Question 1

Trade:

Accepted Answer

A) increases total production,which can benefit everyone involved. 
B) increases total production,which benefits only the more wealthy nation. 
C) decreases total production across nations,but increases it for some. 
D) decreases total production across nations,but benefits everyone because they are individually more productive. 
A) increases total production,which can benefit everyone involved. 
B) increases total production,which benefits only the more wealthy nation. 
C) decreases total production across nations,but increases it for some. 
D) decreases total production across nations,but benefits everyone because they are individually more productive.

Question 2

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year.Country A has 200 workers.Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year.Country B has 400 workers.For a worker in Country B,the trade-off to making one tomato is:

Accepted Answer

A) 2 bananas. 
B) 3 bananas. 
C) 4 bananas. 
D) 5 bananas. 
A) 2 bananas. 
B) 3 bananas. 
C) 4 bananas. 
D) 5 bananas.

Question 3

The invisible hand refers to:

Accepted Answer

A) the coordination that occurs from everyone working in their own self-interest. 
B) the coordination that occurs from a government agency finding efficiencies. 
C) the coordination that occurs from everyone working for the overall good of society. 
D) the coordination that occurs from a government coordinating economic activity. 
A) the coordination that occurs from everyone working in their own self-interest. 
B) the coordination that occurs from a government agency finding efficiencies. 
C) the coordination that occurs from everyone working for the overall good of society. 
D) the coordination that occurs from a government coordinating economic activity.

Question 4

When a producer has the ability to produce a good or service at a lower opportunity cost than others,economists say the producer:

Accepted Answer

A) has an absolute advantage at producing that good. 
B) has a comparative advantage at producing that good. 
C) has no reason to trade with others. 
D) is efficient. 
A) has an absolute advantage at producing that good. 
B) has a comparative advantage at producing that good. 
C) has no reason to trade with others. 
D) is efficient.

Question 5

Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.Country A has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.Country B would be working efficiently if they were producing:

Accepted Answer

A) (200 iPods,1,750 tablets). 
B) (200 iPods,1,500 tablets). 
C) (200 iPods,1,000 tablets). 
D) (200 iPods,750 tablets). 
A) (200 iPods,1,750 tablets). 
B) (200 iPods,1,500 tablets). 
C) (200 iPods,1,000 tablets). 
D) (200 iPods,750 tablets).

Question 6

A production possibilities frontier is a line or curve that:

Accepted Answer

A) shows all the possible combinations of outputs that can be produced using all available resources. 
B) shows what can be produced when all available resources are efficiently used. 
C) shows the best combinations of outputs that can be produced using all available resources. 
D) explains why societies make the choices they do. 
A) shows all the possible combinations of outputs that can be produced using all available resources. 
B) shows what can be produced when all available resources are efficiently used. 
C) shows the best combinations of outputs that can be produced using all available resources. 
D) explains why societies make the choices they do.

Question 7

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year.Country A has 200 workers.Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year.Country B has 400 workers.For a worker in Country A,the trade-off of making one tomato is:

Accepted Answer

A) 2 bananas. 
B) 3 bananas. 
C) 4 bananas. 
D) 5 bananas. 
A) 2 bananas. 
B) 3 bananas. 
C) 4 bananas. 
D) 5 bananas.

Question 8

Two countries will choose to specialize and trade only if:

Accepted Answer

A) the terms of trade fall between their opportunity costs for producing the goods on their own. 
B) the opportunity costs are the same between the two nations. 
C) the opportunity costs are astronomically high for producing the goods on their own. 
D) one country possesses the absolute advantage in both goods,but the comparative advantage in only one good. 
A) the terms of trade fall between their opportunity costs for producing the goods on their own. 
B) the opportunity costs are the same between the two nations. 
C) the opportunity costs are astronomically high for producing the goods on their own. 
D) one country possesses the absolute advantage in both goods,but the comparative advantage in only one good.

Question 9

An increase in productivity as a result of a new technology would cause the production possibilities frontier to:

Accepted Answer

A) shift in. 
B) shift out. 
C) not move until society chose to move it. 
D) become more meaningful in policy decisions. 
A) shift in. 
B) shift out. 
C) not move until society chose to move it. 
D) become more meaningful in policy decisions.

Question 10

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year.Country A has 200 workers.Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year.Country B has 400 workers.The workers in Country A should specialize in __________________ because they possess the ___________________ in the production of that good.

Accepted Answer

A) bananas;comparative advantage 
B) tomatoes;comparative advantage 
C) bananas;absolute advantage 
D) tomatoes;absolute advantage 
A) bananas;comparative advantage 
B) tomatoes;comparative advantage 
C) bananas;absolute advantage 
D) tomatoes;absolute advantage

Question 11

If we consider the reality that each worker has different skills,then the production possibilities frontier:

Accepted Answer

A) would have a convex shape. 
B) would have a concave shape. 
C) would be a straight line. 
D) would shift outward. 
A) would have a convex shape. 
B) would have a concave shape. 
C) would be a straight line. 
D) would shift outward.

Question 12

The slope of a production possibilities frontier measures:

Accepted Answer

A) the opportunity cost of producing one good in terms of the other. 
B) the trade-off inherent in the production of one good versus the other. 
C) how much of one good that must be given up in order to produce the other. 
D) All of these statements are true. 
A) the opportunity cost of producing one good in terms of the other. 
B) the trade-off inherent in the production of one good versus the other. 
C) how much of one good that must be given up in order to produce the other. 
D) All of these statements are true.

Question 13

Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.Country A has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.A bundle of goods that Country B could potentially make would be:

Accepted Answer

A) (400 iPods,2,000 tablets). 
B) (300 iPods,500 tablets). 
C) (200 iPods,1,500 tablets). 
D) (100 iPods,2,000 tablets). 
A) (400 iPods,2,000 tablets). 
B) (300 iPods,500 tablets). 
C) (200 iPods,1,500 tablets). 
D) (100 iPods,2,000 tablets).

Question 14

Suppose England has a comparative advantage over the United States in producing tea.If this is true,then:

Accepted Answer

A) England should produce more tea than it needs and sell the rest to the United States. 
B) England should produce a small amount of tea and buy the rest of the tea it wants from the United States. 
C) England should not produce tea,and should instead buy it all from the United States. 
D) the United States has nothing to gain from buying tea from England. 
A) England should produce more tea than it needs and sell the rest to the United States. 
B) England should produce a small amount of tea and buy the rest of the tea it wants from the United States. 
C) England should not produce tea,and should instead buy it all from the United States. 
D) the United States has nothing to gain from buying tea from England.

Question 15

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day.A Canadian worker,on the other hand,can produce 10 pairs of shoes or grow 20 apples per day.Which of the following statements is true?

Accepted Answer

A) The United States has the absolute advantage in the production of both shoes and apples. 
B) Canada has the absolute advantage in the production of both shoes and apples. 
C) The United States has the absolute advantage in the production of shoes and Canada has the absolute advantage in the production of apples. 
D) Canada has the absolute advantage in the production of shoes and the United States has the absolute advantage in the production of apples. 
A) The United States has the absolute advantage in the production of both shoes and apples. 
B) Canada has the absolute advantage in the production of both shoes and apples. 
C) The United States has the absolute advantage in the production of shoes and Canada has the absolute advantage in the production of apples. 
D) Canada has the absolute advantage in the production of shoes and the United States has the absolute advantage in the production of apples.

Question 16

Choosing to produce at any point within a production possibilities frontier:

Accepted Answer

A) is inefficient,meaning the society would not be using all its available resources in their best possible use. 
B) is efficient,meaning the society would be using all its available resources in their best possible use. 
C) is unobtainable,meaning the society cannot produce that combination of goods. 
D) is efficient,meaning the society would be using all its available resources,though not in their best use. 
A) is inefficient,meaning the society would not be using all its available resources in their best possible use. 
B) is efficient,meaning the society would be using all its available resources in their best possible use. 
C) is unobtainable,meaning the society cannot produce that combination of goods. 
D) is efficient,meaning the society would be using all its available resources,though not in their best use.

Question 17

The concept of the invisible hand was first introduced to economics by:

Accepted Answer

A) David Ricardo. 
B) Adam Smith. 
C) Thomas Malthus. 
D) Milton Friedman. 
A) David Ricardo. 
B) Adam Smith. 
C) Thomas Malthus. 
D) Milton Friedman.

Question 18

Tom and Jerry have two tasks to do all day: set traps and build bombs.If Tom spends all day setting traps,he will have set 16 traps.If he instead devotes his day to building bombs,Tom will build 4 bombs.If Jerry spends his day setting traps,he will set 14 traps;if he spends the day building bombs,he will build 7 bombs.At the end of the day,Jerry could have produced:

Accepted Answer

A) 14 traps and 7 bombs. 
B) 12 traps and 6 bombs. 
C) 10 traps and 5 bombs. 
D) 6 traps and 4 bombs. 
A) 14 traps and 7 bombs. 
B) 12 traps and 6 bombs. 
C) 10 traps and 5 bombs. 
D) 6 traps and 4 bombs.

Question 19

People choose to specialize because:

Accepted Answer

A) it can lead to more consumption than being self-sufficient. 
B) it can lead to consumption beyond the production possibilities frontier. 
C) it allows people to acquire goods at a lower opportunity cost. 
D) All of these statements are true. 
A) it can lead to more consumption than being self-sufficient. 
B) it can lead to consumption beyond the production possibilities frontier. 
C) it allows people to acquire goods at a lower opportunity cost. 
D) All of these statements are true.

Question 20

Tom and Jerry have two tasks to do all day: set traps and build bombs.If Tom spends all day setting traps,he will have set 16 traps.If he instead devotes his day to building bombs,Tom will build 4 bombs.If Jerry spends his day setting traps,he will set 14 traps;if he spends the day building bombs,he will build 7 bombs.Jerry has a comparative advantage in:

Accepted Answer

A) trap production because he has the lower opportunity cost of a trap. 
B) trap production because he has the higher opportunity cost of a trap. 
C) bomb production because he has the lower opportunity cost of a bomb. 
D) bomb production because he has the higher opportunity cost of a bomb. 
A) trap production because he has the lower opportunity cost of a trap. 
B) trap production because he has the higher opportunity cost of a trap. 
C) bomb production because he has the lower opportunity cost of a bomb. 
D) bomb production because he has the higher opportunity cost of a bomb.

Exam 2: Specialization and Exchange

Trade:

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year.Country A has 200 workers.Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year.Country B has 400 workers.For a worker in Country B,the trade-off to making one tomato is:

The invisible hand refers to:

When a producer has the ability to produce a good or service at a lower opportunity cost than others,economists say the producer:

Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.Country A has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.Country B would be working efficiently if they were producing:

A production possibilities frontier is a line or curve that:

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year.Country A has 200 workers.Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year.Country B has 400 workers.For a worker in Country A,the trade-off of making one tomato is:

Two countries will choose to specialize and trade only if:

An increase in productivity as a result of a new technology would cause the production possibilities frontier to:

If we consider the reality that each worker has different skills,then the production possibilities frontier:

The slope of a production possibilities frontier measures:

Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.Country A has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.A bundle of goods that Country B could potentially make would be:

Suppose England has a comparative advantage over the United States in producing tea.If this is true,then:

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day.A Canadian worker,on the other hand,can produce 10 pairs of shoes or grow 20 apples per day.Which of the following statements is true?

Choosing to produce at any point within a production possibilities frontier:

The concept of the invisible hand was first introduced to economics by:

People choose to specialize because:

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