Question 1

Refer to the figure below. If this restaurant makes 75 salads in one hour, then what's the maximum number of pizzas it can make in that same hour?

Accepted Answer

A) 0 
B) 10 
C) 20 
D) 30 
A) 0 
B) 10 
C) 20 
D) 30 D

Question 2

You are the Minister of Trade for a small island country with the following annual PPC:   You are negotiating a trade agreement with a neighboring island with the following annual PPC:   What's the minimum number of fish you would be willing to accept in exchange for a coconut?

Accepted Answer

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

Question 3

Smith and Jones comprise a two-person economy. Their hourly rates of production are shown below. $$\begin{array} { | l | c | c | } 
\hline & \begin{array} { c } 
\text { Calculators } \
\text { Per Hour }
\end{array} & \begin{array} { c } 
\text { Computers } \
\text { Per Hour }
\end{array} \
\hline \text { Smith } & 100 & 10 \
\hline \text { Jones } & 120 & 6 \
\hline
\end{array}$$ If Smith and Jones devote all of their resources to producing computers, then the maximum number of computers they can produce in an hour is:

Accepted Answer

A) 120. 
B) 6. 
C) 16. 
D) 10. 
A) 120. 
B) 6. 
C) 16. 
D) 10. C

Question 4

If a nation has the lowest opportunity cost of producing a good, that nation has a(n) ______ in the production of that good.

Accepted Answer

A) comparative advantage 
B) absolute advantage 
C) comparative advantage and an absolute advantage 
D) absolute advantage and possibly a comparative advantage. 
A) comparative advantage 
B) absolute advantage 
C) comparative advantage and an absolute advantage 
D) absolute advantage and possibly a comparative advantage.

Question 5

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

Accepted Answer

A) less; greater 
B) greater; less 
C) less; less 
D) greater; greater 
A) less; greater 
B) greater; less 
C) less; less 
D) greater; greater

Question 6

Suppose Cathy and Lewis work in a bakery making pies and cakes. Suppose it takes Cathy 1.5 hours to make a pie and 1 hour to make a cake, and suppose it takes Lewis 2 hours to make a pie and 1.5 hours to make a cake. Which of the following statements is correct?

Accepted Answer

A) Cathy should specialize in both pies and cakes. 
B) There are no gains from specialization and trade. 
C) Lewis should specialize in pies, and Cathy should specialize in cakes. 
D) Cathy should specialize in pies, and Lewis should specialize in cakes. 
A) Cathy should specialize in both pies and cakes. 
B) There are no gains from specialization and trade. 
C) Lewis should specialize in pies, and Cathy should specialize in cakes. 
D) Cathy should specialize in pies, and Lewis should specialize in cakes.

Question 7

Earth Movers & Shakers operates 3 iron ore mines. The table below shows each mine's total daily production and the current number of miners at each mine. All miners work for the same wage, and each miner in any given mine produces the same number of tons per day as every other miner in that mine. $$\begin{array} { | l | c | c | } 
\hline & \begin{array} { c } 
\text { Total Tons } \
\text { Per Day }
\end{array} & \begin{array} { c } 
\text { Number of } \
\text { Miners }
\end{array} \
\hline \text { Mother Lode } & 100 & 25 \
\hline \text { Scraping Bottom } & 30 & 10 \
\hline \text { Middle Drift } & 75 & 15 \
\hline
\end{array}$$ Suppose Earth Movers & Shakers needs to fill an order for 100 tons of ore in a single day. If it has no other orders to fill that day, and it's not possible to transfer miners from one mine to another, it should:

Accepted Answer

A) take it all from Mother Lode. 
B) take 75 tons from Middle Drift and 25 tons from Mother Lode. 
C) take 75 tons from Middle Drift and 25 tons from Scraping Bottom. 
D) take 30 tons from Scraping Bottom and 70 tons from Mother Lode. 
A) take it all from Mother Lode. 
B) take 75 tons from Middle Drift and 25 tons from Mother Lode. 
C) take 75 tons from Middle Drift and 25 tons from Scraping Bottom. 
D) take 30 tons from Scraping Bottom and 70 tons from Mother Lode.

Question 8

The fundamental reason firms outsource is that:

Accepted Answer

A) low-wage workers in other countries are more productive than are U.S.workers. 
B) hiring low-wage workers overseas reduces firms' costs. 
C) outsourcing increases employment overseas. 
D) U.S.workers cannot perform the tasks performed by workers in other countries. 
A) low-wage workers in other countries are more productive than are U.S.workers. 
B) hiring low-wage workers overseas reduces firms' costs. 
C) outsourcing increases employment overseas. 
D) U.S.workers cannot perform the tasks performed by workers in other countries.

Question 9

Points that lie below the production possibilities curve are inefficient because:

Accepted Answer

A) more of one good could be produced without producing less of the other. 
B) producing more of one good means producing less of the other. 
C) producers face scarcity. 
D) too many goods are being produced. 
A) more of one good could be produced without producing less of the other. 
B) producing more of one good means producing less of the other. 
C) producers face scarcity. 
D) too many goods are being produced.

Question 10

The figure below shows Becky's daily production possibilities curve for dresses and skirts.   Of the labeled points, only ______ are attainable.

Accepted Answer

A) T and U 
B) X, Y, and Z 
C) W, X, Y, Z, and V 
D) W, X, Y, Z, V, and T 
A) T and U 
B) X, Y, and Z 
C) W, X, Y, Z, and V 
D) W, X, Y, Z, V, and T

Question 11

Any combination of goods that can be produced with currently available resources is an:

Accepted Answer

A) attainable point. 
B) efficient point. 
C) inefficient point. 
D) attainable and efficient point. 
A) attainable point. 
B) efficient point. 
C) inefficient point. 
D) attainable and efficient point.

Question 12

Refer to the table below. According to the table, Corey has the absolute advantage in: $$\begin{array} { | l | c | c | } 
\hline & \begin{array} { c } 
\text { Pizzas } \
\text { Made } \
\text { Per Hour }
\end{array} & \begin{array} { c } 
\text { Pizzas } \
\text { Delivered } \
\text { Per Hour }
\end{array} \
\hline \text { Corey } & 12 & 6 \
\hline \text { Pat } & 10 & 15 \
\hline
\end{array}$$

Accepted Answer

A) making pizza. 
B) neither making nor delivering pizza. 
C) delivering pizza. 
D) making and delivering pizza. 
A) making pizza. 
B) neither making nor delivering pizza. 
C) delivering pizza. 
D) making and delivering pizza.

Question 13

If you have a comparative advantage in a particular task, then:

Accepted Answer

A) you are better at it than other people. 
B) you give up more to accomplish that task than do others. 
C) you give up less to accomplish that task than do others. 
D) you have specialized in that task, while others have not. 
A) you are better at it than other people. 
B) you give up more to accomplish that task than do others. 
C) you give up less to accomplish that task than do others. 
D) you have specialized in that task, while others have not.

Question 14

Refer to the figure below. Which of the following is true?

Accepted Answer

A) Point A is efficient because it is farthest from the origin. 
B) Point D is efficient because it requires using the fewest resources. 
C) Point F is the most efficient because medical care is the highest there. 
D) Points B, C, E and F are efficient. 
A) Point A is efficient because it is farthest from the origin. 
B) Point D is efficient because it requires using the fewest resources. 
C) Point F is the most efficient because medical care is the highest there. 
D) Points B, C, E and F are efficient.

Question 15

Refer to the table below. Julia's opportunity cost of making a pie is: $$\begin{array} { | l | c | c | } 
\hline & \begin{array} { c } 
\text { Time to } \
\text { Make a Pie }
\end{array} & \begin{array} { c } 
\text { Time to } \
\text { Make a Cake }
\end{array} \
\hline \text { Martha } & 60 \text { minutes } & 80 \text { minutes } \
\hline \text { Julia } & 50 \text { minutes } & 60 \text { minutes } \
\hline
\end{array}$$

Accepted Answer

A) 60 cakes 
B) 6 cakes 
C) 6/5 of a cake 
D) 5/6 of a cake 
A) 60 cakes 
B) 6 cakes 
C) 6/5 of a cake 
D) 5/6 of a cake

Question 16

Moe divides his time between studying Physics and studying Economics. His production possibilities curve for his final grade in each class is shown below.   Both of Moe's professors require at least a 65 to pass and a 90 to earn an A. Which of the following is true?

Accepted Answer

A) Moe can pass both classes. 
B) Moe can pass economics, but only if he fails physics. 
C) Moe can pass physics, but only if he fails economics. 
D) Moe could earn an A in economics and still pass physics. 
A) Moe can pass both classes. 
B) Moe can pass economics, but only if he fails physics. 
C) Moe can pass physics, but only if he fails economics. 
D) Moe could earn an A in economics and still pass physics.

Question 17

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 18

If Les can produce two pairs of pants per hour while Eva can produce one pair per hour, then it must be true that:

Accepted Answer

A) Les has a comparative advantage in producing pants. 
B) Les has an absolute advantage in producing pants. 
C) Eva has a comparative advantage in producing pants. 
D) Les has both comparative and absolute advantage in producing pants. 
A) Les has a comparative advantage in producing pants. 
B) Les has an absolute advantage in producing pants. 
C) Eva has a comparative advantage in producing pants. 
D) Les has both comparative and absolute advantage in producing pants.

Question 19

Refer to the table below. Martha's opportunity cost of making a cake is: $$\begin{array} { | l | c | c | } 
\hline & \begin{array} { c } 
\text { Time to } \
\text { Make a Pie }
\end{array} & \begin{array} { c } 
\text { Time to } \
\text { Make a Cake }
\end{array} \
\hline \text { Martha } & 60 \text { minutes } & 80 \text { minutes } \
\hline \text { Julia } & 50 \text { minutes } & 60 \text { minutes } \
\hline
\end{array}$$

Accepted Answer

A) 3/4 of a pie. 
B) 4/3 of a pie. 
C) 6 pies. 
D) 60 pies. 
A) 3/4 of a pie. 
B) 4/3 of a pie. 
C) 6 pies. 
D) 60 pies.

Question 20

Earth Movers & Shakers operates 3 iron ore mines. The table below shows each mine's total daily production and the current number of miners at each mine. All miners work for the same wage, and each miner in any given mine produces the same number of tons per day as every other miner in that mine. $$\begin{array} { | l | c | c | } 
\hline & \begin{array} { c } 
\text { Total Tons } \
\text { Per Day }
\end{array} & \begin{array} { c } 
\text { Number of } \
\text { Miners }
\end{array} \
\hline \text { Mother Lode } & 100 & 25 \
\hline \text { Scraping Bottom } & 30 & 10 \
\hline \text { Middle Drift } & 75 & 15 \
\hline
\end{array}$$ Suppose Earth Movers & Shakers needs to fill an order for 60 tons of ore in a single day. If it has no other orders for that day, it should:

Accepted Answer

A) take it all from Mother Lode. 
B) take it all from Middle Drift. 
C) take 30 tons from Scraping Bottom and 30 tons from Middle Drift. 
D) take 20 tons from each of the three mines. 
A) take it all from Mother Lode. 
B) take it all from Middle Drift. 
C) take 30 tons from Scraping Bottom and 30 tons from Middle Drift. 
D) take 20 tons from each of the three mines.

Refer to the figure below. If this restaurant makes 75 salads in one hour, then what's the maximum number of pizzas it can make in that same hour?

You are the Minister of Trade for a small island country with the following annual PPC: You are negotiating a trade agreement with a neighboring island with the following annual PPC: What's the minimum number of fish you would be willing to accept in exchange for a coconut?

If a nation has the lowest opportunity cost of producing a good, that nation has a(n) ______ in the production of that good.

Suppose Cathy and Lewis work in a bakery making pies and cakes. Suppose it takes Cathy 1.5 hours to make a pie and 1 hour to make a cake, and suppose it takes Lewis 2 hours to make a pie and 1.5 hours to make a cake. Which of the following statements is correct?

The fundamental reason firms outsource is that:

Points that lie below the production possibilities curve are inefficient because:

The figure below shows Becky's daily production possibilities curve for dresses and skirts. Of the labeled points, only ______ are attainable.

Any combination of goods that can be produced with currently available resources is an:

Refer to the table below. According to the table, Corey has the absolute advantage in: Pizzas Made Per Hour Pizzas Delivered Per Hour Corey 12 6 Pat 10 15

If you have a comparative advantage in a particular task, then:

Refer to the figure below. Which of the following is true?

Refer to the table below. Julia's opportunity cost of making a pie is: Time to Make a Pie Time to Make a Cake Martha 60 minutes 80 minutes Julia 50 minutes 60 minutes

Moe divides his time between studying Physics and studying Economics. His production possibilities curve for his final grade in each class is shown below. Both of Moe's professors require at least a 65 to pass and a 90 to earn an A. Which of the following is true?

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

If Les can produce two pairs of pants per hour while Eva can produce one pair per hour, then it must be true that:

Refer to the table below. Martha's opportunity cost of making a cake is: Time to Make a Pie Time to Make a Cake Martha 60 minutes 80 minutes Julia 50 minutes 60 minutes

Thinking Like an Economist

Supply and Demand

Elasticity

Demand

Perfectly Competitive Supply

Efficiency, Exchange, and the Invisible Hand in Action

Monopoly, Oligopoly, and Monopolistic Competition

Games and Strategic Behavior

Externalities and Property Rights

The Economics of Information

Labor Markets, Poverty, and Income Distribution

The Environment, Health, and Safety

Public Goods and Tax Policy

Filters

Exam 2: Comparative Advantage

Refer to the figure below. If this restaurant makes 75 salads in one hour, then what's the maximum number of pizzas it can make in that same hour?

You are the Minister of Trade for a small island country with the following annual PPC: You are negotiating a trade agreement with a neighboring island with the following annual PPC: What's the minimum number of fish you would be willing to accept in exchange for a coconut?

If a nation has the lowest opportunity cost of producing a good, that nation has a(n) ______ in the production of that good.

Suppose Cathy and Lewis work in a bakery making pies and cakes. Suppose it takes Cathy 1.5 hours to make a pie and 1 hour to make a cake, and suppose it takes Lewis 2 hours to make a pie and 1.5 hours to make a cake. Which of the following statements is correct?

The fundamental reason firms outsource is that:

Points that lie below the production possibilities curve are inefficient because:

The figure below shows Becky's daily production possibilities curve for dresses and skirts. Of the labeled points, only ______ are attainable.

Any combination of goods that can be produced with currently available resources is an:

Refer to the table below. According to the table, Corey has the absolute advantage in: Pizzas Made Per Hour Pizzas Delivered Per Hour Corey 12 6 Pat 10 15

If you have a comparative advantage in a particular task, then:

Refer to the figure below. Which of the following is true?

Refer to the table below. Julia's opportunity cost of making a pie is: Time to Make a Pie Time to Make a Cake Martha 60 minutes 80 minutes Julia 50 minutes 60 minutes

Moe divides his time between studying Physics and studying Economics. His production possibilities curve for his final grade in each class is shown below. Both of Moe's professors require at least a 65 to pass and a 90 to earn an A. Which of the following is true?

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

If Les can produce two pairs of pants per hour while Eva can produce one pair per hour, then it must be true that:

Refer to the table below. Martha's opportunity cost of making a cake is: Time to Make a Pie Time to Make a Cake Martha 60 minutes 80 minutes Julia 50 minutes 60 minutes

Thinking Like an Economist

Supply and Demand

Elasticity

Demand

Perfectly Competitive Supply

Efficiency, Exchange, and the Invisible Hand in Action

Monopoly, Oligopoly, and Monopolistic Competition

Games and Strategic Behavior

Externalities and Property Rights

The Economics of Information

Labor Markets, Poverty, and Income Distribution

The Environment, Health, and Safety

Public Goods and Tax Policy

Filters