Question 1

A rational decision maker engages in an activity if that activity is more attractive than the best alternative.

Accepted Answer

A) True 
 B)False

Question 2

Exhibit 2-12 Maria and Hans Production Possibilities for Laundry and Typing  
-According to Exhibit 2-12,Hans' opportunity cost of typing one page is

Accepted Answer

A) 12 loads of laundry 
B) 8 loads of laundry 
C) 3/2 of a load of laundry 
D) 2/3 of a load of laundry 
E) impossible to compute 
A) 12 loads of laundry 
B) 8 loads of laundry 
C) 3/2 of a load of laundry 
D) 2/3 of a load of laundry 
E) impossible to compute

Question 3

If I trade a ginger snap for a chocolate chip cookie,I am engaging in

Accepted Answer

A) barter 
B) comparative advantage 
C) absolute advantage 
D) privatization 
E) division of labor 
A) barter 
B) comparative advantage 
C) absolute advantage 
D) privatization 
E) division of labor

Question 4

If Sam can chop up more carrots per minute than Joe can,then

Accepted Answer

A) Joe has an absolute advantage in carrot chopping 
B) Joe must have a comparative advantage in carrot chopping 
C) Sam has an absolute advantage in carrot chopping 
D) Sam must have a comparative advantage in carrot chopping 
E) we can conclude nothing about absolute advantage 
A) Joe has an absolute advantage in carrot chopping 
B) Joe must have a comparative advantage in carrot chopping 
C) Sam has an absolute advantage in carrot chopping 
D) Sam must have a comparative advantage in carrot chopping 
E) we can conclude nothing about absolute advantage

Question 5

A country has an absolute advantage in the production of a good if that country

Accepted Answer

A) can produce the good using fewer resources than another country would require 
B) has the lowest opportunity cost of producing the good and can produce it with the fewest resources 
C) has the lowest opportunity cost of producing the good regardless of whether it is produced with the fewest resources 
D) has the greatest opportunity cost of producing the good regardless of whether it is produced with the fewest resources 
E) has the greatest opportunity cost of producing the good and produces it with the fewest resources 
A) can produce the good using fewer resources than another country would require 
B) has the lowest opportunity cost of producing the good and can produce it with the fewest resources 
C) has the lowest opportunity cost of producing the good regardless of whether it is produced with the fewest resources 
D) has the greatest opportunity cost of producing the good regardless of whether it is produced with the fewest resources 
E) has the greatest opportunity cost of producing the good and produces it with the fewest resources

Question 6

A major distinguishing feature between capitalist and socialist (or command)economies is that

Accepted Answer

A) under capitalism the average citizen is always wealthier than in socialist economies 
B) decision making is typically decentralized in socialist economies and is centralized in capitalist economies 
C) socialist countries all have red flags and capitalistic economies do not 
D) resources are publicly owned in capitalist economies 
E) decision making is typically decentralized under capitalism while it is centralized in command economies 
A) under capitalism the average citizen is always wealthier than in socialist economies 
B) decision making is typically decentralized in socialist economies and is centralized in capitalist economies 
C) socialist countries all have red flags and capitalistic economies do not 
D) resources are publicly owned in capitalist economies 
E) decision making is typically decentralized under capitalism while it is centralized in command economies

Question 7

Exhibit 2-4  
-In Exhibit 2-4,if all the economy's resources are used efficiently to produce good A,then the economy is at point

Accepted Answer

A) h 
B) e 
C) d 
D) i 
E) c 
A) h 
B) e 
C) d 
D) i 
E) c

Question 8

Pure capitalism and a pure command system represent

Accepted Answer

A) two different ways of answering the basic economic questions 
B) two names describing the same method of answering the basic economic questions 
C) the only two ways of answering the basic economic questions 
D) the most efficient ways to answer the basic economic questions 
E) none of the above 
A) two different ways of answering the basic economic questions 
B) two names describing the same method of answering the basic economic questions 
C) the only two ways of answering the basic economic questions 
D) the most efficient ways to answer the basic economic questions 
E) none of the above

Question 9

The law of comparative advantage does not apply to

Accepted Answer

A) entire nations 
B) natural resources like air and sunshine 
C) individuals 
D) firms 
E) regions of a country 
A) entire nations 
B) natural resources like air and sunshine 
C) individuals 
D) firms 
E) regions of a country

Question 10

In one week,Mohammed can knit 5 sweaters or bake 240 cookies.In one week,Tetah can knit 15 sweaters or bake 480 cookies.In this example,

Accepted Answer

A) Mohammed has the absolute and comparative advantage in both tasks 
B) Tetah has the absolute and comparative advantage in both tasks 
C) Mohammed has the absolute advantage in both tasks and the comparative advantage in knitting sweaters 
D) Tetah has the absolute advantage in both tasks and the comparative advantage in knitting sweaters 
E) Mohammed has the absolute advantage in both tasks and the comparative advantage in baking cookies 
A) Mohammed has the absolute and comparative advantage in both tasks 
B) Tetah has the absolute and comparative advantage in both tasks 
C) Mohammed has the absolute advantage in both tasks and the comparative advantage in knitting sweaters 
D) Tetah has the absolute advantage in both tasks and the comparative advantage in knitting sweaters 
E) Mohammed has the absolute advantage in both tasks and the comparative advantage in baking cookies

Question 11

The law of comparative advantage says that a person should produce a good if she

Accepted Answer

A) has the greatest desire to consume that good 
B) has the lowest opportunity cost of producing that good 
C) has an absolute advantage in a related activity 
D) has a comparative advantage in a related activity 
E) is equally good at producing this good as someone else is 
A) has the greatest desire to consume that good 
B) has the lowest opportunity cost of producing that good 
C) has an absolute advantage in a related activity 
D) has a comparative advantage in a related activity 
E) is equally good at producing this good as someone else is

Question 12

If the production possibilities curve is a downward-sloping straight line,that would indicate

Accepted Answer

A) that society cannot decide which good it prefers 
B) an absence of scarcity 
C) constant opportunity cost 
D) inefficiency 
E) specialization 
A) that society cannot decide which good it prefers 
B) an absence of scarcity 
C) constant opportunity cost 
D) inefficiency 
E) specialization

Question 13

If people specialize in producing those goods for which they possess a comparative advantage,then the economy as a whole can produce a greater quantity of goods.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) $240 
B) 240 cookies 
C) 48 sweaters 
D) 1/48 of a cookie 
E) 48 cookies 
A) $240 
B) 240 cookies 
C) 48 sweaters 
D) 1/48 of a cookie 
E) 48 cookies

Question 15

Exhibit 2-11    
-Refer to exhibit 2-11.Costa Rica has a comparative advantage in the production of T-shirts.

Accepted Answer

A) True 
 B)False

Question 16

Don can produce 10 pens or 20 pencils in one hour while Bob can produce 5 pencils or 15 pens in one hour.Which of the following statements is correct?

Accepted Answer

A) Don has an absolute advantage over Bob in the production of pencils and Bob in the production of pens 
B) Bob has an absolute advantage over Don in the production of pencils 
C) Bob has a comparative advantage over Don in the production of pens 
D) Don has a comparative advantage over Bob in the production of pens 
E) Don does not have a comparative advantage in the production of either good 
A) Don has an absolute advantage over Bob in the production of pencils and Bob in the production of pens 
B) Bob has an absolute advantage over Don in the production of pencils 
C) Bob has a comparative advantage over Don in the production of pens 
D) Don has a comparative advantage over Bob in the production of pens 
E) Don does not have a comparative advantage in the production of either good

Question 17

In economics,specialization means

Accepted Answer

A) producing something using only one type of resource,such as labor 
B) producing something using only one type of labor 
C) focusing efforts on a particular product or a single task 
D) producing only one unit of output 
E) producing something using only one unit of a variable resource 
A) producing something using only one type of resource,such as labor 
B) producing something using only one type of labor 
C) focusing efforts on a particular product or a single task 
D) producing only one unit of output 
E) producing something using only one unit of a variable resource

Question 18

Opportunity cost is the difference between the benefits and the costs of a choice.

Accepted Answer

A) True 
 B)False

Question 19

The economic question of what will be produced is

Accepted Answer

A) primarily answered by the government in a system of pure capitalism 
B) primarily answered by markets in a command economy 
C) faced by all economies regardless of their wealth 
D) does not have to be answered by economies possessing great wealth 
E) cannot be illustrated by the economic concept of the production possibilities frontier 
A) primarily answered by the government in a system of pure capitalism 
B) primarily answered by markets in a command economy 
C) faced by all economies regardless of their wealth 
D) does not have to be answered by economies possessing great wealth 
E) cannot be illustrated by the economic concept of the production possibilities frontier

Question 20

Exhibit 2-12 Maria and Hans Production Possibilities for Laundry and Typing  
-According to Exhibit 2-12,if Hans types one fewer page,how many loads of laundry can he do in the time saved on typing?

Accepted Answer

A) 12 loads 
B) 8 loads 
C) 3/2 of a load 
D) 2/3 of a load 
E) it cannot be determined 
A) 12 loads 
B) 8 loads 
C) 3/2 of a load 
D) 2/3 of a load 
E) it cannot be determined

Exam 2: Economic Tools and Economics Systems

A rational decision maker engages in an activity if that activity is more attractive than the best alternative.

Exhibit 2-12 Maria and Hans Production Possibilities for Laundry and Typing -According to Exhibit 2-12,Hans' opportunity cost of typing one page is

If I trade a ginger snap for a chocolate chip cookie,I am engaging in

If Sam can chop up more carrots per minute than Joe can,then

A country has an absolute advantage in the production of a good if that country

A major distinguishing feature between capitalist and socialist (or command)economies is that

Exhibit 2-4 -In Exhibit 2-4,if all the economy's resources are used efficiently to produce good A,then the economy is at point

Pure capitalism and a pure command system represent

The law of comparative advantage does not apply to

In one week,Mohammed can knit 5 sweaters or bake 240 cookies.In one week,Tetah can knit 15 sweaters or bake 480 cookies.In this example,

The law of comparative advantage says that a person should produce a good if she

If the production possibilities curve is a downward-sloping straight line,that would indicate

If people specialize in producing those goods for which they possess a comparative advantage,then the economy as a whole can produce a greater quantity of goods.

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

Exhibit 2-11 -Refer to exhibit 2-11.Costa Rica has a comparative advantage in the production of T-shirts.

Don can produce 10 pens or 20 pencils in one hour while Bob can produce 5 pencils or 15 pens in one hour.Which of the following statements is correct?

In economics,specialization means

Opportunity cost is the difference between the benefits and the costs of a choice.

The economic question of what will be produced is

Exhibit 2-12 Maria and Hans Production Possibilities for Laundry and Typing -According to Exhibit 2-12,if Hans types one fewer page,how many loads of laundry can he do in the time saved on typing?

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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