Question 1

Entrepreneurs bring together the factors of production to produce goods and services.

Accepted Answer

A) True 
 B)False

Question 2

Figure 2-12 
-Refer to Figure 2-12.One segment of the circular flow diagram in the figure shows the flow of goods and services from market C to economic agents A.What is market C and who are economic agents A?

Accepted Answer

A)  C = factor markets; A = households 
B)  C = product markets; A = households 
C)  C = factor markets; A = firms 
D)  C= product markets; A = firms

Question 3

Specializing in the production of a good or service in which one has a comparative advantage enables a country to do all of the following except

Accepted Answer

A)  engage in mutually beneficial trade with other nations. 
B)  increase the variety of products that it can consume with no increase in resources. 
C)  consume a combination of goods that lies outside its own production possibilities frontier. 
D)  produce a combination of goods that lies outside its own production possibilities frontier.

Question 4

What is comparative advantage? What is absolute advantage?

Accepted Answer

The answer of What is comparative advantage? What is absolute...

Question 5

Suppose there is no unemployment in the economy and society decides that it wants more of one good.Which of the following statements is true?

Accepted Answer

A)  It can only achieve this with an advance in technology. 
B)  It can increase output without giving up another good. 
C)  It can only achieve this with an increase in resource supplies. 
D)  It will have to give up production and consumption of some other good.

Question 6

Table 2-2
Production choices for Billie's Bedroom Shop
 
-Refer to Table 2-2.Assume Billie's Bedroom Shop only produces pillows and blankets.A combination of 9 pillows and 21 blankets would appear

Accepted Answer

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

Question 7

If opportunity costs are constant,the production possibilities frontier would be graphed as

Accepted Answer

A)  a ray from the origin. 
B)  a positively sloped straight line. 
C)  a negatively sloped curve bowed in toward the origin. 
D)  a negatively sloped straight line.

Question 8

Figure 2-4  Figure 2-4 shows various points on three different production possibilities frontiers for a nation.
-Refer to Figure 2-4.A movement from Y to Z

Accepted Answer

A)  represents an increase in the demand for plastic products. 
B)  could occur because of general technological advancements. 
C)  is the result of advancements in food production technology. 
D)  is the result of advancements in plastic production technology.

Question 9

When you purchase a new pair of jeans you do so in the

Accepted Answer

A)  factor market. 
B)  input market. 
C)  product market. 
D)  resource market.

Question 10

In economics,the term "free market" refers to a market where products are traded but not sold.

Accepted Answer

A) True 
 B)False

Question 11

________ marginal opportunity cost implies that the more resources already devoted to any activity,the payoff from allocating yet more resources to that activity increases by progressively smaller amounts.

Accepted Answer

A)  Increasing 
B)  Decreasing 
C)  Constant 
D)  Negative

Question 12

Identify whether each of the following transactions will take place in the factor market or in the product market.
a.Graciela buys a Tesla Motors Model X.
b.Lashan works 60 hours a week at a law firm.
c.Tito sells his family's farmland to a housing developer.
d.Tesla Motors increases employment at its Fremont,California plant.

Accepted Answer

The answer of Identify whether each of the following transactions...

Question 13

Figure 2-5 
-Refer to Figure 2-5.If the economy is currently producing at point X,what is the opportunity cost of moving to point Y?

Accepted Answer

A)  5 million tons of steel 
B)  9 million tons of paper 
C)  5 million tons of paper 
D)  14 million tons of steel

Question 14

The attainable production points on a production possibility curve are

Accepted Answer

A)  the horizontal and vertical intercepts. 
B)  the points along the production possibilities frontier. 
C)  the points outside the area enclosed by the production possibilities frontier. 
D)  the points along and inside the production possibility frontier.

Question 15

If a commercial dairy farm wants to raise funds to purchase feeding troughs,it does so in the

Accepted Answer

A)  output market. 
B)  product market. 
C)  factor market. 
D)  dairy products market.

Question 16

Table 2-9
  Table 2-9 shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras.
-Refer to Table 2-9.If the two countries specialize and trade,who should export canoes?

Accepted Answer

A)  There is no basis for trade between the two countries. 
B)  Guatemala 
C)  Honduras 
D)  They should both be exporting canoes.

Question 17

Table 2-11
  Table 2-11 shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland.
-Refer to Table 2-11.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.

Question 18

Figure 2-9  Figure 2-9 shows the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews.
-Refer to Figure 2-9.If the two countries have the same amount of resources and the same technological knowledge,which country has an absolute advantage in the production of cotton?

Accepted Answer

A)  Indonesia 
B)  They have the same advantage. 
C)  Pakistan 
D)  cannot be determined

Question 19

Table 2-3
Production Choices for Dina's Diner
 
-Refer to Table 2-3.Assume Dina's Diner only produces sliders and hot wings.A combination of 120 sliders and 100 hot wings would appear

Accepted Answer

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

Question 20

In the circular flow model,producers

Accepted Answer

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

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

Entrepreneurs bring together the factors of production to produce goods and services.

Figure 2-12 -Refer to Figure 2-12.One segment of the circular flow diagram in the figure shows the flow of goods and services from market C to economic agents A.What is market C and who are economic agents A?

Specializing in the production of a good or service in which one has a comparative advantage enables a country to do all of the following except

What is comparative advantage? What is absolute advantage?

Suppose there is no unemployment in the economy and society decides that it wants more of one good.Which of the following statements is true?

Table 2-2 Production choices for Billie's Bedroom Shop -Refer to Table 2-2.Assume Billie's Bedroom Shop only produces pillows and blankets.A combination of 9 pillows and 21 blankets would appear

If opportunity costs are constant,the production possibilities frontier would be graphed as

Figure 2-4 Figure 2-4 shows various points on three different production possibilities frontiers for a nation. -Refer to Figure 2-4.A movement from Y to Z

When you purchase a new pair of jeans you do so in the

In economics,the term "free market" refers to a market where products are traded but not sold.

________ marginal opportunity cost implies that the more resources already devoted to any activity,the payoff from allocating yet more resources to that activity increases by progressively smaller amounts.

Figure 2-5 -Refer to Figure 2-5.If the economy is currently producing at point X,what is the opportunity cost of moving to point Y?

The attainable production points on a production possibility curve are

If a commercial dairy farm wants to raise funds to purchase feeding troughs,it does so in the

Table 2-9 Table 2-9 shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras. -Refer to Table 2-9.If the two countries specialize and trade,who should export canoes?

Table 2-11 Table 2-11 shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland. -Refer to Table 2-11.If the two countries specialize and trade,who should export motorcycles?

Table 2-3 Production Choices for Dina's Diner -Refer to Table 2-3.Assume Dina's Diner only produces sliders and hot wings.A combination of 120 sliders and 100 hot wings would appear

In the circular flow model,producers