Question 1

Prices communicate information about relative availability of products. For example, a decrease in the price of corn signals to consumers and producers that:

Accepted Answer

A) ​consumers are buying more corn than before. 
B) ​corn is relatively more abundant than before. 
C) ​corn is relatively less abundant than before. 
D) ​consumers are stocking up on corn because of the predictions of a cold winter. 
A) ​consumers are buying more corn than before. 
B) ​corn is relatively more abundant than before. 
C) ​corn is relatively less abundant than before. 
D) ​consumers are stocking up on corn because of the predictions of a cold winter.

Question 2

Resources are

Accepted Answer

A) ​scarce for households but abundant for the whole economy 
B) ​abundant for households but scarce for the whole economy 
C) ​scarce for households and scarce for the whole economy. 
D) ​abundant for households and the whole economy. 
A) ​scarce for households but abundant for the whole economy 
B) ​abundant for households but scarce for the whole economy 
C) ​scarce for households and scarce for the whole economy. 
D) ​abundant for households and the whole economy.

Question 3

Which of the following is false?

Accepted Answer

A) ​Market prices signal the relative availability of products to buyers. 
B) ​Market prices signal the relative value consumers place on products to sellers. 
C) ​The information and incentives offered by market price adjustments provide the "invisible hand" toward socially desirable cooperation between consumers and producers. 
D) ​None of the above are false; all are true. 
A) ​Market prices signal the relative availability of products to buyers. 
B) ​Market prices signal the relative value consumers place on products to sellers. 
C) ​The information and incentives offered by market price adjustments provide the "invisible hand" toward socially desirable cooperation between consumers and producers. 
D) ​None of the above are false; all are true.

Question 4

Assume that Colombia can produce 1,000 pounds of coffee in one day or produce 200 pounds of bananas in one day. In addition, assume that Ecuador can produce 300 pounds of coffee in one day or produce 100 pounds of bananas in one day. Which country has the comparative advantage in coffee and which has the comparative advantage in bananas? Determine a pattern of trade regarding these countries and these goods that would benefit both countries.
​

Accepted Answer

Colombia has the comparative advantage i

Question 5

If people follow the rule of rational choice they will choose options that they think will:

Accepted Answer

A) ​create more average benefits than average costs 
B) ​create more additional costs than additional benefits 
C) ​create equivalent additional benefits and additional costs 
D) ​create more additional benefits than additional costs 
A) ​create more average benefits than average costs 
B) ​create more additional costs than additional benefits 
C) ​create equivalent additional benefits and additional costs 
D) ​create more additional benefits than additional costs

Question 6

Rational choices:​

Accepted Answer

A) ​are based on a comparison of total benefits and total costs. 
B) ​can only be made by those who are economists. 
C) ​are made based on expectations of the additional benefits and additional costs involved. 
D) ​measure benefits based on the past. 
A) ​are based on a comparison of total benefits and total costs. 
B) ​can only be made by those who are economists. 
C) ​are made based on expectations of the additional benefits and additional costs involved. 
D) ​measure benefits based on the past.

Question 7

Scarcity:​

Accepted Answer

A) ​exists in command economies. 
B) ​exists in market economies. 
C) ​exists only for the poor in any type of economy. 
D) ​(a) and (b) above are correct 
A) ​exists in command economies. 
B) ​exists in market economies. 
C) ​exists only for the poor in any type of economy. 
D) ​(a) and (b) above are correct

Question 8

Which of the following observations regarding economic goods is incorrect?​

Accepted Answer

A) ​They are limited in supply. 
B) ​They are desirable. 
C) ​They are solely low-priced essential goods. 
D) ​They are scarce goods created from scarce resources 
A) ​They are limited in supply. 
B) ​They are desirable. 
C) ​They are solely low-priced essential goods. 
D) ​They are scarce goods created from scarce resources

Question 9

Mike can wash a car in 5 minutes and wax a car in 15 minutes. Tony can wash a car in 10 minutes and wax a car in 20 minutes. Which of the following is true?

Accepted Answer

A) ​Mike can wash a car faster and has comparative advantage in washing cars. 
B) ​Mike can wax a car faster and has comparative advantage in waxing cars. 
C) ​Tony can wash a car faster and has comparative advantage in washing cars. 
D) ​Tony can wax a car faster and has comparative advantage in waxing cars. 
A) ​Mike can wash a car faster and has comparative advantage in washing cars. 
B) ​Mike can wax a car faster and has comparative advantage in waxing cars. 
C) ​Tony can wash a car faster and has comparative advantage in washing cars. 
D) ​Tony can wax a car faster and has comparative advantage in waxing cars.

Question 10

If race-car driving is dangerous, why would any rational person choose to be a race-car driver?

Accepted Answer

A rational person might choose

Question 11

Advantages of specialization do not include:​

Accepted Answer

A) ​reduced interdependence. 
B) ​the exploitation of comparative advantage. 
C) ​the ability to utilize more complex production processes. 
D) ​Productivity gains from learning by doing. 
A) ​reduced interdependence. 
B) ​the exploitation of comparative advantage. 
C) ​the ability to utilize more complex production processes. 
D) ​Productivity gains from learning by doing.

Question 12

If a country wanted to maximize the value of its output, each job should be carried out by the person who:​

Accepted Answer

A) ​has the highest opportunity cost. 
B) ​has a comparative advantage in that activity. 
C) ​can complete the particular job most rapidly. 
D) ​enjoys that job the least. 
A) ​has the highest opportunity cost. 
B) ​has a comparative advantage in that activity. 
C) ​can complete the particular job most rapidly. 
D) ​enjoys that job the least.

Question 13

Maggie is a potter who likes to dig her own clay for producing pots, cups and other ceramic items. She is aware of two places where she can obtain the right clay for her work. The first field is quite close, just at the edge of town. The second field is 15 miles away and (since there are no access roads) requires a half-day of travel just to get there. Compare the opportunity cost of producing pots using clay from each of these fields.​

Accepted Answer

The opportunity cost of the clay necessa

Question 14

Specialization and trade can create more wealth (output of goods and services):

Accepted Answer

A) ​when we only trade for things we could not produce ourselves. 
B) ​when each person specializes in what they do relatively best and trade for the rest. 
C) ​only if we gain and other countries lose. 
D) ​only with certain nations. 
A) ​when we only trade for things we could not produce ourselves. 
B) ​when each person specializes in what they do relatively best and trade for the rest. 
C) ​only if we gain and other countries lose. 
D) ​only with certain nations.

Question 15

Jared declines to purchase a new bicycle priced at $200. Therefore:

Accepted Answer

A) ​Jared does not enjoy riding a bicycle. 
B) ​the expected marginal benefit of the bicycle to Jared exceeds $200 that could be spent on other things. 
C) ​the expected marginal benefit of the bicycle to Jared is less than $200. 
D) ​None of the above is true. 
A) ​Jared does not enjoy riding a bicycle. 
B) ​the expected marginal benefit of the bicycle to Jared exceeds $200 that could be spent on other things. 
C) ​the expected marginal benefit of the bicycle to Jared is less than $200. 
D) ​None of the above is true.

Question 16

The opportunity cost of a two-week vacation in Hawaii for an Arizona resident includes:

Accepted Answer

A) ​the cost of the beach resort hotel accommodations. 
B) ​the airfare to and from Honolulu International Airport. 
C) ​the time that could have been used to travel somewhere else. 
D) ​all of the above. 
A) ​the cost of the beach resort hotel accommodations. 
B) ​the airfare to and from Honolulu International Airport. 
C) ​the time that could have been used to travel somewhere else. 
D) ​all of the above.

Question 17

The marginal benefit to you of drinking one more bottled iced tea is $1.50. The price of a bottle of iced tea is $1.25.

Accepted Answer

A) ​If you purchase iced tea you will suffer a net loss of 25 cents per bottle. 
B) ​If you purchase a bottle of iced tea, the net gain to you from doing so is 25 cents. 
C) ​You will not purchase iced tea if you are acting rationally. 
D) ​If you are acting rationally, you will purchase iced tea until the marginal benefit falls to 25 cents. 
A) ​If you purchase iced tea you will suffer a net loss of 25 cents per bottle. 
B) ​If you purchase a bottle of iced tea, the net gain to you from doing so is 25 cents. 
C) ​You will not purchase iced tea if you are acting rationally. 
D) ​If you are acting rationally, you will purchase iced tea until the marginal benefit falls to 25 cents.

Question 18

In a market economy, the amount of a good that is produced is primarily decided by the interaction of:

Accepted Answer

A) ​buyers and sellers. 
B) ​all consumers. 
C) ​producers and input suppliers. 
D) ​producers and government planning committees. 
A) ​buyers and sellers. 
B) ​all consumers. 
C) ​producers and input suppliers. 
D) ​producers and government planning committees.

Question 19

Which of the following is true?​

Accepted Answer

A) ​Poverty, defined as the lack of a minimum level of consumption, could be potentially eliminated, but scarcity could not. 
B) ​Scarcity could be potentially eliminated but poverty could not. 
C) ​Both scarcity and poverty could be potentially eliminated. 
D) ​Neither scarcity nor poverty could be potentially eliminated. 
A) ​Poverty, defined as the lack of a minimum level of consumption, could be potentially eliminated, but scarcity could not. 
B) ​Scarcity could be potentially eliminated but poverty could not. 
C) ​Both scarcity and poverty could be potentially eliminated. 
D) ​Neither scarcity nor poverty could be potentially eliminated.

Question 20

Scarcity is a problem faced by all but the wealthiest of citizens.

Accepted Answer

A) True 
 B)False

Prices communicate information about relative availability of products. For example, a decrease in the price of corn signals to consumers and producers that:

Resources are

Which of the following is false?

If people follow the rule of rational choice they will choose options that they think will:

Rational choices:

Scarcity:

Which of the following observations regarding economic goods is incorrect?

Mike can wash a car in 5 minutes and wax a car in 15 minutes. Tony can wash a car in 10 minutes and wax a car in 20 minutes. Which of the following is true?

If race-car driving is dangerous, why would any rational person choose to be a race-car driver?

Advantages of specialization do not include:

If a country wanted to maximize the value of its output, each job should be carried out by the person who:

Specialization and trade can create more wealth (output of goods and services):

Jared declines to purchase a new bicycle priced at $200. Therefore:

The opportunity cost of a two-week vacation in Hawaii for an Arizona resident includes:

The marginal benefit to you of drinking one more bottled iced tea is $1.50. The price of a bottle of iced tea is $1.25.

In a market economy, the amount of a good that is produced is primarily decided by the interaction of:

Which of the following is true?

Scarcity is a problem faced by all but the wealthiest of citizens.

The Role and Method of Economics

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

Exam 2: Eight Powerful Ideas

Prices communicate information about relative availability of products. For example, a decrease in the price of corn signals to consumers and producers that:

Resources are

Which of the following is false?

If people follow the rule of rational choice they will choose options that they think will:

Rational choices:​

Scarcity:​

Which of the following observations regarding economic goods is incorrect?​

Mike can wash a car in 5 minutes and wax a car in 15 minutes. Tony can wash a car in 10 minutes and wax a car in 20 minutes. Which of the following is true?

If race-car driving is dangerous, why would any rational person choose to be a race-car driver?

Advantages of specialization do not include:​

If a country wanted to maximize the value of its output, each job should be carried out by the person who:​

Specialization and trade can create more wealth (output of goods and services):

Jared declines to purchase a new bicycle priced at $200. Therefore:

The opportunity cost of a two-week vacation in Hawaii for an Arizona resident includes:

The marginal benefit to you of drinking one more bottled iced tea is $1.50. The price of a bottle of iced tea is $1.25.

In a market economy, the amount of a good that is produced is primarily decided by the interaction of:

Which of the following is true?​

Scarcity is a problem faced by all but the wealthiest of citizens.

The Role and Method of Economics

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

Rational choices:

Scarcity:

Which of the following observations regarding economic goods is incorrect?

Advantages of specialization do not include:

If a country wanted to maximize the value of its output, each job should be carried out by the person who:

Which of the following is true?