Deck 2: Measuring Macroeconomic Performance: Saving and Wealth

Question 1

Jenny's opportunity cost of producing an extra pair of shoes is

A) 1/3 pairs of pants.
B) 1/2 pairs of pants.
C) 2/3 pairs of pants.
D) 1 pair of pants.
E) 3/2 pairs of pants.

Answer 1

2/3 pairs of pants.

Question 2

Application of the Principle of Comparative Advantage leads to

A) greater and greater specialization of labour and other factors of production.
B) reduced specialization of labour.
C) societies where everyone can do a little of everything.
D) lower total output.
E) misallocation of resources.

Answer 2

greater and greater specialization of labour and other factors of production.

Question 3

Based on their comparative advantages,Sam should specialize in producing __________ while Jenny should specialize in producing __________.

A) shoes;pants
B) both;neither
C) neither;both
D) pants;shoes
E) pants;pants

Answer 3

pants;shoes

Question 4

The comparative advantage for shoes belongs to __________ and the comparative advantage for pants belongs to __________.

A) Sam;Jenny
B) Sam;Sam
C) Jenny;Sam
D) Jenny;Jenny
E) both;Sam

Question 5

If Leslie can produce two pairs of pants in an hour while Eva can make one pair in an hour,then

A) Leslie has a comparative advantage.
B) Eva has an absolute advantage.
C) Leslie has an absolute advantage.
D) Eva has a comparative advantage.
E) Leslie has a comparative disadvantagE.

Question 6

Jenny's opportunity cost of producing an extra pair of pants is

A) 1 pair of shoes.
B) 2/3 pairs of shoes.
C) 3/2 pairs of shoes.
D) 2 pairs of shoes.
E) 3 pairs of shoes.

Question 7

If Jane can produce 3 pairs of shoes hourly,while Bob can produce 2,then one can infer that the __________ advantage belongs to __________.

A) absolute;Bob
B) comparative;Jane
C) comparative;Bob
D) comparative;both of them
E) absolute;Jane

Question 8

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

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 9

Which of the following statements is always true?

A) Comparative advantage implies absolute advantage.
B) Absolute advantage implies comparative advantage.
C) Comparative advantage does not require absolute advantage.
D) Absolute advantage requires comparative advantage.
E) Comparative advantage requires absolute advantagE.

Question 10

Under certain assumptions,the model of comparative advantage predicts that maximum output can be achieved if each person produces goods or services where

A) all factors of production are used in equal amounts.
B) the most equitable distribution is created.
C) the government intervenes the least.
D) firms maximize their revenues
E) he or she has the lowest opportunity cost.

Question 11

Sam's opportunity cost of producing an extra pair of pants is

A) 1 pair of shoes.
B) 5/4 pairs of shoes.
C) 4/5 pairs of shoes.
D) 4/3 pairs of shoes.
E) 3/2 pairs of shoes.

Question 12

Sam's opportunity cost of producing an extra pair of shoes is

A) 3/4 pairs of pants.
B) 4/5 pairs of pants.
C) 1 pair of pants.
D) 5/4 pairs of pants.
E) 4/3 pairs of pants.

Question 13

Sam possesses an absolute advantage in

A) the production of shoes.
B) neither shoe nor pants production.
C) the production of pants.
D) both shoe and pants production.
E) pants and possibly shoe production.

Question 14

If a person has the lowest opportunity cost of producing a particular good,that person has a(n)

A) comparative advantage.
B) absolute advantage.
C) comparative and absolute advantage.
D) absolute advantage and a possible comparative advantage.
E) relative advantagE.

Question 15

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

A) absolute advantage.
B) comparative advantage.
C) absolutely comparative advantage.
D) absolute and comparative advantage.
E) comparatively absolute advantagE.

Question 16

If a nation can produce a good more quickly than any other nation,that nation has a(n)

A) comparative advantage.
B) total advantage.
C) relative advantage.
D) absolute advantage.
E) need to tradE.

Question 17

In general,individuals should specialize in producing those goods for which they

A) can produce more quickly than others.
B) can produce less quickly than others.
C) have the lowest opportunity cost compared to others.
D) have the highest opportunity cost compared to others.
E) have an average opportunity cost.

Question 18

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

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.
E) has the most capital.

Question 19

If everyone had the same opportunity cost of producing a particular good,then

A) everyone would have the same absolute advantage.
B) no one would have an absolute advantage.
C) everyone would have the same comparative advantage.
D) the absolute advantage would be the same for everyone but the comparative advantage would vary.
E) the absolute and comparative advantage would be the same for everyonE.

Question 20

According to data,Jenny has an absolute advantage in

A) the production of shoes.
B) neither shoe nor pants production.
C) the production of pants.
D) both shoe and pants production.
E) pants and possibly shoe production.

Question 21

Becky's opportunity cost of producing one gun is

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

Question 22

Lou and Alex live together and share household chores.They like to cook some meals ahead and eat leftovers.Suppose that in one hour Lou and Alex can do the following:

For Alex,the opportunity cost of cleaning one room is ________ meal(s);for Lou the opportunity cost of cleaning one room is _________ meal(s).

A) 1;4/5
B) 1;5/4
C) 1.5;2.5
D) 5/3;4/3
E) 3;5

Question 23

Yolanda can produce 2 dresses or 4 shirts in 8 hours of work,while Sandra can produce 3 dresses or 7 shirts in the same amount of time.Yolanda has a(n):

A) absolute advantage in producing dresses and shirts,and a comparative advantage in producing dresses,while Sandra has a comparative advantage in producing shirts.
B) comparative advantage in producing shirts,while Sandra has an absolute advantage in producing dresses and shirts,and a comparative advantage in producing dresses.
C) comparative advantage in producing dresses,while Sandra has an absolute advantage in producing dresses and shirts,and a comparative advantage in producing shirts.
D) absolute advantage in producing dresses and shirts,and a comparative advantage in producing shirts,while Sandra has a comparative advantage in producing dresses.
E) absolute advantage and a comparative advantage in producing dresses and shirts.

Question 24

Point F is __________ while point G is __________.

A) unattainable;inefficient
B) inefficient;unattainable
C) inefficient;inefficient
D) efficient;inefficient
E) efficient;unattainable

Question 25

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

A) negative;production of one of the two goods is always insufficient
B) negative;to produce more of one good means less production of the other
C) constant;the trade-off in production never changes
D) positive;to produce more of one good means more production of the other
E) positive;to produce more of one good means less production of the other

Question 26

When each individual concentrates on performing the tasks and producing the goods for which she or he has the lowest opportunity cost,they are producing in accordance with the Principle of

A) Increasing Opportunity Cost.
B) Decreasing Opportunity Cost.
C) Comparative Advantage.
D) Scarcity.
E) Low-Hanging Fruit.

Question 27

Of the labelled points,______________ are attainable.

A) F and G
B) B,C,and D
C) A,C,and E
D) A,B,C,D,E,and F
E) A,B,C,D,and E

Question 28

The reason a family doctor would send one of his patients to a surgeon to remove a tumour is because the surgeon has

A) an absolute advantage in providing treatment.
B) a comparative advantage in providing treatment due to inborn talent and training.
C) a comparative advantage in providing treatment due to cultural differences.
D) an arrangement with the family doctor to share the fees for unnecessary surgeries.
E) a better bedside manner.

Question 29

Having a comparative advantage in a particular task means that you

A) are better at it than other people.
B) give up more to accomplish that task than do others.
C) give up less to accomplish that task than do others.
D) have specialized in that task,while others have not
E) have more resources than others.

Question 30

Point G is a(n)__________ point in relation to the production possibilities curve.

A) attainable
B) efficient
C) unattainable
D) inefficient
E) inefficient and attainable

Question 31

Lou and Alex live together and share household chores.They like to cook some meals ahead and eat leftovers.Suppose that in one hour Lou and Alex can do the following:

Alex and Lou have worked out an efficient arrangement.Under that arrangement,

A) Alex and Lou each spend a half hour on cooking and a half hour on cleaning.
B) Alex spends all of his time on cleaning,while Lou does all the cooking.
C) Lou does all of the cleaning and half of the cooking.
D) Lou spends all of his time on cleaning,while Alex does all the cooking
E) Lou does all of the cooking and half of the cleaning.

Question 32

Jane can produce 50 pizzas or 100 hamburgers per day,while Sam can produce 30 pizzas or 90 hamburgers per day.Jane has an absolute advantage in the production of

A) pizzas,but not hamburgers,and has a comparative advantage in the production of pizzas.
B) hamburgers,but not pizzas,and has a comparative advantage in the production of hamburgers.
C) hamburgers and pizzas,as well as a comparative advantage in the production of hamburgers.
D) hamburgers and pizzas,as well as a comparative advantage in the production of pizzas.
E) hamburgers and pizzas,as well as a comparative advantage in the production of hamburgers and pizzas.

Question 33

The production possibilities curve shows

A) the relationship between inputs and output.
B) the minimum amount of one good that can be produced for every possible production level of the other good.
C) a positive relationship.
D) the maximum production of one good for every possible production level of the other good.
E) how increasing the production of one good allows production of the other good to also increasE.

Question 34

The slope of the production possibilities curve must be

A) constant.
B) positive.
C) decreasing.
D) increasing.
E) negativE.

Question 35

Of the labelled points,______________ are efficient.

A) F and G
B) B,C,and D
C) A,C,and E
D) A,B,C,D,E,and F
E) A,B,C,D,and E

Question 36

A graph that illustrates the maximum amount of one good that can be produced for every possible level of production of the other good is termed a(n)

A) production possibilities curve.
B) consumption possibilities curve.
C) production impossibilities curve.
D) comparative advantage curve.
E) absolute advantage curvE.

Question 37

The absolute advantage for electric guitars belongs to __________;for acoustic guitars,it belongs to __________.

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

Question 38

Lou and Alex live together and share household chores.They like to cook some meals ahead and eat leftovers.Suppose that in one hour Lou and Alex can do the following:

Which of the following is true?

A) Lou has both an absolute and comparative advantage over Alex in both tasks.
B) Alex has both an absolute and comparative advantage over Lou in both tasks.
C) Alex has a comparative advantage over Lou in cleaning.
D) Lou has a comparative advantage over Alex in cleaning.
E) Neither Alex nor Lou has a comparative advantagE.

Question 39

The opportunity cost of an extra acoustic guitar for Mark is

A) 0.0625 fewer electric guitars.
B) 8 fewer electric guitars.
C) 16 fewer electric guitars.
D) 20 fewer electric guitars.
E) 30 fewer electric guitars.

Question 40

The opportunity cost of an extra acoustic guitar for Glenn is

A) 0.8 fewer electric guitars.
B) 7 fewer electric guitars.
C) 0.14 more electric guitars.
D) equal to Glenn's opportunity cost of an extra electric guitar.
E) 8 fewer electric guitars.

Question 41

Which of the following statements best describes the given production possibilities curve?

A) The market price of butter must be higher than the market price for guns.
B) The market price of guns must be higher than the market price for butter.
C) It is more profitable for Becky to produce guns than butter.
D) It is more profitable for Becky to produce butter than guns.
E) The opportunity cost for one additional gun is always constant.

Question 42

The following table describes Buffy's abilities to produce either weapons or food each hour.

The opportunity cost of an extra unit of food is

A) 0.333 fewer weapons.
B) 3.33 fewer weapons.
C) 33.3 fewer weapons.
D) fewer weapons but the exact number cannot be calculated.
E) 18 fewer weapons.

Question 43

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

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

Question 44

The equation for Cartman's production possibilities curve is A = 13 - 0.5B,where A and B are the only two goods he can produce.The slope of Cartman's production possibilities curve is __________ and quantifies __________.

A) - 0.5;the change in A for a one-unit change in B
B) 0.5;the change in A for a one-unit change in B
C) - 0.5;the change in B for a one-unit change in A
D) 0.5;the change in B for a one-unit change in A
E) - 2;the change in A for a one-unit change in B

Question 45

The following table describes Buffy's abilities to produce either weapons or food each hour.

The data indicate that it takes Buffy __________ minutes to produce a weapon and __________ minutes to produce a unit of food.

A) 3.33;10
B) 10;3.33
C) 6;18
D) 1;33.3
E) 100;0.333

Question 46

Which of the following statements is true?

A) An unattainable point is inefficient.
B) An efficient point may or may not be attainable.
C) An inefficient point must be unattainable.
D) An efficient point must be attainable.
E) An attainable point must be efficient.

Question 47

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

A) unattainable point.
B) efficient point.
C) inefficient point.
D) attainable and efficient point.
E) attainable point.

Question 48

Smith and Jones comprise a two-person economy.Their hourly rates of production are shown below.

The opportunity cost of an extra calculator for Smith is __________ and for Jones it is __________.

A) 0.10 computers;0.05 computers
B) 10 computers;6 computers
C) 1 computer;0.5 computers
D) 0.6 computers;1.2 computers
E) 0.05 computers;0.10 computers

Question 49

The following table describes Buffy's abilities to produce either weapons or food each hour.

Buffy's production possibilities curve has a __________ slope because producing 6 extra units of food means __________ weapons can be produced.

A) positive;two more
B) negative;two fewer
C) negative;three fewer
D) negative;six fewer
E) negative;0.333 fewer

Question 50

The opportunity cost to Becky of producing 20 units of butter is

A) one gun.
B) one hour.
C) one hour and four guns.
D) four guns.
E) either one hour or four guns.

Question 51

The following table describes Buffy's abilities to produce either weapons or food each hour.

If weapons were on the vertical axis and food on the horizontal,the y-intercept would be __________ and the x-intercept would be __________.

A) 6;0
B) 0;18
C) 6;18
D) 0;0
E) 24;12

Question 52

Smith and Jones comprise a two-person economy.Their hourly rates of production are shown below.

Based on the data,Smith has a(n)__________ advantage in __________ while Jones has a(n)__________ advantage in __________.

A) comparative;calculators;absolute;calculators
B) absolute;calculators;absolute;computers
C) absolute;computers;comparative;computers
D) comparative;computers;comparative;calculators
E) comparative;calculators;comparative;calculators

Question 53

Smith and Jones comprise a two-person economy.Their hourly rates of production are shown below.

For any efficient point with at least 10 computers and less than 120 calculators,Smith will __________ and Jones will __________.

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

Question 54

The fundamental reason that a production possibilities curve has a negative slope is that

A) workers are inefficient.
B) resources are of low quality.
C) resources are fixed and therefore trade-offs must be made.
D) it has empirical support but why it is so is still a mystery.
E) comparative advantage exists.

Question 55

As Becky produces more and more butter,she finds that

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 56

Smith and Jones comprise a two-person economy.Their hourly rates of production are shown below.

Suppose Smith and Jones begin at the point of producing 16 computers and 0 calculators in one hour.If they wish to produce 14 computers and 40 calculators in one hour,then Smith will spend __________ and Jones will spend __________.

A) 1 hour on computers;40 minutes on computers and 20 minutes on calculators
B) 1 hour on computers;20 minutes on computers and 40 minutes on calculators
C) 30 minutes on each;30 minutes on each
D) 45 minutes on computers and 15 on calculators;1 hour on calculators
E) 1 hour on computers;50 minutes on computers and 10 minutes on calculators

Question 57

Which of the following statements best describe the given production possibilities curve?

A) Consumers prefer butter to guns.
B) Consumers prefer guns to butter.
C) Consumers like guns as much as they like butter.
D) Becky prefers to produce butter rather than guns.
E) Becky is able to produce guns and/or butter.

Question 58

An inefficient point is

A) necessarily an attainable point.
B) may be an attainable point.
C) necessarily an unattainable point.
D) possibly an unattainable point.
E) one that uses too many resources.

Question 59

Smith and Jones comprise a two-person economy.Their hourly rates of production are shown below.

Suppose Smith and Jones begin at the point of producing 0 computers and 220 calculators in one hour.If they wish to produce 2 computers and 200 calculators in one hour,then Smith will spend __________ and Jones will spend __________.

A) 30 minutes on each;30 minutes on each.
B) 48 minutes on computers and 12 minutes on calculators;1 hour on calculators.
C) 1 hour on calculators;10 minutes on computers and 50 minutes on calculators.
D) 6 minutes on computers and 54 minutes on calculators;10 minutes on computers and 50 minutes on calculators.
E) 12 minutes on computers and 48 minutes on calculators;1 hour on calculators.

Question 60

The following table describes Buffy's abilities to produce either weapons or food each hour.

The absolute value of the slope of Buffy's production possibilities curve (with weapons on the vertical axis)is

A) 4.
B) 3.
C) 6.
D) 2.
E) 0.333.

Question 61

Teddy's production possibilities curve for goods M and N is described by the following equation: M = 21 - 3N,where M is the quantity of good M produced and N is the quantity of good N produced.The maximum quantity of N that Teddy can produce is

A) 63.
B) 21.
C) 14.
D) 7.
E) 0.

Question 62

Production possibilities curves are downward sloping,reflecting the principle of

A) scarcity.
B) comparative advantage.
C) increasing opportunity cost.
D) absolute advantage.
E) low-hanging fruit.

Question 63

Maria can produce 100 pounds of tomatoes or 25 pounds of squash in her garden each summer,while Tonya can produce 50 pounds of tomatoes or 25 pounds of squash.If the production possibilities curves are drawn with tomatoes on the vertical axis and squash on the horizontal axis,then the absolute values of the slope of Maria's and Tonya's production possibilities curves,respectively,are

A) 1/4 and 1/2.
B) 1/2 and 1/4.
C) 4 and 2.
D) 2 and 4.
E) 100 and 50.

Question 64

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

A) one person has an absolute advantage in both goods.
B) neither person has an absolute advantage.
C) both persons have identical absolute advantages.
D) the difference in their respective opportunity costs is large.
E) the difference in their respective opportunity costs is small.

Question 65

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 __________.

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 66

Teddy's production possibilities curve for goods M and N is described by the following equation: M = 21 - 3N,where M is the quantity of good M produced and N is the quantity of good N produced.The slope of Teddy's production possibilities curve,when M is on the vertical axis,is

A) - 3.
B) 3.
C) - 0.333.
D) 0.333.
E) 0.0333.

Question 67

Bobby Jo's opportunity cost of an extra bale of hemp is __________ and Mary Lou's is __________.

A) 0.33 fewer jugs of moonshine;0.29 fewer jugs of moonshine
B) 3 fewer jugs of moonshine;3.5 fewer jugs of moonshine
C) 3 fewer jugs of moonshine;0.29 fewer jugs of moonshine
D) 0.33 fewer jugs of moonshine;3.5 fewer jugs of moonshine
E) 27 fewer jugs of moonshine;14 fewer jugs of moonshine

Question 68

Jerry's production possibilities curve for goods W and Z is W = 20 - 2Z,where W is the quantity of good W produced and Z is the quantity of good Z produced.The combination of W and Z (14,3)is a(n)__________ point.

A) unattainable
B) inefficient
C) inefficient but attainable
D) efficient
E) efficient and unattainable

Question 69

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

A) beyond the production possibilities curve.
B) possible to expand production of one good without lowering the amount of the other.
C) on the production possibilities curve.
D) either an attainable or unattainable point.
E) the best combination out of all possible combinations.

Question 70

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

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 71

Because Bobby Jo and Mary Lou have __________ opportunity costs,they can experience __________ from specialization.

A) identical;a gain
B) unequal;a gain
C) unequal;no gain
D) equal;no gain
E) unequal;a loss

Question 72

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

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 73

If a given production combination is known to be attainable,then it must be

A) on the production possibilities curve.
B) beyond the production possibilities curve.
C) an efficient point.
D) an inefficient point.
E) either an inefficient or efficient point.

Question 74

Jerry's production possibilities curve for goods W and Z is W = 20 - 2Z,where W is the quantity of good W produced and Z is the quantity of good Z produced.The combination of W and Z (11,5)is a(n)__________ point.

A) unattainable
B) inefficient
C) inefficient but attainable
D) efficient
E) efficient and unattainable

Question 75

The production possibilities curve is

A) the boundary that divides all production combinations into efficient ones 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 convex (bowed into the origin)curve illustrating production trade-offs.
E) the boundary that divides all production combinations into good ones and bad ones.

Question 76

Joe's opportunity cost of producing body piercings is 3 tattoos,while Sam's is 0.75 tattoos.The Principle of Increasing Opportunity Cost would indicate that,to produce more and more body piercings,

A) Joe would be used first,followed by Sam.
B) Sam would always be used.
C) Sam would be used first and then Joe.
D) the sequencing of Sam and Joe is irrelevant.
E) Joe would always be used.

Question 77

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

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

Question 78

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

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

Question 79

In one 8-hour workday,Hector can produce 25 court appeals or 5 new lawsuits.If appeals are on the vertical axis,the slope of his production possibilities curve is

A) - 5.
B) 5.
C) - 2.
D) 0.2.
E) - 1.

Question 80

Teddy's production possibilities curve for goods M and N is described by the following equation: M = 21 - 3N,where M is the quantity of good M produced and N is the quantity of good N produced.The maximum quantity of M that Teddy can produce is

A) 63.
B) 21.
C) 14.
D) 7.
E) 0.