Question 1

In every economic system,choices must be made because resources

Accepted Answer

A) are unlimited,but human desires and wants are limited. 
B) are limited,but human desires and wants are unlimited. 
C) are unlimited,and so are human desires and wants. 
D) are limited,and so are human desires and wants. 
A) are unlimited,but human desires and wants are limited. 
B) are limited,but human desires and wants are unlimited. 
C) are unlimited,and so are human desires and wants. 
D) are limited,and so are human desires and wants.

Question 2

Both an NBA basketball player and a fast-food cook are going to graduate school.Who has a higher opportunity cost? Explain.

Accepted Answer

The opportunity cost is the income lost

Question 3

The production possibilities curve represents the maximum feasible production combinations resulting from

Accepted Answer

A) the mix of current resources that utilizes all available inputs using current technology. 
B) a fixed amount of demand by consumers. 
C) the lack of trade-offs in production. 
D) the lack of technology used in production. 
A) the mix of current resources that utilizes all available inputs using current technology. 
B) a fixed amount of demand by consumers. 
C) the lack of trade-offs in production. 
D) the lack of technology used in production.

Question 4

-In the above figure,points u,v,y,and z show

Accepted Answer

A) an inefficient allocation of society's scarce resources. 
B) possible combinations of televisions and personal computers. 
C) a constant trade-off between televisions and personal computers. 
D) that society prefers more televisions than computers. 
A) an inefficient allocation of society's scarce resources. 
B) possible combinations of televisions and personal computers. 
C) a constant trade-off between televisions and personal computers. 
D) that society prefers more televisions than computers.

Question 5

Suppose that Canadian farmers can grow wheat more cheaply than can U.S.farmers.In the interest of efficiency,what is the desirable outcome?

Accepted Answer

A) Allow the Canadian farmers to sell their wheat for a lower price. 
B) Pass a law in Canada mandating a minimum price for wheat equal to what is charged by U.S.farmers. 
C) Pass a law in the United States mandating a maximum price for wheat equal to what is charged by Canadian farmers. 
D) Have U.S.citizens boycott Canadian wheat. 
A) Allow the Canadian farmers to sell their wheat for a lower price. 
B) Pass a law in Canada mandating a minimum price for wheat equal to what is charged by U.S.farmers. 
C) Pass a law in the United States mandating a maximum price for wheat equal to what is charged by Canadian farmers. 
D) Have U.S.citizens boycott Canadian wheat.

Question 6

The president of the United States promises that the nation's economy will simultaneously produce more defense goods without any decreases in the production of other goods.Under which of the following conditions could such a promise be valid?

Accepted Answer

A) If the United States were producing at a point on its production possibilities curve 
B) If the United States were producing inside its production possibilities curve 
C) If the United States were producing to the right of its production possibilities curve 
D) None of the above; the production possibilities curve must shift to the right. 
A) If the United States were producing at a point on its production possibilities curve 
B) If the United States were producing inside its production possibilities curve 
C) If the United States were producing to the right of its production possibilities curve 
D) None of the above; the production possibilities curve must shift to the right.

Question 7

The reason the production possibilities curve is bowed outward (concave)is

Accepted Answer

A) the law of increasing additional cost. 
B) that technology is constantly changing. 
C) that the number of resources is increasing. 
D) that the economy has more capital goods than entrepreneurial effort. 
A) the law of increasing additional cost. 
B) that technology is constantly changing. 
C) that the number of resources is increasing. 
D) that the economy has more capital goods than entrepreneurial effort.

Question 8

-Refer to the above figure.Assume that only two goods can be produced in the economy.Which of the following statements is true?

Accepted Answer

A) Points a,b,and c are all obtainable points of production. 
B) Points a and b are obtainable points of production. 
C) Points b and c are obtainable points of production. 
D) Only point b is an obtainable and efficient point of production. 
A) Points a,b,and c are all obtainable points of production. 
B) Points a and b are obtainable points of production. 
C) Points b and c are obtainable points of production. 
D) Only point b is an obtainable and efficient point of production.

Question 9

Generally,specialization leads to

Accepted Answer

A) constant opportunity costs. 
B) greater productivity. 
C) the production of fewer capital goods. 
D) greater self-reliance. 
A) constant opportunity costs. 
B) greater productivity. 
C) the production of fewer capital goods. 
D) greater self-reliance.

Question 10

As an economy moves from point to point along its production possibilities curve,which one of the following variables changes?

Accepted Answer

A) the total amount of resources employed 
B) the level of technology 
C) the time frame under consideration 
D) the amount of each good or service produced 
A) the total amount of resources employed 
B) the level of technology 
C) the time frame under consideration 
D) the amount of each good or service produced

Question 11

Explain how comparative advantage,specialization and division of labor are related.

Accepted Answer

Comparative advantage is the ability to

Question 12

The text argues that if avocado growers in Mexico can produce avocadoes cheaper than avocado growers in the United States,this will not reduce total jobs available in the United States.The logic underlying this argument is that

Accepted Answer

A) avocado growers in the United States did not earn much anyway. 
B) avocado growers in the United States are welcome to emigrate to Mexico. 
C) avocado growers in the United States will switch to specializing in a crop in which they hold the comparative advantage. 
D) avocado growers in Mexico need the jobs more than Americans do. 
A) avocado growers in the United States did not earn much anyway. 
B) avocado growers in the United States are welcome to emigrate to Mexico. 
C) avocado growers in the United States will switch to specializing in a crop in which they hold the comparative advantage. 
D) avocado growers in Mexico need the jobs more than Americans do.

Question 13

All mutually beneficial trades have taken place.This implies that

Accepted Answer

A) the production possibilities curve is bowed out. 
B) society is inside the production possibilities curve. 
C) economic efficiency prevails in the society. 
D) society is on the constant cost portion of its production possibilities curve. 
A) the production possibilities curve is bowed out. 
B) society is inside the production possibilities curve. 
C) economic efficiency prevails in the society. 
D) society is on the constant cost portion of its production possibilities curve.

Question 14

It is not uncommon for people to say something like,"If we can put someone on the moon we should be able to ...," followed by the person's favorite project.What response can an economist make to this person?

Accepted Answer

Society must make choices,and when it ch

Question 15

The idea of comparative advantage is related to

Accepted Answer

A) the idea of opportunity cost. 
B) the idea of absolute advantage. 
C) using the worker with the most diverse sets of skills. 
D) engineering efficiency. 
A) the idea of opportunity cost. 
B) the idea of absolute advantage. 
C) using the worker with the most diverse sets of skills. 
D) engineering efficiency.

Question 16

If Joey goes surfing for four hours instead of earning $10 per hour for those four hours,his opportunity cost is

Accepted Answer

A) the good time spent surfing. 
B) the cost of gasoline used to get to the beach. 
C) the travel time to the beach. 
D) $40. 
A) the good time spent surfing. 
B) the cost of gasoline used to get to the beach. 
C) the travel time to the beach. 
D) $40.

Question 17

-Refer to the above figure.If the farmer has 50 acres of land,the farmer is producing at point a,and an acre of land yields 400 bushels of beans or 800 bushels of wheat,how much land is devoted to the production of wheat?

Accepted Answer

A) 8.5 acres 
B) 10 acres 
C) 12.5 acres 
D) 15 acres 
A) 8.5 acres 
B) 10 acres 
C) 12.5 acres 
D) 15 acres

Question 18

Comparative advantage implies that you

Accepted Answer

A) can produce more units of a good or service than another. 
B) can produce a good or service at a lower opportunity cost. 
C) can produce goods with more capital resources. 
D) can produce goods with more human resources. 
A) can produce more units of a good or service than another. 
B) can produce a good or service at a lower opportunity cost. 
C) can produce goods with more capital resources. 
D) can produce goods with more human resources.

Question 19

-In the above figure,the production of 75 ukuleles and 75 guitars is

Accepted Answer

A) efficient production. 
B) inefficient production. 
C) impossible production. 
D) full employment production. 
A) efficient production. 
B) inefficient production. 
C) impossible production. 
D) full employment production.

Question 20

People always face trade-offs because

Accepted Answer

A) they always have more than one use for their time and money. 
B) they buy goods with money. 
C) trading takes place in a market economy. 
D) they can make themselves better off through trade. 
A) they always have more than one use for their time and money. 
B) they buy goods with money. 
C) trading takes place in a market economy. 
D) they can make themselves better off through trade.

Exam 2: Scarcity and the World of Trade-Offs

In every economic system,choices must be made because resources

Both an NBA basketball player and a fast-food cook are going to graduate school.Who has a higher opportunity cost? Explain.

The production possibilities curve represents the maximum feasible production combinations resulting from

-In the above figure,points u,v,y,and z show

Suppose that Canadian farmers can grow wheat more cheaply than can U.S.farmers.In the interest of efficiency,what is the desirable outcome?

The president of the United States promises that the nation's economy will simultaneously produce more defense goods without any decreases in the production of other goods.Under which of the following conditions could such a promise be valid?

The reason the production possibilities curve is bowed outward (concave)is

-Refer to the above figure.Assume that only two goods can be produced in the economy.Which of the following statements is true?

Generally,specialization leads to

As an economy moves from point to point along its production possibilities curve,which one of the following variables changes?

Explain how comparative advantage,specialization and division of labor are related.

The text argues that if avocado growers in Mexico can produce avocadoes cheaper than avocado growers in the United States,this will not reduce total jobs available in the United States.The logic underlying this argument is that

All mutually beneficial trades have taken place.This implies that

It is not uncommon for people to say something like,"If we can put someone on the moon we should be able to ...," followed by the person's favorite project.What response can an economist make to this person?

The idea of comparative advantage is related to

If Joey goes surfing for four hours instead of earning $10 per hour for those four hours,his opportunity cost is

-Refer to the above figure.If the farmer has 50 acres of land,the farmer is producing at point a,and an acre of land yields 400 bushels of beans or 800 bushels of wheat,how much land is devoted to the production of wheat?

Comparative advantage implies that you

-In the above figure,the production of 75 ukuleles and 75 guitars is

People always face trade-offs because

The Nature of Economics

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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