Question 1

Figure 2-15
 
-Refer to Figure 2-15.In the circular flow diagram,market K represents

Accepted Answer

A) households. 
B) product markets. 
C) firms. 
D) factor markets. 
A) households. 
B) product markets. 
C) firms. 
D) factor markets.

Question 2

Bella can produce either a combination of 60 silk roses and 80 silk leaves or a combination of 70 silk roses and 55 silk leaves.If she now produces 60 silk roses and 80 silk leaves,what is the opportunity cost of producing an additional 10 silk roses?

Accepted Answer

A) 2.5 silk leaves 
B) 10 silk leaves 
C) 25 silk leaves 
D) 55 silk leaves 
A) 2.5 silk leaves 
B) 10 silk leaves 
C) 25 silk leaves 
D) 55 silk leaves

Question 3

Figure 2-6  
-Refer to Figure 2-6.If the economy is currently producing at point D,what is the opportunity cost of moving to point B?

Accepted Answer

A) 8 thousand wrenches 
B) 23 thousand hammers 
C) 30 thousand wrenches 
D) 0 hammers 
A) 8 thousand wrenches 
B) 23 thousand hammers 
C) 30 thousand wrenches 
D) 0 hammers

Question 4

In the circular flow model,households supply resources such as labor services in the factor market.

Accepted Answer

A) True 
 B)False

Question 5

$$\begin{array} { | l | c | c | } 
\hline & \text { One Motorcycle } & \text { One Guitar } \
\hline \text { Ireland } & 20 \text { hours } & 4 \text { hours } \
\hline \text { Scotland } & 8 \text { hours } & 2 \text { hours } \
\hline
\end{array}$$ Table 2-14 shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland.
-Refer to Table 2-14.If the two countries specialize and trade,who should export motorcycles?

Accepted Answer

A) There is no basis for trade between the two countries. 
B) Ireland 
C) Scotland 
D) They should both be importing motorcycles. 
A) There is no basis for trade between the two countries. 
B) Ireland 
C) Scotland 
D) They should both be importing motorcycles.

Question 6

Figure 2-18  
-Refer to Figure 2-18.Which two arrows in the diagram depict the following transaction: Dorian Gray hires "Wild Oscar," a professional portrait artist,to paint his picture.

Accepted Answer

A) J and M 
B) K and G 
C) K and M 
D) J and G 
A) J and M 
B) K and G 
C) K and M 
D) J and G

Question 7

$$\begin{array} { | l | c | c | } 
\hline & \text { George } & \text { Jack } \
\hline \begin{array} { l } 
\text { Lawns } \
\text { Mowed }
\end{array} & 10 & 6 \
\hline \begin{array} { l } 
\text { Gardens } \
\text { Cultivated }
\end{array} & 5 & 4 \
\hline
\end{array}$$ Table 2-15 shows the output per day of two gardeners,George and Jack.They can either devote their time to mowing lawns or cultivating gardens.
-Refer to Table 2-15.What is Jack's opportunity cost of mowing a lawn?

Accepted Answer

A) one-half of a garden cultivated 
B) two lawns mowed 
C) two-thirds of a garden cultivated 
D) one and a half lawns mowed 
A) one-half of a garden cultivated 
B) two lawns mowed 
C) two-thirds of a garden cultivated 
D) one and a half lawns mowed

Question 8

Table 2-1
Production choices for Tomaso's Trattoria
 $$\begin{array} { | c | c | c | } 
\hline \text { Choice } & \begin{array} { l } 
\text { Quantity of } \
\text { Pizzas } \
\text { Produced }
\end{array} & \begin{array} { l } 
\text { Quantity of } \
\text { Calzones } \
\text { Produced }
\end{array} \
\hline \text { A } & 48 & 0 \
\hline \text { B } & 36 & 15 \
\hline \text { C } & 24 & 30 \
\hline \text { D } & 12 & 45 \
\hline \text { E } & 0 & 60 \
\hline
\end{array}$$
-Refer to Table 2-1.Assume Tomaso's Trattoria only produces pizzas and calzones.A combination of 36 pizzas and 30 calzones would appear

Accepted Answer

A) along Tomaso's production possibilities frontier. 
B) inside Tomaso's production possibilities frontier. 
C) outside Tomaso's production possibilities frontier. 
D) at the horizontal intercept of Tomaso's production possibilities frontier. 
A) along Tomaso's production possibilities frontier. 
B) inside Tomaso's production possibilities frontier. 
C) outside Tomaso's production possibilities frontier. 
D) at the horizontal intercept of Tomaso's production possibilities frontier.

Question 9

The production possibilities frontier model shows that

Accepted Answer

A) if consumers decide to buy more of a product,its price will increase. 
B) a market economy is more efficient in producing goods and services than is a centrally planned economy. 
C) economic growth can only be achieved by free market economies. 
D) if all resources are fully and efficiently utilized,more of one good can be produced only by producing less of another good. 
A) if consumers decide to buy more of a product,its price will increase. 
B) a market economy is more efficient in producing goods and services than is a centrally planned economy. 
C) economic growth can only be achieved by free market economies. 
D) if all resources are fully and efficiently utilized,more of one good can be produced only by producing less of another good.

Question 10

Households

Accepted Answer

A) have no involvement in the circular flow in a market economy. 
B) purchase resources in the factor market. 
C) sell goods in the product market. 
D) sell resources in the factor market. 
A) have no involvement in the circular flow in a market economy. 
B) purchase resources in the factor market. 
C) sell goods in the product market. 
D) sell resources in the factor market.

Question 11

The natural resources used in production are made available in the

Accepted Answer

A) goods and services market. 
B) product market. 
C) government market. 
D) factor market. 
A) goods and services market. 
B) product market. 
C) government market. 
D) factor market.

Question 12

$$\begin{array} { | l | c | c | } 
\hline& \text { One Cell Phone } & \begin{array} { c } 
\text { Lumber (per } \
\text { board foot) }
\end{array} \
\hline \text { Estonia } & 40 \text { hours } & 8 \text { hours } \
\hline \text { Finland } & 16 \text { hours } & 4 \text { hours } \
\hline
\end{array}$$ Table 2-16 shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland.
-Refer to Table 2-16.What is Estonia's opportunity cost of producing one cell phone?

Accepted Answer

A) 0.2 board feet of lumber 
B) 5 board feet of lumber 
C) 8 board feet of lumber 
D) 32 board feet of lumber 
A) 0.2 board feet of lumber 
B) 5 board feet of lumber 
C) 8 board feet of lumber 
D) 32 board feet of lumber

Question 13

In the circular flow model,households

Accepted Answer

A) sell goods and services in the input market. 
B) and firms spend earnings from resource sales on goods and services in the factor market. 
C) hire resources sold by firms in the factor market. 
D) spend earnings from resource sales on goods and services in the product market. 
A) sell goods and services in the input market. 
B) and firms spend earnings from resource sales on goods and services in the factor market. 
C) hire resources sold by firms in the factor market. 
D) spend earnings from resource sales on goods and services in the product market.

Question 14

A major factor contributing to the slow growth rate of less-developed economies is

Accepted Answer

A) the lack of well-defined and enforceable property rights. 
B) the lack of natural resources. 
C) the lack of workers. 
D) the high rate of illiteracy. 
A) the lack of well-defined and enforceable property rights. 
B) the lack of natural resources. 
C) the lack of workers. 
D) the high rate of illiteracy.

Question 15

The unattainable points in a production possibilities diagram are

Accepted Answer

A) the points within the production possibilities frontier. 
B) the points along the production possibilities frontier. 
C) the points of the horizontal and vertical intercepts. 
D) the points outside the production possibilities frontier. 
A) the points within the production possibilities frontier. 
B) the points along the production possibilities frontier. 
C) the points of the horizontal and vertical intercepts. 
D) the points outside the production possibilities frontier.

Question 16

Identify whether each of the following transactions will take place in the factor market or in the product market:
a.Shondra buys a Harley-Davidson Softail motorcycle.
b.Aimee works 20 hours a week at a grocery store.
c.Gustavo sells a warehouse to a produce delivery company.
d.Ocean Spray increases employment at its Middleboro,Massachusetts plant.

Accepted Answer

a takes place in the

Question 17

$$\begin{array} { | l | c | c | } 
\hline & \text { One Wristwatch } & \text { Rice (per pound) } \
\hline \text { Japan } & 50 \text { hours } & 2 \text { hours } \
\hline \text { Thailand } & 30 \text { hours } & 1.5 \text { hours } \
\hline
\end{array}$$ Table 2-20 shows the number of labor hours required to produce a wristwatch and a pound of rice in Japan and Thailand.
-Refer to Table 2-20.What is Japan's opportunity cost of producing one wristwatch?

Accepted Answer

A) 0.04 pounds of rice 
B) 4 pounds of rice 
C) 25 pounds of rice 
D) 40 pounds of rice 
A) 0.04 pounds of rice 
B) 4 pounds of rice 
C) 25 pounds of rice 
D) 40 pounds of rice

Question 18

$$\begin{array} { | l | c | c | } 
\hline& \text { One Cell Phone } & \begin{array} { c } 
\text { Lumber (per } \
\text { board foot) }
\end{array} \
\hline \text { Estonia } & 40 \text { hours } & 8 \text { hours } \
\hline \text { Finland } & 16 \text { hours } & 4 \text { hours } \
\hline
\end{array}$$ Table 2-16 shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland.
-Refer to Table 2-16.If the two countries specialize and trade,who should export cell phones?

Accepted Answer

A) There is no basis for trade between the two countries. 
B) Estonia 
C) Finland 
D) They should both be importing cell phones. 
A) There is no basis for trade between the two countries. 
B) Estonia 
C) Finland 
D) They should both be importing cell phones.

Question 19

Which of the following is an example of spending on goods and services in the circular flow model?

Accepted Answer

A) Belinda purchases a new computer for her tax-preparation business. 
B) Javier buys 800 square feet of wood flooring for his vacation home. 
C) Celeste buys fresh herbs at the farmers' market to use in her restaurant. 
D) Timmy purchases a new examination table for use in his veterinary clinic. 
A) Belinda purchases a new computer for her tax-preparation business. 
B) Javier buys 800 square feet of wood flooring for his vacation home. 
C) Celeste buys fresh herbs at the farmers' market to use in her restaurant. 
D) Timmy purchases a new examination table for use in his veterinary clinic.

Question 20

$$\begin{array} { | l | l | l | } 
\hline & \text { Fred } & \text { Barney } \
\hline \text { Pogo Sticks } & 24 & 28 \
\hline \text { Unicycles } & 8 & 14 \
\hline
\end{array}$$ Table 2-10 shows the output per month of two people,Fred and Barney.They can either devote their time to making pogo sticks or making unicycles.
-Refer to Table 2-10.What is Fred's opportunity cost of making a unicycle?

Accepted Answer

A) 1/3 of a pogo stick 
B) 3 pogo sticks 
C) 1/2 of a unicycle 
D) 1.3 pogo sticks 
A) 1/3 of a pogo stick 
B) 3 pogo sticks 
C) 1/2 of a unicycle 
D) 1.3 pogo sticks

Exam 2: Trade-Offs, comparative Advantage, and the Market System

Figure 2-15 -Refer to Figure 2-15.In the circular flow diagram,market K represents

Bella can produce either a combination of 60 silk roses and 80 silk leaves or a combination of 70 silk roses and 55 silk leaves.If she now produces 60 silk roses and 80 silk leaves,what is the opportunity cost of producing an additional 10 silk roses?

Figure 2-6 -Refer to Figure 2-6.If the economy is currently producing at point D,what is the opportunity cost of moving to point B?

In the circular flow model,households supply resources such as labor services in the factor market.

One Motorcycle One Guitar Ireland 20 hours 4 hours Scotland 8 hours 2 hours Table 2-14 shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland. -Refer to Table 2-14.If the two countries specialize and trade,who should export motorcycles?

Figure 2-18 -Refer to Figure 2-18.Which two arrows in the diagram depict the following transaction: Dorian Gray hires "Wild Oscar," a professional portrait artist,to paint his picture.

George Jack Lawns Mowed 10 6 Gardens Cultivated 5 4 Table 2-15 shows the output per day of two gardeners,George and Jack.They can either devote their time to mowing lawns or cultivating gardens. -Refer to Table 2-15.What is Jack's opportunity cost of mowing a lawn?

Table 2-1 Production choices for Tomaso's Trattoria Choice Quantity of Pizzas Produced Quantity of Calzones Produced A 48 0 B 36 15 C 24 30 D 12 45 E 0 60 -Refer to Table 2-1.Assume Tomaso's Trattoria only produces pizzas and calzones.A combination of 36 pizzas and 30 calzones would appear

The production possibilities frontier model shows that

Households

The natural resources used in production are made available in the

In the circular flow model,households

A major factor contributing to the slow growth rate of less-developed economies is

The unattainable points in a production possibilities diagram are

One Wristwatch Rice (per pound) Japan 50 hours 2 hours Thailand 30 hours 1.5 hours Table 2-20 shows the number of labor hours required to produce a wristwatch and a pound of rice in Japan and Thailand. -Refer to Table 2-20.What is Japan's opportunity cost of producing one wristwatch?

Which of the following is an example of spending on goods and services in the circular flow model?

Fred Barney Pogo Sticks 24 28 Unicycles 8 14 Table 2-10 shows the output per month of two people,Fred and Barney.They can either devote their time to making pogo sticks or making unicycles. -Refer to Table 2-10.What is Fred's opportunity cost of making a unicycle?

Economics: Foundations and Models

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms,the Stock Market,and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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