13

An improvement in technology would

Accepted Answer

A) enable the economy to produce outside its original production possibilities frontier 
B) enable the economy to move along its original production possibilities frontier 
C) eliminate scarcity; therefore,the production possibilities frontier would no longer exist 
D) have no effect on the production possibilities frontier 
E) change the production possibilities frontier to a line with a positive slope 
A) enable the economy to produce outside its original production possibilities frontier 
B) enable the economy to move along its original production possibilities frontier 
C) eliminate scarcity; therefore,the production possibilities frontier would no longer exist 
D) have no effect on the production possibilities frontier 
E) change the production possibilities frontier to a line with a positive slope

Question 14

When drawing a production possibilities frontier,all of the following are usually assumed except one.Which is the exception?

Accepted Answer

A) The quantity of resources is rapidly growing. 
B) Technology is fixed. 
C) Resources can be shifted between production of the two goods. 
D) The production possibilities frontier is drawn for a particular time period. 
E) Resources are fully and efficiently employed. 
A) The quantity of resources is rapidly growing. 
B) Technology is fixed. 
C) Resources can be shifted between production of the two goods. 
D) The production possibilities frontier is drawn for a particular time period. 
E) Resources are fully and efficiently employed.

Question 15

The "rules of the game," the set of conditions that shape individual incentives and constraints,are determined by

Accepted Answer

A) the production possibilities frontier 
B) scarcity 
C) technology 
D) the amount of consumer goods in the economy 
E) laws about resource ownership and the role of government 
A) the production possibilities frontier 
B) scarcity 
C) technology 
D) the amount of consumer goods in the economy 
E) laws about resource ownership and the role of government

Question 16

An economic system

Accepted Answer

A) must answer the three economic questions to the satisfaction of everyone in society 
B) must not allow some members of society to gain an unfair advantage when answering the three economic questions 
C) must choose pure capitalism to adequately answer the three economic questions 
D) is a set of social institutions and mechanisms organized to answer the three economic questions 
E) can address problems of scarcity only by embracing the social institution of private property 
A) must answer the three economic questions to the satisfaction of everyone in society 
B) must not allow some members of society to gain an unfair advantage when answering the three economic questions 
C) must choose pure capitalism to adequately answer the three economic questions 
D) is a set of social institutions and mechanisms organized to answer the three economic questions 
E) can address problems of scarcity only by embracing the social institution of private property

Question 17

A production possibilities frontier can shift outward for all of the following reasons except one.Which is the exception?

Accepted Answer

A) a decrease in the unemployment rate 
B) an improvement in labor skills 
C) an improvement in technology 
D) a larger work force 
E) a larger capital stock 
A) a decrease in the unemployment rate 
B) an improvement in labor skills 
C) an improvement in technology 
D) a larger work force 
E) a larger capital stock

Question 18

All of the following are evidence of specialization except

Accepted Answer

A) a solo carpenter who builds a whole bedroom set 
B) restaurants that range from subs to sushi 
C) the credits at the end of a movie 
D) professional mourners in Taiwan 
E) online sellers 
A) a solo carpenter who builds a whole bedroom set 
B) restaurants that range from subs to sushi 
C) the credits at the end of a movie 
D) professional mourners in Taiwan 
E) online sellers

Question 19

The set of mechanisms and institutions that resolve the basic economic questions is called the

Accepted Answer

A) economic system 
B) production possibilities dilemma 
C) business resolution device 
D) absolute advantage determination 
E) comparative advantage determination 
A) economic system 
B) production possibilities dilemma 
C) business resolution device 
D) absolute advantage determination 
E) comparative advantage determination

Question 20

The law of increasing opportunity cost explains why

Accepted Answer

A) opportunity cost is constant along the production possibilities frontier 
B) the production possibilities frontier is downward sloping 
C) the production possibilities frontier is curved 
D) efficient points lie along the production possibilities frontier 
E) technology remains constant along a production possibilities frontier 
A) opportunity cost is constant along the production possibilities frontier 
B) the production possibilities frontier is downward sloping 
C) the production possibilities frontier is curved 
D) efficient points lie along the production possibilities frontier 
E) technology remains constant along a production possibilities frontier

Exam 2: Economic Tools and Economics Systems

The economic question of "what to produce" is often referred to as the distribution question.

If Robin has an absolute advantage in both gardening and baking when compared to Robert,then

A production possibilities frontier will be bowed out if

Specialization of labor

On a straight-line production possibilities frontier,which of the following is true?

Exhibit 2-4 -Which of the following points in Exhibit 2-4 is unattainable,given the quantity of resources and level of technology?

If Jason can wash a car in 20 minutes and wash a dog in 10 minutes,and Megan can wash a car in 15 minutes and wash a dog in 15 minutes,which of the following statements is true?

Each point along a nation's production possibilities frontier represents efficient use of all resources.

The opportunity cost of an activity is best measured

Exhibit 2-9 -Current production at which labeled point in Exhibit 2-9 would lead to the largest outward shift in the production possibilities frontier in a later year?

Because of specialization and comparative advantage,most people

John takes 10 minutes to iron a shirt and 20 minutes to type a paper.Harry takes 10 minutes to iron a shirt and 30 minutes to type a paper.Which of the following statements is correct?

An improvement in technology would

When drawing a production possibilities frontier,all of the following are usually assumed except one.Which is the exception?

The "rules of the game," the set of conditions that shape individual incentives and constraints,are determined by

An economic system

A production possibilities frontier can shift outward for all of the following reasons except one.Which is the exception?

All of the following are evidence of specialization except

The set of mechanisms and institutions that resolve the basic economic questions is called the

The law of increasing opportunity cost explains why

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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