Question 1

Which of the following statements indicates the idea of trade-offs?

Accepted Answer

A) "I chose the road less traveled." 
B) "The devil made me do it." 
C) "You've got me under your spell." 
D) "Always give it the best that you can." 
A) "I chose the road less traveled." 
B) "The devil made me do it." 
C) "You've got me under your spell." 
D) "Always give it the best that you can."

Question 2

What is the "division of labor"? How is the division of labor related to production?

Accepted Answer

The division of labor refers to the segr

Question 3

If Irene can make either four chairs or one table in an hour and Greg can make either three chairs or two tables in an hour, then

Accepted Answer

A) Irene has the absolute advantage in the production of tables. 
B) Greg has the absolute advantage in the production of chairs. 
C) Irene has the comparative advantage in the production of chairs. 
D) Greg has the comparative advantage in the production of chairs. 
A) Irene has the absolute advantage in the production of tables. 
B) Greg has the absolute advantage in the production of chairs. 
C) Irene has the comparative advantage in the production of chairs. 
D) Greg has the comparative advantage in the production of chairs.

Question 4

The discovery of new natural resources will cause

Accepted Answer

A) the economy to move closer to the production possibilities curve. 
B) the production possibilities curve to shift up and to the right. 
C) an upward movement along the curve. 
D) the curve to shift back and to the left. 
A) the economy to move closer to the production possibilities curve. 
B) the production possibilities curve to shift up and to the right. 
C) an upward movement along the curve. 
D) the curve to shift back and to the left.

Question 5

If individual X has comparative advantage in painting and individual Y has comparative advantage in carpentry, then

Accepted Answer

A) individual X must use fewer hours to paint a fence than individual Y. 
B) individual Y will specialize in painting. 
C) there is a lower opportunity cost (expressed in units of carpentry)for individual X to paint than for individual Y to paint. 
D) specialization will not occur, since each does not have a clear absolute advantage. 
A) individual X must use fewer hours to paint a fence than individual Y. 
B) individual Y will specialize in painting. 
C) there is a lower opportunity cost (expressed in units of carpentry)for individual X to paint than for individual Y to paint. 
D) specialization will not occur, since each does not have a clear absolute advantage.

Question 6

Some resources are better suited to produce certain goods than other resources. This fact leads to

Accepted Answer

A) a linear production possibilities curve. 
B) inefficiency in the economy. 
C) the law of increasing additional cost. 
D) increases in technology. 
A) a linear production possibilities curve. 
B) inefficiency in the economy. 
C) the law of increasing additional cost. 
D) increases in technology.

Question 7

Why do most people specialize in their work?

Accepted Answer

Most people specialize because

Question 8

"Wants" as an economic concept includes

Accepted Answer

A) both material and nonmaterial desires. 
B) only the purchase of necessary basic goods. 
C) only the desire for luxury goods. 
D) only those goods that can be purchased with one's paycheck. 
A) both material and nonmaterial desires. 
B) only the purchase of necessary basic goods. 
C) only the desire for luxury goods. 
D) only those goods that can be purchased with one's paycheck.

Question 9

Briefly explain the factors of production and give an example of each.

Accepted Answer

The resources, which are the inputs used

Question 10

Labor, human capital, and entrepreneurship are resources related to human beings. Distinguish among the three resources.

Accepted Answer

Labor is the work done by human beings.

Question 11

Politicians often argue that a country's standard of living is reduced when it allows imports into the country. Offer an economically sound counter-argument.

Accepted Answer

Specialization of labor is productive, s

Question 12

During periods of unemployment

Accepted Answer

A) the economy operates at a point inside the production possibilities curve. 
B) the economy operates at a point outside the production possibilities curve. 
C) the production possibilities curve shifts inward. 
D) the production possibilities curve shifts outward. 
A) the economy operates at a point inside the production possibilities curve. 
B) the economy operates at a point outside the production possibilities curve. 
C) the production possibilities curve shifts inward. 
D) the production possibilities curve shifts outward.

Question 13

The opportunity cost of going to college full time away from home is

Accepted Answer

A) the income you could have earned from a full-time job. 
B) the funds you would have saved if you had not paid the tuition. 
C) the time you could have spent with friends back home. 
D) All of the above are correct. 
A) the income you could have earned from a full-time job. 
B) the funds you would have saved if you had not paid the tuition. 
C) the time you could have spent with friends back home. 
D) All of the above are correct.

Question 14

Which of the following is NOT considered to be an economic resource?

Accepted Answer

A) your economics professor 
B) the telephone company repair truck 
C) the local gas station 
D) a view of the stars on a clear night 
A) your economics professor 
B) the telephone company repair truck 
C) the local gas station 
D) a view of the stars on a clear night

Question 15

All of the following are examples of physical capital EXCEPT

Accepted Answer

A) buildings. 
B) machinery. 
C) company stocks and bonds. 
D) a hydroelectric power plant. 
A) buildings. 
B) machinery. 
C) company stocks and bonds. 
D) a hydroelectric power plant.

Question 16

-All of the following would cause the production possibilities curve to shift outward EXCEPT

Accepted Answer

A) an improvement in technology. 
B) an increase in the amount of labor available. 
C) a decline in the unemployment rate. 
D) an increase in the level of capital stock. 
A) an improvement in technology. 
B) an increase in the amount of labor available. 
C) a decline in the unemployment rate. 
D) an increase in the level of capital stock.

Question 17

A country that must reduce current consumption to increase future consumption possibilities

Accepted Answer

A) must be allocating resources inefficiently. 
B) must be producing along the production possibilities curve. 
C) must be producing outside the production possibilities curve. 
D) must not have private ownership of property. 
A) must be allocating resources inefficiently. 
B) must be producing along the production possibilities curve. 
C) must be producing outside the production possibilities curve. 
D) must not have private ownership of property.

Question 18

When an employee at a grocery store scans the price of your items, bags the groceries, and collects your paper, the individual has provided

Accepted Answer

A) physical capital. 
B) entrepreneurship. 
C) a service. 
D) land. 
A) physical capital. 
B) entrepreneurship. 
C) a service. 
D) land.

Question 19

The division of productive activities among persons and regions so that no one individual or area is totally self-sufficient is known as

Accepted Answer

A) advantage-taking. 
B) comparative value. 
C) specialization. 
D) outsourcing. 
A) advantage-taking. 
B) comparative value. 
C) specialization. 
D) outsourcing.

Question 20

The saying that "You cannot have your cake and eat it too" illustrates the economic concept of

Accepted Answer

A) a positive statement. 
B) a normative statement. 
C) physical capital. 
D) opportunity cost. 
A) a positive statement. 
B) a normative statement. 
C) physical capital. 
D) opportunity cost.

Exam 2: Scarcity and the World of Trade-Offs

Which of the following statements indicates the idea of trade-offs?

What is the "division of labor"? How is the division of labor related to production?

If Irene can make either four chairs or one table in an hour and Greg can make either three chairs or two tables in an hour, then

The discovery of new natural resources will cause

If individual X has comparative advantage in painting and individual Y has comparative advantage in carpentry, then

Some resources are better suited to produce certain goods than other resources. This fact leads to

Why do most people specialize in their work?

"Wants" as an economic concept includes

Briefly explain the factors of production and give an example of each.

Labor, human capital, and entrepreneurship are resources related to human beings. Distinguish among the three resources.

Politicians often argue that a country's standard of living is reduced when it allows imports into the country. Offer an economically sound counter-argument.

During periods of unemployment

The opportunity cost of going to college full time away from home is

Which of the following is NOT considered to be an economic resource?

All of the following are examples of physical capital EXCEPT

-All of the following would cause the production possibilities curve to shift outward EXCEPT

A country that must reduce current consumption to increase future consumption possibilities

When an employee at a grocery store scans the price of your items, bags the groceries, and collects your paper, the individual has provided

The division of productive activities among persons and regions so that no one individual or area is totally self-sufficient is known as

The saying that "You cannot have your cake and eat it too" illustrates the economic concept of

The Nature of Economics

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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