Exam 1: First Principles

(Table: Bongos and Frisbees) Look at the table Bongos and Frisbees.Bill and Mickey make bongos and Frisbees.Who has the comparative advantage in producing Frisbees? A.Bill B.Mickey C.both D.neither

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 capital that flows to the firms that produce fish.Assume that there is a corresponding decrease in the amount of capital that flows to the firms that produce coconuts.This adjustment in the economy would be best represented in the production possibilities figure by a move 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).

Which of the following is an example of a positive statement? A.The poverty rate should be 4%. B.A high rate of economic growth is good for the country. C.The federal government pays for 46% of U.S.health care costs. D.Everyone in the country should be covered by national health insurance.

To achieve the gains from trade, each nation should specialize in the production of a good or service if: A.its production possibility frontier is larger than that of any other country. B.its production possibility frontier is smaller than that of any other country. C.the country can make the product using fewer resources than any other country. D.the country can make the product while forgoing fewer alternative products than any other country.

All points on the production possibility frontier are: A.efficient production points. B.inefficient production points. C.infeasible production points. D.economic growth.

Consider a nation with a large economy like the United States and a nation with a small economy like the Dominican Republic.How can the United States, with absolute advantage in production of almost all goods, benefit from trade with the Dominican Republic?

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.With specialization, how many brownies and cookies will be made in one day for the bake sale?

(Table: Coffee and Salmon Production Possibilities II) Look at the table Coffee and Salmon Production Possibilities II.This table shows the maximum amounts of coffee and salmon that Brazil and Alaska can produce if they just produce one good.Alaska has an absolute advantage in producing: A.coffee only. B.salmon only. C.both coffee and salmon. D.neither coffee nor salmon.

(Table: Coffee and Salmon Production Possibilities II) Look at the table Coffee and Salmon Production Possibilities II.This table shows the maximum amounts of coffee and salmon that Brazil and Alaska can produce if they just produce one good.Brazil has an absolute advantage in producing: A.coffee only. B.salmon only. C.both coffee and salmon. D.neither coffee nor salmon.

(Table: Wheat and Aluminum) Look at the table Wheat and Aluminum.that shows the maximum possible production (in tons) of wheat and aluminum for both the United States and Germany.Are gains from trade possible between these nations? Explain.

(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 coffee for Brazil is: A.2 salmon. B.1/4 salmon. C.1 salmon. D.1/2 salmon.

If Farmer Sam MacDonald can produce 200 pounds of cabbages and no potatoes or no cabbages and 100 pounds of potatoes and if he faces a linear production possibility frontier for his farm, the opportunity cost of producing an additional pound of cabbage is ________ pound(s) of potatoes. A.1/2 B.2 C.100 D.200

An inward shift in the U.S.economy's production possibility frontier could represent which of the following?

(Figure: Strawberries and Submarines) Look at the figure Strawberries and Submarines.As the economy moves from point A toward point D, it will find that the opportunity cost of each additional submarine: A.falls. B.rises. C.remains unchanged.

Roommates Sarah and Zoe are hosting a Halloween party and have to make food for their guests and costumes for themselves.To finish both tasks as quickly as possible, Sarah and Zoe know that each of them should focus on just one task, but they don't know who should do what.To decide which roommate should do the cooking, Sarah and Zoe should determine which roommate: A.has the absolute advantage in cooking. B.has the comparative advantage in cooking. C.has the largest production possibility frontier in cooking. D.can complete the cooking in the least amount of time.

Figure: Wine and Wheat (Figure: Wine and Wheat) Look at the figure Wine and Wheat.If this economy is producing at point A and it wants to produce at point B, it needs to: A.trade with another country. B.increase its resources. C.decrease production. D.use its existing resources efficiently.

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

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

Figure: Production Possibility Frontier Curve for Tealand (Figure: Production Possibility Frontier for Tealand) Look at the figure Production Possibility Frontier for Tealand.In the figure, Tealand can produce at point E only if the government: A.eliminates unemployment. B.raises taxes. C.permits more immigration. D.increases the cost of production by decreasing the use of technology.

Which of the following offices of the U.S.government is a major employer of economists? A.International Monetary B.Fund United Nations C.World Bank D.Bureau of Labor Statistics