Question 1

One of the major characteristics of the circular flow in our economy is

Accepted Answer

A)  the production possibility curve. 
B)  market prices. 
C)  opportunity cost. 
D)  specialization and exchange. 
E)  absolute advantagE. 
A)  the production possibility curve. 
B)  market prices. 
C)  opportunity cost. 
D)  specialization and exchange. 
E)  absolute advantagE.

Question 2

Joan can produce a maximum of 14 units of good Y and a maximum of 21 units of good X.If Y is on the vertical axis,the equation for her production possibilities curve is

Accepted Answer

A)  X = 14 - 0.67Y. 
B)  Y = 21 - 14X. 
C)  Y = 14 - 0.67X. 
D)  Y = 14 - 1.5X. 
E)  X = 14 - 1.5Y. 
A)  X = 14 - 0.67Y. 
B)  Y = 21 - 14X. 
C)  Y = 14 - 0.67X. 
D)  Y = 14 - 1.5X. 
E)  X = 14 - 1.5Y.

Question 3

-Suppose the guitar store received a rush order for 26 electric guitars.The efficient allocation of labour resources would be to have __________ work on electric guitars.

Accepted Answer

A)  all three employees 
B)  Mark and Glenn 
C)  only Mark 
D)  Glenn and Dennis 
E)  only Dennis 
A)  all three employees 
B)  Mark and Glenn 
C)  only Mark 
D)  Glenn and Dennis 
E)  only Dennis

Question 4

When it is impossible to reorganize economic resources so that at least one person is better off while nobody is worse off,we have attained

Accepted Answer

A)  allocative efficiency. 
B)  productive efficiency. 
C)  absolute advantage 
D)  comparative advantage. 
E)  a point outside the production possibilities curvE. 
A)  allocative efficiency. 
B)  productive efficiency. 
C)  absolute advantage 
D)  comparative advantage. 
E)  a point outside the production possibilities curvE.

Question 5

Smith and Jones comprise a two-person economy.Their hourly rates of production are shown below.
  
-By coordinating their production decisions,the maximum number of computers Smith and Jones can produce is

Accepted Answer

A)  120. 
B)  100. 
C)  16. 
D)  10. 
E)  6. 
A)  120. 
B)  100. 
C)  16. 
D)  10. 
E)  6.

Question 6

In one hour,Juan can produce 8 chairs or 2 tables.If chairs are on the vertical axis,the slope of his production possibilities curve is

Accepted Answer

A)  0.25. 
B)  - 0.25. 
C)  4. 
D)  - 4. 
E)  - 2. 
A)  0.25. 
B)  - 0.25. 
C)  4. 
D)  - 4. 
E)  - 2.

Question 7

Joe has an absolute advantage in producing goods X and Y compared to Ted.Moreover,they have the same opportunity costs.One can predict that the gains from coordinating production and specialization is

Accepted Answer

A)  zero. 
B)  small. 
C)  large. 
D)  negative. 
E)  indeterminatE. 
A)  zero. 
B)  small. 
C)  large. 
D)  negative. 
E)  indeterminatE.

Question 8

Becky's opportunity cost of producing one gun is

Accepted Answer

A)  20 hours. 
B)  4 hours. 
C)  20 units of butter. 
D)  15 units of butter. 
E)  5 units of butter. 
A)  20 hours. 
B)  4 hours. 
C)  20 units of butter. 
D)  15 units of butter. 
E)  5 units of butter.

Question 9

-If all three employees were initially working on electric guitars,but one acoustic guitar needed to be built,__________ should be assigned the task.

Accepted Answer

A)  Glenn or Dennis 
B)  Mark or Glenn 
C)  Mark 
D)  Glenn 
E)  Dennis 
A)  Glenn or Dennis 
B)  Mark or Glenn 
C)  Mark 
D)  Glenn 
E)  Dennis

Question 10

Which of the following statements is NOT true about specialization?

Accepted Answer

A)  Total economic output is larger. 
B)  Worker skills are better matched with tasks. 
C)  Specialization focuses experience and increases the comparative advantage. 
D)  The variety of tasks associated with a particular job grows over time. 
E)  Down time due to switching tasks is lessened. 
A)  Total economic output is larger. 
B)  Worker skills are better matched with tasks. 
C)  Specialization focuses experience and increases the comparative advantage. 
D)  The variety of tasks associated with a particular job grows over time. 
E)  Down time due to switching tasks is lessened.

Question 11

As Becky produces more and more butter,she finds that

Accepted Answer

A)  she has to give up increasing amounts of guns for each additional unit of butter. 
B)  she has to give up decreasing amounts of guns for each additional unit of butter. 
C)  she has to give up the same amount of guns for each additional unit of butter. 
D)  she does not have to give up any guns for each additional unit of butter. 
E)  she has to give up four guns for one last unit of butter. 
A)  she has to give up increasing amounts of guns for each additional unit of butter. 
B)  she has to give up decreasing amounts of guns for each additional unit of butter. 
C)  she has to give up the same amount of guns for each additional unit of butter. 
D)  she does not have to give up any guns for each additional unit of butter. 
E)  she has to give up four guns for one last unit of butter.

Question 12

An existing comparative advantage can be increased by specialization because

Accepted Answer

A)  less production time is used by switching from one task to another. 
B)  repetition results in boredom. 
C)  the variety of tasks will rise. 
D)  small tasks will be merged into larger tasks. 
E)  workers will start shirking their tasks. 
A)  less production time is used by switching from one task to another. 
B)  repetition results in boredom. 
C)  the variety of tasks will rise. 
D)  small tasks will be merged into larger tasks. 
E)  workers will start shirking their tasks.

Question 13

When productive activity is organized according to comparative advantage,

Accepted Answer

A)  there is a decrease in the amount of goods and services that an economy can gain from its resources. 
B)  there is an increase in the amount of goods and services that an economy can gain from its resources. 
C)  there is no change in the amount of goods and services that an economy can gain from its resources. 
D)  the amount of goods and services that an economy can gain from its resources may increase or decrease. 
E)  there is a decrease in the quality of the goods and services produced in the economy. 
A)  there is a decrease in the amount of goods and services that an economy can gain from its resources. 
B)  there is an increase in the amount of goods and services that an economy can gain from its resources. 
C)  there is no change in the amount of goods and services that an economy can gain from its resources. 
D)  the amount of goods and services that an economy can gain from its resources may increase or decrease. 
E)  there is a decrease in the quality of the goods and services produced in the economy.

Question 14

To say some person has a comparative advantage in the writing of an economics textbook means that

Accepted Answer

A)  she can write a textbook faster than anyone else. 
B)  she has the best word processing technology. 
C)  her book will have more features. 
D)  her book will be the easiest to read. 
E)  she has a low opportunity cost of writing an economics textbook. 
A)  she can write a textbook faster than anyone else. 
B)  she has the best word processing technology. 
C)  her book will have more features. 
D)  her book will be the easiest to read. 
E)  she has a low opportunity cost of writing an economics textbook.

Question 15

A country's production possibilities curve is concave to the origin (i.e. ,bowed out from the origin)because

Accepted Answer

A)  of the principle of scarcity. 
B)  the production of one good is expanded by first employing those resources with an absolute advantage. 
C)  the production of one good is expanded by first employing those resources with the lowest opportunity cost. 
D)  there is a trade off that requires a decrease in the production of one good in order to increase the production of the other good. 
E)  of the principle of absolute advantagE. 
A)  of the principle of scarcity. 
B)  the production of one good is expanded by first employing those resources with an absolute advantage. 
C)  the production of one good is expanded by first employing those resources with the lowest opportunity cost. 
D)  there is a trade off that requires a decrease in the production of one good in order to increase the production of the other good. 
E)  of the principle of absolute advantagE.

Question 16

Smith and Jones comprise a two-person economy.Their hourly rates of production are shown below.
  
-For any efficient point with less than 10 computers and more than 120 calculators,Smith will __________ and Jones will __________.

Accepted Answer

A)  split his time between the two;only produce calculators 
B)  split his time between the two;split his time between the two 
C)  only produce calculators;only produce computers 
D)  only produce computers;only produce calculators 
E)  evenly divide his time between the two;evenly divide his time between the two 
A)  split his time between the two;only produce calculators 
B)  split his time between the two;split his time between the two 
C)  only produce calculators;only produce computers 
D)  only produce computers;only produce calculators 
E)  evenly divide his time between the two;evenly divide his time between the two

Question 17

An influx of immigrants would cause the production possibilities curve to

Accepted Answer

A)  become steeper. 
B)  shift away from the origin. 
C)  become flatter. 
D)  shift towards the origin. 
E)  change in an unpredictable way. 
A)  become steeper. 
B)  shift away from the origin. 
C)  become flatter. 
D)  shift towards the origin. 
E)  change in an unpredictable way.

Question 18

When individuals or groups specialize in producing those goods for which they have a comparative advantage and exchange those goods with one another,

Accepted Answer

A)  those with an absolute advantage will gain the most,while those without an absolute advantage will lose. 
B)  those with a comparative advantage will gain the most,while those without a comparative advantage will lose. 
C)  total production will be greater than it would be without specialization,but would be the greatest if they produced those goods in which they only have an absolute advantage. 
D)  total production will be less than it would be without specialization. 
E)  total production will be the greatest that they can achieve given the available resources. 
A)  those with an absolute advantage will gain the most,while those without an absolute advantage will lose. 
B)  those with a comparative advantage will gain the most,while those without a comparative advantage will lose. 
C)  total production will be greater than it would be without specialization,but would be the greatest if they produced those goods in which they only have an absolute advantage. 
D)  total production will be less than it would be without specialization. 
E)  total production will be the greatest that they can achieve given the available resources.

Question 19

Suppose that Penn's opportunity cost of producing an extra Pepsi is 3 cheeseburgers while Teller's opportunity cost is 0.14 cheeseburgers.One could predict that

Accepted Answer

A)  Penn must have an absolute advantage in producing cheeseburgers. 
B)  Teller must have an absolute advantage in producing Pepsis. 
C)  they have little to gain from specialization and coordinating production. 
D)  Teller has a comparative advantage in cheeseburger production. 
E)  they have potentially much to gain from specialization and coordinating production. 
A)  Penn must have an absolute advantage in producing cheeseburgers. 
B)  Teller must have an absolute advantage in producing Pepsis. 
C)  they have little to gain from specialization and coordinating production. 
D)  Teller has a comparative advantage in cheeseburger production. 
E)  they have potentially much to gain from specialization and coordinating production.

Question 20

Good W is on the vertical axis and good Z is on the horizontal axis of a production possibilities curve.An increase in the amount of training received only by workers producing good Z would cause the production possibilities curve to

Accepted Answer

A)  become steeper. 
B)  shift away from the origin. 
C)  become flatter. 
D)  shift towards the origin. 
E)  change in an unpredictable way. 
A)  become steeper. 
B)  shift away from the origin. 
C)  become flatter. 
D)  shift towards the origin. 
E)  change in an unpredictable way.

One of the major characteristics of the circular flow in our economy is

Joan can produce a maximum of 14 units of good Y and a maximum of 21 units of good X.If Y is on the vertical axis,the equation for her production possibilities curve is

-Suppose the guitar store received a rush order for 26 electric guitars.The efficient allocation of labour resources would be to have __________ work on electric guitars.

When it is impossible to reorganize economic resources so that at least one person is better off while nobody is worse off,we have attained

Smith and Jones comprise a two-person economy.Their hourly rates of production are shown below. -By coordinating their production decisions,the maximum number of computers Smith and Jones can produce is

In one hour,Juan can produce 8 chairs or 2 tables.If chairs are on the vertical axis,the slope of his production possibilities curve is

Joe has an absolute advantage in producing goods X and Y compared to Ted.Moreover,they have the same opportunity costs.One can predict that the gains from coordinating production and specialization is

Becky's opportunity cost of producing one gun is

-If all three employees were initially working on electric guitars,but one acoustic guitar needed to be built,__________ should be assigned the task.

Which of the following statements is NOT true about specialization?

As Becky produces more and more butter,she finds that

An existing comparative advantage can be increased by specialization because

When productive activity is organized according to comparative advantage,

To say some person has a comparative advantage in the writing of an economics textbook means that

A country's production possibilities curve is concave to the origin (i.e. ,bowed out from the origin)because

Smith and Jones comprise a two-person economy.Their hourly rates of production are shown below. -For any efficient point with less than 10 computers and more than 120 calculators,Smith will and Jones will .

An influx of immigrants would cause the production possibilities curve to

When individuals or groups specialize in producing those goods for which they have a comparative advantage and exchange those goods with one another,

Suppose that Penn's opportunity cost of producing an extra Pepsi is 3 cheeseburgers while Teller's opportunity cost is 0.14 cheeseburgers.One could predict that

Good W is on the vertical axis and good Z is on the horizontal axis of a production possibilities curve.An increase in the amount of training received only by workers producing good Z would cause the production possibilities curve to

Measuring Macroeconomic Performance: Output and Prices

Measuring Macroeconomic Performance: Wages, Employment and the Labour Market

Short-Term Economic Fluctuations

Spending and Output in the Short Run

Fiscal Policy

Money, Prices and the Reserve Bank

The Reserve Bank and the Economy

The Aggregate Demand - Aggregate Supply Model

Macroeconomic Policy

The Economy in the Long Run: an Introduction to Economic Growth

The Production Function Approach to Understanding Growth

Savings, Capital Formation and Comparative Economic Growth

International Trade

Exchange Rates and the Open Economy

The Balance of Payments: Net Exports and International Capital Flows

Filters

Exam 2: Measuring Macroeconomic Performance: Saving and Wealth

One of the major characteristics of the circular flow in our economy is

Joan can produce a maximum of 14 units of good Y and a maximum of 21 units of good X.If Y is on the vertical axis,the equation for her production possibilities curve is

-Suppose the guitar store received a rush order for 26 electric guitars.The efficient allocation of labour resources would be to have __________ work on electric guitars.

When it is impossible to reorganize economic resources so that at least one person is better off while nobody is worse off,we have attained

Smith and Jones comprise a two-person economy.Their hourly rates of production are shown below. -By coordinating their production decisions,the maximum number of computers Smith and Jones can produce is

In one hour,Juan can produce 8 chairs or 2 tables.If chairs are on the vertical axis,the slope of his production possibilities curve is

Joe has an absolute advantage in producing goods X and Y compared to Ted.Moreover,they have the same opportunity costs.One can predict that the gains from coordinating production and specialization is

Becky's opportunity cost of producing one gun is

-If all three employees were initially working on electric guitars,but one acoustic guitar needed to be built,__________ should be assigned the task.

Which of the following statements is NOT true about specialization?

As Becky produces more and more butter,she finds that

An existing comparative advantage can be increased by specialization because

When productive activity is organized according to comparative advantage,

To say some person has a comparative advantage in the writing of an economics textbook means that

A country's production possibilities curve is concave to the origin (i.e. ,bowed out from the origin)because

Smith and Jones comprise a two-person economy.Their hourly rates of production are shown below. -For any efficient point with less than 10 computers and more than 120 calculators,Smith will __________ and Jones will __________.

An influx of immigrants would cause the production possibilities curve to

When individuals or groups specialize in producing those goods for which they have a comparative advantage and exchange those goods with one another,

Suppose that Penn's opportunity cost of producing an extra Pepsi is 3 cheeseburgers while Teller's opportunity cost is 0.14 cheeseburgers.One could predict that

Good W is on the vertical axis and good Z is on the horizontal axis of a production possibilities curve.An increase in the amount of training received only by workers producing good Z would cause the production possibilities curve to

Measuring Macroeconomic Performance: Output and Prices

Measuring Macroeconomic Performance: Wages, Employment and the Labour Market

Short-Term Economic Fluctuations

Spending and Output in the Short Run

Fiscal Policy

Money, Prices and the Reserve Bank

The Reserve Bank and the Economy

The Aggregate Demand - Aggregate Supply Model

Macroeconomic Policy

The Economy in the Long Run: an Introduction to Economic Growth

The Production Function Approach to Understanding Growth

Savings, Capital Formation and Comparative Economic Growth

International Trade

Exchange Rates and the Open Economy

The Balance of Payments: Net Exports and International Capital Flows

Filters

Smith and Jones comprise a two-person economy.Their hourly rates of production are shown below. -For any efficient point with less than 10 computers and more than 120 calculators,Smith will and Jones will .