Question 1

Any combination of goods that can be produced with currently available resources defines a(n):

Accepted Answer

A) attainable point on a production possibilities curve. 
B) efficient point on a production possibilities curve. 
C) inefficient point on a production possibilities curve. 
D) attainable and efficient point on a production possibilities curve. 
A) attainable point on a production possibilities curve. 
B) efficient point on a production possibilities curve. 
C) inefficient point on a production possibilities curve. 
D) attainable and efficient point on a production possibilities curve.

Question 2

The production possibilities curve is:

Accepted Answer

A) the boundary that divides all production combinations into efficient and inefficient ones. 
B) a graph illustrating the production combinations society would like to choose. 
C) the boundary that divides all production combinations into attainable ones and unattainable ones. 
D) a graph illustrating supply curves for different combinations of output. 
A) the boundary that divides all production combinations into efficient and inefficient ones. 
B) a graph illustrating the production combinations society would like to choose. 
C) the boundary that divides all production combinations into attainable ones and unattainable ones. 
D) a graph illustrating supply curves for different combinations of output.

Question 3

If Jane can produce 3 pairs of shoes hourly,while Bob can produce 2,then one can infer that the __________ advantage belongs to __________.

Accepted Answer

A) absolute;Jane 
B) comparative;Jane 
C) comparative;Bob 
D) comparative and absolute;Jane 
A) absolute;Jane 
B) comparative;Jane 
C) comparative;Bob 
D) comparative and absolute;Jane

Question 4

If a nation has the lowest opportunity cost of producing a good,that nation has a(n):

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

Working efficiently,Jordan can write 3 essays and outline 4 chapters each week.It must be true that:

Accepted Answer

A) 6 essays and 0 chapter outlines would be unattainable. 
B) 2 essays and 3 chapter outlines would be efficient. 
C) 3 essays and 5 chapter outlines would be unattainable. 
D) 4 essays and 3 chapter outlines would be both attainable and efficient. 
A) 6 essays and 0 chapter outlines would be unattainable. 
B) 2 essays and 3 chapter outlines would be efficient. 
C) 3 essays and 5 chapter outlines would be unattainable. 
D) 4 essays and 3 chapter outlines would be both attainable and efficient.

Question 6

A country may have a comparative advantage in the production of cars if:

Accepted Answer

A) it imports most of the raw materials necessary to produce cars. 
B) its citizens prefer driving cars to other forms of transportation. 
C) it has strict environmental protection laws governing automobile emissions. 
D) it has the natural resources needed to produce steel. 
A) it imports most of the raw materials necessary to produce cars. 
B) its citizens prefer driving cars to other forms of transportation. 
C) it has strict environmental protection laws governing automobile emissions. 
D) it has the natural resources needed to produce steel.

Question 7

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.You have arrived with 300 coconuts to trade.The minimum number of fish you would be willing to accept in exchange for those coconuts:

Accepted Answer

A) is 1,500 fish,because that's how many you can catch without trade. 
B) is 1,200 fish,because that is just enough to offset the opportunity cost of harvesting the coconuts. 
C) is 301 fish,because anything better than a one-for-one trade benefits your island. 
D) is 901 fish,because that is just a little more than the opportunity cost of harvesting the coconuts. 
A) is 1,500 fish,because that's how many you can catch without trade. 
B) is 1,200 fish,because that is just enough to offset the opportunity cost of harvesting the coconuts. 
C) is 301 fish,because anything better than a one-for-one trade benefits your island. 
D) is 901 fish,because that is just a little more than the opportunity cost of harvesting the coconuts.

Question 8

Point A on a linear production possibilities curve represents a combination of 12 coffees and 3 cappuccinos,and point B represents 3 coffees and 6 cappuccinos.Suppose coffees are on the vertical axis and cappuccinos are on the horizontal axis.
The absolute value of the slope of the production possibilities curve between points A and B equals:

Accepted Answer

A) 6 
B) 4 
C) 3 
D) 1/3 
A) 6 
B) 4 
C) 3 
D) 1/3

Question 9

This graph describes the production possibilities on the island of Genovia:  
Assuming efficient production,If 500 cars are produced in Genovia:

Accepted Answer

A) 50,000 tons of agricultural products are also being produced. 
B) 25,000 tons of agricultural products are also being produced. 
C) 45,000 tons of agricultural products are also being produced. 
D) 40,000 tons of agricultural products are also being produced. 
A) 50,000 tons of agricultural products are also being produced. 
B) 25,000 tons of agricultural products are also being produced. 
C) 45,000 tons of agricultural products are also being produced. 
D) 40,000 tons of agricultural products are also being produced.

Question 10

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 has just received an order for 60 tons of ore,to be filled in a single day.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.

Question 11

When journalists write about outsourcing,they are referring to:

Accepted Answer

A) firms that hire illegal immigrants at wages less than the minimum wage. 
B) firms that import raw materials in order to produce more cheaply in the United States. 
C) exports. 
D) firms that hire low-wage workers in other countries to perform some of their work. 
A) firms that hire illegal immigrants at wages less than the minimum wage. 
B) firms that import raw materials in order to produce more cheaply in the United States. 
C) exports. 
D) firms that hire low-wage workers in other countries to perform some of their work.

Question 12

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 13

The slope of any production possibilities curve is __________ because __________.

Accepted Answer

A) negative;more production of one good means less production of the other 
B) constant;the tradeoff in production never changes 
C) positive;more production of one good means more production of the other 
D) positive;more production of one good means less production of the other 
A) negative;more production of one good means less production of the other 
B) constant;the tradeoff in production never changes 
C) positive;more production of one good means more production of the other 
D) positive;more production of one good means less production of the other

Question 14

This graph describes the production possibilities on the island of Genovia:  
The opportunity cost of producing one car in Genovia is:

Accepted Answer

A) 5,000 tons of agricultural products. 
B) 500 tons of agricultural products. 
C) 5 tons of agricultural products. 
D) 50 tons of agricultural products. 
A) 5,000 tons of agricultural products. 
B) 500 tons of agricultural products. 
C) 5 tons of agricultural products. 
D) 50 tons of agricultural products.

Question 15

When firms engage in outsourcing,________ benefit and ______ are harmed.

Accepted Answer

A) the firms;consumers 
B) consumers;the firms 
C) consumers;the firm's domestic employees 
D) the firms;the firms' foreign employees 
A) the firms;consumers 
B) consumers;the firms 
C) consumers;the firm's domestic employees 
D) the firms;the firms' foreign employees

Question 16

Generally,on a linear two-good production possibilities curve,the opportunity cost of the good measured on the vertical axis is:

Accepted Answer

A) one minus the opportunity cost of the good measured on the horizontal axis. 
B) the reciprocal of the opportunity cost of the good measured on the horizontal axis. 
C) the slope of the production possibilities line. 
D) the negative of the opportunity cost of the good measured on the horizontal axis. 
A) one minus the opportunity cost of the good measured on the horizontal axis. 
B) the reciprocal of the opportunity cost of the good measured on the horizontal axis. 
C) the slope of the production possibilities line. 
D) the negative of the opportunity cost of the good measured on the horizontal axis.

Question 17

Ginger and Maryann are lost in the jungle,where the only things to eat are mangoes and fish.Ginger can gather mangoes faster than Maryann and can also catch more fish per hour than can Maryann.Therefore:

Accepted Answer

A) Ginger should specialize in fishing because it is harder than gathering mangoes,and Maryann should specialize in gathering mangoes. 
B) Ginger should strike out on her own,because Maryann reduces their combined productivity. 
C) Maryann should specialize in the activity for which she has a comparative advantage. 
D) Ginger should specialize in the activity for which she has an absolute advantage. 
A) Ginger should specialize in fishing because it is harder than gathering mangoes,and Maryann should specialize in gathering mangoes. 
B) Ginger should strike out on her own,because Maryann reduces their combined productivity. 
C) Maryann should specialize in the activity for which she has a comparative advantage. 
D) Ginger should specialize in the activity for which she has an absolute advantage.

Question 18

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 19

An existing comparative advantage can be further magnified by specialization because:

Accepted Answer

A) it eliminates the need to switch from one task to another. 
B) repetition results in boredom. 
C) a variety of tasks will rise. 
D) small tasks will be merged into larger tasks. 
A) it eliminates the need to switch from one task to another. 
B) repetition results in boredom. 
C) a variety of tasks will rise. 
D) small tasks will be merged into larger tasks.

Question 20

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

Exam 2: Comparative Advantage

Any combination of goods that can be produced with currently available resources defines a(n):

The production possibilities curve is:

If Jane can produce 3 pairs of shoes hourly,while Bob can produce 2,then one can infer that the __________ advantage belongs to __________.

If a nation has the lowest opportunity cost of producing a good,that nation has a(n):

Working efficiently,Jordan can write 3 essays and outline 4 chapters each week.It must be true that:

A country may have a comparative advantage in the production of cars if:

This graph describes the production possibilities on the island of Genovia: Assuming efficient production,If 500 cars are produced in Genovia:

When journalists write about outsourcing,they are referring to:

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:

The slope of any production possibilities curve is __________ because __________.

This graph describes the production possibilities on the island of Genovia: The opportunity cost of producing one car in Genovia is:

When firms engage in outsourcing,________ benefit and ______ are harmed.

Generally,on a linear two-good production possibilities curve,the opportunity cost of the good measured on the vertical axis is:

Ginger and Maryann are lost in the jungle,where the only things to eat are mangoes and fish.Ginger can gather mangoes faster than Maryann and can also catch more fish per hour than can Maryann.Therefore:

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:

An existing comparative advantage can be further magnified by specialization because:

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 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.

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

If Jane can produce 3 pairs of shoes hourly,while Bob can produce 2,then one can infer that the advantage belongs to .

The slope of any production possibilities curve is because .

When firms engage in outsourcing,__ benefit and are harmed.

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 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.