Question 1

Exhibit 2-11    
-Refer to exhibit 2-11.The United States has a comparative advantage in the production of T-shirts.

Accepted Answer

A) True 
 B)False

Question 2

Suppose you have an hour before your next class starts.You can either read a book,get something to eat,or take a nap.The opportunity cost of getting something to eat is

Accepted Answer

A) the cost of what you eat 
B) the value of reading and sleeping 
C) the loss of value from not reading or sleeping 
D) the net benefit of sleeping for another hour 
E) impossible to determine because the most preferred alternative is not known 
A) the cost of what you eat 
B) the value of reading and sleeping 
C) the loss of value from not reading or sleeping 
D) the net benefit of sleeping for another hour 
E) impossible to determine because the most preferred alternative is not known

Question 3

An improvement in technology

Accepted Answer

A) will always result in a parallel shift of the production possibilities frontier 
B) will never result in a parallel shift of the production possibilities frontier 
C) will be indicated as a movement along the production possibilities frontier 
D) will shift the production possibilities frontier outward but not necessarily to a parallel position 
E) may not shift the production possibilities frontier 
A) will always result in a parallel shift of the production possibilities frontier 
B) will never result in a parallel shift of the production possibilities frontier 
C) will be indicated as a movement along the production possibilities frontier 
D) will shift the production possibilities frontier outward but not necessarily to a parallel position 
E) may not shift the production possibilities frontier

Question 4

If Jeremy has an absolute advantage in cooking and Margaret has an absolute advantage in cleaning,then

Accepted Answer

A) Jeremy has a comparative advantage in cooking,and Margaret has a comparative advantage in cleaning 
B) Jeremy has a comparative advantage in cleaning,and Margaret has a comparative advantage in cooking 
C) we can conclude nothing about comparative advantage 
D) Jeremy has a comparative advantage in cooking,but we can conclude nothing about Margaret 
E) Margaret has a comparative advantage in cleaning,but we can conclude nothing about Jeremy 
A) Jeremy has a comparative advantage in cooking,and Margaret has a comparative advantage in cleaning 
B) Jeremy has a comparative advantage in cleaning,and Margaret has a comparative advantage in cooking 
C) we can conclude nothing about comparative advantage 
D) Jeremy has a comparative advantage in cooking,but we can conclude nothing about Margaret 
E) Margaret has a comparative advantage in cleaning,but we can conclude nothing about Jeremy

Question 5

A production possibilities frontier will shift outward if there is an improvement in technology.

Accepted Answer

A) True 
 B)False

Question 6

Suppose you have purchased a non-refundable plane ticket and,at the last moment,you cannot take the trip.You can,however,sell the ticket.If you paid $700 for the ticket,the cost of sending the ticket to someone through overnight mail is $20,and you spend $10 on a courier to get the ticket to the post office for overnight delivery,what is the minimum you should accept for the ticket?

Accepted Answer

A) $700 because that is what the ticket cost. 
B) $720 because that is the cost of the ticket and of getting it to the buyer. 
C) $730 because that is the total cost of the ticket and getting it to the buyer. 
D) More than $730,so that you can make a profit. 
E) $30 because the $700 is a sunk cost. 
A) $700 because that is what the ticket cost. 
B) $720 because that is the cost of the ticket and of getting it to the buyer. 
C) $730 because that is the total cost of the ticket and getting it to the buyer. 
D) More than $730,so that you can make a profit. 
E) $30 because the $700 is a sunk cost.

Question 7

Exhibit 2-11    
-Refer to exhibit 2-11.In Costa Rica the opportunity cost of 1 ton of rice is:

Accepted Answer

A) 1/2 of a T-shirt 
B) 3/4 of a T-shirt 
C) 1 T-shirt 
D) 11/2 T-shirts 
E) 2 T-shirts 
A) 1/2 of a T-shirt 
B) 3/4 of a T-shirt 
C) 1 T-shirt 
D) 11/2 T-shirts 
E) 2 T-shirts

Question 8

In a command economy

Accepted Answer

A) a dictator makes every economic decision 
B) owners can sell their resources to the highest bidder 
C) no individual or group coordinates the economy 
D) in theory,individual choices are reflected in collective decisions,and decisions are made by central planners 
E) public ownership of resources is combined with free markets to direct economic activity 
A) a dictator makes every economic decision 
B) owners can sell their resources to the highest bidder 
C) no individual or group coordinates the economy 
D) in theory,individual choices are reflected in collective decisions,and decisions are made by central planners 
E) public ownership of resources is combined with free markets to direct economic activity

Question 9

Which of the following is most appropriately measured along one axis of the production possibilities frontier diagram?

Accepted Answer

A) the quantity of a produced good 
B) the price of a produced good 
C) the quantity of natural resources 
D) the state of technology 
E) society's welfare and satisfaction 
A) the quantity of a produced good 
B) the price of a produced good 
C) the quantity of natural resources 
D) the state of technology 
E) society's welfare and satisfaction

Question 10

Opportunity cost exists because

Accepted Answer

A) technology is fixed at any point in time 
B) the law of comparative advantage is working 
C) resources are scarce but wants are unlimited 
D) the value of lost opportunities varies from person to person 
E) efficiency is measured by the monetary cost of an activity 
A) technology is fixed at any point in time 
B) the law of comparative advantage is working 
C) resources are scarce but wants are unlimited 
D) the value of lost opportunities varies from person to person 
E) efficiency is measured by the monetary cost of an activity

Question 11

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

Accepted Answer

A) 4 loads 
B) 6 loads 
C) 2/3 of a load 
D) 3/2 of a load 
E) it cannot be determined 
A) 4 loads 
B) 6 loads 
C) 2/3 of a load 
D) 3/2 of a load 
E) it cannot be determined

Question 12

Based on an analysis of opportunity cost,everyone should go to college.

Accepted Answer

A) True 
 B)False

Question 13

Which economic concept does the expression "there's no such thing as a free lunch" reflect?

Accepted Answer

A) opportunity cost 
B) specialization 
C) market exchange 
D) comparative advantage 
E) efficiency 
A) opportunity cost 
B) specialization 
C) market exchange 
D) comparative advantage 
E) efficiency

Question 14

People have less incentive to invest the more concerned they are that their investment will not be

Accepted Answer

A) appropriated by government 
B) stolen by thieves 
C) protected from high tax rates 
D) destroyed by civil unrest 
E) blown up by terrorists 
A) appropriated by government 
B) stolen by thieves 
C) protected from high tax rates 
D) destroyed by civil unrest 
E) blown up by terrorists

Question 15

Recognizing the incentive power of property rights and markets,some of the most die-hard central planners are now allowing

Accepted Answer

A) more influence from custom or religion 
B) family relations to play significant roles 
C) a role for markets 
D) communal ownership of property 
E) inefficient use of resources 
A) more influence from custom or religion 
B) family relations to play significant roles 
C) a role for markets 
D) communal ownership of property 
E) inefficient use of resources

Question 16

Which of the following would not shift the production possibilities frontier?

Accepted Answer

A) an increase in worker training 
B) a war that destroyed many buildings 
C) a technological improvement that improved fuel efficiency in cars 
D) a decrease in the size of the labor force 
E) a change to a more inefficient production process 
A) an increase in worker training 
B) a war that destroyed many buildings 
C) a technological improvement that improved fuel efficiency in cars 
D) a decrease in the size of the labor force 
E) a change to a more inefficient production process

Question 17

If one person has the absolute advantage in producing both of two goods,then that person

Accepted Answer

A) must also have a comparative advantage in both goods 
B) cannot benefit from trade 
C) cannot have a comparative advantage in either good 
D) will have the comparative advantage in only one good 
E) should specialize in the production of both goods 
A) must also have a comparative advantage in both goods 
B) cannot benefit from trade 
C) cannot have a comparative advantage in either good 
D) will have the comparative advantage in only one good 
E) should specialize in the production of both goods

Question 18

The bowed-out shape of the production possibilities frontier indicates increasing opportunity costs.

Accepted Answer

A) True 
 B)False

Question 19

Of the various types of economic systems,pure market capitalism involves the greatest government interference and control over the economy.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following cannot be determined from a nation's position relative to its production possibilities frontier?

Accepted Answer

A) whether it is producing efficiently 
B) whether it has unemployed resources 
C) the opportunity cost of each good illustrated 
D) the society's relative preferences regarding each good illustrated 
E) the price of each good illustrated 
A) whether it is producing efficiently 
B) whether it has unemployed resources 
C) the opportunity cost of each good illustrated 
D) the society's relative preferences regarding each good illustrated 
E) the price of each good illustrated

Exam 2: Economic Tools and Economics Systems

Exhibit 2-11 -Refer to exhibit 2-11.The United States has a comparative advantage in the production of T-shirts.

Suppose you have an hour before your next class starts.You can either read a book,get something to eat,or take a nap.The opportunity cost of getting something to eat is

An improvement in technology

If Jeremy has an absolute advantage in cooking and Margaret has an absolute advantage in cleaning,then

A production possibilities frontier will shift outward if there is an improvement in technology.

Exhibit 2-11 -Refer to exhibit 2-11.In Costa Rica the opportunity cost of 1 ton of rice is:

In a command economy

Which of the following is most appropriately measured along one axis of the production possibilities frontier diagram?

Opportunity cost exists because

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

Based on an analysis of opportunity cost,everyone should go to college.

Which economic concept does the expression "there's no such thing as a free lunch" reflect?

People have less incentive to invest the more concerned they are that their investment will not be

Recognizing the incentive power of property rights and markets,some of the most die-hard central planners are now allowing

Which of the following would not shift the production possibilities frontier?

If one person has the absolute advantage in producing both of two goods,then that person

The bowed-out shape of the production possibilities frontier indicates increasing opportunity costs.

Of the various types of economic systems,pure market capitalism involves the greatest government interference and control over the economy.

Which of the following cannot be determined from a nation's position relative to its production possibilities frontier?

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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