Question 1

If Scout has an absolute advantage over Dill:

Accepted Answer

A)  Scout has more money than Dill. 
B)  the problem of scarcity applies to Dill,but not to Scout. 
C)  the problem of scarcity applies to Scout,but not to Dill. 
D)  Scout can accomplish more in a given period of time than can Dill. 
A)  Scout has more money than Dill. 
B)  the problem of scarcity applies to Dill,but not to Scout. 
C)  the problem of scarcity applies to Scout,but not to Dill. 
D)  Scout can accomplish more in a given period of time than can Dill.

Question 2

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 3

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 4

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 5

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 opportunity cost of moving one miner from Middle Drift to Mother Lode is:

Accepted Answer

A)  1 ton. 
B)  3 tons. 
C)  4 tons. 
D)  5 tons. 
A)  1 ton. 
B)  3 tons. 
C)  4 tons. 
D)  5 tons.

Question 6

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 7

Which of the following statements is NOT true about specialization?

Accepted Answer

A)  Total economic output is larger due to specialization. 
B)  After specialization,worker skills are better matched with tasks. 
C)  Specialization focuses experience and increases comparative advantage. 
D)  The variety of tasks associated with a particular job grows over time due to specialization. 
A)  Total economic output is larger due to specialization. 
B)  After specialization,worker skills are better matched with tasks. 
C)  Specialization focuses experience and increases comparative advantage. 
D)  The variety of tasks associated with a particular job grows over time due to specialization.

Question 8

The fundamental reason the production possibilities curve has a downward slope is:

Accepted Answer

A)  workers are inefficient. 
B)  resources are of low quality. 
C)  resources are fixed and therefore tradeoffs must be made. 
D)  it has empirical support but why it is so is still a mystery. 
A)  workers are inefficient. 
B)  resources are of low quality. 
C)  resources are fixed and therefore tradeoffs must be made. 
D)  it has empirical support but why it is so is still a mystery.

Question 9

The United States generally has a comparative advantage in the development of technology because of:

Accepted Answer

A)  larger amounts of natural resources. 
B)  a high concentration of the best research universities. 
C)  tax incentives. 
D)  the existence of patent law,which no other country provides. 
A)  larger amounts of natural resources. 
B)  a high concentration of the best research universities. 
C)  tax incentives. 
D)  the existence of patent law,which no other country provides.

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

The United States was unable to maintain its dominance in the production of televisions because:

Accepted Answer

A)  the highly technical skills necessary to produce televisions are greater in other countries. 
B)  the raw materials necessary to build televisions became scarce in the United States. 
C)  the product designs evolved too rapidly for United States engineers to keep up. 
D)  automated production allowed production to be outsourced to countries with less-skilled workers. 
A)  the highly technical skills necessary to produce televisions are greater in other countries. 
B)  the raw materials necessary to build televisions became scarce in the United States. 
C)  the product designs evolved too rapidly for United States engineers to keep up. 
D)  automated production allowed production to be outsourced to countries with less-skilled workers.

Question 12

In general,individuals and nations should specialize in producing those goods for which they have a(n):

Accepted Answer

A)  absolute advantage. 
B)  comparative advantage. 
C)  absolutely comparative advantage. 
D)  absolute advantage and a comparative advantage. 
A)  absolute advantage. 
B)  comparative advantage. 
C)  absolutely comparative advantage. 
D)  absolute advantage and a comparative advantage.

Question 13

When U.S.companies open offices in Asia and hire workers there,it is evidence that:

Accepted Answer

A)  workers in Asian countries have an absolute advantage over American workers. 
B)  workers in Asian countries have a comparative advantage over American workers. 
C)  American workers have already picked all of the low-hanging fruit in the US,forcing companies to look elsewhere. 
D)  all of the resources with low opportunity costs have been depleted. 
A)  workers in Asian countries have an absolute advantage over American workers. 
B)  workers in Asian countries have a comparative advantage over American workers. 
C)  American workers have already picked all of the low-hanging fruit in the US,forcing companies to look elsewhere. 
D)  all of the resources with low opportunity costs have been depleted.

Question 14

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.

Question 15

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 16

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 your island has a total of _____ coconuts and _____ fish.

Accepted Answer

A)  150;2,800 
B)  500;1,300 
C)  150;1,300 
D)  500;1,500 
A)  150;2,800 
B)  500;1,300 
C)  150;1,300 
D)  500;1,500

Question 17

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 18

Larry has a comparative advantage in writing a term paper if he:

Accepted Answer

A)  can write a paper faster than the other students in class. 
B)  has an absolute advantage in writing a term paper. 
C)  always earns an A on his papers. 
D)  has the lowest opportunity cost for writing a term paper. 
A)  can write a paper faster than the other students in class. 
B)  has an absolute advantage in writing a term paper. 
C)  always earns an A on his papers. 
D)  has the lowest opportunity cost for writing a term paper.

Question 19

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 20

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 Mother Lode to Scraping Bottom is:

Accepted Answer

A)  2 tons. 
B)  3 tons. 
C)  4 tons. 
D)  1 ton. 
A)  2 tons. 
B)  3 tons. 
C)  4 tons. 
D)  1 ton.

If Scout has an absolute advantage over Dill:

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:

The slope of any production possibilities curve is because .

The production possibilities curve is:

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

Which of the following statements is NOT true about specialization?

The fundamental reason the production possibilities curve has a downward slope is:

The United States generally has a comparative advantage in the development of technology because of:

The United States was unable to maintain its dominance in the production of televisions because:

In general,individuals and nations should specialize in producing those goods for which they have a(n):

When U.S.companies open offices in Asia and hire workers there,it is evidence that:

An inefficient point on a production possibilities curve is:

Larry has a comparative advantage in writing a term paper if he:

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

If Scout has an absolute advantage over Dill:

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:

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

The production possibilities curve is:

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

Which of the following statements is NOT true about specialization?

The fundamental reason the production possibilities curve has a downward slope is:

The United States generally has a comparative advantage in the development of technology because of:

The United States was unable to maintain its dominance in the production of televisions because:

In general,individuals and nations should specialize in producing those goods for which they have a(n):

When U.S.companies open offices in Asia and hire workers there,it is evidence that:

An inefficient point on a production possibilities curve is:

Larry has a comparative advantage in writing a term paper if he:

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

The slope of any production possibilities curve is because .