Question 1

Attending college can be viewed as a form of

Accepted Answer

A) investment in which costs are borne today and benefits are received in the future 
B) investment in which benefits are received today and costs are borne in the future 
C) consumption,because learning is an enjoyable activity 
D) leisure,because learning is an enjoyable activity 
E) saving for the future 
A) investment in which costs are borne today and benefits are received in the future 
B) investment in which benefits are received today and costs are borne in the future 
C) consumption,because learning is an enjoyable activity 
D) leisure,because learning is an enjoyable activity 
E) saving for the future

Question 2

Any movement along the production possibilities frontier involves the production of

Accepted Answer

A) more of both goods 
B) more of one good and less of the other 
C) less of both goods 
D) more resources 
E) better technology 
A) more of both goods 
B) more of one good and less of the other 
C) less of both goods 
D) more resources 
E) better technology

Question 3

Society's production possibilities frontier

Accepted Answer

A) helps explain the immense complexity of the real economy 
B) demonstrates that,although resources are scarce for individuals,there is no problem of scarcity for society as a whole 
C) is based on unrealistic assumptions and therefore has no value as an economic tool 
D) is based on simplifying assumptions,but is still useful for illustrating scarcity,opportunity cost,and economic growth 
E) is based on the assumption that technology is constantly changing 
A) helps explain the immense complexity of the real economy 
B) demonstrates that,although resources are scarce for individuals,there is no problem of scarcity for society as a whole 
C) is based on unrealistic assumptions and therefore has no value as an economic tool 
D) is based on simplifying assumptions,but is still useful for illustrating scarcity,opportunity cost,and economic growth 
E) is based on the assumption that technology is constantly changing

Question 4

Money facilitates trade because

Accepted Answer

A) it eliminates the need for specialization 
B) it prevents people from taking advantage of each other 
C) it serves as a medium of exchange 
D) division of labor allows money to be produced at a lower cost 
E) people do not benefit from barter unless money is used 
A) it eliminates the need for specialization 
B) it prevents people from taking advantage of each other 
C) it serves as a medium of exchange 
D) division of labor allows money to be produced at a lower cost 
E) people do not benefit from barter unless money is used

Question 5

If you enjoy playing golf,the opportunity cost of cleaning your room

Accepted Answer

A) is the same on sunny days as it is on rainy days 
B) is greater on sunny days than it is on rainy days 
C) is smaller on sunny days than it is on rainy days 
D) does not change with the weather conditions 
E) is equal to the opportunity cost of any other chore you have to do that day 
A) is the same on sunny days as it is on rainy days 
B) is greater on sunny days than it is on rainy days 
C) is smaller on sunny days than it is on rainy days 
D) does not change with the weather conditions 
E) is equal to the opportunity cost of any other chore you have to do that day

Question 6

Along a bowed-out production possibilities frontier,as more of one good is produced,

Accepted Answer

A) the opportunity cost of producing that good remains constant 
B) the opportunity cost of producing that good decreases 
C) efficiency decreases 
D) the opportunity cost of producing both goods must remain constant 
E) technology remains constant 
A) the opportunity cost of producing that good remains constant 
B) the opportunity cost of producing that good decreases 
C) efficiency decreases 
D) the opportunity cost of producing both goods must remain constant 
E) technology remains constant

Question 7

Because resources are not perfectly adaptable to the production of both good A and good B,

Accepted Answer

A) the opportunity cost of A increases as production of A increases 
B) the opportunity cost of A decreases as production of A increases 
C) it is impossible for the economy to produce both A and B 
D) the opportunity cost of A is constant 
E) the opportunity cost of B is constant 
A) the opportunity cost of A increases as production of A increases 
B) the opportunity cost of A decreases as production of A increases 
C) it is impossible for the economy to produce both A and B 
D) the opportunity cost of A is constant 
E) the opportunity cost of B is constant

Question 8

Exhibit 2-12 Maria and Hans Production Possibilities for Laundry and Typing  
-According to Exhibit 2-12,if Hans does one fewer load of laundry,how many pages can he type in the time saved on laundry?

Accepted Answer

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

Question 9

The opportunity cost of an activity is

Accepted Answer

A) zero if you choose the activity voluntarily 
B) the amount of money spent on the activity 
C) the value of the best alternative not chosen 
D) the sum of benefits from all of the sacrificed alternatives 
E) the difference between the benefits and the costs of that activity 
A) zero if you choose the activity voluntarily 
B) the amount of money spent on the activity 
C) the value of the best alternative not chosen 
D) the sum of benefits from all of the sacrificed alternatives 
E) the difference between the benefits and the costs of that activity

Question 10

A PPF will not shift because of an increase in

Accepted Answer

A) the stability of the rules of the game 
B) capital stock 
C) resource availability 
D) unemployment 
E) technological change 
A) the stability of the rules of the game 
B) capital stock 
C) resource availability 
D) unemployment 
E) technological change

Question 11

Which economic question does the decision to give all of the butter the economy produces to the homeless answer?

Accepted Answer

A) What to produce? 
B) How to produce? 
C) For whom to produce? 
D) Who has a comparative advantage in butter production? 
E) Who has an absolute advantage in butter production? 
A) What to produce? 
B) How to produce? 
C) For whom to produce? 
D) Who has a comparative advantage in butter production? 
E) Who has an absolute advantage in butter production?

Question 12

The opportunity cost of a particular activity

Accepted Answer

A) must be the same for everyone 
B) is the value of all alternative activities that are forgone 
C) has a maximum value equal to the minimum wage 
D) varies from person to person 
E) can usually be known with certainty 
A) must be the same for everyone 
B) is the value of all alternative activities that are forgone 
C) has a maximum value equal to the minimum wage 
D) varies from person to person 
E) can usually be known with certainty

Question 13

The production possibilities frontier represents all desirable combinations of outputs.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not a gain from division of labor?

Accepted Answer

A) Workers' abilities are matched to tasks. 
B) Workers gain experience from the repetition of the tasks. 
C) Workers save time by not moving to different tasks. 
D) Workers' morale increases as tasks become more specialized. 
E) The introduction of labor-saving machinery is possible. 
A) Workers' abilities are matched to tasks. 
B) Workers gain experience from the repetition of the tasks. 
C) Workers save time by not moving to different tasks. 
D) Workers' morale increases as tasks become more specialized. 
E) The introduction of labor-saving machinery is possible.

Question 15

Exhibit 2-1 John and Harry's Production Possibilities for Ironing Shirts and Typing Papers  
-Exhibit 2-1 shows the production possibilities for ironing shirts and typing papers for John and Harry.Each has 5 hours per week to spend on these tasks.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 16

A test was scheduled for Monday morning,but you went to a party on Saturday night.If you hadn't attended the party,you could have studied for the test or gone to a movie.Which of the following is true?

Accepted Answer

A) The opportunity cost of going to the movie is studying for the test. 
B) The opportunity cost of going to the party is the movie. 
C) The opportunity cost of going to the party is both the movie and the study time. 
D) Because you could go to the party only that night but could go to a movie any time,the opportunity cost of the party is the study time. 
E) From the above information,it's not possible to determine the opportunity cost of attending the party. 
A) The opportunity cost of going to the movie is studying for the test. 
B) The opportunity cost of going to the party is the movie. 
C) The opportunity cost of going to the party is both the movie and the study time. 
D) Because you could go to the party only that night but could go to a movie any time,the opportunity cost of the party is the study time. 
E) From the above information,it's not possible to determine the opportunity cost of attending the party.

Question 17

Exhibit 2-4
 
-Point f in Exhibit 2-4 represents

Accepted Answer

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

Question 18

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

Accepted Answer

A) 4 loads of laundry 
B) 6 loads of laundry 
C) 2/3 of a load of laundry 
D) 3/2 of a load of laundry 
E) impossible to compute 
A) 4 loads of laundry 
B) 6 loads of laundry 
C) 2/3 of a load of laundry 
D) 3/2 of a load of laundry 
E) impossible to compute

Question 19

Barter occurs when

Accepted Answer

A) two people share everything 
B) one product is exchanged directly for another product 
C) money is used to buy goods 
D) money is exchanged directly for other money 
E) goods are used to buy money 
A) two people share everything 
B) one product is exchanged directly for another product 
C) money is used to buy goods 
D) money is exchanged directly for other money 
E) goods are used to buy money

Question 20

The reason that the production possibilities frontier is usually a bow-shaped curve instead of a straight line is that

Accepted Answer

A) it makes it easier to illustrate the concepts of scarcity and prices with a bow-shaped curve than it is with a straight line 
B) early economists began drawing them in this way and the convention has continued throughout the years 
C) output eventually reaches a maximum and then declines 
D) resources are not perfectly adaptable to the production of all goods 
E) the frontier will shift outward over time 
A) it makes it easier to illustrate the concepts of scarcity and prices with a bow-shaped curve than it is with a straight line 
B) early economists began drawing them in this way and the convention has continued throughout the years 
C) output eventually reaches a maximum and then declines 
D) resources are not perfectly adaptable to the production of all goods 
E) the frontier will shift outward over time

Exam 2: Economic Tools and Economics Systems

Attending college can be viewed as a form of

Any movement along the production possibilities frontier involves the production of

Society's production possibilities frontier

Money facilitates trade because

If you enjoy playing golf,the opportunity cost of cleaning your room

Along a bowed-out production possibilities frontier,as more of one good is produced,

Because resources are not perfectly adaptable to the production of both good A and good B,

Exhibit 2-12 Maria and Hans Production Possibilities for Laundry and Typing -According to Exhibit 2-12,if Hans does one fewer load of laundry,how many pages can he type in the time saved on laundry?

The opportunity cost of an activity is

A PPF will not shift because of an increase in

Which economic question does the decision to give all of the butter the economy produces to the homeless answer?

The opportunity cost of a particular activity

The production possibilities frontier represents all desirable combinations of outputs.

Which of the following is not a gain from division of labor?

Exhibit 2-1 John and Harry's Production Possibilities for Ironing Shirts and Typing Papers -Exhibit 2-1 shows the production possibilities for ironing shirts and typing papers for John and Harry.Each has 5 hours per week to spend on these tasks.Which of the following statements is correct?

A test was scheduled for Monday morning,but you went to a party on Saturday night.If you hadn't attended the party,you could have studied for the test or gone to a movie.Which of the following is true?

Exhibit 2-4 -Point f in Exhibit 2-4 represents

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

Barter occurs when

The reason that the production possibilities frontier is usually a bow-shaped curve instead of a straight line is 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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