Question 1

The law of comparative advantage suggests that

Accepted Answer

A)  curtailing U.S.trade with other countries would make U.S.consumers better off.
B)  everyone would be better off if they were self-sufficient.
C)  countries will tend to import commodities that they can produce at a relatively low opportunity cost.
D)  countries will tend to import commodities that they can produce at a relatively high opportunity cost.E) C) and D)
F) A) and D)

Question 2

The government enforces property rights by

Accepted Answer

A)  requiring property owners to pay property taxes.
B)  providing police and courts.
C)  forcing people to own property.
D)  providing public parks and recreation facilities.E) B) and D)
F) All of the above

Question 3

Middlemen, such as grocers, stockbrokers, and realtors

Accepted Answer

A)  specialize in reducing transactions costs.
B)  provide nothing of value to either the buyer or the seller.
C)  have no effect on economic output in society.
D)  do not exist in capitalist economies.E) A) and B)
F) A) and C)

Question 4

Table 2-3
 
-Refer to Table 2-3. The rancher has a comparative advantage in

Accepted Answer

A)  neither good, and the farmer has a comparative advantage in both goods.
B)  both goods, and the farmer has a comparative advantage in neither good.
C)  potatoes, and the farmer has a comparative advantage in meat.
D)  meat, and the farmer has a comparative advantage in potatoes.E) A) and B)
F) All of the above

Question 5

Three basic decisions must be made by all economies. What are they?

Accepted Answer

A)  How much will be produced; when will it be produced; who will produce it?
B)  What goods will be produced; how will goods be produced; for whom will goods be produced?
C)  What will be consumed; how will goods be consumed; for whom will goods be consumed?
D)  How will the opportunity cost principle be applied; if the law of comparative advantage will be utilized, how will it be utilized; will the production possibilities constraint apply?E) B) and C)
F) A) and D)

Question 6

Which of the following statements about exchange is false?

Accepted Answer

A)  The expectation of gain motivates people to engage in trade.
B)  If a party to a potential exchange does not believe that it will lead to personal gain, he or she can chose not to engage in the trade.
C)  Voluntary exchange is generally mutually beneficial to the trading partners.
D)  If one trading partner gains, the other must lose.E) B) and C)
F) B) and D)

Question 7

If an economy is operating at a point inside the production possibilities curve,

Accepted Answer

A)  its resources are not being used efficiently.
B)  the curve will begin to shift inward.
C)  the curve will begin to shift outward.
D)  This is a trick question because an economy cannot produce at a point inside the curve.E) B) and C)
F) All of the above

Question 8

Michael takes 10 minutes to iron a shirt and 20 minutes to type a paper. Aiden takes 10 minutes to iron a shirt and 30 minutes to type a paper. Which of the following statements is correct?

Accepted Answer

A)  Aiden has a comparative advantage in ironing.
B)  Aiden has a comparative advantage in typing.
C)  Michael has a comparative advantage in ironing.
D)  Neither can gain from specialization and exchange.E) A) and B)
F) B) and D)

Question 9

Market economies are often criticized for how they answer the basic question, "For whom are goods produced?" This criticism usually comes from people who believe that the distribution of income is not "fair." Is there some way to separate production from distribution so that we can leave production just as it is but make the distribution of income "fairer"?

Accepted Answer

Unfortunately, there is no way to totall...

Question 10

Which of the following most accurately indicates the implications of an economy's production possibilities curve?

Accepted Answer

A)  If all the resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced.
B)  If all the resources of an economy are being used efficiently, it is generally possible to produce more of one good without having to sacrifice the production of other goods.
C)  Over time, it is generally impossible for a country to expand its production of goods.
D)  An economy will automatically move toward a point that lies outside of the production possibilities curve unless proper government policy constrains production.E) B) and C)
F) A) and B)

Question 11

Which of the following is true with regard to value and exchange?

Accepted Answer

A)  Exchange generally moves a good from a person who values it more to a person who values it less.
B)  Transaction costs reduce our ability to gain from potentially advantageous trades.
C)  Middlemen increase transaction costs and, thereby, reduce the potential gains derived from trade.
D)  Physical goods have an objective value that is unrelated to time and the person of ownership.E) None of the above
F) All of the above

Question 12

Explain the idea of capital investment by using the story of Robinson Crusoe. What is sacrificed, and what is gained?

Accepted Answer

For Robinson Crusoe, engaging in capital...

Question 13

Which of the following most accurately states the function of middlemen?

Accepted Answer

A)  Middlemen reduce transaction costs.
B)  Middlemen add to the expense of buyers and sellers without providing any benefit.
C)  Our economy would work just as well without middlemen since they do not expand the availability of physical goods.
D)  Middlemen reduce the number of transactions since they increase the buyer's price and reduce the seller's net receipts.E) A) and C)
F) All of the above

Question 14

The production possibilities curve illustrates the basic principle that

Accepted Answer

A)  an economy's capacity to produce is unrelated to its population.
B)  if all the resources of an economy are being used efficiently, more of one good can be produced only if more of another good is produced.
C)  an economy will automatically move toward a point at which all of its resources are being used inefficiently.
D)  if all the resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced.E) A) and B)
F) B) and C)

Question 15

A point inside the production possibilities curve represents a combination of goods that is

Accepted Answer

A)  inefficient.
B)  efficient.
C)  unattainable.
D)  attainable.E) B) and D)
F) All of the above

Question 16

Over time, an increase in a nation's stock of physical capital will

Accepted Answer

A)  shift the production possibilities curve inward.
B)  cause an economy to operate inside its production possibilities curve.
C)  shift the production possibilities curve outward.
D)  eliminate the basic economic problem of scarcity.E) B) and C)
F) A) and D)

Question 17

In economics, the term that refers to the time, effort, and other resources needed to search out, negotiate, and consummate an exchange is

Accepted Answer

A)  transaction costs.
B)  specialization costs.
C)  pecuniary costs.
D)  comparative costs.E) All of the above
F) A) and B)

Question 18

Figure 2-8 
-Points A, B, and C in Figure 2-8 indicate consumption and investment for three economies. Other things constant, which of the economies is likely to grow more rapidly in the future?

Accepted Answer

A)  economy A
B)  economy B
C)  economy C
D)  They would all be expected to grow at the same rate.E) All of the above
F) A) and D)

Question 19

Abigail wishes to spend more time this week studying for her classes. Using the idea of a production possibilities curve, and assuming Abigail is currently spending all of her time efficiently, Abigail can spend more time studying this week only if

Accepted Answer

A)  she also spends more time doing other things.
B)  she spends less time doing other things.
C)  Daylight Savings Time begins this week, so everyone moves their clocks ahead one hour.
D)  none of the above.E) B) and D)
F) B) and C)

Question 20

Noah values his car at $10,000, and Emily values it at $14,000. If Emily buys it from Noah for $11,000, which of the following is true?

Accepted Answer

A)  Noah gains $1,000 of value, and Emily gains $3,000 of value.
B)  Noah gains $11,000 of value, and Emily loses $11,000 of value.
C)  Noah gains $10,000 of value, and Emily loses $14,000 of value.
D)  Noah and Emily both gain $11,000 of value.E) All of the above
F) None of the above

Exam 2: Some Tools of the Economist

Over time, an increase in a nation's stock of physical capital will

Correct Answer
verified

Michael takes 10 minutes to iron a shirt and 20 minutes to type a paper. Aiden takes 10 minutes to iron a shirt and 30 minutes to type a paper. Which of the following statements is correct?

Correct Answer
verified

Which of the following statements about exchange is false?

Correct Answer
verified

Which of the following most accurately indicates the implications of an economy's production possibilities curve?

Correct Answer
verified

Table 2-3 -Refer to Table 2-3. The rancher has a comparative advantage in

Correct Answer
verified

Middlemen, such as grocers, stockbrokers, and realtors

Correct Answer
verified

Which of the following is true with regard to value and exchange?

Correct Answer
verified

Three basic decisions must be made by all economies. What are they?

Correct Answer
verified

In economics, the term that refers to the time, effort, and other resources needed to search out, negotiate, and consummate an exchange is

Correct Answer
verified

The government enforces property rights by

Correct Answer
verified

Abigail wishes to spend more time this week studying for her classes. Using the idea of a production possibilities curve, and assuming Abigail is currently spending all of her time efficiently, Abigail can spend more time studying this week only if

Correct Answer
verified

Explain the idea of capital investment by using the story of Robinson Crusoe. What is sacrificed, and what is gained?

Correct Answer
verified
For Robinson Crusoe, engaging in capital...
View Answer

The law of comparative advantage suggests that

Correct Answer
verified

Figure 2-8 -Points A, B, and C in Figure 2-8 indicate consumption and investment for three economies. Other things constant, which of the economies is likely to grow more rapidly in the future?

Correct Answer
verified

Correct Answer
verified
Unfortunately, there is no way to totall...
View Answer

If an economy is operating at a point inside the production possibilities curve,

Correct Answer
verified

Noah values his car at $10,000, and Emily values it at $14,000. If Emily buys it from Noah for $11,000, which of the following is true?

Correct Answer
verified

A point inside the production possibilities curve represents a combination of goods that is

Correct Answer
verified

Which of the following most accurately states the function of middlemen?

Correct Answer
verified

The production possibilities curve illustrates the basic principle that

Correct Answer
verified

Exam 2: Some Tools of the Economist

Over time, an increase in a nation's stock of physical capital will

Correct AnswerverifiedShow Answer

Michael takes 10 minutes to iron a shirt and 20 minutes to type a paper. Aiden takes 10 minutes to iron a shirt and 30 minutes to type a paper. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Which of the following statements about exchange is false?

Correct AnswerverifiedShow Answer

Which of the following most accurately indicates the implications of an economy's production possibilities curve?

Correct AnswerverifiedShow Answer

Table 2-3 -Refer to Table 2-3. The rancher has a comparative advantage in

Correct AnswerverifiedShow Answer

Middlemen, such as grocers, stockbrokers, and realtors

Correct AnswerverifiedShow Answer

Which of the following is true with regard to value and exchange?

Correct AnswerverifiedShow Answer

Three basic decisions must be made by all economies. What are they?

Correct AnswerverifiedShow Answer

In economics, the term that refers to the time, effort, and other resources needed to search out, negotiate, and consummate an exchange is

Correct AnswerverifiedShow Answer

The government enforces property rights by

Correct AnswerverifiedShow Answer

Abigail wishes to spend more time this week studying for her classes. Using the idea of a production possibilities curve, and assuming Abigail is currently spending all of her time efficiently, Abigail can spend more time studying this week only if

Correct AnswerverifiedShow Answer

Explain the idea of capital investment by using the story of Robinson Crusoe. What is sacrificed, and what is gained?

Correct AnswerverifiedFor Robinson Crusoe, engaging in capital...View AnswerShow Answer

The law of comparative advantage suggests that

Correct AnswerverifiedShow Answer

Figure 2-8 -Points A, B, and C in Figure 2-8 indicate consumption and investment for three economies. Other things constant, which of the economies is likely to grow more rapidly in the future?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedUnfortunately, there is no way to totall...View AnswerShow Answer

If an economy is operating at a point inside the production possibilities curve,

Correct AnswerverifiedShow Answer

Noah values his car at $10,000, and Emily values it at $14,000. If Emily buys it from Noah for $11,000, which of the following is true?

Correct AnswerverifiedShow Answer

A point inside the production possibilities curve represents a combination of goods that is

Correct AnswerverifiedShow Answer

Which of the following most accurately states the function of middlemen?

Correct AnswerverifiedShow Answer

The production possibilities curve illustrates the basic principle that

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
For Robinson Crusoe, engaging in capital...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Unfortunately, there is no way to totall...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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