Question 1

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 2

Pat has 4 hours to spend either studying for a test or playing a new video game.If Pat spends all of that time studying,Pat can score a 92 on the test.If Pat plays for 1 hour,Pat's test score falls 5 points.For playing a second hour,Pat's score falls by another 7 points.Playing for a third hour will lower Pat's score by another 10 points.
Refer to the information above.The opportunity cost of the 2nd hour of playing the video game is:

Accepted Answer

A) 10 points on the test. 
B) 5 points on the test. 
C) 7 points on the test. 
D) 2.5 points on the test. 
A) 10 points on the test. 
B) 5 points on the test. 
C) 7 points on the test. 
D) 2.5 points on the test.

Question 3

If a given production combination is efficient,then it must be:

Accepted Answer

A) beyond the production possibilities curve. 
B) on the production possibilities curve. 
C) either an attainable or an unattainable point. 
D) the best combination out of all possible combinations. 
A) beyond the production possibilities curve. 
B) on the production possibilities curve. 
C) either an attainable or an unattainable point. 
D) the best combination out of all possible combinations.

Question 4

Earth Movers & Shakers operates 3 iron ore mines.This table shows their daily production rates and the current number of miners at each mine.All of the miners work for the same wage and each miner in any given mine produces the same number of tons as each other miner in that mine. $$\begin{array} { | l | l | l | } 
\hline \text { Mine } & \text { Tons } & \begin{array} { l } 
\text { Number of } \
\text { Miners }
\end{array} \
\hline \text { Mother Lode } & 100 & 25 \
\hline \text { Scraping Bottom } & 30 & 10 \
\hline \text { Middle Drift } & 75 & 15 \
\hline
\end{array}$$
Refer to the table above.Earth Movers & Shakers needs to fill an order for 100 tons of ore in a single day,and has no other orders to fill that day.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 5

The political concern expressed about the North American Free Trade Agreement (NAFTA)was that:

Accepted Answer

A) prices to U.S.consumers would fall. 
B) wages in Mexico would rise. 
C) highly skilled workers in the United States would lose their jobs. 
D) unskilled workers in the United States would lose their jobs. 
A) prices to U.S.consumers would fall. 
B) wages in Mexico would rise. 
C) highly skilled workers in the United States would lose their jobs. 
D) unskilled workers in the United States would lose their jobs.

Question 6

Earth Movers & Shakers operates 3 iron ore mines.This table shows their daily production rates and the current number of miners at each mine.All of the miners work for the same wage and each miner in any given mine produces the same number of tons as each other miner in that mine. $$\begin{array} { | l | l | l | } 
\hline \text { Mine } & \text { Tons } & \begin{array} { l } 
\text { Number of } \
\text { Miners }
\end{array} \
\hline \text { Mother Lode } & 100 & 25 \
\hline \text { Scraping Bottom } & 30 & 10 \
\hline \text { Middle Drift } & 75 & 15 \
\hline
\end{array}$$
Refer to the table above.The daily opportunity cost of moving one miner from Scraping Bottom to Middle Drift is:

Accepted Answer

A) less than 0. 
B) 3 tons. 
C) 4 tons. 
D) 5 tons. 
A) less than 0. 
B) 3 tons. 
C) 4 tons. 
D) 5 tons.

Question 7

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 8

The benefits to specialization are enhanced when two trading partners have:

Accepted Answer

A) absolute advantages in producing the same goods. 
B) similar consumption preferences. 
C) very similar opportunity costs. 
D) large comparative advantages in different goods. 
A) absolute advantages in producing the same goods. 
B) similar consumption preferences. 
C) very similar opportunity costs. 
D) large comparative advantages in different goods.

Question 9

Smith and Jones comprise a two-person economy.Their hourly rates of production are shown below. $\begin{array}{ccc}
\underline{\text { Good }}&\underline{\text { Smith }} & \underline{\text { Jones }} \
\text { Computers } & 10 & 6 \
\text { Calculators } & 100 & 120
\end{array}$
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 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.Both islands specialize exclusively in the product for which they have a comparative advantage.You have agreed to sell the other island 350 coconuts in exchange for 1,300 fish.After the trade the other island has a total of _____ coconuts and _____ fish.

Accepted Answer

A) 850;1,200 
B) 500;1,200 
C) 350;1,500 
D) 350;1,200 
A) 850;1,200 
B) 500;1,200 
C) 350;1,500 
D) 350;1,200

Question 11

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 12

If a producer is operating at an inefficient point on a production possibilities curve using currently available resources,that producer:

Accepted Answer

A) cannot produce more of one good without giving up some of the other good. 
B) can produce more of one good without producing less of the other good. 
C) must be at an unattainable point on the production possibilities curve. 
D) must be specializing in activities for which it has a comparative advantage. 
A) cannot produce more of one good without giving up some of the other good. 
B) can produce more of one good without producing less of the other good. 
C) must be at an unattainable point on the production possibilities curve. 
D) must be specializing in activities for which it has a comparative advantage.

Question 13

Suppose that a further increase in specialization allows a country to increase total output by 10%,but afterward it was discovered that work absenteeism increased by 30%.This is likely an example of:

Accepted Answer

A) modern production. 
B) too much specialization. 
C) too little specialization. 
D) inefficiencies caused by labor unions. 
A) modern production. 
B) too much specialization. 
C) too little specialization. 
D) inefficiencies caused by labor unions.

Question 14

Pat has 4 hours to spend either studying for a test or playing a new video game.If Pat spends all of that time studying,Pat can score a 92 on the test.If Pat plays for 1 hour,Pat's test score falls 5 points.For playing a second hour,Pat's score falls by another 7 points.Playing for a third hour will lower Pat's score by another 10 points.
Refer to the information above.The opportunity cost of playing video games:

Accepted Answer

A) decreases the longer Pat plays. 
B) increases the longer Pat plays. 
C) is greater than the value of earning a higher grade on the test. 
D) is equal to the value of earning a higher grade on the test. 
A) decreases the longer Pat plays. 
B) increases the longer Pat plays. 
C) is greater than the value of earning a higher grade on the test. 
D) is equal to the value of earning a higher grade on the test.

Question 15

Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen.Data for their sales last month are shown in this table: $$\begin{array} { | l | l | l | } 
\hline & \text { Cars Sold } & \text { Trucks Sold } \
\hline \text { Larry } & 10 & 5 \
\hline \text { Joe } & 9 & 9 \
\hline \text { Ralph } & 3 & 12 \
\hline
\end{array}$$
________ has an absolute advantage in selling cars and __________ has an absolute advantage in selling trucks.

Accepted Answer

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

Question 16

Moe divides his time between studying Physics and studying Economics.He has discovered that he can earn grades as shown on this production possibilities curve.  
Refer to the figure above.Which of the following is evidence that the low-hanging fruit principle applies to Moe's study habits?

Accepted Answer

A) Earning the first 65 points in economics has a lower opportunity cost than earning the ten points that moves his score from 90 to 100 in economics. 
B) Physics is easier to grasp than economics,so it is the "low-hanging fruit" for Moe. 
C) Economics is easier to grasp than physics,so it is the "low-hanging fruit" for Moe. 
D) The low-hanging fruit principle applies only to production of goods and services,not to grades. 
A) Earning the first 65 points in economics has a lower opportunity cost than earning the ten points that moves his score from 90 to 100 in economics. 
B) Physics is easier to grasp than economics,so it is the "low-hanging fruit" for Moe. 
C) Economics is easier to grasp than physics,so it is the "low-hanging fruit" for Moe. 
D) The low-hanging fruit principle applies only to production of goods and services,not to grades.

Question 17

In a two-person,two-good economy,the benefits of labor specialization will be larger when:

Accepted Answer

A) one person has an absolute advantage in both goods. 
B) neither person has an absolute advantage. 
C) there are small differences in the respective opportunity costs of the two individuals for both goods. 
D) there are large differences in the respective opportunity costs of the two individuals for both goods. 
A) one person has an absolute advantage in both goods. 
B) neither person has an absolute advantage. 
C) there are small differences in the respective opportunity costs of the two individuals for both goods. 
D) there are large differences in the respective opportunity costs of the two individuals for both goods.

Question 18

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 19

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 Joe,the opportunity cost of selling a truck is:

Accepted Answer

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

Question 20

An inefficient point on a production possibilities curve is:

Accepted Answer

A) necessarily also an attainable point. 
B) not necessarily an attainable point. 
C) necessarily an unattainable point. 
D) possibly an unattainable point. 
A) necessarily also an attainable point. 
B) not necessarily an attainable point. 
C) necessarily an unattainable point. 
D) possibly an unattainable point.

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

If a given production combination is efficient,then it must be:

The political concern expressed about the North American Free Trade Agreement (NAFTA)was that:

The benefits to specialization are enhanced when two trading partners have:

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

If a producer is operating at an inefficient point on a production possibilities curve using currently available resources,that producer:

Suppose that a further increase in specialization allows a country to increase total output by 10%,but afterward it was discovered that work absenteeism increased by 30%.This is likely an example of:

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 has an absolute advantage in selling cars and __ has an absolute advantage in selling trucks.

Moe divides his time between studying Physics and studying Economics.He has discovered that he can earn grades as shown on this production possibilities curve. Refer to the figure above.Which of the following is evidence that the low-hanging fruit principle applies to Moe's study habits?

In a two-person,two-good economy,the benefits of labor specialization will be larger when:

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:

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 Joe,the opportunity cost of selling a truck is:

An inefficient point on a production possibilities curve is:

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

Spending, Income, and GDP

Inflation and the Price Level

Wages and Unemployment

Economic Growth

Saving, Capital Formation, and Financial Markets

Money, Prices, and the Financial System

Short-Term Economic Fluctuations

Spending, Output, and Fiscal Policy

Monetary Policy and the Federal Reserve

Aggregate Demand, Aggregate Supply, and Business Cycles

Macroeconomic Policy

Exchange Rates, International Trade, and Capital Flows

Filters

Exam 2: Comparative Advantage

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

If a given production combination is efficient,then it must be:

The political concern expressed about the North American Free Trade Agreement (NAFTA)was that:

The benefits to specialization are enhanced when two trading partners have:

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

If a producer is operating at an inefficient point on a production possibilities curve using currently available resources,that producer:

Suppose that a further increase in specialization allows a country to increase total output by 10%,but afterward it was discovered that work absenteeism increased by 30%.This is likely an example of:

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 ________ has an absolute advantage in selling cars and __________ has an absolute advantage in selling trucks.

Moe divides his time between studying Physics and studying Economics.He has discovered that he can earn grades as shown on this production possibilities curve. Refer to the figure above.Which of the following is evidence that the low-hanging fruit principle applies to Moe's study habits?

In a two-person,two-good economy,the benefits of labor specialization will be larger when:

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:

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 Joe,the opportunity cost of selling a truck is:

An inefficient point on a production possibilities curve is:

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

Spending, Income, and GDP

Inflation and the Price Level

Wages and Unemployment

Economic Growth

Saving, Capital Formation, and Financial Markets

Money, Prices, and the Financial System

Short-Term Economic Fluctuations

Spending, Output, and Fiscal Policy

Monetary Policy and the Federal Reserve

Aggregate Demand, Aggregate Supply, and Business Cycles

Macroeconomic Policy

Exchange Rates, International Trade, and Capital Flows

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 has an absolute advantage in selling cars and __ has an absolute advantage in selling trucks.