Exam 1: First Principles

Figure: Comparative Advantage Eastland and Westland produce only two goods, boxes of peaches and boxes of oranges, and this figure shows each nation's production possibility frontier for the two goods. (Figure: Comparative Advantage) Look at the figure Comparative Advantage.The opportunity cost of producing 1 box of oranges for Eastland is: A.1 box of peaches. B.1/4 box of peaches. C.4 boxes of peaches. D.10 boxes of peaches.

Figure: Wine and Wheat (Figure: Wine and Wheat) Look at the figure Wine and Wheat.What is the opportunity cost of moving from only producing wheat to producing at point D? A.3 tons of wheat B.6 tons of wheat C.9 tons of wheat D.15 tons of wheat

Figure: Production Possibility Frontier (Figure: Production Possibility Frontier) Look at the figure Production Possibilities Frontier.Which of the following is not the maximum amounts of cars and computers this economy can produce? A.18 cars and 0 computers per B.period 0 cars and 20 computers C.per period 16 cars and 12 computers D.per period 0 cars and 18 computers per period

Which of the following is a normative statement? A.Women's labor force participation rate has increased during the past 100 years. B.The federal minimum wage is higher today than it was in 1990. C.Children in the United States are required to go to school until they reach a certain age. D.The best way to encourage growth in the economy is through government spending.

Mark and Julie are going to sell brownies and cookies for their third annual fundraiser bake sale.In one day, Mark can make 40 brownies or 20 cookies, and Julie can make 15 brownies or 15 cookies.What is Mark's opportunity cost to produce one brownie? A.1 cookie B.1 brownie C.1/2 cookie D.1/2 brownie

Nations can gain from trade with other nations even if they are less productive in all industries than the nations they trade with.

Figure: Consumer and Capital Goods (Figure: Consumer and Capital Goods) Look at the figure Consumer and Capital Goods.Point Z: A.is unattainable, all other things unchanged. B.is attainable if the economy is able to reach full employment. C.is attainable if the quantity and/or quality of factors decreases. D.will be attained as soon as the economy becomes efficient and moves to curve 2.

Which of the following is a positive economic statement? A.Government has grown too large and should be reduced. B.There has been an increase in the rate of inflation. C.Government should be subject to the same rules as all other institutions. D.Women should be paid as much as men for the same work.

(Table: Comparative Advantage I) Look at the table Comparative Advantage I.The opportunity cost of producing 1 box of herring for Finland is:

Suppose Indiana produces only steel and corn, with fixed amounts of land, labor, and capital resources.Which of the following best creates potential economic growth? A.The unemployment rate in Indiana rises from 5% to 6%. B.The Midwestern United States has a devastating drought. C.The percentage of Indiana residents with a college degree rises from 25% to 30%. D.The United States imports more and more low-cost steel from Asian countries.

Explain how technological progress is a source for economic growth.

Which of the following is a normative statement? A.International trade leads to expanded consumption opportunities. B.Higher expenditures on health care will reduce infant mortality rates. C.We would all be better off if we could reduce our dependence on oil imports. D.Increased defense spending will lead to higher budget deficits.

An example of a positive statement is: A.the rate of unemployment should be 4%. B.a high rate of economic growth is good for the country. C.the federal government spends half of its budget on national defense. D.everyone in the country should be covered by national health insurance.

Figure: Tom's Production Possibilities (Figure: Tom's Production Possibilities) Look at the figure Tom's Production Possibilities.In the figure, which point or points would represent an inefficient combination of coconuts and Fish for Tom to produce?

Figure: Production Possibilities and Circular-Flow Diagram (Figure: Production Possibilities and Circular-Flow Diagram) Look at the figure Production Possibilities and Circular-Flow Diagram.Assume the two figures represent the same economy.Suppose that in the circular-flow diagram there is a significant increase in the amount of human capital that flows to both types of firms (coconut producers and fish producers).If all other variables remain unchanged, then the adjustment in this economy would be best represented in the production possibilities figure by a movement from point A toward: A.point A (no movement would occur). B.point B (an increase in fish production). C.point C (a decrease in coconut production). D.point D (an outward shift of the entire curve).

If they spend all night writing computer programs, Laurence can write 10 programs while Carrie Anne can write 5.If they spend all night making sunglasses, Laurence can make 6 while Carrie Anne can make 4.We know that: A.Laurence's opportunity cost of writing programs is less than that of Carrie Anne. B.Laurence's opportunity cost of writing programs and of making sunglasses is less than that of Carrie Anne. C.Carrie Anne's opportunity cost of writing programs and of making sunglasses is less than that of Laurence. D.Carrie Anne's opportunity cost of writing programs is less than that of Laurence.

Figure: Tom's Production Possibilities (Figure: Tom's Production Possibilities) Look at the figure Tom's Production Possibilities.In the figure, which point or points represent an efficient combination of coconuts and fish that Tom could choose to produce? A.A only B.A and B C.B and C D.D only

The process observed when an economy's production possibility frontier is shifted outward is: A.comparative advantage. B.economic growth. C.full employment. D.specialization.

(Table: Coffee and Salmon Production Possibilities) Look at the table Coffee and Salmon Production Possibilities.The table shows the maximum amounts of coffee and salmon that Brazil and Alaska can produce if they just produce one good.The opportunity cost of producing 1 unit of salmon for Alaska is: A.2 coffees. B.1/4 coffee. C.1 coffee. D.1/2 coffee.

Fertilizer, used to grow pumpkins, is an example of a factor of production.