Question 1

Goods that are produced today in order to make other valuable goods and services in the future are called _______goods.

Accepted Answer

A)  normal 
B)  inferior 
C)  consumer 
D)  capital 
E)  personal 
A)  normal 
B)  inferior 
C)  consumer 
D)  capital 
E)  personal

Question 2

Consider the following scenario to answer the next  questions: Two friends, Monica and Chandler, enjoy baking bread and making apple pies. Monica takes two hours to bake 1 loaf of bread and one hour to make 1 pie. Chandler takes four hours to bake 1 loaf of bread and four hours to make 1 pie.
-What is Chandler's opportunity cost of baking 1 loaf of bread?

Accepted Answer

A)  4 pies 
B)  2 pies 
C)  1 pie 
D)  1 loaf of bread 
E)  1/2 loaf of bread 
A)  4 pies 
B)  2 pies 
C)  1 pie 
D)  1 loaf of bread 
E)  1/2 loaf of bread

Question 3

When one producer has a comparative advantage in production, he or she

Accepted Answer

A)  can produce more output than someone else using the same quantity of resources. 
B)  can produce a good at a lower opportunity cost than someone else. 
C)  does not benefit from trade with other producers. 
D)  is unable to reach his or her production possibilities frontier PPF). 
E)  trades only with others who have the same comparative advantage. 
A)  can produce more output than someone else using the same quantity of resources. 
B)  can produce a good at a lower opportunity cost than someone else. 
C)  does not benefit from trade with other producers. 
D)  is unable to reach his or her production possibilities frontier PPF). 
E)  trades only with others who have the same comparative advantage.

Question 4

A positive statement

Accepted Answer

A)  is a claim that can be tested. 
B)  is a statement about what ought to be. 
C)  is a declaration of opinion. 
D)  is a claim that cannot be tested. 
E)  cannot be evaluated using the scientific method. 
A)  is a claim that can be tested. 
B)  is a statement about what ought to be. 
C)  is a declaration of opinion. 
D)  is a claim that cannot be tested. 
E)  cannot be evaluated using the scientific method.

Question 5

The figure depicts a shift in a society's production possibilities frontier PPF) for the manufacture of trains and planes: train-manufacturing capacity expands while plane-manufacturing capacity shrinks. Refer to this figure to answer the next  questions.
  
-Which point represents an output that was efficient before the shift but is inefficient afterward?

Accepted Answer

A)  point A 
B)  point B 
C)  point C 
D)  point D 
E)  point E 
A)  point A 
B)  point B 
C)  point C 
D)  point D 
E)  point E

Question 6

Economists use the scientific method and the tools of economics to study

Accepted Answer

A)  only the decisions of individuals. 
B)  only the decisions of business firms. 
C)  only economic growth and gross domestic product GDP). 
D)  only the production possibilities curve. 
E)  anything around them; the world is the economist's laboratory. 
A)  only the decisions of individuals. 
B)  only the decisions of business firms. 
C)  only economic growth and gross domestic product GDP). 
D)  only the production possibilities curve. 
E)  anything around them; the world is the economist's laboratory.

Question 7

Ceteris paribus, if a society is producing at a point on the production possibilities frontier PPF), it can only increase the production of one good by

Accepted Answer

A)  also increasing the production of the second good. 
B)  decreasing the production of the second good. 
C)  increasing the price of the second good. 
D)  decreasing the price of the second good. 
E)  reducing the resources available for production. 
A)  also increasing the production of the second good. 
B)  decreasing the production of the second good. 
C)  increasing the price of the second good. 
D)  decreasing the price of the second good. 
E)  reducing the resources available for production.

Question 8

As we move from one efficient point on the production possibilities frontier PPF) to another efficient point on the PPF, we experience

Accepted Answer

A)  decreasing relative cost. 
B)  opportunity cost. 
C)  macroeconomics. 
D)  unlimited resources. 
E)  unattainable combinations. 
A)  decreasing relative cost. 
B)  opportunity cost. 
C)  macroeconomics. 
D)  unlimited resources. 
E)  unattainable combinations.

Question 9

When an economy shifts away from production of consumer goods and toward production of capital goods, for the average worker this trade-off means

Accepted Answer

A)  a higher standard of living. 
B)  longer work hours. 
C)  a lower savings rate as a percentage of income). 
D)  more leisure time. 
E)  more disposable income. 
A)  a higher standard of living. 
B)  longer work hours. 
C)  a lower savings rate as a percentage of income). 
D)  more leisure time. 
E)  more disposable income.

Question 10

$\text {Refer to the following table to onswer the next five questions.}$
$\begin{array}{llc} 
&{\text { New York Pizzas Philly Cheesesteaks }} \
\hline \text { Jay-Z } & 40 & 120 \
\text { Solange } & 50 & 125 \
\hline
\end{array}$

-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 11

Consider the production possibilities frontier PPF) shown in the figure below to answer the next  questions.
  
-Given current resources and technology, the attainable 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: points inside the PPF and points on the PPF. 
E)  area O: points 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: points inside the PPF and points on the PPF. 
E)  area O: points outside the PPF and points on the PPF.

Question 12

Why doesn't our society invest more resources into the production of capital goods to enhance the level of growth in our future production possibilities frontier PPF)?

Accepted Answer

Capital goods are great because they lea

Question 13

How can a person who is "better" or more efficient in that he or she has an absolute advantage in the production of various goods on the PPF) at producing several things be made even better off by specialization and trade?

Accepted Answer

It sometimes seems counterintuitive that

Question 14

Explain why, in the figure, a country might rather be at point B than at point A.

Accepted Answer

The curve represents a production possib

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 next  questions  
-Based on the table, does Mikhail or Stefan have an absolute advantage?

Accepted Answer

A)  Yes, Mikhail has an absolute advantage in both sculptures and paintings. 
B)  Yes, Stefan has an absolute advantage in both sculptures and paintings. 
C)  Yes, Mikhail has an absolute advantage in paintings, and Stefan has an absolute advantage in sculptures. 
D)  Yes, Mikhail has an absolute advantage in sculptures, and Stefan has an absolute advantage in paintings. 
E)  No, neither has an absolute advantage. 
A)  Yes, Mikhail has an absolute advantage in both sculptures and paintings. 
B)  Yes, Stefan has an absolute advantage in both sculptures and paintings. 
C)  Yes, Mikhail has an absolute advantage in paintings, and Stefan has an absolute advantage in sculptures. 
D)  Yes, Mikhail has an absolute advantage in sculptures, and Stefan has an absolute advantage in paintings. 
E)  No, neither has an absolute advantage.

Question 16

Think of the production possibilities frontier PPF) model. When society is producing the largest possible output from its resources, it is operating

Accepted Answer

A)  inefficiently. 
B)  efficiently. 
C)  with no opportunity cost. 
D)  inside within) the PPF. 
E)  beyond its opportunity cost. 
A)  inefficiently. 
B)  efficiently. 
C)  with no opportunity cost. 
D)  inside within) the PPF. 
E)  beyond its opportunity cost.

Question 17

To determine which of two producers has a comparative advantage, one would need to know their

Accepted Answer

A)  increasing relative costs. 
B)  opportunity costs of production for both goods. 
C)  normative beliefs. 
D)  zero-sum games. 
E)  levels of investment. 
A)  increasing relative costs. 
B)  opportunity costs of production for both goods. 
C)  normative beliefs. 
D)  zero-sum games. 
E)  levels of investment.

Question 18

Consumer goods

Accepted Answer

A)  are produced today to be used to produce more goods in the future. 
B)  are produced today to be consumed at some point in the future. 
C)  are invested today in order to consume more today. 
D)  are produced today to be consumed today. 
E)  generate economic growth. 
A)  are produced today to be used to produce more goods in the future. 
B)  are produced today to be consumed at some point in the future. 
C)  are invested today in order to consume more today. 
D)  are produced today to be consumed today. 
E)  generate economic growth.

Question 19

$\text {Refer to the following table to onswer the next five questions.}$
$\begin{array}{llc} 
&{\text { New York Pizzas Philly Cheesesteaks }} \
\hline \text { Jay-Z } & 40 & 120 \
\text { Solange } & 50 & 125 \
\hline
\end{array}$

-Given the same quantity of resources, what is Solange's opportunity cost of producing a New York pizza?

Accepted Answer

A)  5/2 Philly cheesesteaks 
B)  2/5 Philly cheesesteak 
C)  3 Philly cheesesteaks 
D)  1/3 New York pizza 
E)  4/5 New York pizza 
A)  5/2 Philly cheesesteaks 
B)  2/5 Philly cheesesteak 
C)  3 Philly cheesesteaks 
D)  1/3 New York pizza 
E)  4/5 New York pizza

Question 20

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.

Goods that are produced today in order to make other valuable goods and services in the future are called _______goods.

When one producer has a comparative advantage in production, he or she

A positive statement

Economists use the scientific method and the tools of economics to study

Ceteris paribus, if a society is producing at a point on the production possibilities frontier PPF), it can only increase the production of one good by

As we move from one efficient point on the production possibilities frontier PPF) to another efficient point on the PPF, we experience

When an economy shifts away from production of consumer goods and toward production of capital goods, for the average worker this trade-off means

$\text {Refer to the following table to onswer the next five questions.}$ New York Pizzas Philly Cheesesteaks Jay-Z 40 120 Solange 50 125 -Given an eight-hour workday, to experience gains from trade,

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

Why doesn't our society invest more resources into the production of capital goods to enhance the level of growth in our future production possibilities frontier PPF)?

How can a person who is "better" or more efficient in that he or she has an absolute advantage in the production of various goods on the PPF) at producing several things be made even better off by specialization and trade?

Explain why, in the figure, a country might rather be at point B than at point A.

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 next questions -Based on the table, does Mikhail or Stefan have an absolute advantage?

Think of the production possibilities frontier PPF) model. When society is producing the largest possible output from its resources, it is operating

To determine which of two producers has a comparative advantage, one would need to know their

Consumer goods

$\text {Refer to the following table to onswer the next five questions.}$ New York Pizzas Philly Cheesesteaks Jay-Z 40 120 Solange 50 125 -Given the same quantity of resources, what is Solange's opportunity cost of producing a New York pizza?

Someone has a comparative advantage in producing a good whenever

Five Foundations of Economics

The Market at Work: Supply and Demand

Market Outcomes and Tax Incidence

Price Controls

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 Learning Objectives

International Trade

International Finance

Filters

Exam 2: Model Building and Gains From Trade

Goods that are produced today in order to make other valuable goods and services in the future are called _______goods.

When one producer has a comparative advantage in production, he or she

A positive statement

Economists use the scientific method and the tools of economics to study

Ceteris paribus, if a society is producing at a point on the production possibilities frontier PPF), it can only increase the production of one good by

As we move from one efficient point on the production possibilities frontier PPF) to another efficient point on the PPF, we experience

When an economy shifts away from production of consumer goods and toward production of capital goods, for the average worker this trade-off means

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

Why doesn't our society invest more resources into the production of capital goods to enhance the level of growth in our future production possibilities frontier PPF)?

How can a person who is "better" or more efficient in that he or she has an absolute advantage in the production of various goods on the PPF) at producing several things be made even better off by specialization and trade?

Explain why, in the figure, a country might rather be at point B than at point A.

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 next questions -Based on the table, does Mikhail or Stefan have an absolute advantage?

Think of the production possibilities frontier PPF) model. When society is producing the largest possible output from its resources, it is operating

To determine which of two producers has a comparative advantage, one would need to know their

Consumer goods

Someone has a comparative advantage in producing a good whenever

Five Foundations of Economics

The Market at Work: Supply and Demand

Market Outcomes and Tax Incidence

Price Controls

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 Learning Objectives

International Trade

International Finance

Filters