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

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 3

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 4

Having a comparative advantage in a particular task means that:

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 5

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.Moe's PPC is bowed out because:

Accepted Answer

A)  he is better at physics than at economics. 
B)  his studying is subject to the principle of increasing opportunity costs. 
C)  he is better at economics than at physics. 
D)  he has failed to take advantage of his comparative advantage. 
A)  he is better at physics than at economics. 
B)  his studying is subject to the principle of increasing opportunity costs. 
C)  he is better at economics than at physics. 
D)  he has failed to take advantage of his comparative advantage.

Question 6

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 7

The core principle that is illustrated by the production possibilities curve is:

Accepted Answer

A)  the Scarcity Principle. 
B)  the Cost-Benefit Principle. 
C)  the Incentive Principle. 
D)  The Principle of Comparative Advantage. 
A)  the Scarcity Principle. 
B)  the Cost-Benefit Principle. 
C)  the Incentive Principle. 
D)  The Principle of Comparative Advantage.

Question 8

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 9

Production possibilities curves for large economies generally have an outward bow shape because:

Accepted Answer

A)  specialization gives some producers a comparative advantage. 
B)  opportunity costs tend to decrease with increases in production. 
C)  opportunity costs tend to increase with increases in production. 
D)  as more resources are used to produce the same good,those resources become less and less expensive. 
A)  specialization gives some producers a comparative advantage. 
B)  opportunity costs tend to decrease with increases in production. 
C)  opportunity costs tend to increase with increases in production. 
D)  as more resources are used to produce the same good,those resources become less and less expensive.

Question 10

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 11

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 12

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.Both of Moe's professors require at least a 65 to pass and a 90 to earn an A.After looking at his PPC,Moe realizes that:

Accepted Answer

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

Question 13

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 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

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.When the other island's delegate offers to give you 1,000 fish in exchange for 500 coconuts,you:

Accepted Answer

A)  accept because you will then have a total of 2,500 fish. 
B)  refuse because the trade would leave you at a level of consumption that is less than what you could produce on your own. 
C)  accept because the trade will leave you at a level of consumption that is more than what you could produce on your own. 
D)  counter,offering to give them 400 coconuts in exchange for 1,000 fish. 
A)  accept because you will then have a total of 2,500 fish. 
B)  refuse because the trade would leave you at a level of consumption that is less than what you could produce on your own. 
C)  accept because the trade will leave you at a level of consumption that is more than what you could produce on your own. 
D)  counter,offering to give them 400 coconuts in exchange for 1,000 fish.

Question 16

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 17

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 18

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 19

You have noticed that your next-door neighbor,Mary,always works in the garden and her husband,Joe,always walks the dog.Based on this observation,you conclude that:

Accepted Answer

A)  Mary has an absolute advantage in gardening. 
B)  Joe has a comparative advantage in walking the dog. 
C)  Mary does not understand the principle of low-hanging fruit. 
D)  Joe experiences increasing opportunity costs when he gardens,but not when he walks the dog. 
A)  Mary has an absolute advantage in gardening. 
B)  Joe has a comparative advantage in walking the dog. 
C)  Mary does not understand the principle of low-hanging fruit. 
D)  Joe experiences increasing opportunity costs when he gardens,but not when he walks the dog.

Question 20

To say that an individual possesses an absolute advantage in the production of software means that individual:

Accepted Answer

A)  has a lower opportunity cost of producing software. 
B)  can produce more and/or higher quality software in a given amount of time. 
C)  was the first to create the software. 
D)  charges the lowest price for software. 
A)  has a lower opportunity cost of producing software. 
B)  can produce more and/or higher quality software in a given amount of time. 
C)  was the first to create the software. 
D)  charges the lowest price for software.

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

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

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?

Having a comparative advantage in a particular task means that:

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.Moe's PPC is bowed out because:

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

The core principle that is illustrated by the production possibilities curve is:

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:

Production possibilities curves for large economies generally have an outward bow shape because:

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:

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

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

A job is most likely to be outsourced if it:

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

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

You have noticed that your next-door neighbor,Mary,always works in the garden and her husband,Joe,always walks the dog.Based on this observation,you conclude that:

To say that an individual possesses an absolute advantage in the production of software means that individual:

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

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

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

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?

Having a comparative advantage in a particular task means that:

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.Moe's PPC is bowed out because:

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

The core principle that is illustrated by the production possibilities curve is:

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:

Production possibilities curves for large economies generally have an outward bow shape because:

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:

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

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

A job is most likely to be outsourced if it:

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

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

You have noticed that your next-door neighbor,Mary,always works in the garden and her husband,Joe,always walks the dog.Based on this observation,you conclude that:

To say that an individual possesses an absolute advantage in the production of software means that individual:

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