Question 1

Money eliminated the need for the double coincidence of wants through its role as:

Accepted Answer

A)  fiat, or declared, money. 
B)  an accounting unit. 
C)  something to store value. 
D)  a medium of exchange. 
E)  a hard currency. 
A)  fiat, or declared, money. 
B)  an accounting unit. 
C)  something to store value. 
D)  a medium of exchange. 
E)  a hard currency. D

Question 2

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the questions that follow.
  
-Which statement best describes absolute advantage?

Accepted Answer

A)  DiNozzo has an absolute advantage in the production of wooden boats. 
B)  DiNozzo has an absolute advantage in both. 
C)  Gibbs has an absolute advantage in solving crimes, whereas DiNozzo has an absolute advantage in making wooden boats. 
D)  Gibbs has an absolute advantage in both. 
E)  Gibbs has an absolute advantage in making wooden boats, whereas DiNozzo has an absolute advantage in solving crimes. 
A)  DiNozzo has an absolute advantage in the production of wooden boats. 
B)  DiNozzo has an absolute advantage in both. 
C)  Gibbs has an absolute advantage in solving crimes, whereas DiNozzo has an absolute advantage in making wooden boats. 
D)  Gibbs has an absolute advantage in both. 
E)  Gibbs has an absolute advantage in making wooden boats, whereas DiNozzo has an absolute advantage in solving crimes. D

Question 3

The area inside (within)the production possibilities frontier (PPF)contains ________ points.

Accepted Answer

A)  normative 
B)  positive 
C)  efficient 
D)  inefficient 
E)  high opportunity cost 
A)  normative 
B)  positive 
C)  efficient 
D)  inefficient 
E)  high opportunity cost D

Question 4

Refer to the following table to answer the questions that follow.
  
-Given an eight-hour workday,to experience gains from trade:

Accepted Answer

A)  Alicia should make pizzas and Jay-Z should make cheesesteaks. 
B)  Alicia should make cheesesteaks and Jay-Z should make pizzas. 
C)  each should make their own cheesesteaks and pizzas. 
D)  Alicia should produce both pizzas and cheesesteaks. 
E)  Jay-Z should produce both pizzas and cheesesteaks. 
A)  Alicia should make pizzas and Jay-Z should make cheesesteaks. 
B)  Alicia should make cheesesteaks and Jay-Z should make pizzas. 
C)  each should make their own cheesesteaks and pizzas. 
D)  Alicia should produce both pizzas and cheesesteaks. 
E)  Jay-Z should produce both pizzas and cheesesteaks.

Question 5

You have a comparative advantage in producing a good whenever:

Accepted Answer

A)  you enjoy producing that good. 
B)  you can produce more of the good than someone else can using the same resources. 
C)  your opportunity cost is constant. 
D)  your opportunity cost of producing that good is lower than that of other producers. 
E)  you have specific training in the production of that good. 
A)  you enjoy producing that good. 
B)  you can produce more of the good than someone else can using the same resources. 
C)  your opportunity cost is constant. 
D)  your opportunity cost of producing that good is lower than that of other producers. 
E)  you have specific training in the production of that good.

Question 6

Ceteris paribus,if a society is producing at a point on the production possibilities frontier (PPF),it can only increase the production of one good by:

Accepted Answer

A)  also increasing the production of the second good. 
B)  decreasing the production of the second good. 
C)  increasing the price of the second good. 
D)  decreasing the price of the second good. 
E)  reducing the resources available for production. 
A)  also increasing the production of the second good. 
B)  decreasing the production of the second good. 
C)  increasing the price of the second good. 
D)  decreasing the price of the second good. 
E)  reducing the resources available for production.

Question 7

The ability of one producer to produce a good at a lower opportunity cost than another producer is called:

Accepted Answer

A)  a normative statement. 
B)  a zero-sum game. 
C)  absolute advantage. 
D)  comparative advantage. 
E)  the law of increasing relative cost. 
A)  a normative statement. 
B)  a zero-sum game. 
C)  absolute advantage. 
D)  comparative advantage. 
E)  the law of increasing relative cost.

Question 8

When one producer has a comparative advantage in production,he or she:

Accepted Answer

A)  can produce more output than someone else using the same quantity of resources. 
B)  can produce a good at a lower opportunity cost than someone else. 
C)  does not benefit from trade with other producers. 
D)  is unable to reach his or her production possibilities frontier (PPF). 
E)  trades only with others who have the same comparative advantage. 
A)  can produce more output than someone else using the same quantity of resources. 
B)  can produce a good at a lower opportunity cost than someone else. 
C)  does not benefit from trade with other producers. 
D)  is unable to reach his or her production possibilities frontier (PPF). 
E)  trades only with others who have the same comparative advantage.

Question 9

The ________ illustrates the various combinations of output that a society can produce if all of its resources are being used efficiently.

Accepted Answer

A)  concept of absolute advantage 
B)  law of positive statements 
C)  law of demand 
D)  production possibilities frontier (PPF) 
E)  principle of comparative advantage 
A)  concept of absolute advantage 
B)  law of positive statements 
C)  law of demand 
D)  production possibilities frontier (PPF) 
E)  principle of comparative advantage

Question 10

Why do economists use models?

Accepted Answer

A)  Models are used to add complexity to a simple world. 
B)  Models allow us to study a simplified version of a complex world. 
C)  Models allow us to control external factors. 
D)  Models make the world harder to understand. 
E)  Models allow us to examine more factors than what actually exists in our world. 
A)  Models are used to add complexity to a simple world. 
B)  Models allow us to study a simplified version of a complex world. 
C)  Models allow us to control external factors. 
D)  Models make the world harder to understand. 
E)  Models allow us to examine more factors than what actually exists in our world.

Question 11

Which of the following is a normative statement?

Accepted Answer

A)  The current exchange rate is 0.7 British pounds per U.S.dollar. 
B)  In January, the average temperature in Fargo, North Dakota, is 56 degrees. 
C)  Winters in Arkansas are too cold. 
D)  On average, people save 15% when they switch to GEICO. 
E)  University of Virginia graduates earn more than Duke University graduates. 
A)  The current exchange rate is 0.7 British pounds per U.S.dollar. 
B)  In January, the average temperature in Fargo, North Dakota, is 56 degrees. 
C)  Winters in Arkansas are too cold. 
D)  On average, people save 15% when they switch to GEICO. 
E)  University of Virginia graduates earn more than Duke University graduates.

Question 12

Refer to the following figure to answer the questions that follow.
  
-You can see that the opportunity cost of moving from point B to point D is different from the opportunity cost of moving from point D to point C because:

Accepted Answer

A)  apples are bigger than blueberries. 
B)  the slope of the production possibilities frontier (PPF) is different in each of the two segments. 
C)  they are all efficient points. 
D)  they are all attainable points. 
E)  the opportunity cost is constant along the PPF. 
A)  apples are bigger than blueberries. 
B)  the slope of the production possibilities frontier (PPF) is different in each of the two segments. 
C)  they are all efficient points. 
D)  they are all attainable points. 
E)  the opportunity cost is constant along the PPF.

Question 13

Draw a production possibilities frontier (PPF)for Good A and Good B.Suppose that these goods are subject to increasing relative costs in production,and be sure that your graph reflects this fact.
Now suppose that a new and innovative technology enhances the production of Good A but not Good B.Illustrate how this new innovation changes the PPF.

Accepted Answer

The answer of Draw a production possibilities frontier (PPF)for Good...

Question 14

Refer to the following figure to answer the questions that follow.
  
-Which point in the corresponding figure shows that productive resources are NOT fully employed?

Accepted Answer

A)  point A 
B)  point B 
C)  point C 
D)  point D 
E)  point E 
A)  point A 
B)  point B 
C)  point C 
D)  point D 
E)  point E

Question 15

Refer to the following figures to answer the questions that follow.
  
-Which allocation point in the short-run production possibilities frontier (PPF)will lead to the most significant growth in the long-run PPF?

Accepted Answer

A)  point A 
B)  point B 
C)  point C 
D)  point D 
E)  point E 
A)  point A 
B)  point B 
C)  point C 
D)  point D 
E)  point E

Question 16

The scientific method and the tools of economics are useful in examining:

Accepted Answer

A)  only how individuals make decisions. 
B)  only how business firms make decisions. 
C)  only how government policies affect macroeconomic outcomes. 
D)  only the trade-offs evident in production possibilities frontier (PPF). 
E)  anything; economists will use their tools to study anything in the world around them. 
A)  only how individuals make decisions. 
B)  only how business firms make decisions. 
C)  only how government policies affect macroeconomic outcomes. 
D)  only the trade-offs evident in production possibilities frontier (PPF). 
E)  anything; economists will use their tools to study anything in the world around them.

Question 17

Economic growth is represented on a production possibilities frontier (PPF)by the PPF:

Accepted Answer

A)  getting steeper. 
B)  getting flatter. 
C)  shifting inward. 
D)  shifting outward. 
E)  rotating downward. 
A)  getting steeper. 
B)  getting flatter. 
C)  shifting inward. 
D)  shifting outward. 
E)  rotating downward.

Question 18

Refer to the accompanying figure to answer the questions that follow.
  
-Based on the figure,you would need even more hours in each day in order to attain:

Accepted Answer

A)  point A. 
B)  point B. 
C)  point C. 
D)  point D. 
E)  point E. 
A)  point A. 
B)  point B. 
C)  point C. 
D)  point D. 
E)  point E.

Question 19

On the television show MythBusters,the hosts design experiments,collect data,and test theories based on popular myths.This is an example of:

Accepted Answer

A)  the scientific method as used in economics. 
B)  economic growth. 
C)  gains from trade. 
D)  production possibilities. 
E)  absolute advantage. 
A)  the scientific method as used in economics. 
B)  economic growth. 
C)  gains from trade. 
D)  production possibilities. 
E)  absolute advantage.

Question 20

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between making pizzas and making stromboli. Refer to these figures to answer the questions that follow.
  
-If Jim and Pam were to specialize and trade,at what exchange rate would they find some quantity of trade to be mutually beneficial?

Accepted Answer

A)  3 pizzas for 1 stromboli 
B)  1 pizza for 1 stromboli 
C)  10 pizzas for 2 stromboli 
D)  1 pizza for 1/2 stromboli 
E)  1 pizza for 1/4 stromboli 
A)  3 pizzas for 1 stromboli 
B)  1 pizza for 1 stromboli 
C)  10 pizzas for 2 stromboli 
D)  1 pizza for 1/2 stromboli 
E)  1 pizza for 1/4 stromboli

Money eliminated the need for the double coincidence of wants through its role as:

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the questions that follow. -Which statement best describes absolute advantage?

The area inside (within)the production possibilities frontier (PPF)contains ________ points.

Refer to the following table to answer the questions that follow. -Given an eight-hour workday,to experience gains from trade:

You have a comparative advantage in producing a good whenever:

Ceteris paribus,if a society is producing at a point on the production possibilities frontier (PPF),it can only increase the production of one good by:

The ability of one producer to produce a good at a lower opportunity cost than another producer is called:

When one producer has a comparative advantage in production,he or she:

The ________ illustrates the various combinations of output that a society can produce if all of its resources are being used efficiently.

Why do economists use models?

Which of the following is a normative statement?

Refer to the following figure to answer the questions that follow. -You can see that the opportunity cost of moving from point B to point D is different from the opportunity cost of moving from point D to point C because:

Refer to the following figure to answer the questions that follow. -Which point in the corresponding figure shows that productive resources are NOT fully employed?

Refer to the following figures to answer the questions that follow. -Which allocation point in the short-run production possibilities frontier (PPF)will lead to the most significant growth in the long-run PPF?

The scientific method and the tools of economics are useful in examining:

Economic growth is represented on a production possibilities frontier (PPF)by the PPF:

Refer to the accompanying figure to answer the questions that follow. -Based on the figure,you would need even more hours in each day in order to attain:

On the television show MythBusters,the hosts design experiments,collect data,and test theories based on popular myths.This is an example of:

Thinking Like an Economist

The Market at Work: Supply and Demand

Market Efficiency

Costs and Production: How Do Businesses Work?

Market Structures

Behavioral Economics and Game Theory

Labor Markets and Earnings

Government in the Economy

What Is Macroeconomics?

Measuring the Macroeconomy, Inflation, and Unemployment

Aggregate Demand and Aggregate Supply

Economic Growth and the Wealth of Nations

Savings, Investment, and the Market for Loanable Funds

Money and the Federal Reserve

Monetary Policy

Fiscal Policy and Budget Deficits

International Economics

Personal Finance

Filters

Exam 2: Economic Models and Gains From Trade

Money eliminated the need for the double coincidence of wants through its role as:

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the questions that follow. -Which statement best describes absolute advantage?

The area inside (within)the production possibilities frontier (PPF)contains ________ points.

Refer to the following table to answer the questions that follow. -Given an eight-hour workday,to experience gains from trade:

You have a comparative advantage in producing a good whenever:

Ceteris paribus,if a society is producing at a point on the production possibilities frontier (PPF),it can only increase the production of one good by:

The ability of one producer to produce a good at a lower opportunity cost than another producer is called:

When one producer has a comparative advantage in production,he or she:

The ________ illustrates the various combinations of output that a society can produce if all of its resources are being used efficiently.

Why do economists use models?

Which of the following is a normative statement?

Refer to the following figure to answer the questions that follow. -You can see that the opportunity cost of moving from point B to point D is different from the opportunity cost of moving from point D to point C because:

Refer to the following figure to answer the questions that follow. -Which point in the corresponding figure shows that productive resources are NOT fully employed?

Refer to the following figures to answer the questions that follow. -Which allocation point in the short-run production possibilities frontier (PPF)will lead to the most significant growth in the long-run PPF?

The scientific method and the tools of economics are useful in examining:

Economic growth is represented on a production possibilities frontier (PPF)by the PPF:

Refer to the accompanying figure to answer the questions that follow. -Based on the figure,you would need even more hours in each day in order to attain:

On the television show MythBusters,the hosts design experiments,collect data,and test theories based on popular myths.This is an example of:

Thinking Like an Economist

The Market at Work: Supply and Demand

Market Efficiency

Costs and Production: How Do Businesses Work?

Market Structures

Behavioral Economics and Game Theory

Labor Markets and Earnings

Government in the Economy

What Is Macroeconomics?

Measuring the Macroeconomy, Inflation, and Unemployment

Aggregate Demand and Aggregate Supply

Economic Growth and the Wealth of Nations

Savings, Investment, and the Market for Loanable Funds

Money and the Federal Reserve

Monetary Policy

Fiscal Policy and Budget Deficits

International Economics

Personal Finance

Filters