Question 1

Which of the following factors would not contribute to increasing an existing comparative advantage?

Accepted Answer

A)  Productivity improvements from greater experience. 
B)  Less time lost by switching tasks. 
C)  Import restrictions. 
D)  Efficiency improvements due to learning. 
A)  Productivity improvements from greater experience. 
B)  Less time lost by switching tasks. 
C)  Import restrictions. 
D)  Efficiency improvements due to learning.

Question 2

Lou and Alex live together and share household chores. They like to cook some meals ahead of time and eat leftovers. Suppose that in one hour Lou and Alex can do the following: $$\begin{array} { | l | l | l | } 
\hline & \text { Alex } & \text { Lou } \
\hline \text { Whole Hour Cleaning } & 3 \text { rooms } & 5 \text { rooms } \
\hline \text { Whole Hour Cooking } & 3 \text { meals } & 4 \text { meals } \
\hline 1 / 2 \text { hour, Each Activity } & 1.5 \text { rooms; } 1.5 \text { meals } & 2.5 \text { rooms; } 2 \text { meals } \
\hline
\end{array}$$ Alex and Lou have worked out an efficient arrangement. Under that arrangement:

Accepted Answer

A)  Alex and Lou do half of the cooking and half of the cleaning. 
B)  Alex does all of the cleaning, while Lou does all the cooking. 
C)  Lou does all of the cleaning and half of the cooking. 
D)  Lou does all of the cleaning, while Alex does all of the cooking. 
A)  Alex and Lou do half of the cooking and half of the cleaning. 
B)  Alex does all of the cleaning, while Lou does all the cooking. 
C)  Lou does all of the cleaning and half of the cooking. 
D)  Lou does all of the cleaning, while Alex does all of the cooking.

Question 3

Large developed countries can produce more of practically everything than can small, less developed countries. Which of the following statements is true?

Accepted Answer

A)  The large country has no incentive to trade with the smaller country. 
B)  It would be impossible for the smaller country to have a comparative advantage in making any products that the larger country wants to buy. 
C)  Trade will benefit both countries if each country has a comparative advantage in a traded product. 
D)  Trade between the countries is more likely to benefit the small country and harm the larger country. 
A)  The large country has no incentive to trade with the smaller country. 
B)  It would be impossible for the smaller country to have a comparative advantage in making any products that the larger country wants to buy. 
C)  Trade will benefit both countries if each country has a comparative advantage in a traded product. 
D)  Trade between the countries is more likely to benefit the small country and harm the larger country.

Question 4

In the long-run, if the production of all goods increases for a society (there is economic growth), it will cause the production possibility curve to:

Accepted Answer

A)  shift inward. 
B)  shift outward. 
C)  first shift inward and then shift outward. 
D)  stay the same. 
A)  shift inward. 
B)  shift outward. 
C)  first shift inward and then shift outward. 
D)  stay the same.

Question 5

Which of the following jobs is least likely to be outsourced?

Accepted Answer

A)  Flipping hamburgers 
B)  Technical assistance over the phone for your computer 
C)  Transcription of physicians' records 
D)  Software design 
A)  Flipping hamburgers 
B)  Technical assistance over the phone for your computer 
C)  Transcription of physicians' records 
D)  Software design

Question 6

In general, it is true that:

Accepted Answer

A)  more specialization is always better. 
B)  less specialization is always better. 
C)  specialization imposes costs as well as benefits. 
D)  more specialization is always worse. 
A)  more specialization is always better. 
B)  less specialization is always better. 
C)  specialization imposes costs as well as benefits. 
D)  more specialization is always worse.

Question 7

The slope of the production possibilities curve must be:

Accepted Answer

A)  positive. 
B)  decreasing. 
C)  increasing. 
D)  negative. 
A)  positive. 
B)  decreasing. 
C)  increasing. 
D)  negative.

Question 8

If Leslie can produce two pairs of pants in an hour while Eva can make one pair an hour, then it must be the case that:

Accepted Answer

A)  Leslie has a comparative advantage. 
B)  Leslie has an absolute advantage. 
C)  Eva has a comparative advantage. 
D)  Leslie has both comparative and absolute advantage. 
A)  Leslie has a comparative advantage. 
B)  Leslie has an absolute advantage. 
C)  Eva has a comparative advantage. 
D)  Leslie has both comparative and absolute advantage.

Question 9

When a government increases the cost of international trade, it is:

Accepted Answer

A)  helping domestic consumers. 
B)  hurting all domestic producers. 
C)  reducing the total amount of output available to domestic consumers. 
D)  keeping all domestic prices artificially low. 
A)  helping domestic consumers. 
B)  hurting all domestic producers. 
C)  reducing the total amount of output available to domestic consumers. 
D)  keeping all domestic prices artificially low.

Question 10

You are the Minister of Trade for a small island country in the South Pacific with the following annual production possibilities curve:   You are negotiating a deal with a neighboring island that has the following annual PPC:   Refer to the figure above. As soon as you see the other island's PPC, you realize:

Accepted Answer

A)  there will be no trade because the other island has the same comparative advantage as yours. 
B)  there will be no trade because there is no difference in your ability to harvest coconuts. 
C)  there will be no trade because the other island has an absolute advantage. 
D)  your island will have to specialize in coconuts if it wants to gain from trade. 
A)  there will be no trade because the other island has the same comparative advantage as yours. 
B)  there will be no trade because there is no difference in your ability to harvest coconuts. 
C)  there will be no trade because the other island has an absolute advantage. 
D)  your island will have to specialize in coconuts if it wants to gain from trade.

Question 11

In general, individuals and nations should specialize in producing goods _________ other individuals or nations.

Accepted Answer

A)  that they can produce more quickly than 
B)  that they can produce less quickly than 
C)  for which they have a lower opportunity cost compared to 
D)  for which they have a higher opportunity cost compared to 
A)  that they can produce more quickly than 
B)  that they can produce less quickly than 
C)  for which they have a lower opportunity cost compared to 
D)  for which they have a higher opportunity cost compared to

Question 12

According to the textbook, the evidence indicates that NAFTA has:

Accepted Answer

A)  reduced the wages of skilled workers in the United States. 
B)  reduced the employment of unskilled workers in the United States significantly. 
C)  stopped illegal immigration from Mexico. 
D)  not reduced the employment of unskilled workers in the United States. 
A)  reduced the wages of skilled workers in the United States. 
B)  reduced the employment of unskilled workers in the United States significantly. 
C)  stopped illegal immigration from Mexico. 
D)  not reduced the employment of unskilled workers in the United States.

Question 13

The principle of comparative advantage states that specialization increases productivity, but the principle of increasing opportunity costs states that, when you increase production of a single good, you must use increasingly costly resources. These two principles:

Accepted Answer

A)  are evidence that economic theory is internally inconsistent. 
B)  are an example of the difference between abstract models and the real world. 
C)  cannot be true at the same time. 
D)  together account for the outward bow shape of production possibility curves. 
A)  are evidence that economic theory is internally inconsistent. 
B)  are an example of the difference between abstract models and the real world. 
C)  cannot be true at the same time. 
D)  together account for the outward bow shape of production possibility curves.

Question 14

A job is most likely to be outsourced if it:

Accepted Answer

A)  involves face-to-face contact. 
B)  cannot be done by a computer. 
C)  does not require complex communication. 
D)  does not require use of computers or other technology. 
A)  involves face-to-face contact. 
B)  cannot be done by a computer. 
C)  does not require complex communication. 
D)  does not require use of computers or other technology.

Question 15

Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: $$\begin{array} { | l | l | l | } 
\hline & \text { Cars Sold } & \text { Trucks Sold } \
\hline \text { Larry } & 10 & 5 \
\hline \text { Joe } & 9 & 9 \
\hline \text { Ralph } & 3 & 12 \
\hline
\end{array}$$ ______ should specialize in truck sales, and ______ should specialize in car sales.

Accepted Answer

A)  Joe; Ralph 
B)  Ralph; Larry 
C)  Larry; Ralph 
D)  Larry; Joe 
A)  Joe; Ralph 
B)  Ralph; Larry 
C)  Larry; Ralph 
D)  Larry; Joe

Question 16

Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: $$\begin{array} { | l | l | l | } 
\hline & \text { Cars Sold } & \text { Trucks Sold } \
\hline \text { Larry } & 10 & 5 \
\hline \text { Joe } & 9 & 9 \
\hline \text { Ralph } & 3 & 12 \
\hline
\end{array}$$ For Ralph, the opportunity cost of selling a truck is:

Accepted Answer

A)  9 fewer cars sold. 
B)  1/3 car not sold. 
C)  3 fewer cars sold. 
D)  1/4 car not sold. 
A)  9 fewer cars sold. 
B)  1/3 car not sold. 
C)  3 fewer cars sold. 
D)  1/4 car not sold.

Question 17

Smith and Jones comprise a two-person economy. Their hourly rates of production are shown below. $\begin{array}{lccc}
\text { Good } &\text { Smith } &  \text { Jones } \
\text { Computers } & 10 & 6 \
\text { Calculators } & 100 & 120
\end{array}$ Refer to the table above. The opportunity cost of making an extra calculator for Smith is __________ and for Jones it is __________.

Accepted Answer

A)  0.10 computers; 0.05 computers 
B)  10 computers; 6 computers 
C)  1 computer; 0.5 computers 
D)  0.6 computers; 1.2 computers 
A)  0.10 computers; 0.05 computers 
B)  10 computers; 6 computers 
C)  1 computer; 0.5 computers 
D)  0.6 computers; 1.2 computers

Question 18

A graph that illustrates the maximum amount of one good that can be produced for every possible level of production of the other good is called a(n):

Accepted Answer

A)  production possibilities curve. 
B)  consumption possibilities curve. 
C)  production function. 
D)  supply curve. 
A)  production possibilities curve. 
B)  consumption possibilities curve. 
C)  production function. 
D)  supply curve.

Question 19

Smith and Jones comprise a two-person economy. Their hourly rates of production are shown below. $\begin{array}{lccc}
\text { Good } &\text { Smith } &  \text { Jones } \
\text { Computers } & 10 & 6 \
\text { Calculators } & 100 & 120
\end{array}$ Refer to the table above. Suppose Smith and Jones begin by producing 16 computers and 0 calculators per hour. If they wish to produce 14 computers and 40 calculators per hour, then Smith will spend __________ and Jones will spend __________.

Accepted Answer

A)  1 hour on computers; 40 minutes on computers and 20 minutes on calculators 
B)  1 hour on computers; 20 minutes on computers and 40 minutes on calculators 
C)  30 minutes on each; 30 minutes on each 
D)  45 minutes on computers and 15 on calculators; 1 hour on calculators 
A)  1 hour on computers; 40 minutes on computers and 20 minutes on calculators 
B)  1 hour on computers; 20 minutes on computers and 40 minutes on calculators 
C)  30 minutes on each; 30 minutes on each 
D)  45 minutes on computers and 15 on calculators; 1 hour on calculators

Question 20

The textbook notes that the last time a major league batter hit .400 was in 1941. This is because:

Accepted Answer

A)  the average quality of batters has fallen. 
B)  the league imposes harsh penalties for steroid use. 
C)  specialization by pitchers, infielders, and outfielders has made it harder for batters to hit. 
D)  baseball diamonds have become larger. 
A)  the average quality of batters has fallen. 
B)  the league imposes harsh penalties for steroid use. 
C)  specialization by pitchers, infielders, and outfielders has made it harder for batters to hit. 
D)  baseball diamonds have become larger.

Which of the following factors would not contribute to increasing an existing comparative advantage?

Large developed countries can produce more of practically everything than can small, less developed countries. Which of the following statements is true?

In the long-run, if the production of all goods increases for a society (there is economic growth), it will cause the production possibility curve to:

Which of the following jobs is least likely to be outsourced?

In general, it is true that:

The slope of the production possibilities curve must be:

If Leslie can produce two pairs of pants in an hour while Eva can make one pair an hour, then it must be the case that:

When a government increases the cost of international trade, it is:

In general, individuals and nations should specialize in producing goods _________ other individuals or nations.

According to the textbook, the evidence indicates that NAFTA has:

The principle of comparative advantage states that specialization increases productivity, but the principle of increasing opportunity costs states that, when you increase production of a single good, you must use increasingly costly resources. These two principles:

A job is most likely to be outsourced if it:

Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: Cars Sold Trucks Sold Larry 10 5 Joe 9 9 Ralph 3 12 should specialize in truck sales, and should specialize in car sales.

Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: Cars Sold Trucks Sold Larry 10 5 Joe 9 9 Ralph 3 12 For Ralph, the opportunity cost of selling a truck is:

Smith and Jones comprise a two-person economy. Their hourly rates of production are shown below. Good Smith Jones Computers 10 6 Calculators 100 120 Refer to the table above. The opportunity cost of making an extra calculator for Smith is and for Jones it is .

A graph that illustrates the maximum amount of one good that can be produced for every possible level of production of the other good is called a(n):

The textbook notes that the last time a major league batter hit .400 was in 1941. This is because:

Thinking Like an Economist

Supply and Demand

Macroeconomics: the Birds-Eye View of the Economy

Measuring Economic Activity: Gdp and Unemployment

Measuring the Price Level and Inflation

Economic Growth, Productivity, and Living Standards

Workers, Wages, and Unemployment

Saving and Capital Formation

Money, Prices, and the Federal Reserve

Financial Markets and International Capital Flows

Short-Term Economics Fluctuations: An Introduction

Spending and Output in the Short Run

Stabilizing the Economy: the Role of the Fed

Aggregate Demand, Aggregate Supply, and Inflation

Filters

Exam 2: Comparative Advantage

Which of the following factors would not contribute to increasing an existing comparative advantage?

Large developed countries can produce more of practically everything than can small, less developed countries. Which of the following statements is true?

In the long-run, if the production of all goods increases for a society (there is economic growth), it will cause the production possibility curve to:

Which of the following jobs is least likely to be outsourced?

In general, it is true that:

The slope of the production possibilities curve must be:

If Leslie can produce two pairs of pants in an hour while Eva can make one pair an hour, then it must be the case that:

When a government increases the cost of international trade, it is:

In general, individuals and nations should specialize in producing goods _________ other individuals or nations.

According to the textbook, the evidence indicates that NAFTA has:

The principle of comparative advantage states that specialization increases productivity, but the principle of increasing opportunity costs states that, when you increase production of a single good, you must use increasingly costly resources. These two principles:

A job is most likely to be outsourced if it:

Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: Cars Sold Trucks Sold Larry 10 5 Joe 9 9 Ralph 3 12 ______ should specialize in truck sales, and ______ should specialize in car sales.

Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: Cars Sold Trucks Sold Larry 10 5 Joe 9 9 Ralph 3 12 For Ralph, the opportunity cost of selling a truck is:

Smith and Jones comprise a two-person economy. Their hourly rates of production are shown below. Good Smith Jones Computers 10 6 Calculators 100 120 Refer to the table above. The opportunity cost of making an extra calculator for Smith is __________ and for Jones it is __________.

A graph that illustrates the maximum amount of one good that can be produced for every possible level of production of the other good is called a(n):

The textbook notes that the last time a major league batter hit .400 was in 1941. This is because:

Thinking Like an Economist

Supply and Demand

Macroeconomics: the Birds-Eye View of the Economy

Measuring Economic Activity: Gdp and Unemployment

Measuring the Price Level and Inflation

Economic Growth, Productivity, and Living Standards

Workers, Wages, and Unemployment

Saving and Capital Formation

Money, Prices, and the Federal Reserve

Financial Markets and International Capital Flows

Short-Term Economics Fluctuations: An Introduction

Spending and Output in the Short Run

Stabilizing the Economy: the Role of the Fed

Aggregate Demand, Aggregate Supply, and Inflation

Filters

Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: Cars Sold Trucks Sold Larry 10 5 Joe 9 9 Ralph 3 12 should specialize in truck sales, and should specialize in car sales.

Smith and Jones comprise a two-person economy. Their hourly rates of production are shown below. Good Smith Jones Computers 10 6 Calculators 100 120 Refer to the table above. The opportunity cost of making an extra calculator for Smith is and for Jones it is .