Question 1

A world-renowned brain surgeon can type twice as fast as her secretarial assistant.Which of the following statements is true in this situation?

Accepted Answer

A) The secretary has an absolute advantage in typing. 
B) The surgeon should do her own typing to save money. 
C) The surgeon should fire the assistant and work weekends and evenings to stay up on her typing. 
D) The surgeon should spend her time doing brain surgery and allow her secretary to do the typing because the secretary has a comparative advantage in typing. 
E) The surgeon should spend her time doing brain surgery and allow her secretary to do the typing because the surgeon has a comparative advantage in typing. 
A) The secretary has an absolute advantage in typing. 
B) The surgeon should do her own typing to save money. 
C) The surgeon should fire the assistant and work weekends and evenings to stay up on her typing. 
D) The surgeon should spend her time doing brain surgery and allow her secretary to do the typing because the secretary has a comparative advantage in typing. 
E) The surgeon should spend her time doing brain surgery and allow her secretary to do the typing because the surgeon has a comparative advantage in typing.

Question 2

Which of the following will result in an outward shift of the production possibilities curve [PPC]?

Accepted Answer

A) A decrease in the quantity of resources 
B) An improvement in the quality of resources 
C) A fall in education standards 
D) A unsustainable growth in population 
E) An increase in unemployment rate 
A) A decrease in the quantity of resources 
B) An improvement in the quality of resources 
C) A fall in education standards 
D) A unsustainable growth in population 
E) An increase in unemployment rate

Question 3

The tradeoffs facing a society can be illustrated in a graph known as the:

Accepted Answer

A) production operations curve. 
B) production cost curve. 
C) production cost model. 
D) production cost forecast curve. 
E) production possibilities curve. 
A) production operations curve. 
B) production cost curve. 
C) production cost model. 
D) production cost forecast curve. 
E) production possibilities curve.

Question 4

A bowed-out production possibilities curve [PPC] implies that the marginal opportunity cost of producing more of one good is:

Accepted Answer

A) decreasing. 
B) increasing. 
C) constant. 
D) zero. 
E) less than zero. 
A) decreasing. 
B) increasing. 
C) constant. 
D) zero. 
E) less than zero.

Question 5

Julio makes wine and beer.Last year he made 20 bottles of wine and 20 cases of beer.If the price of grapes goes down (making wine cheaper to make), Julio will be able to make the same amount of wine and more beer.

Accepted Answer

A) True 
 B)False

Question 6

A nation's production possibilities curve [PPC] will shift outward if its workers receive better training.

Accepted Answer

A) True 
 B)False

Question 7

If a nation specializes in activities in which opportunity costs are the lowest and then trades with other nations, it is most likely to:

Accepted Answer

A) have a higher standard of living for its citizens than it would it if did not specialize and then trade. 
B) have a lower standard of living for its citizens than it would if it did not specialize and then trade. 
C) create as much wealth for its citizens as it could if it did not specialize and then trade. 
D) benefit in the short run but incur heavy loss in the long run. 
E) incur heavy loss in the short run and eventually cease production in the long run. 
A) have a higher standard of living for its citizens than it would it if did not specialize and then trade. 
B) have a lower standard of living for its citizens than it would if it did not specialize and then trade. 
C) create as much wealth for its citizens as it could if it did not specialize and then trade. 
D) benefit in the short run but incur heavy loss in the long run. 
E) incur heavy loss in the short run and eventually cease production in the long run.

Question 8

A decrease in the quantity of available resources would be represented by:

Accepted Answer

A) a steeper PPC. 
B) a point inside the PPC. 
C) an inward shift of the PPC. 
D) an upward movement along the PPC. 
E) a downward movement along the PPC. 
A) a steeper PPC. 
B) a point inside the PPC. 
C) an inward shift of the PPC. 
D) an upward movement along the PPC. 
E) a downward movement along the PPC.

Question 9

Which of the following exemplifies a private property right?

Accepted Answer

A) A tenant repairing his apartment without the owner's consent 
B) Free entrance for morning walkers at the town park 
C) Tickets purchased for entering the town museum 
D) A patent right received by a software developer for her latest invention 
E) A toll-free expressway used by drivers 
A) A tenant repairing his apartment without the owner's consent 
B) Free entrance for morning walkers at the town park 
C) Tickets purchased for entering the town museum 
D) A patent right received by a software developer for her latest invention 
E) A toll-free expressway used by drivers

Question 10

There is no cost of using your own savings in your business.

Accepted Answer

A) True 
 B)False

Question 11

It has been generally observed that most trade in the world occurs between a developed and a less-developed nation rather than between industrial or developed nations.

Accepted Answer

A) True 
 B)False

Question 12

Assume that a doctor makes $200 per hour, a lawyer $250 per hour, an architect $140 per hour, a professor $50 per hour, and a waiter $35 per hour.Which of these professionals is most likely to spend time to negotiate with a car dealer?

Accepted Answer

A) The doctor 
B) The lawyer 
C) The architect 
D) The professor 
E) The waiter 
A) The doctor 
B) The lawyer 
C) The architect 
D) The professor 
E) The waiter

Question 13

Which of the following will bring about an inward shift of a production possibilities curve [PPC]?

Accepted Answer

A) A decrease in the amount of resource employment 
B) An increase in the working-age population 
C) An increase in unemployment 
D) A decrease in the availability of natural resources 
E) An increase in the amount of capital available 
A) A decrease in the amount of resource employment 
B) An increase in the working-age population 
C) An increase in unemployment 
D) A decrease in the availability of natural resources 
E) An increase in the amount of capital available

Question 14

If you have a choice of consuming either two apples, three oranges, or one candy bar, the opportunity cost of the candy bar is:

Accepted Answer

A) two apples. 
B) three oranges. 
C) two apples and three oranges. 
D) two apples or three oranges, whichever you value more. 
E) the difference in the prices of the three options. 
A) two apples. 
B) three oranges. 
C) two apples and three oranges. 
D) two apples or three oranges, whichever you value more. 
E) the difference in the prices of the three options.

Question 15

A point inside a nation's production possibilities curve can represent:

Accepted Answer

A) a recession. 
B) an increase in population size. 
C) an economic growth. 
D) a technological advancement. 
E) an improvement in living standards. 
A) a recession. 
B) an increase in population size. 
C) an economic growth. 
D) a technological advancement. 
E) an improvement in living standards.

Question 16

Archie can paint 5 backyard fences or repair 2 cars in 8 hours, while Austin can paint 4 backyard fences or repair 2 cars in 8 hours.Identify the correct statement.

Accepted Answer

A) Archie is relatively better in repairing cars. 
B) Archie is relatively better in painting fences. 
C) Austin is relatively better in painting fences. 
D) Archie and Austin are equally good in painting fences. 
E) Neither Archie not Austin are good in repairing cars. 
A) Archie is relatively better in repairing cars. 
B) Archie is relatively better in painting fences. 
C) Austin is relatively better in painting fences. 
D) Archie and Austin are equally good in painting fences. 
E) Neither Archie not Austin are good in repairing cars.

Question 17

Refer to Figure 2.2.If there is an increase in the education level of the population, graph(s)_____ best illustrate(s)what will happen to the production possibilities curve [PPC].

Accepted Answer

A) A 
B) B 
C) C 
D) A and C 
E) A and B 
A) A 
B) B 
C) C 
D) A and C 
E) A and B

Question 18

Free trade leads to an overall improvement in the standard of living in a country because everything is produced at the lowest possible cost.

Accepted Answer

A) True 
 B)False

Question 19

The table given below represents butter and ham production by two countries Norway and Sweden. Table 2.5
  According to Table 2.5, Norway has a comparative advantage in _____ and an absolute advantage in _____.

Accepted Answer

A) butter and ham;butter 
B) ham;butter 
C) nothing;butter 
D) ham;nothing 
E) butter;ham 
A) butter and ham;butter 
B) ham;butter 
C) nothing;butter 
D) ham;nothing 
E) butter;ham

Question 20

A person has a comparative advantage in producing a good if:

Accepted Answer

A) that person can produce the good at a lower absolute cost than anyone else. 
B) that person can produce the good at a lower opportunity cost than anyone else. 
C) that person can do a better job than anyone else. 
D) that person spends less money in out-of-pocket expenses than anybody else. 
E) that person can produce the good at a higher opportunity cost than anyone else. 
A) that person can produce the good at a lower absolute cost than anyone else. 
B) that person can produce the good at a lower opportunity cost than anyone else. 
C) that person can do a better job than anyone else. 
D) that person spends less money in out-of-pocket expenses than anybody else. 
E) that person can produce the good at a higher opportunity cost than anyone else.

Exam 2: Choice, Opportunity Costs, and Specialization

A world-renowned brain surgeon can type twice as fast as her secretarial assistant.Which of the following statements is true in this situation?

Which of the following will result in an outward shift of the production possibilities curve [PPC]?

The tradeoffs facing a society can be illustrated in a graph known as the:

A bowed-out production possibilities curve [PPC] implies that the marginal opportunity cost of producing more of one good is:

Julio makes wine and beer.Last year he made 20 bottles of wine and 20 cases of beer.If the price of grapes goes down (making wine cheaper to make), Julio will be able to make the same amount of wine and more beer.

A nation's production possibilities curve [PPC] will shift outward if its workers receive better training.

If a nation specializes in activities in which opportunity costs are the lowest and then trades with other nations, it is most likely to:

A decrease in the quantity of available resources would be represented by:

Which of the following exemplifies a private property right?

There is no cost of using your own savings in your business.

It has been generally observed that most trade in the world occurs between a developed and a less-developed nation rather than between industrial or developed nations.

Assume that a doctor makes $200 per hour, a lawyer $250 per hour, an architect $140 per hour, a professor $50 per hour, and a waiter $35 per hour.Which of these professionals is most likely to spend time to negotiate with a car dealer?

Which of the following will bring about an inward shift of a production possibilities curve [PPC]?

If you have a choice of consuming either two apples, three oranges, or one candy bar, the opportunity cost of the candy bar is:

A point inside a nation's production possibilities curve can represent:

Archie can paint 5 backyard fences or repair 2 cars in 8 hours, while Austin can paint 4 backyard fences or repair 2 cars in 8 hours.Identify the correct statement.

Refer to Figure 2.2.If there is an increase in the education level of the population, graph(s)_____ best illustrate(s)what will happen to the production possibilities curve [PPC].

Free trade leads to an overall improvement in the standard of living in a country because everything is produced at the lowest possible cost.

The table given below represents butter and ham production by two countries Norway and Sweden. Table 2.5 According to Table 2.5, Norway has a comparative advantage in _____ and an absolute advantage in _____.

A person has a comparative advantage in producing a good if:

Economics: The World Around You

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

National Income Accounting

an Introduction to the Foreign Exchange Market and the Balance of Payments

Consumer Choice

Supply: The Costs of Doing Business

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Profit Maximization

Aggregate Expenditures

Perfect Competition

Income and Expenditures Equilibrium

Monopoly

Fiscal Policy

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Money and Banking

Market Failures, Government Failures, and Rent Seeking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Resource Markets

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

The Labor Market

Capital Markets

Economic Growth

Development Economics

the Land Market and Natural Resources

Aging, Social Security and Health Care

Globalization

Elasticity: Demand and Supply

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

Consumer Choice

International Trade Restrictions

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

International Trade Restrictions

Supply: the Costs of Doing Business

Exchange Rates and Financial Links Between Countries

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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The table given below represents butter and ham production by two countries Norway and Sweden. Table 2.5 According to Table 2.5, Norway has a comparative advantage in _ and an absolute advantage in _.