Question 1

Which of the following is an example of market governance?

Accepted Answer

A) A firm vertically integrating backward to own the necessary inputs 
B) A firm entering into a contract with input suppliers. 
C) A school recruiting a part-time teacher to cover for a permanent employee who falls very ill. 
D) A school requesting its permanent employees to cover for a teacher who suddenly falls ill. 
A) A firm vertically integrating backward to own the necessary inputs 
B) A firm entering into a contract with input suppliers. 
C) A school recruiting a part-time teacher to cover for a permanent employee who falls very ill. 
D) A school requesting its permanent employees to cover for a teacher who suddenly falls ill.

Question 2

Inefficient use of resources leads to:

Accepted Answer

A) production bundles inside the production set. 
B) production bundles outside the production set. 
C) a reduction in the production set. 
D) production of a combination on the production set. 
A) production bundles inside the production set. 
B) production bundles outside the production set. 
C) a reduction in the production set. 
D) production of a combination on the production set.

Question 3

A production point is economically efficient as long as it lies within the production possibilities set.

Accepted Answer

A) True 
 B)False

Question 4

In the early twentieth century, general stores in the upper Midwest had more power over prices because:

Accepted Answer

A) they acted as intermediaries between farmers and buyers. 
B) the transportation network was bad, leaving farmers and buyers with no alternatives except the general stores in small towns. 
C) inventories at the general stores were low and demand was high. 
D) stockouts were a chronic problem and there was little variety. 
A) they acted as intermediaries between farmers and buyers. 
B) the transportation network was bad, leaving farmers and buyers with no alternatives except the general stores in small towns. 
C) inventories at the general stores were low and demand was high. 
D) stockouts were a chronic problem and there was little variety.

Question 5

Natalie can produce 6 shirts in a day, or cook three meals.Her opportunity cost of producing a shirt is 2 meals.

Accepted Answer

A) True 
 B)False

Question 6

What is the marginal cost of producing one unit of A for an economy that produces only two goods, A and B.

Accepted Answer

The amount of B that must be g

Question 7

The shares of the economic value of a particular transaction that accrues to the seller and the buyer depend on:

Accepted Answer

A) the buyer's opportunity cost. 
B) the relative bargaining powers of the two parties. 
C) the cost of production incurred by the seller while producing the good. 
D) the lobbying techniques adopted by the two parties. 
A) the buyer's opportunity cost. 
B) the relative bargaining powers of the two parties. 
C) the cost of production incurred by the seller while producing the good. 
D) the lobbying techniques adopted by the two parties.

Question 8

_____ are an institution where the protocols may determine a _____ and the expected revenue of the seller.

Accepted Answer

A) Contracts; buyer's pricing strategy 
B) Auctions; participant's best bidding strategy 
C) Auctions; participant's chances of winning the bid 
D) Contracts; buyer's share of gains from the transaction 
A) Contracts; buyer's pricing strategy 
B) Auctions; participant's best bidding strategy 
C) Auctions; participant's chances of winning the bid 
D) Contracts; buyer's share of gains from the transaction

Question 9

Fab Tools Inc.can produce 150 widgets and 100 axes in a month.Another company AllMyTools Inc.can produce 180 widgets and 50 axes per month.Which of the following statements is true?

Accepted Answer

A) Fab Tools has a comparative advantage in the production of widgets. 
B) Fab Tools has an absolute advantage in the production of both goods. 
C) AllMyTools has a comparative advantage in the production of widgets. 
D) AllMyTools has an absolute advantage in the production of both goods. 
A) Fab Tools has a comparative advantage in the production of widgets. 
B) Fab Tools has an absolute advantage in the production of both goods. 
C) AllMyTools has a comparative advantage in the production of widgets. 
D) AllMyTools has an absolute advantage in the production of both goods.

Question 10

Identify the correct statement from the following.

Accepted Answer

A) Modern telecommunications turned cities like Omaha and Bangalore into new resources for the world. 
B) Being only 10 hours away from most of the industrial world enabled Anchorage, Alaska to become the busiest cargo airport in the world. 
C) Call centers in the U.S.set up shop in small towns to prevent large-scale migration to bigger cities. 
D) Unless a city is in an advantageous location for conducting any form of business, it is difficult to boost its economy in today's world. 
A) Modern telecommunications turned cities like Omaha and Bangalore into new resources for the world. 
B) Being only 10 hours away from most of the industrial world enabled Anchorage, Alaska to become the busiest cargo airport in the world. 
C) Call centers in the U.S.set up shop in small towns to prevent large-scale migration to bigger cities. 
D) Unless a city is in an advantageous location for conducting any form of business, it is difficult to boost its economy in today's world.

Question 11

With technological developments, more resources are discovered which change production sets for countries and make world trade more and more beneficial.

Accepted Answer

A) True 
 B)False

Question 12

With cheaper communication technology and easy flow of information between countries,

Accepted Answer

A) industrial production becomes more labor intensive. 
B) the pattern of employment and production can change. 
C) the digital divide widens. 
D) transaction costs increase. 
A) industrial production becomes more labor intensive. 
B) the pattern of employment and production can change. 
C) the digital divide widens. 
D) transaction costs increase.

Question 13

The main reason Sears Roebuck became the largest retailer in the United States during the late nineteenth century was that:

Accepted Answer

A) it reduced a host of transaction costs which allowed higher profits to shareholders and lower prices to customers. 
B) the railroad network improved substantially and charged higher rates for transporting goods. 
C) the lack of competition lowered the cost of advertising and increased profits for shareholders. 
D) his organization only interacted with the best wholesalers, distributors, and shippers in the business. 
A) it reduced a host of transaction costs which allowed higher profits to shareholders and lower prices to customers. 
B) the railroad network improved substantially and charged higher rates for transporting goods. 
C) the lack of competition lowered the cost of advertising and increased profits for shareholders. 
D) his organization only interacted with the best wholesalers, distributors, and shippers in the business.

Question 14

Why do economists show little interest in how the benefits from an exchange are shared between the two parties?

Accepted Answer

To economists, what matters most is that

Question 15

Reducing _____ the benefits available to the buyer and seller and might also enable them to make exchanges that were previously impossible.

Accepted Answer

A) transaction costs decreases 
B) transaction costs increases 
C) marginal costs decreases 
D) marginal costs increases 
A) transaction costs decreases 
B) transaction costs increases 
C) marginal costs decreases 
D) marginal costs increases

Question 16

What matters in Economics is:

Accepted Answer

A) how much gain a transaction yields. 
B) how the gains from a transaction are split between the buyer and the seller. 
C) how much gain the buyer realizes from a transaction. 
D) that the transaction between a buyer and a seller takes place. 
A) how much gain a transaction yields. 
B) how the gains from a transaction are split between the buyer and the seller. 
C) how much gain the buyer realizes from a transaction. 
D) that the transaction between a buyer and a seller takes place.

Question 17

Suppose Zia spends her time picking berries and apples.Her production set is described by the equation $x + 2 y = 40$ , where $x$ is the number of berries and y the number of apples.Which of the following statements will be true?

Accepted Answer

A) 25 apples and 10 berries is achievable but inefficient. 
B) 10 berries and 2 apples is efficient but unachievable. 
C) 20 apples and 5 berries is an inefficient level of production. 
D) 30 berries and 5 apples is an efficient level of production. 
A) 25 apples and 10 berries is achievable but inefficient. 
B) 10 berries and 2 apples is efficient but unachievable. 
C) 20 apples and 5 berries is an inefficient level of production. 
D) 30 berries and 5 apples is an efficient level of production.

Question 18

In a two-person exchange, if the price offered to the seller is less than the opportunity cost of production, the exchange will not take place.

Accepted Answer

A) True 
 B)False

Question 19

An exchange will take place between two parties as long as:

Accepted Answer

A) the seller benefits from it. 
B) the buyer benefits from it. 
C) any one of the parties benefit from it. 
D) both the parties benefit from it. 
A) the seller benefits from it. 
B) the buyer benefits from it. 
C) any one of the parties benefit from it. 
D) both the parties benefit from it.

Question 20

The economic value which can be created by a transaction between two people, Ed (seller) and Luis (buyer), is $50 as Ed's opportunity cost of selling is $135 and Luis' valuation of the good is $185.Suppose Ed and Luis do not speak the same language and Ed hires an interpreter who charges $2 per hour.Ed and Luis finally agree to a price of $160.This implies:

Accepted Answer

A) Luis' valuation of the good will increase. 
B) Ed's opportunity cost will decline. 
C) economic value from the transaction will decline. 
D) Ed will receive to a lower benefit than Luis. 
A) Luis' valuation of the good will increase. 
B) Ed's opportunity cost will decline. 
C) economic value from the transaction will decline. 
D) Ed will receive to a lower benefit than Luis.

Which of the following is an example of market governance?

Inefficient use of resources leads to:

A production point is economically efficient as long as it lies within the production possibilities set.

In the early twentieth century, general stores in the upper Midwest had more power over prices because:

Natalie can produce 6 shirts in a day, or cook three meals.Her opportunity cost of producing a shirt is 2 meals.

What is the marginal cost of producing one unit of A for an economy that produces only two goods, A and B.

The shares of the economic value of a particular transaction that accrues to the seller and the buyer depend on:

_ are an institution where the protocols may determine a _ and the expected revenue of the seller.

Fab Tools Inc.can produce 150 widgets and 100 axes in a month.Another company AllMyTools Inc.can produce 180 widgets and 50 axes per month.Which of the following statements is true?

Identify the correct statement from the following.

With technological developments, more resources are discovered which change production sets for countries and make world trade more and more beneficial.

With cheaper communication technology and easy flow of information between countries,

The main reason Sears Roebuck became the largest retailer in the United States during the late nineteenth century was that:

Why do economists show little interest in how the benefits from an exchange are shared between the two parties?

Reducing _____ the benefits available to the buyer and seller and might also enable them to make exchanges that were previously impossible.

What matters in Economics is:

Suppose Zia spends her time picking berries and apples.Her production set is described by the equation $x + 2 y = 40$ , where $x$ is the number of berries and y the number of apples.Which of the following statements will be true?

In a two-person exchange, if the price offered to the seller is less than the opportunity cost of production, the exchange will not take place.

An exchange will take place between two parties as long as:

Reasoning With Economics: Models and Information

Markets

Cost and Production

Extreme Markets I: Perfect Competition

Extreme Markets II: Monopoly

Between the Extremes: Interaction and Strategy

Competition and Strategy

Beyond Markets; Property and Contracts

The Economics of Contracts

Risk and Information in Contracts

Organizations in Concept and Practice

Organizational Design

Vertical Relationships

Employment Relationships

Time, Risk and Options

Conflict, Negotiation and Group Choice

Filters

Exam 2: Transactions and Institutions: the Building Blocks

Which of the following is an example of market governance?

Inefficient use of resources leads to:

A production point is economically efficient as long as it lies within the production possibilities set.

In the early twentieth century, general stores in the upper Midwest had more power over prices because:

Natalie can produce 6 shirts in a day, or cook three meals.Her opportunity cost of producing a shirt is 2 meals.

What is the marginal cost of producing one unit of A for an economy that produces only two goods, A and B.

The shares of the economic value of a particular transaction that accrues to the seller and the buyer depend on:

_____ are an institution where the protocols may determine a _____ and the expected revenue of the seller.

Fab Tools Inc.can produce 150 widgets and 100 axes in a month.Another company AllMyTools Inc.can produce 180 widgets and 50 axes per month.Which of the following statements is true?

Identify the correct statement from the following.

With technological developments, more resources are discovered which change production sets for countries and make world trade more and more beneficial.

With cheaper communication technology and easy flow of information between countries,

The main reason Sears Roebuck became the largest retailer in the United States during the late nineteenth century was that:

Why do economists show little interest in how the benefits from an exchange are shared between the two parties?

Reducing _____ the benefits available to the buyer and seller and might also enable them to make exchanges that were previously impossible.

What matters in Economics is:

Suppose Zia spends her time picking berries and apples.Her production set is described by the equation x+2y=40x + 2 y = 40x+2y=40 , where xxx is the number of berries and y the number of apples.Which of the following statements will be true?

In a two-person exchange, if the price offered to the seller is less than the opportunity cost of production, the exchange will not take place.

An exchange will take place between two parties as long as:

Reasoning With Economics: Models and Information

Markets

Cost and Production

Extreme Markets I: Perfect Competition

Extreme Markets II: Monopoly

Between the Extremes: Interaction and Strategy

Competition and Strategy

Beyond Markets; Property and Contracts

The Economics of Contracts

Risk and Information in Contracts

Organizations in Concept and Practice

Organizational Design

Vertical Relationships

Employment Relationships

Time, Risk and Options

Conflict, Negotiation and Group Choice

Filters

_ are an institution where the protocols may determine a _ and the expected revenue of the seller.

Suppose Zia spends her time picking berries and apples.Her production set is described by the equation $x + 2 y = 40$ , where $x$ is the number of berries and y the number of apples.Which of the following statements will be true?