Question 1

According to the law of comparative advantage, a particular task is performed most efficiently by the individual with the lowest

Accepted Answer

A)  wage rate.
B)  tax liability.
C)  net worth.
D)  opportunity cost.

Question 2

Which of the following is NOT true of opportunity cost?

Accepted Answer

A)  Opportunity costs are subjective because they depend upon how the decision-maker values his or her options.
B)  Opportunity costs are only the monetary costs of lost options.
C)  Opportunity costs are the highest-valued alternative sacrificed in order to choose an option.
D)  Only the decision-maker can determine his or her opportunity costs for any particular action.

Question 3

The law of comparative advantage indicates that

Accepted Answer

A)  a group of people will reduce their output when each good or service is supplied by the low opportunity cost producer.
B)  trading partners lose when they can acquire a good through trade cheaper than they can produce it.
C)  trade is most effective when people trade only among those in their own nation.
D)  a group of people can increase their output when each good or service is supplied by the low opportunity cost producer.

Question 4

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 5

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 6

After the terrorist attacks on September 11, 2001, the United States began devoting substantial resources toward the War on Terrorism, homeland security, and relief efforts. Use the production possibilities curve to demonstrate how this might affect the production of other goods in the United States.

Accepted Answer

Increased resources devoted to...

Question 7

The process by which new products and methods of production are continuously replacing old ones is known as:

Accepted Answer

A)  opportunity cost.
B)  the production possibilities frontier.
C)  creative destruction.
D)  the fallacy of composition.

Question 8

Dr. Jones, a dentist, is choosing between driving and flying from Pittsburgh to New York City. If Jones drove, she would have to close her office four hours earlier than if she flew by airplane. Her expected income (after taxes)  from her practice is $50 per hour. Assuming all other factors are equal, if Jones was a rational decision maker, she would drive if the price differential (air cost minus driving)  was greater than

Accepted Answer

A)  $50.
B)  $100.
C)  $150.
D)  $200.

Question 9

A production possibilities curve graphically represents the maximum quantities of two products produced when all resources in the economy are being used efficiently. If an economy operates at a point inside its production possibilities curve,

Accepted Answer

A)  it lacks the resources necessary to produce at full employment.
B)  it is utilizing some resources inefficiently.
C)  it does not confront the problem of scarce goods relative to unlimited wants.
D)  it does not exist in the real world since it is impossible for an economy to operate inside its production possibilities curve.

Question 10

Keri decided to sleep in today rather than attend her 9a.m. economics class. According to economic analysis, her choice was

Accepted Answer

A)  irrational, because economic analysis suggests you should always attend classes that you have already paid for.
B)  irrational, because oversleeping is not in Keri's self-interest.
C)  rational if Keri has not missed any other classes.
D)  rational if Keri values sleep more highly than the benefit she expects to receive from attending the class.

Question 11

Given freedom of movement for both goods and resources, if Florida producers specialize in oranges and Georgia producers specialize in peaches, then it would be reasonable to conclude that

Accepted Answer

A)  the opportunity cost of growing oranges is higher in Florida than in Georgia.
B)  Georgia has a comparative advantage in producing peaches.
C)  Florida has a comparative advantage in producing peaches.
D)  total output will be expanded when Georgia allocates more resources to producing oranges and Florida allocates more resources to producing peaches.

Question 12

According to the law of comparative advantage,

Accepted Answer

A)  each producer should strive toward self-sufficiency in order to maximize the total production of the economy.
B)  each product should be produced by the lowest opportunity cost producer in order to maximize output.
C)  one should never compare one's abilities with those of another.
D)  each product should be produced by the individual who can produce more of that product than any other individual.

Question 13

The president of a large public university proclaims, "If we can get the state government to fund our new football stadium, it will not cost us anything." Evaluate this view from an economic perspective.

Accepted Answer

While it may not directly affect the uni...

Exam 2: B: Some Tools of the Economist

According to the law of comparative advantage, a particular task is performed most efficiently by the individual with the lowest

Correct Answer
verified

Keri decided to sleep in today rather than attend her 9a.m. economics class. According to economic analysis, her choice was

Correct Answer
verified

Which of the following is NOT true of opportunity cost?

Correct Answer
verified

According to the law of comparative advantage,

Correct Answer
verified

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

The process by which new products and methods of production are continuously replacing old ones is known as:

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 indicates that

Correct Answer
verified

Correct Answer
verified

The president of a large public university proclaims, "If we can get the state government to fund our new football stadium, it will not cost us anything." Evaluate this view from an economic perspective.

Correct Answer
verified
While it may not directly affect the uni...
View Answer

A production possibilities curve graphically represents the maximum quantities of two products produced when all resources in the economy are being used efficiently. If an economy operates at a point inside its production possibilities curve,

Correct Answer
verified

Given freedom of movement for both goods and resources, if Florida producers specialize in oranges and Georgia producers specialize in peaches, then it would be reasonable to conclude that

Correct Answer
verified

Correct Answer
verified
Increased resources devoted to...
View Answer

Exam 2: B: Some Tools of the Economist

According to the law of comparative advantage, a particular task is performed most efficiently by the individual with the lowest

Correct AnswerverifiedShow Answer

Keri decided to sleep in today rather than attend her 9a.m. economics class. According to economic analysis, her choice was

Correct AnswerverifiedShow Answer

Which of the following is NOT true of opportunity cost?

Correct AnswerverifiedShow Answer

According to the law of comparative advantage,

Correct AnswerverifiedShow Answer

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

The process by which new products and methods of production are continuously replacing old ones is known as:

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 indicates that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The president of a large public university proclaims, "If we can get the state government to fund our new football stadium, it will not cost us anything." Evaluate this view from an economic perspective.

Correct AnswerverifiedWhile it may not directly affect the uni...View AnswerShow Answer

A production possibilities curve graphically represents the maximum quantities of two products produced when all resources in the economy are being used efficiently. If an economy operates at a point inside its production possibilities curve,

Correct AnswerverifiedShow Answer

Given freedom of movement for both goods and resources, if Florida producers specialize in oranges and Georgia producers specialize in peaches, then it would be reasonable to conclude that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedIncreased resources devoted to...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
While it may not directly affect the uni...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Increased resources devoted to...
View Answer