Question 1

In a capitalist society, consumers signal what products they want by their demands.

Accepted Answer

A) True 
 B)False  True

Question 2

Abdul decided to sleep in rather than attend his 8:30 A.M. economics class. Economists would find this choice

Accepted Answer

A)  rational if Abdul has not missed any other classes. 
B)  irrational because economic analysis suggests you should always attend the classes for which you have paid. 
C)  irrational because oversleeping is not in Abdul's self-interest. 
D)  rational if Abdul values sleep more highly than the benefit he would expect to receive from attending the class. 
A)  rational if Abdul has not missed any other classes. 
B)  irrational because economic analysis suggests you should always attend the classes for which you have paid. 
C)  irrational because oversleeping is not in Abdul's self-interest. 
D)  rational if Abdul values sleep more highly than the benefit he would expect to receive from attending the class. D

Question 3

(Figure: Corn and Oil in the United States and the United Kingdom) Refer to the graphs for the United States and the United Kingdom. If the starting point is a, what is the opportunity cost of the United States producing 15 more barrels of oil?

Accepted Answer

A)  5 bushels of corn 
B)  10 bushels of corn 
C)  15 bushels of corn 
D)  20 bushels of corn 
A)  5 bushels of corn 
B)  10 bushels of corn 
C)  15 bushels of corn 
D)  20 bushels of corn C

Question 4

The production of too many Matchbox cars and not enough Barbie Dolls is an example of _____ inefficiency.

Accepted Answer

A)  production 
B)  allocative 
C)  technical 
D)  labor 
A)  production 
B)  allocative 
C)  technical 
D)  labor

Question 5

What can governments do to increase economic growth?

Accepted Answer

Greater investment by business (physical

Question 6

Investment in human capital refers to

Accepted Answer

A)  education, on-the-job training, and professional training activities. 
B)  increasing the machinery and equipment that firms use. 
C)  increasing the number of people working at companies. 
D)  increasing the financial capital in the economy. 
A)  education, on-the-job training, and professional training activities. 
B)  increasing the machinery and equipment that firms use. 
C)  increasing the number of people working at companies. 
D)  increasing the financial capital in the economy.

Question 7

(Figure: Biscuits and Cookies PPFs) Looking at Greg and Melissa's production possibilities frontiers (PPFs), what production and trade situation would allow both Greg and Melissa to consume a combination of biscuits and cookies outside their PPF?

Accepted Answer

A)  Greg produces 200 cookies, Melissa produces 160 biscuits, and Greg trades 100 cookies in exchange for 30 biscuits. 
B)  Greg produces 200 cookies, Melissa produces 160 biscuits, and Greg trades 100 cookies in exchange for 60 biscuits. 
C)  Greg produces 100 biscuits, Melissa produces 80 cookies, and Greg trades 50 biscuits in exchange for 40 cookies. 
D)  Greg produces 100 biscuits, Melissa produces 80 cookies, and Greg trades 50 biscuits in exchange for 70 cookies. 
A)  Greg produces 200 cookies, Melissa produces 160 biscuits, and Greg trades 100 cookies in exchange for 30 biscuits. 
B)  Greg produces 200 cookies, Melissa produces 160 biscuits, and Greg trades 100 cookies in exchange for 60 biscuits. 
C)  Greg produces 100 biscuits, Melissa produces 80 cookies, and Greg trades 50 biscuits in exchange for 40 cookies. 
D)  Greg produces 100 biscuits, Melissa produces 80 cookies, and Greg trades 50 biscuits in exchange for 70 cookies.

Question 8

(Figure: PPF of Econia (a small nation)) Looking at the production possibilities frontier (PPF) of Econia, what is the opportunity cost of moving production from point B (350 tons of wheat and 400 bales of cotton) to point G (190 tons of wheat and 700 bales of cotton)?

Accepted Answer

A)  0.53 ton of wheat per bale of cotton 
B)  1.875 tons of wheat per bale of cotton 
C)  300 tons of wheat per 160 bales of cotton 
D)  700 bales of cotton per 400 tons of wheat 
A)  0.53 ton of wheat per bale of cotton 
B)  1.875 tons of wheat per bale of cotton 
C)  300 tons of wheat per 160 bales of cotton 
D)  700 bales of cotton per 400 tons of wheat

Question 9

Industries at a comparative disadvantage may find it necessary to decrease their workforce.

Accepted Answer

A) True 
 B)False

Question 10

Comparative advantage arises because

Accepted Answer

A)  all resources are equally effective in the production of goods. 
B)  the division of labor increases efficiency. 
C)  the division of labor helps markets function effectively. 
D)  not all resources are equally effective in the production of goods. 
A)  all resources are equally effective in the production of goods. 
B)  the division of labor increases efficiency. 
C)  the division of labor helps markets function effectively. 
D)  not all resources are equally effective in the production of goods.

Question 11

The government sets regulations to improve safety for factory workers. This relates to which basic economic question?

Accepted Answer

A)  How much should the government pay? 
B)  What mix of goods and services should be produced? 
C)  How should goods and services be produced? 
D)  Who will receive the goods and services? 
A)  How much should the government pay? 
B)  What mix of goods and services should be produced? 
C)  How should goods and services be produced? 
D)  Who will receive the goods and services?

Question 12

Every point on a production possibilities frontier (PPF) represents _____ efficiency.

Accepted Answer

A)  production 
B)  allocative 
C)  production and allocative 
D)  X 
A)  production 
B)  allocative 
C)  production and allocative 
D)  X

Question 13

Zetaland produces widgets and gadgets. At current levels of output, it can produce more of both. We can conclude that

Accepted Answer

A)  Zetaland is at full employment. 
B)  opportunity cost is maximized. 
C)  some resources are not being used. 
D)  the economy is on the production possibilities frontier. 
A)  Zetaland is at full employment. 
B)  opportunity cost is maximized. 
C)  some resources are not being used. 
D)  the economy is on the production possibilities frontier.

Question 14

Points inside (below and to the left of) the production possibility frontier are

Accepted Answer

A)  attainable and efficient. 
B)  unattainable and efficient. 
C)  attainable and inefficient. 
D)  unattainable and inefficient. 
A)  attainable and efficient. 
B)  unattainable and efficient. 
C)  attainable and inefficient. 
D)  unattainable and inefficient.

Question 15

Increased illegal immigration into the United States would best be represented with a production possibilities frontier (PPF) as a(n) _____ the PPF.

Accepted Answer

A)  outward shift of 
B)  inward shift of 
C)  movement from inside the PPF onto 
D)  movement from a point on the PPF to a point inside 
A)  outward shift of 
B)  inward shift of 
C)  movement from inside the PPF onto 
D)  movement from a point on the PPF to a point inside

Question 16

Capital, which includes all manufactured products that are used to produce other goods and services, earns

Accepted Answer

A)  profit. 
B)  wages. 
C)  interest. 
D)  rent. 
A)  profit. 
B)  wages. 
C)  interest. 
D)  rent.

Question 17

Increasing opportunity costs occur along the production possibilities frontier because

Accepted Answer

A)  of unemployment in the economy. 
B)  not all resources are equally well suited to produce all goods. 
C)  resources lack specialization. 
D)  of inequities in the distribution of income. 
A)  of unemployment in the economy. 
B)  not all resources are equally well suited to produce all goods. 
C)  resources lack specialization. 
D)  of inequities in the distribution of income.

Question 18

A point on a nation's production possibilities frontier indicates

Accepted Answer

A)  an undesirable combination of goods and services. 
B)  combinations of output that are unattainable, given the current stock of resources and technology. 
C)  levels of production that will cause both unemployment and inflation. 
D)  that resources are fully utilized in producing the given combination of goods and services. 
A)  an undesirable combination of goods and services. 
B)  combinations of output that are unattainable, given the current stock of resources and technology. 
C)  levels of production that will cause both unemployment and inflation. 
D)  that resources are fully utilized in producing the given combination of goods and services.

Question 19

_____ advantage exists when one country can produce more of a good than another country.

Accepted Answer

A)  Comparative 
B)  Absolute 
C)  Unfair 
D)  Home country 
A)  Comparative 
B)  Absolute 
C)  Unfair 
D)  Home country

Question 20

Assume that Australia has a comparative advantage over France in the production of pencils, and that France has a comparative advantage over Australia in the production of haircuts. What is a practical reason why Australia and France might NOT trade?

Accepted Answer

A)  The high transportation costs for travel between the countries might discourage trade in haircuts. 
B)  Given current communication technologies, it is unlikely that people in one country could learn of the hairstyles available in the other country. 
C)  Pencils are very fragile and are likely to be damaged during shipment. 
D)  Australian pencil makers might resist the import of pencils into Australia even though comparative advantage indicates Australia should import pencils. 
A)  The high transportation costs for travel between the countries might discourage trade in haircuts. 
B)  Given current communication technologies, it is unlikely that people in one country could learn of the hairstyles available in the other country. 
C)  Pencils are very fragile and are likely to be damaged during shipment. 
D)  Australian pencil makers might resist the import of pencils into Australia even though comparative advantage indicates Australia should import pencils.

In a capitalist society, consumers signal what products they want by their demands.

Abdul decided to sleep in rather than attend his 8:30 A.M. economics class. Economists would find this choice

(Figure: Corn and Oil in the United States and the United Kingdom) Refer to the graphs for the United States and the United Kingdom. If the starting point is a, what is the opportunity cost of the United States producing 15 more barrels of oil?

The production of too many Matchbox cars and not enough Barbie Dolls is an example of _____ inefficiency.

What can governments do to increase economic growth?

Investment in human capital refers to

(Figure: Biscuits and Cookies PPFs) Looking at Greg and Melissa's production possibilities frontiers (PPFs), what production and trade situation would allow both Greg and Melissa to consume a combination of biscuits and cookies outside their PPF?

(Figure: PPF of Econia (a small nation)) Looking at the production possibilities frontier (PPF) of Econia, what is the opportunity cost of moving production from point B (350 tons of wheat and 400 bales of cotton) to point G (190 tons of wheat and 700 bales of cotton)?

Industries at a comparative disadvantage may find it necessary to decrease their workforce.

Comparative advantage arises because

The government sets regulations to improve safety for factory workers. This relates to which basic economic question?

Every point on a production possibilities frontier (PPF) represents _____ efficiency.

Zetaland produces widgets and gadgets. At current levels of output, it can produce more of both. We can conclude that

Points inside (below and to the left of) the production possibility frontier are

Increased illegal immigration into the United States would best be represented with a production possibilities frontier (PPF) as a(n) _____ the PPF.

Capital, which includes all manufactured products that are used to produce other goods and services, earns

Increasing opportunity costs occur along the production possibilities frontier because

A point on a nation's production possibilities frontier indicates

_____ advantage exists when one country can produce more of a good than another country.

Assume that Australia has a comparative advantage over France in the production of pencils, and that France has a comparative advantage over Australia in the production of haircuts. What is a practical reason why Australia and France might NOT trade?

Exploring Economics

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Aggregate Demand and Supply

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters

Exam 2: Production, Economic Growth, and Trade

In a capitalist society, consumers signal what products they want by their demands.

Abdul decided to sleep in rather than attend his 8:30 A.M. economics class. Economists would find this choice

(Figure: Corn and Oil in the United States and the United Kingdom) Refer to the graphs for the United States and the United Kingdom. If the starting point is a, what is the opportunity cost of the United States producing 15 more barrels of oil?

The production of too many Matchbox cars and not enough Barbie Dolls is an example of _____ inefficiency.

What can governments do to increase economic growth?

Investment in human capital refers to

(Figure: Biscuits and Cookies PPFs) Looking at Greg and Melissa's production possibilities frontiers (PPFs), what production and trade situation would allow both Greg and Melissa to consume a combination of biscuits and cookies outside their PPF?

(Figure: PPF of Econia (a small nation)) Looking at the production possibilities frontier (PPF) of Econia, what is the opportunity cost of moving production from point B (350 tons of wheat and 400 bales of cotton) to point G (190 tons of wheat and 700 bales of cotton)?

Industries at a comparative disadvantage may find it necessary to decrease their workforce.

Comparative advantage arises because

The government sets regulations to improve safety for factory workers. This relates to which basic economic question?

Every point on a production possibilities frontier (PPF) represents _____ efficiency.

Zetaland produces widgets and gadgets. At current levels of output, it can produce more of both. We can conclude that

Points inside (below and to the left of) the production possibility frontier are

Increased illegal immigration into the United States would best be represented with a production possibilities frontier (PPF) as a(n) _____ the PPF.

Capital, which includes all manufactured products that are used to produce other goods and services, earns

Increasing opportunity costs occur along the production possibilities frontier because

A point on a nation's production possibilities frontier indicates

_____ advantage exists when one country can produce more of a good than another country.

Assume that Australia has a comparative advantage over France in the production of pencils, and that France has a comparative advantage over Australia in the production of haircuts. What is a practical reason why Australia and France might NOT trade?

Exploring Economics

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Aggregate Demand and Supply

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomics

Filters