Question 1

Table 3.1
-Table 3.1 illustrates Willy and Blythe's hourly production for apples and carrots.From the table,we can conclude that:

Accepted Answer

A) Willy should specialize in carrots and trade for apples. 
B) Willy should specialize in apples and trade for carrots. 
C) Blithe should specialize in both goods. 
D) Willy should specialize in both goods.

Question 2

Table 3.1
-Table 3.1 illustrates Willy and Blythe's hourly production for apples and carrots.Based on the table,Blythe's opportunity cost of 1 apple is:

Accepted Answer

A) 1 carrot. 
B) 4 carrots. 
C) 6 carrots. 
D) 1/3 carrot.

Question 3

People who develop new products and production processes increase their profitability by taking out ________ on their inventions.

Accepted Answer

The answer of People who develop new products and production...

Question 4

Suppose a product suddenly loses popularity and the firms producing the product begin to realize large losses.As firms exit the market,the equilibrium price in the market will:

Accepted Answer

A) increase and make the remaining firms stay in business. 
B) decrease and make the remaining firms stay in business. 
C) decrease further and push more firms out of business. 
D) decrease further while making the remaining firms realize profits again.

Question 5

What are some of the sources of market failure?

Accepted Answer

The answer of What are some of the sources of...

Question 6

Suppose that in the time it takes for him to bake a cake,Bob can sew 5 pairs of jeans.In the time it takes for Joe to bake a cake,he can sew 8 pairs of jeans day.In this example,who has the comparative advantage in baking a cake?

Accepted Answer

A) Joe 
B) both Bob and Joe 
C) Bob 
D) neither Bob nor Joe

Question 7

The market system works by getting each person,motivated by his or her own self-interest,to produce products for other people.

Accepted Answer

A) True 
 B)False

Question 8

Under a market system,the people with information about buyers' desires,production technology,and resources make the decisions.

Accepted Answer

A) True 
 B)False

Question 9

If Tom can produce 20 multiple choice questions or 30 true/false questions in an hour,and Mary can produce 15 multiple choice questions or 15 true/false questions in an hour,then Mary has a comparative advantage in writing multiple choice questions.

Accepted Answer

A) True 
 B)False

Question 10

The reason why the government taxes the gasoline used by pollution-causing automobiles is because it is trying to:

Accepted Answer

A) make the drivers face the full cost of their driving decisions. 
B) make the government face the full cost of the driver's driving decisions. 
C) make the oil companies face the full cost of the driver's driving decisions. 
D) make the people who suffer from asthma face the full cost of the driver's driving decisions.

Question 11

To make new commercial ventures more attractive for entrepreneurs,________ can be used to reduce risk.

Accepted Answer

The answer of To make new commercial ventures more attractive...

Question 12

A market failure could be caused by:

Accepted Answer

A) firms not bearing the full costs of production. 
B) firms competing against each other for customers. 
C) profit. 
D) capitalism.

Question 13

The ability of one person or nation to produce a good at a lower opportunity cost than another is called a(n):

Accepted Answer

A) market advantage. 
B) comparative advantage. 
C) absolute advantage. 
D) specialization advantage.

Question 14

For country A,an import is a good produced in:

Accepted Answer

A) country B and purchased by residents of country B. 
B) country B and purchased by residents of country A. 
C) country A and purchased by residents of country B. 
D) country A and purchased by residents of country A.

Question 15

The decrease in the scarcity of a product usually results in:

Accepted Answer

A) an increased number of sizes. 
B) more colors being available. 
C) lower prices. 
D) more stores selling the product.

Question 16

Markets exist:

Accepted Answer

A) as an arrangement that allows buyers and sellers to exchange things. 
B) because people are not self-sufficient. 
C) because people specialize in the production of one or two products. 
D) all of the above

Question 17

________ occurs when a firm is shifting part of its production to another country.

Accepted Answer

A) Outsourcing 
B) Importing 
C) Exporting 
D) All of the above are correct.

Question 18

Suppose that a vehicle is invented such that it emits no pollutants into the atmosphere.To achieve an efficient market outcome,the government must:

Accepted Answer

A) allow other vehicles that emit pollutants into the atmosphere,as long as vehicle owners pay all the costs associated with their pollution. 
B) outlaw SUV and other vehicles that pollute the environment. 
C) be the sole producer of that vehicle. 
D) require all auto makers to produce the vehicles that produces zero emissions.

Question 19

An individual or country that has a comparative advantage in the production of one good:

Accepted Answer

A) must have an absolute advantage in the good's production. 
B) must not have an absolute advantage in the good's production. 
C) may or may not have an absolute advantage in the good's production. 
D) must not have an absolute advantage in the production of the other good.

Question 20

According to the Application,Latvia would be better off if it does not trade with any of its neighboring European countries.

Accepted Answer

A) True 
 B)False

Exam 3: Exchange and Markets

Table 3.1 -Table 3.1 illustrates Willy and Blythe's hourly production for apples and carrots.From the table,we can conclude that:

Table 3.1 -Table 3.1 illustrates Willy and Blythe's hourly production for apples and carrots.Based on the table,Blythe's opportunity cost of 1 apple is:

People who develop new products and production processes increase their profitability by taking out ________ on their inventions.

Suppose a product suddenly loses popularity and the firms producing the product begin to realize large losses.As firms exit the market,the equilibrium price in the market will:

What are some of the sources of market failure?

Suppose that in the time it takes for him to bake a cake,Bob can sew 5 pairs of jeans.In the time it takes for Joe to bake a cake,he can sew 8 pairs of jeans day.In this example,who has the comparative advantage in baking a cake?

The market system works by getting each person,motivated by his or her own self-interest,to produce products for other people.

Under a market system,the people with information about buyers' desires,production technology,and resources make the decisions.

If Tom can produce 20 multiple choice questions or 30 true/false questions in an hour,and Mary can produce 15 multiple choice questions or 15 true/false questions in an hour,then Mary has a comparative advantage in writing multiple choice questions.

The reason why the government taxes the gasoline used by pollution-causing automobiles is because it is trying to:

To make new commercial ventures more attractive for entrepreneurs,________ can be used to reduce risk.

A market failure could be caused by:

The ability of one person or nation to produce a good at a lower opportunity cost than another is called a(n) :

For country A,an import is a good produced in:

The decrease in the scarcity of a product usually results in:

Markets exist:

________ occurs when a firm is shifting part of its production to another country.

Suppose that a vehicle is invented such that it emits no pollutants into the atmosphere.To achieve an efficient market outcome,the government must:

An individual or country that has a comparative advantage in the production of one good:

According to the Application,Latvia would be better off if it does not trade with any of its neighboring European countries.