Question 1

A drought has destroyed orange crops in California. The drought has caused

Accepted Answer

A)  scarcity because there are less oranges now than people want. 
B)  scarcity because people have to switch to oranges grown in Florida. 
C)  a shortage because people cannot obtain as many oranges as they wish to buy at the pre-freeze price. 
D)  a shortage because orange growers will have less income. 
A)  scarcity because there are less oranges now than people want. 
B)  scarcity because people have to switch to oranges grown in Florida. 
C)  a shortage because people cannot obtain as many oranges as they wish to buy at the pre-freeze price. 
D)  a shortage because orange growers will have less income.

Question 2

Samia has decided that with the two hours in between classes she can do one of 3 things. She has ranked her choices, from highest to lowest as, (1) chat with her friends, (2) study economics or (3) take a nap. The opportunity cost of chatting with her friends is

Accepted Answer

A)  the combined value of studying economics and taking a nap. 
B)  the value of studying economics, the next best use of time. 
C)  the value of chatting with her friends. 
D)  zero since she does not pay her friends to talk to her. 
A)  the combined value of studying economics and taking a nap. 
B)  the value of studying economics, the next best use of time. 
C)  the value of chatting with her friends. 
D)  zero since she does not pay her friends to talk to her.

Question 3

John has decided to watch the sunrise tomorrow morning. The sunrise is an example of

Accepted Answer

A)  a good. 
B)  an economic good. 
C)  a service. 
D)  an economic bad. 
A)  a good. 
B)  an economic good. 
C)  a service. 
D)  an economic bad.

Question 4

The principle of comparative advantage implies that

Accepted Answer

A)  only wealthy countries ultimately can benefit from international trade. 
B)  every country can benefit from international trade. 
C)  we should limit the extent to which people specialize. 
D)  most people are harmed by trade. 
A)  only wealthy countries ultimately can benefit from international trade. 
B)  every country can benefit from international trade. 
C)  we should limit the extent to which people specialize. 
D)  most people are harmed by trade.

Question 5

Jose and Maria work at a restaurant. Jose can make either 10 pancakes or 4 waffles; Maria can make either 8 pancakes or 2 waffles. According to this scenario

Accepted Answer

A)  Maria has the absolute advantage in making waffles 
B)  Maria has the absolute advantage in making pancakes. 
C)  Maria has the comparative advantage in making pancakes. 
D)  Jose has the comparative advantage in making pancakes. 
A)  Maria has the absolute advantage in making waffles 
B)  Maria has the absolute advantage in making pancakes. 
C)  Maria has the comparative advantage in making pancakes. 
D)  Jose has the comparative advantage in making pancakes.

Question 6

How does an economy represented by a straight-line production possibilities curve differ from one represented by a traditional production possibilities curve with a bowed shape?

Accepted Answer

A)  In the economy represented by a straight-line production possibilities curve, there is no opportunity cost. 
B)  In the economy represented by a straight-line production possibilities curve, neither good is scarce. 
C)  In the economy represented by a straight-line production possibilities curve, the law of increasing relative cost does not apply. 
D)  In the economy represented by a straight-line production possibilities curve, changing the amount of resources devoted to the production of each good will not alter the amount of each good actually produced. 
A)  In the economy represented by a straight-line production possibilities curve, there is no opportunity cost. 
B)  In the economy represented by a straight-line production possibilities curve, neither good is scarce. 
C)  In the economy represented by a straight-line production possibilities curve, the law of increasing relative cost does not apply. 
D)  In the economy represented by a straight-line production possibilities curve, changing the amount of resources devoted to the production of each good will not alter the amount of each good actually produced.

Question 7

The division of labor refers to

Accepted Answer

A)  workers being assigned specific tasks. 
B)  workers performing multiple tasks. 
C)  separating men and women in the workforce. 
D)  creating jobs that all people can perform at the same level. 
A)  workers being assigned specific tasks. 
B)  workers performing multiple tasks. 
C)  separating men and women in the workforce. 
D)  creating jobs that all people can perform at the same level.

Question 8

If Irene can make either four chairs or one table in an hour and Greg can make either three chairs or two tables in an hour then

Accepted Answer

A)  Irene has the absolute advantage in the production of chairs. 
B)  Irene has the comparative advantage in the production of tables. 
C)  Greg has the absolute advantage in the production of chairs. 
D)  Greg has the comparative advantage in the production of chairs. 
A)  Irene has the absolute advantage in the production of chairs. 
B)  Irene has the comparative advantage in the production of tables. 
C)  Greg has the absolute advantage in the production of chairs. 
D)  Greg has the comparative advantage in the production of chairs.

Question 9

An irrigation system is installed on a farm in Kansas. This is an example of which factor of production?

Accepted Answer

A)  labor 
B)  land 
C)  human capital 
D)  physical capital 
A)  labor 
B)  land 
C)  human capital 
D)  physical capital

Question 10

In the above figure, points u, v, y, and z show

Accepted Answer

A)  an inefficient allocation of society's scarce resources. 
B)  possible combinations of televisions and personal computers. 
C)  a constant trade-off between televisions and personal computers. 
D)  that society prefers more televisions than computers. 
A)  an inefficient allocation of society's scarce resources. 
B)  possible combinations of televisions and personal computers. 
C)  a constant trade-off between televisions and personal computers. 
D)  that society prefers more televisions than computers.

Question 11

Whenever a society forgoes current consumption to invest in capital goods

Accepted Answer

A)  it will have less to consume next year. 
B)  it will be easier for that society to consume less in the future because people will become accustomed to less. 
C)  that society can consume more in the future. 
D)  it will be forced to produce fewer capital goods in the future. 
A)  it will have less to consume next year. 
B)  it will be easier for that society to consume less in the future because people will become accustomed to less. 
C)  that society can consume more in the future. 
D)  it will be forced to produce fewer capital goods in the future.

Question 12

For a country that produces two goods: Environmental clean-up goods and space program goods. What economic information is contained in its production possibility curve?

Accepted Answer

@#IMG-DLM& The above figure illustrates the produc

Question 13

A waitress brings a free glass of water when you sit down in a restaurant. This glass of water is

Accepted Answer

A)  a service because the waitress carried it instead of making it. 
B)  a good, but not an economic good because there is no price charged for the water. 
C)  a bad because there is no price charged for the water. 
D)  an economic good because the water is a scarce resource, even if it is free to you. 
A)  a service because the waitress carried it instead of making it. 
B)  a good, but not an economic good because there is no price charged for the water. 
C)  a bad because there is no price charged for the water. 
D)  an economic good because the water is a scarce resource, even if it is free to you.

Question 14

When a country specializes and trades with other countries, it is most likely that it specializes in goods for which

Accepted Answer

A)  it has a comparative advantage. 
B)  it has an absolute advantage. 
C)  it has no advantage. 
D)  are very costly to produce. 
A)  it has a comparative advantage. 
B)  it has an absolute advantage. 
C)  it has no advantage. 
D)  are very costly to produce.

Question 15

Entrepreneurs are important to market economies because

Accepted Answer

A)  they engage in risk taking and innovation. 
B)  they make up a large portion of low-skilled labor. 
C)  they take few risks and thereby, suffer fewer bankruptcies. 
D)  they represent the bulk of employment at large corporations. 
A)  they engage in risk taking and innovation. 
B)  they make up a large portion of low-skilled labor. 
C)  they take few risks and thereby, suffer fewer bankruptcies. 
D)  they represent the bulk of employment at large corporations.

Question 16

If Hillary goes surfing for two hours instead of earning $10 per hour for those two hours, her opportunity cost is

Accepted Answer

A)  the good time spent surfing. 
B)  the minimum wage that some other people would earn. 
C)  the travel time to the beach. 
D)  $20. 
A)  the good time spent surfing. 
B)  the minimum wage that some other people would earn. 
C)  the travel time to the beach. 
D)  $20.

Question 17

All mutually beneficial trades have taken place. This implies that

Accepted Answer

A)  the production possibilities curve is bowed out. 
B)  society is inside the production possibilities curve. 
C)  economic efficiency prevails in the society. 
D)  society is on the constant cost portion of its production possibilities curve. 
A)  the production possibilities curve is bowed out. 
B)  society is inside the production possibilities curve. 
C)  economic efficiency prevails in the society. 
D)  society is on the constant cost portion of its production possibilities curve.

Question 18

Specialization and the division of labor typically result in

Accepted Answer

A)  cost overruns. 
B)  increased output. 
C)  decreased output. 
D)  a greater reliance upon imports. 
A)  cost overruns. 
B)  increased output. 
C)  decreased output. 
D)  a greater reliance upon imports.

Question 19

The above table shows the daily production possibilities for a bakery.
Currently the bakery bakes 60 pizzas and 180 loaves of bread, that is at alternative C.
-Using the above table, what is the opportunity cost of moving from alternative C to alternative D?

Accepted Answer

A)  60 loaves of bread 
B)  2 loaves of bread 
C)  30 loaves of bread 
D)  1/2 loaf of bread 
A)  60 loaves of bread 
B)  2 loaves of bread 
C)  30 loaves of bread 
D)  1/2 loaf of bread

Question 20

The opportunity cost of going to college full time away from home includes

Accepted Answer

A)  the income you could have earned from a full-time job. 
B)  the funds you would have saved if you had not paid the tuition. 
C)  the time you could have spent with parents back home. 
D)  All of the above are correct. 
A)  the income you could have earned from a full-time job. 
B)  the funds you would have saved if you had not paid the tuition. 
C)  the time you could have spent with parents back home. 
D)  All of the above are correct.

Exam 2: Scarcity and the World of Trade-Offs

A drought has destroyed orange crops in California. The drought has caused

Samia has decided that with the two hours in between classes she can do one of 3 things. She has ranked her choices, from highest to lowest as, (1) chat with her friends, (2) study economics or (3) take a nap. The opportunity cost of chatting with her friends is

John has decided to watch the sunrise tomorrow morning. The sunrise is an example of

The principle of comparative advantage implies that

Jose and Maria work at a restaurant. Jose can make either 10 pancakes or 4 waffles; Maria can make either 8 pancakes or 2 waffles. According to this scenario

How does an economy represented by a straight-line production possibilities curve differ from one represented by a traditional production possibilities curve with a bowed shape?

The division of labor refers to

If Irene can make either four chairs or one table in an hour and Greg can make either three chairs or two tables in an hour then

An irrigation system is installed on a farm in Kansas. This is an example of which factor of production?

In the above figure, points u, v, y, and z show

Whenever a society forgoes current consumption to invest in capital goods

For a country that produces two goods: Environmental clean-up goods and space program goods. What economic information is contained in its production possibility curve?

A waitress brings a free glass of water when you sit down in a restaurant. This glass of water is

When a country specializes and trades with other countries, it is most likely that it specializes in goods for which

Entrepreneurs are important to market economies because

If Hillary goes surfing for two hours instead of earning $10 per hour for those two hours, her opportunity cost is

All mutually beneficial trades have taken place. This implies that

Specialization and the division of labor typically result in

The above table shows the daily production possibilities for a bakery. Currently the bakery bakes 60 pizzas and 180 loaves of bread, that is at alternative C. -Using the above table, what is the opportunity cost of moving from alternative C to alternative D?

The opportunity cost of going to college full time away from home includes

The Nature of Economics

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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