Question 1

Specialization and trade allow individuals to

Accepted Answer

A)  consume outside their own production possibilities frontiers (PPFs). 
B)  shift their PPFs outward. 
C)  produce more goods with less technology. 
D)  eliminate scarcity. 
E)  produce fewer goods with less technology. 
A)  consume outside their own production possibilities frontiers (PPFs). 
B)  shift their PPFs outward. 
C)  produce more goods with less technology. 
D)  eliminate scarcity. 
E)  produce fewer goods with less technology.

Question 2

Goods that are produced now so that they can be used to produce other goods in the future are called ________ goods.

Accepted Answer

A)  capital 
B)  consumer 
C)  investment 
D)  normal 
E)  opportunity 
A)  capital 
B)  consumer 
C)  investment 
D)  normal 
E)  opportunity

Question 3

Refer to the following table to answer the following questions.  
-Suppose that Solange and Jay-Z could each make either New York-style pizza or Philly cheesesteaks.Given an eight-hour workday,which of the following would permit them to consume outside their respective production possibilities frontiers (PPFs)?

Accepted Answer

A)  a decrease in technology 
B)  a decrease in resources 
C)  specialization and trade 
D)  efficient use of all their productive resources 
E)  an "Empire State" of mind 
A)  a decrease in technology 
B)  a decrease in resources 
C)  specialization and trade 
D)  efficient use of all their productive resources 
E)  an "Empire State" of mind

Question 4

Someone has a comparative advantage in producing a good whenever

Accepted Answer

A)  one enjoys producing that good. 
B)  one can produce more of the good than someone else using the same resources. 
C)  one's opportunity cost is constant. 
D)  one's opportunity cost of producing that good is lower than that of other producers. 
E)  one has specific training in the production of that good. 
A)  one enjoys producing that good. 
B)  one can produce more of the good than someone else using the same resources. 
C)  one's opportunity cost is constant. 
D)  one's opportunity cost of producing that good is lower than that of other producers. 
E)  one has specific training in the production of that good.

Question 5

Use these production possibilities frontier (PPF) curves, which compare the ancient production of agricultural products to art and literature, to answer the following questions.          
-Suppose a great plague wipes out half of the society's population.Which of the following graphs best depicts how this would affect the PPF?

Accepted Answer

A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D 
E)  Graph E 
A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D 
E)  Graph E

Question 6

For a phenomenon to be investigated by means of experiments,the phenomenon must

Accepted Answer

A)  involve human beings. 
B)  have observable effects. 
C)  have occurred in the past. 
D)  be well understood. 
E)  be quantitatively measurable. 
A)  involve human beings. 
B)  have observable effects. 
C)  have occurred in the past. 
D)  be well understood. 
E)  be quantitatively measurable.

Question 7

Consider the production possibilities frontier (PPF) shown in the figure below to answer the following questions  
-Given current resources and technology,the unattainable range is best described as

Accepted Answer

A)  only area O: points outside the PPF. 
B)  points on the PPF only. 
C)  only area I: points inside the PPF. 
D)  area I: inside the PPF and points on the PPF. 
E)  area O: outside the PPF and points on the PPF. 
A)  only area O: points outside the PPF. 
B)  points on the PPF only. 
C)  only area I: points inside the PPF. 
D)  area I: inside the PPF and points on the PPF. 
E)  area O: outside the PPF and points on the PPF.

Question 8

The ability of one producer to produce a good at a lower opportunity cost than another producer is called

Accepted Answer

A)  a normative statement. 
B)  a zero-sum game. 
C)  absolute advantage. 
D)  comparative advantage. 
E)  the law of increasing relative cost. 
A)  a normative statement. 
B)  a zero-sum game. 
C)  absolute advantage. 
D)  comparative advantage. 
E)  the law of increasing relative cost.

Question 9

Consider the following scenario to answer the following questions: On a particular Saturday, Mark Zuckerberg and Bill Gates can either plant trees or spread mulch in their gardens. Their maximum output per day is listed in the following table, along with spaces where you can calculate the opportunity cost.  
-Based on this scenario,who has an absolute advantage in spreading mulch?

Accepted Answer

A)  Zuckerberg has the advantage because he gives up fewer trees each time he spreads 1 cubic yard of mulch. 
B)  Gates has the advantage because he gives up fewer trees each time he spreads 1 cubic yard of mulch. 
C)  Zuckerberg has the advantage because he gives up more trees each time he spreads 1 cubic yard of mulch. 
D)  Neither has an absolute advantage in spreading mulch. 
E)  Both parties have an absolute advantage in planting trees. 
A)  Zuckerberg has the advantage because he gives up fewer trees each time he spreads 1 cubic yard of mulch. 
B)  Gates has the advantage because he gives up fewer trees each time he spreads 1 cubic yard of mulch. 
C)  Zuckerberg has the advantage because he gives up more trees each time he spreads 1 cubic yard of mulch. 
D)  Neither has an absolute advantage in spreading mulch. 
E)  Both parties have an absolute advantage in planting trees.

Question 10

The production possibilities frontier (PPF)shows

Accepted Answer

A)  the trade-off between the efficient production of two different goods. 
B)  the difference between microanalysis and macroanalysis. 
C)  the difference between normative and positive analysis. 
D)  how a firm should price a new product. 
E)  how price and quantity are related for a single good. 
A)  the trade-off between the efficient production of two different goods. 
B)  the difference between microanalysis and macroanalysis. 
C)  the difference between normative and positive analysis. 
D)  how a firm should price a new product. 
E)  how price and quantity are related for a single good.

Question 11

Refer to the following table to answer the following questions.  
-Given an eight-hour workday,to experience gains from trade,

Accepted Answer

A)  Solange should make pizzas and Jay-Z should make cheesesteaks. 
B)  Solange should make cheesesteaks and Jay-Z should make pizzas. 
C)  each should make his or her own cheesesteaks and pizzas. 
D)  Solange should produce both pizzas and cheesesteaks. 
E)  Jay-Z should produce both pizzas and cheesesteaks. 
A)  Solange should make pizzas and Jay-Z should make cheesesteaks. 
B)  Solange should make cheesesteaks and Jay-Z should make pizzas. 
C)  each should make his or her own cheesesteaks and pizzas. 
D)  Solange should produce both pizzas and cheesesteaks. 
E)  Jay-Z should produce both pizzas and cheesesteaks.

Question 12

Mikhail and Stefan are both artists who can create sculptures or paintings each day. The following table describes their maximum outputs per day. Use this table to answer the following questions.  
-What is Stefan's opportunity cost of a painting?

Accepted Answer

A)  1/3 painting 
B)  1/3 sculpture 
C)  2/5 sculpture 
D)  3 paintings 
E)  3 sculptures 
A)  1/3 painting 
B)  1/3 sculpture 
C)  2/5 sculpture 
D)  3 paintings 
E)  3 sculptures

Question 13

Which of the following is a positive statement?

Accepted Answer

A)  An economist should test every theory at least twice. 
B)  Increases in the minimum wage cause unemployment. 
C)  We ought to deregulate the mortgage market. 
D)  The government must provide unlimited health care to citizens. 
E)  We should forgo some current consumption in order to invest in the future. 
A)  An economist should test every theory at least twice. 
B)  Increases in the minimum wage cause unemployment. 
C)  We ought to deregulate the mortgage market. 
D)  The government must provide unlimited health care to citizens. 
E)  We should forgo some current consumption in order to invest in the future.

Question 14

Why has India's economy grown faster than the United States' in recent years?

Accepted Answer

A)  India production has focused more on consumer goods. 
B)  India has lowered its population growth rate. 
C)  India has attained a higher standard of living than the United States. 
D)  India's production has focused more on capital goods. 
E)  India has placed more focus on its citizens' immediate needs. 
A)  India production has focused more on consumer goods. 
B)  India has lowered its population growth rate. 
C)  India has attained a higher standard of living than the United States. 
D)  India's production has focused more on capital goods. 
E)  India has placed more focus on its citizens' immediate needs.

Question 15

Mikhail and Stefan are both artists who can create sculptures or paintings each day. The following table describes their maximum outputs per day. Use this table to answer the following questions.  
-What is Stefan's opportunity cost of a sculpture?

Accepted Answer

A)  1/2 painting 
B)  1/3 painting 
C)  3 paintings 
D)  1/3 sculpture 
E)  3/5 sculpture 
A)  1/2 painting 
B)  1/3 painting 
C)  3 paintings 
D)  1/3 sculpture 
E)  3/5 sculpture

Question 16

How will a reduction in the national unemployment rate affect a nation's production possibilities frontier (PPF)?

Accepted Answer

A)  It will cause the PPF to shift inward. 
B)  It will cause the PPF to shift outward. 
C)  It will move society to a point inward,to a point farther away from the PPF. 
D)  It will move society outward,to a point closer to or on the PPF. 
E)  It will push society to a point outside its PPF. 
A)  It will cause the PPF to shift inward. 
B)  It will cause the PPF to shift outward. 
C)  It will move society to a point inward,to a point farther away from the PPF. 
D)  It will move society outward,to a point closer to or on the PPF. 
E)  It will push society to a point outside its PPF.

Question 17

When economists use models to make predictions,faulty assumptions can have disastrous consequences.Why is "avoid making assumptions" not the solution to this problem? Use the concepts of endogenous and exogenous factors to explain.

Accepted Answer

Economics studies human behavior,which i

Question 18

Refer to the following figure to answer the following questions. 
-Which statement best describes the opportunity cost evident in the production possibilities frontier (PPF)for the accompanying figure?

Accepted Answer

A)  The law of increasing relative cost applies because the PPF is a straight line. 
B)  The law of increasing relative cost applies because the PPF is bowed outward. 
C)  The opportunity cost is constant because the PPF is a straight line. 
D)  The opportunity cost is constant because the PPF is bowed outward. 
E)  The opportunity cost decreases because the line has negative slope. 
A)  The law of increasing relative cost applies because the PPF is a straight line. 
B)  The law of increasing relative cost applies because the PPF is bowed outward. 
C)  The opportunity cost is constant because the PPF is a straight line. 
D)  The opportunity cost is constant because the PPF is bowed outward. 
E)  The opportunity cost decreases because the line has negative slope.

Question 19

An economist's use of experiments and real-world data to test a theory is an example of

Accepted Answer

A)  the scientific method in economics. 
B)  macroeconomics. 
C)  economic growth. 
D)  normative analysis. 
E)  comparative advantage. 
A)  the scientific method in economics. 
B)  macroeconomics. 
C)  economic growth. 
D)  normative analysis. 
E)  comparative advantage.

Question 20

Greater investment in capital goods today leads to

Accepted Answer

A)  greater growth in the production possibilities frontier (PPF)in the future. 
B)  greater consumption today. 
C)  the end of scarcity. 
D)  less opportunity cost. 
E)  scarcity. 
A)  greater growth in the production possibilities frontier (PPF)in the future. 
B)  greater consumption today. 
C)  the end of scarcity. 
D)  less opportunity cost. 
E)  scarcity.

Exam 2: Model Building and Gains From Trade

Specialization and trade allow individuals to

Goods that are produced now so that they can be used to produce other goods in the future are called ________ goods.

Someone has a comparative advantage in producing a good whenever

For a phenomenon to be investigated by means of experiments,the phenomenon must

Consider the production possibilities frontier (PPF) shown in the figure below to answer the following questions -Given current resources and technology,the unattainable range is best described as

The ability of one producer to produce a good at a lower opportunity cost than another producer is called

The production possibilities frontier (PPF)shows

Refer to the following table to answer the following questions. -Given an eight-hour workday,to experience gains from trade,

Mikhail and Stefan are both artists who can create sculptures or paintings each day. The following table describes their maximum outputs per day. Use this table to answer the following questions. -What is Stefan's opportunity cost of a painting?

Which of the following is a positive statement?

Why has India's economy grown faster than the United States' in recent years?

Mikhail and Stefan are both artists who can create sculptures or paintings each day. The following table describes their maximum outputs per day. Use this table to answer the following questions. -What is Stefan's opportunity cost of a sculpture?

How will a reduction in the national unemployment rate affect a nation's production possibilities frontier (PPF)?

When economists use models to make predictions,faulty assumptions can have disastrous consequences.Why is "avoid making assumptions" not the solution to this problem? Use the concepts of endogenous and exogenous factors to explain.

Refer to the following figure to answer the following questions. -Which statement best describes the opportunity cost evident in the production possibilities frontier (PPF)for the accompanying figure?

An economist's use of experiments and real-world data to test a theory is an example of

Greater investment in capital goods today leads to

Five Foundations of Economics

The Market at Work: Supply and Demand

Elasticity

Market Outcomes and Tax Incidence

Price Controls

Market Inefficiencies: Externalities and Public Goods

Business Costs and Production

Firms in a Competitive Market

Understanding Monopoly

Price Discrimination

Monopolistic Competition and Advertising

Oligopoly and Strategic Behavior

The Demand and Supply of Resources

Income,inequality,and Poverty

Consumer Choice

Behavioral Economics and Risk Taking

Health Insurance and Health Care

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings,interest Rates,and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Aggregate Demandaggregate Supply Model

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

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