Question 1

Goods that are produced today in order to make other valuable goods and services in the future are called:

Accepted Answer

A)  normal goods. 
B)  inferior goods. 
C)  consumer goods. 
D)  capital goods. 
E)  personal goods. 
A)  normal goods. 
B)  inferior goods. 
C)  consumer goods. 
D)  capital goods. 
E)  personal goods.

Question 2

When testing a paper airplane on your campus quad, which of the following would be an exogenous factor?

Accepted Answer

A)  the weight of the paper used in making the plane 
B)  the ratio of wingspan to plane length 
C)  the height of the body of the plane 
D)  the level of wind encountered 
E)  the number of folds in the wings 
A)  the weight of the paper used in making the plane 
B)  the ratio of wingspan to plane length 
C)  the height of the body of the plane 
D)  the level of wind encountered 
E)  the number of folds in the wings

Question 3

Use these production possibilities frontier (PPF) curves, which compare the ancient production of agricultural products to art and literature, to answer the next questions.
a. Graph A   b. Graph B   c. Graph C   d. Graph D   e. Graph E  
-Suppose the printing press is invented. Which graph best depicts how this would affect the PPF?

Accepted Answer

A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D 
E)  Graph E 
A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D 
E)  Graph E

Question 4

Refer to the following figure to answer the next  questions.  
-What is the most preferred consumption point for a pie-appreciating society?

Accepted Answer

A)  point A 
B)  point B 
C)  point C 
D)  point D 
E)  point E 
A)  point A 
B)  point B 
C)  point C 
D)  point D 
E)  point E

Question 5

The ability of one producer to create more of a good than another producer using the same quantity of resources is called:

Accepted Answer

A)  comparative advantage. 
B)  absolute advantage. 
C)  a positive-sum game. 
D)  gains from trade. 
E)  the law of increasing relative cost. 
A)  comparative advantage. 
B)  absolute advantage. 
C)  a positive-sum game. 
D)  gains from trade. 
E)  the law of increasing relative cost.

Question 6

Refer to the following table to answer the next  questions.  
-Given an eight-hour workday, and to experience gains from trade,

Accepted Answer

A)  Alicia should make pizzas and Jay-Z should make cheesesteaks. 
B)  Alicia should make cheesesteaks and Jay-Z should make pizzas. 
C)  each should make their own cheesesteaks and pizzas. 
D)  Alicia should produce both pizzas and cheesesteaks. 
E)  Jay-Z should produce both pizzas and cheesesteaks. 
A)  Alicia should make pizzas and Jay-Z should make cheesesteaks. 
B)  Alicia should make cheesesteaks and Jay-Z should make pizzas. 
C)  each should make their own cheesesteaks and pizzas. 
D)  Alicia should produce both pizzas and cheesesteaks. 
E)  Jay-Z should produce both pizzas and cheesesteaks.

Question 7

Use these production possibilities frontier (PPF) curves, which compare the ancient production of agricultural products to art and literature, to answer the next questions.
a. Graph A   b. Graph B   c. Graph C   d. Graph D   e. Graph E  
-Suppose a new generation of baby boomers is entering the workforce. Which graph best depicts how this would affect the PPF?

Accepted Answer

A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D 
E)  Graph E 
A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D 
E)  Graph E

Question 8

The _________ states that the opportunity cost of producing a good always rises as you produce more of it.

Accepted Answer

A)  law of increasing relative cost 
B)  law of positive economics 
C)  law of demand 
D)  production possibilities frontier (PPF) model 
E)  zero-sum game 
A)  law of increasing relative cost 
B)  law of positive economics 
C)  law of demand 
D)  production possibilities frontier (PPF) model 
E)  zero-sum game

Question 9

Which of the following is a positive statement?

Accepted Answer

A)  Winters in Arkansas are too cold. 
B)  Everyone should work in a bank to understand the true value of money. 
C)  Harvard University is the top education institution in the country. 
D)  On average, people save 15% when they switch to GEICO. 
E)  Everyone ought to have a life insurance policy. 
A)  Winters in Arkansas are too cold. 
B)  Everyone should work in a bank to understand the true value of money. 
C)  Harvard University is the top education institution in the country. 
D)  On average, people save 15% when they switch to GEICO. 
E)  Everyone ought to have a life insurance policy.

Question 10

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the next questions.  
-What is Gibbs's opportunity cost of making a wooden boat?

Accepted Answer

A)  20 solved crimes 
B)  30 solved crimes 
C)  10 solved crimes 
D)  1/20 of a boat 
E)  1/10 of a boat 
A)  20 solved crimes 
B)  30 solved crimes 
C)  10 solved crimes 
D)  1/20 of a boat 
E)  1/10 of a boat

Question 11

Suppose you are studying a production possibilities frontier (PPF) that has a bowed-out shape relative to the origin. What causes this shape?

Accepted Answer

A)  economic growth 
B)  the law of increasing relative cost 
C)  absolute advantage 
D)  normative economics 
E)  more resources 
A)  economic growth 
B)  the law of increasing relative cost 
C)  absolute advantage 
D)  normative economics 
E)  more resources

Question 12

Michael and Angelo are both artists who can create sculptures or paintings each day. The following table describes their maximum outputs per day. Use this table to answer the next questions.  
-What is Angelo's opportunity cost of a sculpture?

Accepted Answer

A)  1/2 painting 
B)  1/3 painting 
C)  3 paintings 
D)  1/3 sculpture 
E)  6/10 sculpture 
A)  1/2 painting 
B)  1/3 painting 
C)  3 paintings 
D)  1/3 sculpture 
E)  6/10 sculpture

Question 13

Which statement best describes the absolute advantage as shown in the graphs?

Accepted Answer

A)  Pam has an absolute advantage in the production of both. 
B)  Jim has an absolute advantage in the production of both. 
C)  Jim has an absolute advantage in the production of pizzas, and Pam has an absolute advantage in the production of stromboli. 
D)  Pam has an absolute advantage in the production of pizzas, and Jim has an absolute advantage in the production of stromboli. 
E)  They both have an absolute advantage in the production of stromboli. 
A)  Pam has an absolute advantage in the production of both. 
B)  Jim has an absolute advantage in the production of both. 
C)  Jim has an absolute advantage in the production of pizzas, and Pam has an absolute advantage in the production of stromboli. 
D)  Pam has an absolute advantage in the production of pizzas, and Jim has an absolute advantage in the production of stromboli. 
E)  They both have an absolute advantage in the production of stromboli.

Question 14

The area inside (within) the production possibilities frontier (PPF) contains:

Accepted Answer

A)  normative points. 
B)  positive points. 
C)  efficient points. 
D)  inefficient points. 
E)  high opportunity cost points. 
A)  normative points. 
B)  positive points. 
C)  efficient points. 
D)  inefficient points. 
E)  high opportunity cost points.

Question 15

Which of the following is a normative statement?

Accepted Answer

A)  The current exchange rate is 0.7 British pounds per U.S. dollar. 
B)  In January, the average temperature in Fargo, North Dakota, is 56 degrees. 
C)  Winters in Arkansas are too cold. 
D)  On average, people save 15% when they switch to GEICO. 
E)  University of Virginia graduates earn more than Duke University graduates. 
A)  The current exchange rate is 0.7 British pounds per U.S. dollar. 
B)  In January, the average temperature in Fargo, North Dakota, is 56 degrees. 
C)  Winters in Arkansas are too cold. 
D)  On average, people save 15% when they switch to GEICO. 
E)  University of Virginia graduates earn more than Duke University graduates.

Question 16

How can a person who is "better" or more efficient (in that they have an absolute advantage in the production of various goods on the PPF) at producing several things be made even better off by specialization and trade?

Accepted Answer

It sometimes seems counterintuitive that

Question 17

An economist's use of experiments and real-world data to test a theory is an example of:

Accepted Answer

A)  the scientific method in economics. 
B)  macroeconomics. 
C)  economic growth. 
D)  normative analysis. 
E)  comparative advantage. 
A)  the scientific method in economics. 
B)  macroeconomics. 
C)  economic growth. 
D)  normative analysis. 
E)  comparative advantage.

Question 18

Consider the production possibilities frontier (PPF) shown in the figure below to answer the next  questions.  
-Given current resources and technology, the unattainable range is best described as:

Accepted Answer

A)  only area O: points outside the PPF. 
B)  points on the PPF only. 
C)  only area I: points inside the PPF. 
D)  area I: inside the PPF and points on the PPF. 
E)  Area O: outside the PPF and points on the PPF. 
A)  only area O: points outside the PPF. 
B)  points on the PPF only. 
C)  only area I: points inside the PPF. 
D)  area I: inside the PPF and points on the PPF. 
E)  Area O: outside the PPF and points on the PPF.

Question 19

Opportunity cost is evident on the production possibilities frontier (PPF) graph:

Accepted Answer

A)  as you move from one point on the frontier to another point on the frontier. 
B)  as you move from the origin to any inefficient point. 
C)  as you move from one unattainable point to an efficient point on the frontier. 
D)  as you move from an inefficient point to the origin. 
E)  at any one single point on the graph. 
A)  as you move from one point on the frontier to another point on the frontier. 
B)  as you move from the origin to any inefficient point. 
C)  as you move from one unattainable point to an efficient point on the frontier. 
D)  as you move from an inefficient point to the origin. 
E)  at any one single point on the graph.

Question 20

Suppose that, during an afternoon at your favorite ski resort, you could either make additional runs down the slopes or produce and sip hot chocolate by the fire in the lodge. Draw a production possibilities frontier (PPF) that describes your production trade-offs between runs skied (by riding the chairlift to the top and skiing down the slope) versus cups of hot chocolate produced and sipped. Your production of each of these goods is subject to constant marginal opportunity costs in production, so be sure that in your graph, the opportunity cost of one activity in terms of the other is the same at any point on the PPF.
Now suppose that a new superfast ski lift reduces the time it takes to get to the top of the mountain. Show, on the same graph, how this changes the PPF.

Accepted Answer

The answer of Suppose that, during an afternoon at your...

Goods that are produced today in order to make other valuable goods and services in the future are called:

When testing a paper airplane on your campus quad, which of the following would be an exogenous factor?

Refer to the following figure to answer the next questions. -What is the most preferred consumption point for a pie-appreciating society?

The ability of one producer to create more of a good than another producer using the same quantity of resources is called:

Refer to the following table to answer the next questions. -Given an eight-hour workday, and to experience gains from trade,

The _________ states that the opportunity cost of producing a good always rises as you produce more of it.

Which of the following is a positive statement?

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the next questions. -What is Gibbs's opportunity cost of making a wooden boat?

Suppose you are studying a production possibilities frontier (PPF) that has a bowed-out shape relative to the origin. What causes this shape?

Michael and Angelo are both artists who can create sculptures or paintings each day. The following table describes their maximum outputs per day. Use this table to answer the next questions. -What is Angelo's opportunity cost of a sculpture?

Which statement best describes the absolute advantage as shown in the graphs?

The area inside (within) the production possibilities frontier (PPF) contains:

Which of the following is a normative statement?

How can a person who is "better" or more efficient (in that they have an absolute advantage in the production of various goods on the PPF) at producing several things be made even better off by specialization and trade?

An economist's use of experiments and real-world data to test a theory is an example of:

Consider the production possibilities frontier (PPF) shown in the figure below to answer the next questions. -Given current resources and technology, the unattainable range is best described as:

Opportunity cost is evident on the production possibilities frontier (PPF) graph:

The Five Foundations of Economics

The Market at Work: Supply and Demand

Price Controls

The Efficiency of Markets and the Costs of Taxation

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings, Interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Aggregate Demandaggregate Supply Model

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

Filters

Exam 2: Model Building and Gains From Trade

Goods that are produced today in order to make other valuable goods and services in the future are called:

When testing a paper airplane on your campus quad, which of the following would be an exogenous factor?

Refer to the following figure to answer the next questions. -What is the most preferred consumption point for a pie-appreciating society?

The ability of one producer to create more of a good than another producer using the same quantity of resources is called:

Refer to the following table to answer the next questions. -Given an eight-hour workday, and to experience gains from trade,

The _________ states that the opportunity cost of producing a good always rises as you produce more of it.

Which of the following is a positive statement?

The figures below depict the production possibilities frontiers (PPFs) for two people who can allocate the same amount of time between building wooden boats and solving crimes. Refer to these figures to answer the next questions. -What is Gibbs's opportunity cost of making a wooden boat?

Suppose you are studying a production possibilities frontier (PPF) that has a bowed-out shape relative to the origin. What causes this shape?

Michael and Angelo are both artists who can create sculptures or paintings each day. The following table describes their maximum outputs per day. Use this table to answer the next questions. -What is Angelo's opportunity cost of a sculpture?

Which statement best describes the absolute advantage as shown in the graphs?

The area inside (within) the production possibilities frontier (PPF) contains:

Which of the following is a normative statement?

How can a person who is "better" or more efficient (in that they have an absolute advantage in the production of various goods on the PPF) at producing several things be made even better off by specialization and trade?

An economist's use of experiments and real-world data to test a theory is an example of:

Consider the production possibilities frontier (PPF) shown in the figure below to answer the next questions. -Given current resources and technology, the unattainable range is best described as:

Opportunity cost is evident on the production possibilities frontier (PPF) graph:

The Five Foundations of Economics

The Market at Work: Supply and Demand

Price Controls

The Efficiency of Markets and the Costs of Taxation

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings, Interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Aggregate Demandaggregate Supply Model

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

Filters