Question 1

Which of the following statements illustrates that the idea of comparative advantage is embedded in the circular flow diagram?

Accepted Answer

A)  Households spend money on durable and non durable goods. 
B)  Households are composed of individuals. 
C)  The total dollar value of expenditures should equal the dollar value of incomes. 
D)  Wages and salaries represent a major percentage of the firms' expenditures. 
E)  Firms use the labour they hire to produce goods and services,which they sell to households. 
A)  Households spend money on durable and non durable goods. 
B)  Households are composed of individuals. 
C)  The total dollar value of expenditures should equal the dollar value of incomes. 
D)  Wages and salaries represent a major percentage of the firms' expenditures. 
E)  Firms use the labour they hire to produce goods and services,which they sell to households.

Question 2

Jerry's production possibilities curve for goods W and Z is W = 20 - 2Z,where W is the quantity of good W produced and Z is the quantity of good Z produced.The combination of W and Z (11,5)is a(n)__________ point.

Accepted Answer

A)  unattainable 
B)  inefficient 
C)  inefficient but attainable 
D)  efficient 
E)  efficient and unattainable 
A)  unattainable 
B)  inefficient 
C)  inefficient but attainable 
D)  efficient 
E)  efficient and unattainable

Question 3

As Becky produces more and more butter,she finds that

Accepted Answer

A)  she has to give up increasing amounts of guns for each additional unit of butter. 
B)  she has to give up decreasing amounts of guns for each additional unit of butter. 
C)  she has to give up the same amount of guns for each additional unit of butter. 
D)  she does not have to give up any guns for each additional unit of butter. 
E)  she has to give up four guns for one last unit of butter. 
A)  she has to give up increasing amounts of guns for each additional unit of butter. 
B)  she has to give up decreasing amounts of guns for each additional unit of butter. 
C)  she has to give up the same amount of guns for each additional unit of butter. 
D)  she does not have to give up any guns for each additional unit of butter. 
E)  she has to give up four guns for one last unit of butter.

Question 4

A graph that illustrates the maximum amount of one good that can be produced for every possible level of production of the other good is termed a(n)

Accepted Answer

A)  production possibilities curve. 
B)  consumption possibilities curve. 
C)  production impossibilities curve. 
D)  comparative advantage curve. 
E)  absolute advantage curve. 
A)  production possibilities curve. 
B)  consumption possibilities curve. 
C)  production impossibilities curve. 
D)  comparative advantage curve. 
E)  absolute advantage curve.

Question 5

Alex and Lou have worked out an efficient arrangement.Under that arrangement,

Accepted Answer

A)  Alex and Lou each spend a half hour on cooking and a half hour on cleaning. 
B)  Alex spends all of his time on cleaning,while Lou does all the cooking. 
C)  Lou does all of the cleaning and half of the cooking. 
D)  Lou spends all of his time on cleaning,while Alex does all the cooking 
E)  Lou does all of the cooking and half of the cleaning. 
A)  Alex and Lou each spend a half hour on cooking and a half hour on cleaning. 
B)  Alex spends all of his time on cleaning,while Lou does all the cooking. 
C)  Lou does all of the cleaning and half of the cooking. 
D)  Lou spends all of his time on cleaning,while Alex does all the cooking 
E)  Lou does all of the cooking and half of the cleaning.

Question 6

In general,individuals should specialize in producing those goods for which they

Accepted Answer

A)  can produce more quickly than others. 
B)  can produce less quickly than others. 
C)  have the lowest opportunity cost compared to others. 
D)  have the highest opportunity cost compared to others. 
E)  have an average opportunity cost. 
A)  can produce more quickly than others. 
B)  can produce less quickly than others. 
C)  have the lowest opportunity cost compared to others. 
D)  have the highest opportunity cost compared to others. 
E)  have an average opportunity cost.

Question 7

Point A on a production possibilities curve,where bicycles are on the vertical axis and tricycles on the horizontal axis,represents a combination of 10 bicycles and 4 tricycles,and point B represents 6 bicycles and 6 tricycles.The absolute value of the slope of the production possibilities curve between points A and B equals

Accepted Answer

A)  2. 
B)  4. 
C)  ½. 
D)  ¼. 
E)  6. 
A)  2. 
B)  4. 
C)  ½. 
D)  ¼. 
E)  6.

Question 8

The production possibilities curve is

Accepted Answer

A)  the boundary that divides all production combinations into efficient ones and inefficient ones. 
B)  a graph illustrating the production combinations society would like to choose. 
C)  the boundary that divides all production combinations into attainable ones and unattainable ones. 
D)  a convex (bowed into the origin)curve illustrating production trade-offs. 
E)  the boundary that divides all production combinations into good ones and bad ones. 
A)  the boundary that divides all production combinations into efficient ones and inefficient ones. 
B)  a graph illustrating the production combinations society would like to choose. 
C)  the boundary that divides all production combinations into attainable ones and unattainable ones. 
D)  a convex (bowed into the origin)curve illustrating production trade-offs. 
E)  the boundary that divides all production combinations into good ones and bad ones.

Question 9

While there exists the potential for specialization to go too far,it is equally true that

Accepted Answer

A)  these fears are overstated by the media. 
B)  any work is mind numbing and distasteful. 
C)  failure to specialize has significant costs. 
D)  less specialization means higher wages. 
E)  less specialization would improve conversation at parties. 
A)  these fears are overstated by the media. 
B)  any work is mind numbing and distasteful. 
C)  failure to specialize has significant costs. 
D)  less specialization means higher wages. 
E)  less specialization would improve conversation at parties.

Question 10

When productive activity is organized according to comparative advantage,

Accepted Answer

A)  there is a decrease in the amount of goods and services that an economy can gain from its resources. 
B)  there is an increase in the amount of goods and services that an economy can gain from its resources. 
C)  there is no change in the amount of goods and services that an economy can gain from its resources. 
D)  the amount of goods and services that an economy can gain from its resources may increase or decrease. 
E)  there is a decrease in the quality of the goods and services produced in the economy. 
A)  there is a decrease in the amount of goods and services that an economy can gain from its resources. 
B)  there is an increase in the amount of goods and services that an economy can gain from its resources. 
C)  there is no change in the amount of goods and services that an economy can gain from its resources. 
D)  the amount of goods and services that an economy can gain from its resources may increase or decrease. 
E)  there is a decrease in the quality of the goods and services produced in the economy.

Question 11

Refer to the graph below.As you move from point B to point A,

Accepted Answer

A)  efficiency is increased because we have more of good X. 
B)  efficiency is decreased because we have less of good Y. 
C)  efficiency is increased because the economy's productive resources are employed more effectively. 
D)  the change in efficiency is unclear. 
E)  efficiency is unchanged. 
A)  efficiency is increased because we have more of good X. 
B)  efficiency is decreased because we have less of good Y. 
C)  efficiency is increased because the economy's productive resources are employed more effectively. 
D)  the change in efficiency is unclear. 
E)  efficiency is unchanged.

Question 12

The comparative advantage for shoes belongs to __________ and the comparative advantage for pants belongs to __________.

Accepted Answer

A)  Sam;Jenny 
B)  Sam;Sam 
C)  Jenny;Sam 
D)  Jenny;Jenny 
E)  both;Sam 
A)  Sam;Jenny 
B)  Sam;Sam 
C)  Jenny;Sam 
D)  Jenny;Jenny 
E)  both;Sam

Question 13

In general,it is true that

Accepted Answer

A)  more specialization is always better. 
B)  less specialization is always better. 
C)  specialization imposes costs as well as benefits. 
D)  more specialization is always worse. 
E)  less specialization is always worse. 
A)  more specialization is always better. 
B)  less specialization is always better. 
C)  specialization imposes costs as well as benefits. 
D)  more specialization is always worse. 
E)  less specialization is always worse.

Question 14

When individuals or groups specialize in producing those goods for which they have a comparative advantage and exchange those goods with one another,

Accepted Answer

A)  those with an absolute advantage will gain the most,while those without an absolute advantage will lose. 
B)  those with a comparative advantage will gain the most,while those without a comparative advantage will lose. 
C)  total production will be greater than it would be without specialization,but would be the greatest if they produced those goods in which they only have an absolute advantage. 
D)  total production will be less than it would be without specialization. 
E)  total production will be the greatest that they can achieve given the available resources. 
A)  those with an absolute advantage will gain the most,while those without an absolute advantage will lose. 
B)  those with a comparative advantage will gain the most,while those without a comparative advantage will lose. 
C)  total production will be greater than it would be without specialization,but would be the greatest if they produced those goods in which they only have an absolute advantage. 
D)  total production will be less than it would be without specialization. 
E)  total production will be the greatest that they can achieve given the available resources.

Question 15

-As Bo increases her production of apples from 6 units to 12 units,she finds that

Accepted Answer

A)  she has to give up increasing amounts of fish for each additional unit of apples. 
B)  she has to give up smaller amounts of fish for each additional unit of apples. 
C)  she has to give up the same amount of fish for each additional unit of apples. 
D)  she does not have to give up fish for each additional unit of apples. 
E)  she has to give up all her fish. 
A)  she has to give up increasing amounts of fish for each additional unit of apples. 
B)  she has to give up smaller amounts of fish for each additional unit of apples. 
C)  she has to give up the same amount of fish for each additional unit of apples. 
D)  she does not have to give up fish for each additional unit of apples. 
E)  she has to give up all her fish.

Question 16

An inefficient point is

Accepted Answer

A)  necessarily an attainable point. 
B)  may be an attainable point. 
C)  necessarily an unattainable point. 
D)  possibly an unattainable point. 
E)  one that uses too many resources. 
A)  necessarily an attainable point. 
B)  may be an attainable point. 
C)  necessarily an unattainable point. 
D)  possibly an unattainable point. 
E)  one that uses too many resources.

Question 17

Having a comparative advantage in a particular task means that you

Accepted Answer

A)  are better at it than other people. 
B)  give up more to accomplish that task than do others. 
C)  give up less to accomplish that task than do others. 
D)  have specialized in that task,while others have not 
E)  have more resources than others. 
A)  are better at it than other people. 
B)  give up more to accomplish that task than do others. 
C)  give up less to accomplish that task than do others. 
D)  have specialized in that task,while others have not 
E)  have more resources than others.

Question 18

In one hour,Juan can produce 8 chairs or 2 tables.If chairs are on the vertical axis,the slope of his production possibilities curve is

Accepted Answer

A)  0.25. 
B)  -0.25. 
C)  4. 
D)  -4. 
E)  -2. 
A)  0.25. 
B)  -0.25. 
C)  4. 
D)  -4. 
E)  -2.

Question 19

The psychological cost of specialization is likely to affect

Accepted Answer

A)  all workers to the same degree. 
B)  very few workers. 
C)  a factory worker less than a brain surgeon. 
D)  a factory worker more than a brain surgeon. 
E)  a factory worker and a brain surgeon equally. 
A)  all workers to the same degree. 
B)  very few workers. 
C)  a factory worker less than a brain surgeon. 
D)  a factory worker more than a brain surgeon. 
E)  a factory worker and a brain surgeon equally.

Question 20

The absolute value of the slope of Buffy's production possibilities curve (with weapons on the vertical axis)is

Accepted Answer

A)  4. 
B)  3. 
C)  6. 
D)  2. 
E)  0.333. 
A)  4. 
B)  3. 
C)  6. 
D)  2. 
E)  0.333.

Which of the following statements illustrates that the idea of comparative advantage is embedded in the circular flow diagram?

Jerry's production possibilities curve for goods W and Z is W = 20 - 2Z,where W is the quantity of good W produced and Z is the quantity of good Z produced.The combination of W and Z (11,5)is a(n)__________ point.

As Becky produces more and more butter,she finds that

A graph that illustrates the maximum amount of one good that can be produced for every possible level of production of the other good is termed a(n)

Alex and Lou have worked out an efficient arrangement.Under that arrangement,

In general,individuals should specialize in producing those goods for which they

The production possibilities curve is

While there exists the potential for specialization to go too far,it is equally true that

When productive activity is organized according to comparative advantage,

Refer to the graph below.As you move from point B to point A,

The comparative advantage for shoes belongs to and the comparative advantage for pants belongs to .

In general,it is true that

When individuals or groups specialize in producing those goods for which they have a comparative advantage and exchange those goods with one another,

-As Bo increases her production of apples from 6 units to 12 units,she finds that

An inefficient point is

Having a comparative advantage in a particular task means that you

In one hour,Juan can produce 8 chairs or 2 tables.If chairs are on the vertical axis,the slope of his production possibilities curve is

The psychological cost of specialization is likely to affect

The absolute value of the slope of Buffy's production possibilities curve (with weapons on the vertical axis)is

Thinking Like an Economist

Supply and Demand: an Introduction

Demand: the Benefit Side of the Market

Perfectly Competitive Supply: the Cost Side of the Market

Efficiency and Exchange

The Quest for Profit and the Invisible Hand

Monopoly and Other Forms of Imperfect Competition

Thinking Strategically

Externalities and Property Rights

The Economics of Information

Labour Markets

The Economics of Public Policy

Public Goods and Taxation

Income Distribution

Filters

Exam 2: Comparative Advantage: the Basis for Exchange

Which of the following statements illustrates that the idea of comparative advantage is embedded in the circular flow diagram?

Jerry's production possibilities curve for goods W and Z is W = 20 - 2Z,where W is the quantity of good W produced and Z is the quantity of good Z produced.The combination of W and Z (11,5)is a(n)__________ point.

As Becky produces more and more butter,she finds that

A graph that illustrates the maximum amount of one good that can be produced for every possible level of production of the other good is termed a(n)

Alex and Lou have worked out an efficient arrangement.Under that arrangement,

In general,individuals should specialize in producing those goods for which they

The production possibilities curve is

While there exists the potential for specialization to go too far,it is equally true that

When productive activity is organized according to comparative advantage,

Refer to the graph below.As you move from point B to point A,

The comparative advantage for shoes belongs to __________ and the comparative advantage for pants belongs to __________.

In general,it is true that

When individuals or groups specialize in producing those goods for which they have a comparative advantage and exchange those goods with one another,

-As Bo increases her production of apples from 6 units to 12 units,she finds that

An inefficient point is

Having a comparative advantage in a particular task means that you

In one hour,Juan can produce 8 chairs or 2 tables.If chairs are on the vertical axis,the slope of his production possibilities curve is

The psychological cost of specialization is likely to affect

The absolute value of the slope of Buffy's production possibilities curve (with weapons on the vertical axis)is

Thinking Like an Economist

Supply and Demand: an Introduction

Demand: the Benefit Side of the Market

Perfectly Competitive Supply: the Cost Side of the Market

Efficiency and Exchange

The Quest for Profit and the Invisible Hand

Monopoly and Other Forms of Imperfect Competition

Thinking Strategically

Externalities and Property Rights

The Economics of Information

Labour Markets

The Economics of Public Policy

Public Goods and Taxation

Income Distribution

Filters

The comparative advantage for shoes belongs to and the comparative advantage for pants belongs to .