Question 1

As job opportunities for women and the wages those jobs pay have increased,the opportunity cost of doing housework has ________,so many families have chosen to hire specialists in households chores,such as cleaning services and lawn care services,because the cost of these specialists is ________ than the cost of the wife (or husband)performing those chores.

Accepted Answer

A) increased;higher 
B) increased;lower 
C) decreased;higher 
D) decreased;lower

Question 2

Table 2-5
Production choices for Nadia's Neckware
 $$\begin{array} { | c | c | c | } 
\hline \text { Choice } & \begin{array} { l } 
\text { Quantity of } \
\text { Ascots } \
\text { Produced }
\end{array} & \begin{array} { l } 
\text { Quantity of } \
\text { Bowties } \
\text { Produced }
\end{array} \
\hline \text { A } & 32 & 0 \
\hline \text { B } & 24 & 6 \
\hline \text { C } & 16 & 12 \
\hline \text { D } & 8 & 18 \
\hline \text { E } & 0 & 24 \
\hline
\end{array}$$
-Refer to Table 2-5.Assume Nadia's Neckties only produces ascots and bowties.Nadia faces ________ opportunity costs in the production of ascots and bowties.

Accepted Answer

A) increasing 
B) decreasing 
C) constant 
D) negative

Question 3

________ 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 4

A production possibilities frontier with a ________ shape indicates increasing opportunity costs as more and more of one good is produced.

Accepted Answer

A) linear 
B) bowed inward 
C) bowed outward 
D) perfectly horizontal

Question 5

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 6

Table 2-4
Production Choices for Dina's Diner
 $$\begin{array} { | c | c | c | } 
\hline \text { Choice } & \begin{array} { l } 
\text { Quantity of } \
\text { Sliders } \
\text { Produced }
\end{array} & \begin{array} { l } 
\text { Quantity of } \
\text { Hot Wings } \
\text { Produced }
\end{array} \
\hline \text { A } & 80 & 0 \
\hline \text { B } & 60 & 25 \
\hline \text { C } & 40 & 50 \
\hline \text { D } & 20 & 75 \
\hline \text { E } & 0 & 100 \
\hline
\end{array}$$
-Refer to Table 2-4.Assume Dina's Diner only produces sliders and hot wings.A combination of 40 sliders and 25 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 7

Figure 2-13 shows the production possibilities frontiers for Costa Rica and Guatemala.Each country produces two goods,pineapples and coconuts.
-Refer to Figure 2-13.What is the opportunity cost of producing 1 ton of pineapples in Guatemala?

Accepted Answer

A) 1/2 of a ton of coconuts 
B) 1 1/3 tons of coconuts 
C) 2 tons of coconuts 
D) 180 tons of coconuts

Question 8

Figure 2-14 shows the production possibilities frontiers for Greenland and Iceland.Each country produces two goods,snow cones and popsicles.
-Refer to Figure 2-14.What is the opportunity cost of producing 1 snow cone in Greenland?

Accepted Answer

A) 2/3 of a popsicle 
B) 5/6 of a popsicle 
C) 1 1/5 popsicles 
D) 200 popsicles

Question 9

Which of the following are separate flows in the circular flow model?

Accepted Answer

A) the flow of goods and the flow of services 
B) the flow of costs and the flow of revenue 
C) the flow of income earned from the sale of resources and the flow of expenditures on goods and services. 
D) the flow of income received by households and the flow of tax revenues paid by households

Question 10

The ________ production points on a production possibilities frontier are the points along and inside the production possibilities frontier.

Accepted Answer

A) attainable 
B) unattainable 
C) productively efficient 
D) allocatively efficient

Question 11

$$\begin{array} { | l | c | c | } 
\hline & \text { One Cande } & \text { One Sailbat } \
\hline \text { Guaternala } & 10 \text { hours } & 60 \text { hours } \
\hline \text { Honduras } & 15 \text { hours } & 75 \text { hours } \
\hline
\end{array}$$ Table 2-12 shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras.
-Refer to Table 2-12.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 12

$$\begin{array} { | l | c | c | } 
\hline & \text { Serena } & \text { Haley } \
\hline \text { Bracelets } & 8 & 9 \
\hline \text { Necklaces } & 16 & 12 \
\hline
\end{array}$$ Table 2-9 shows the output per week of two jewelers,Serena and Haley.They can either devote their time to making bracelets or making necklaces.
-Refer to Table 2-9.What is Serena's opportunity cost of making a bracelet?

Accepted Answer

A) 2 necklaces 
B) 1/2 of a bracelet 
C) 1/2 of a necklace 
D) 3/4 of a bracelet

Question 13

In a free market there are significant restrictions on how a good or service can be produced or sold.

Accepted Answer

A) True 
 B)False

Question 14

Households

Accepted Answer

A) purchase final goods and services in the factor market. 
B) purchase final goods and services in the product market. 
C) purchase resources in the product market. 
D) purchase resources in the factor market.

Question 15

Figure 2-2 above shows the production possibilities frontier for Mendonca,an agrarian nation that produces two goods,meat and vegetables.
-Refer to Figure 2-2.Suppose Mendonca is currently producing 60 pounds of vegetables per period.How much meat is it also producing,assuming that resources are fully utilized?

Accepted Answer

A) 45 pounds of meat 
B) 75 pounds of meat 
C) 80 pounds of meat 
D) 100 pounds of meat

Question 16

Figure 2-14 shows the production possibilities frontiers for Greenland and Iceland.Each country produces two goods,snow cones and popsicles.
-Refer to Figure 2-14.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 popsicles?

Accepted Answer

A) Greenland 
B) They have the same advantage. 
C) Iceland 
D) cannot be determined

Question 17

Which of the following is an example of spending on factors of production in the circular flow model?

Accepted Answer

A) Tuan purchases a cappuccino at the student union. 
B) Laurence rents a car to drive to a wedding in San Diego. 
C) Yvette pays $50 to join a softball league. 
D) The "Lucky Ducky" casino buys a new craps table for the casino floor.

Question 18

$$\begin{array} { | l | c | c | } 
\hline & \text { Wilma } & \text { Betty } \
\hline \text { Statues } & 12 & 14 \
\hline \text { Benches } & 4 & 7 \
\hline
\end{array}$$ Table 2-19 shows the output per month of two people,Wilma and Betty.They can either devote their time to making marble statues or making marble benches.
-Refer to Table 2-19.What is Wilma's opportunity cost of making a bench?

Accepted Answer

A) 1/3 of a statue 
B) 3 statues 
C) 1/2 of a bench 
D) 1.3 statues

Question 19

$$\begin{array} { | l | c | c | } 
\hline & \text { One Cande } & \text { One Sailbat } \
\hline \text { Guaternala } & 10 \text { hours } & 60 \text { hours } \
\hline \text { Honduras } & 15 \text { hours } & 75 \text { hours } \
\hline
\end{array}$$ Table 2-12 shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras.
-Refer to Table 2-12.Does either Guatemala or Honduras have an absolute advantage and if so,in what product?

Accepted Answer

A) Guatemala only has an absolute advantage in producing canoes. 
B) Honduras only has an absolute advantage in producing canoes. 
C) Guatemala has an absolute advantage in producing both products. 
D) Honduras only has an absolute advantage in producing sailboats.

Question 20

Horatio can produce either a combination of 15 bird houses and 25 wind chimes or a combination of 30 bird houses and 15 wind chimes.If he now produces 30 bird houses and 15 wind chimes,what is the opportunity cost of producing an additional 10 wind chimes?

Accepted Answer

A) 2 bird houses 
B) 15 bird houses 
C) 30 bird houses 
D) 45 bird houses

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