Exam 1: First Principles

Because Casey can type reports faster and more accurately than Ahmet, Casey has ________ in typing reports. A.a comparative advantage B.an absolute advantage C.an opportunity cost D.a specialization

Which of the following is a normative economic statement?

Which of the following is false about the circular-flow diagram? A.Households are the primary demanders of goods and services. B.Firms are the primary suppliers of goods and services. C.Money flows from households to firms as households offer factors of production for sale. D.Money flows in the direction opposite to goods and services and factors of production.

(Table: Production Possibilities Schedule II) Look at the table Production Possibilities Schedule II.The production of 8 units of consumer goods and 2 units of capital goods per period would: A.result in full employment. B.result in no unused resources. C.result in some unused or inefficiently used resources. D.increase economic growth.

The illustrates the trade-offs facing an economy that produces only two goods. A.production possibility frontier B.circular-flow diagram C.all else equal assumption D.income distribution

(Table: Crab and Cake Production in Chesapeake) Look at the table Crab and Cake Production in Chesapeake.The table shows the maximum annual output combinations of crabs and cakes.Given the scarce resources and limited technology, as Chesapeake uses more resources to the production of cakes, fewer resources are available to produce crabs.Can this nation produce 200 crabs and 500 cakes? Is this efficient? Explain.

Figure: Production Possibility Frontier (Figure: Production Possibility Frontier) Look at the figure Production Possibilities Frontier.This production possibility frontier is: A.bowed out from the origin because of increasing opportunity costs. B.bowed in toward the origin because of increasing opportunity costs. C.bowed in toward the origin because of constant cost of cars and D.computers.linear because of constant costs.

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.Given this information and supposing Laurence and Carrie Anne have constant opportunity costs, we know that: A.Laurence has an absolute advantage in programs but not in sunglasses. B.Laurence has an absolute advantage in both programs and sunglasses. C.Carrie Anne has an absolute advantage in programs but not in sunglasses. D.Carrie Anne has an absolute advantage in both programs and sunglasses.

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 Westland is: A.1 box of peaches. B.1/4 box of peaches. C.4 boxes of peaches. D.10 boxes of peaches.

(Table: Crab and Cake Production in Chesapeake) Look at the table Crab and Cake Production in Chesapeake.What is the opportunity cost of increasing the production of crabs from zero to 100? What is the opportunity cost of increasing the production of crabs from 400 to 500? Explain the difference in your answers.

Smallville has a linear production possibility frontier in the production of good X and good Y.It can produce 6 of X per hour or 8 of Y per hour.Suppose it has 240 hours of labor and divides labor hours equally between good X production and good Y production.What is the maximum amount of good Y it can produce? A.960 Y B.30 of Y C.14 of Y D.6 of Y

Figure: Bicycles and Radishes II (Figure: Bicycles and Radishes II) Look at the figure Bicycles and Radishes II.The country depicted in this figure is operating at point M.It could achieve production at point I only if it: A.used its resources more efficiently. B.devoted more resources to radish production. C.devoted more resources to bicycle production. D.increased the quantities of capital, natural resources, or labor available or improved its technology.

In a single day, Sarah can produce 10 hamburgers while Abe can produce 5 hamburgers.We then know that: A.Sarah has a comparative advantage in making hamburgers. B.Sarah has an absolute advantage in making hamburgers. C.Abe has a comparative advantage in making hamburgers. D.Abe has an absolute advantage in making hamburgers.

An economy that has the lowest opportunity cost for producing a particular good is said to have: A.an absolute advantage. B.a comparative advantage. C.a production possibility frontier. D.an increasing opportunity cost.

When a nation experiences economic growth: A.its production possibility frontier shifts outward. B.its production possibility frontier shifts inward. C.it has been able to reach full employment. D.it has moved to a more consumer-oriented position on its production possibility frontier.

Frances has a linear production possibility frontier when she produces tomatoes and green beans.If she uses all of her resources, she can produce 400 bushels of tomatoes or 800 bushels of green beans.Which of the following combinations is not efficient for Frances? A.400 bushels of tomatoes and zero bushels of green beans B.200 bushels of tomatoes and 400 bushels of green beans C.200 bushels of tomatoes and 200 bushels of green beans D.800 bushels of green beans and zero bushels of tomatoes

Unemployment of 5% is too high.This is an example of: A.a normative statement. B.a positive statement. C.the circular-flow model. C.comparative advantage.

If the opportunity cost of manufacturing machinery is lower in the United States than in Britain and the opportunity cost of manufacturing sweaters is higher in the United States than in Britain, then the United States will: A.export both sweaters and machinery to Britain. B.import both sweaters and machinery from Britain. C.export sweaters to Britain and import machinery from Britain. D.import sweaters from Britain and export machinery to Britain.

Which of the following is an example of normative economics?

Economists may disagree about policies because: A.they may approach the issue using the same sets of values. B.they may use different economic models. C.they enjoy disagreeing with each other. D.they only consider issues in positive economics.