Question 1

When private ownership of a resource is clearly defined and enforced, the private owner

Accepted Answer

A)   has little incentive to consider the wishes of others when deciding how to employ the resource.
B)   has little incentive to use the resource wisely.
C)   has a strong incentive to consume the resource during the period rather than conserving it for the future.
D)   has a strong incentive to use the resource wisely.

Question 2

Use the production possibilities data below to answer the following question(s) .
Table 2-3

Refer to Table 2-3. The opportunity cost of 1 pound of potatoes for the farmer is

Accepted Answer

A)   8 hours of labor.
B)   2 hours of labor.
C)   4 pounds of meat.
D)   1/4 pound of meat.

Question 3

When an entrepreneur like Bill Gates makes $10 billion through creating and selling new products,

Accepted Answer

A)   there will be exactly $10 billion less for other individuals in the economy.
B)   the total size of the economic pie has been increased.
C)   there will be more than $10 billion in losses to other workers who lose their jobs.
D)   it is likely that the new products are not as good as other products that are available in the market.

Question 4

Ms. Liebowitz has a choice of driving or flying from Morgantown, West Virginia to Washington, D.C. for a one-day business trip. If she travels by air, she will be able to work seven hours in D.C., while if she drives, she will only have time to work four hours once there. Her expected income from each hour of work in D.C. is $40. If Ms. Liebowitz is a rational decision maker, she will chose to fly if and only if the price differential (air cost minus driving cost)  is less than

Accepted Answer

A)   $40.
B)   $120.
C)   $160.
D)   $280.

Question 5

A production possibilities curve indicates that when resources are being used efficiently,

Accepted Answer

A)   you can only produce more of one good only if you lower its price.
B)   you can only produce more of one good only if you produce more of another good.
C)   you can only produce more of one good only if you produce less of another good.
D)   it is impossible to expand the total output of goods over time.

Question 6

In order to prosper, entrepreneurs must

Accepted Answer

A)   undertake projects that create wealth and increase the value of resources.
B)   find ways to prevent technological change.
C)   have their own wealth with which to finance projects that they want to undertake.
D)   undertake projects that use resources that are more valuable than is the output they produce.

Question 7

Use the production possibilities data below to answer the following question(s) .
Table 2-3

Refer to Table 2-3. The opportunity cost of 1 pound of meat for the farmer is

Accepted Answer

A)   1/4 hour of labor.
B)   4 hours of labor.
C)   4 pounds of potatoes.
D)   1/4 pound of potatoes.

Question 8

Kelly is an attorney and also an excellent typist. She can type 120 words per minute, but she charges attorney fees at $100 per hour. Todd would like some typing work but can only type 60 words per minute. According to the law of comparative advantage, Kelly should hire Todd to do her typing if and only if his wage rate is less than

Accepted Answer

A)   $10 per hour.
B)   $50 per hour.
C)   $60 per hour.
D)   $100 per hour.

Question 9

Land used to grow corn could also be used to grow soybeans. Which of the following is true when the farmer plants soybeans and the market price of corn rises?

Accepted Answer

A)   The opportunity cost of producing soybeans decreases.
B)   The opportunity cost of producing soybeans increases.
C)   There will be no change in the opportunity cost of producing soybeans.
D)   The opportunity cost of producing corn increases.

Question 10

An economics professor points to a student in the front row and announces that "sitting in class is the thing you value most during this time period." Is the professor correct? Why or why not?

Accepted Answer

If the student is rational (and this is ...

Question 11

Economic thinking suggests that a nation in which middlemen are considered to be unproductive seekers of profit, and where their activities are heavily restricted by law, will

Accepted Answer

A)   gain by channeling people's efforts away from unproductive middleman activity toward physical output.
B)   lose the potential gains from trade that would result from lower transaction costs emanating from middleman activities.
C)   find that it is richer because the added transaction costs normally imposed by middlemen will be reduced.
D)   gain because the value of total output will rise.

Question 12

The law of comparative advantage explains why

Accepted Answer

A)   specialization and exchange will make it possible for trading partners to expand their combined output.
B)   there will be an inverse relationship between the price of a product and the quantity of it that will be demanded.
C)   larger firms will have lower per unit costs than smaller firms.
D)   an increase in the price of a good will lead to an expansion in the quantity supplied by business firms.

Question 13

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.

Question 14

The law of comparative advantage implies that a nation, individual, or region should trade for those economic goods for which it

Accepted Answer

A)   has an absolute advantage.
B)   has a comparative advantage.
C)   is a low opportunity cost producer.
D)   is a high opportunity cost producer.

Question 15

If Harry Bartolini's Ford dealership sells Rosa Brown a new automobile for $30,000, economic analysis indicates that

Accepted Answer

A)   both parties to the transaction will gain.
B)   Mr. Bartolini will gain from the transaction, while Rosa Brown will lose.
C)   Rosa Brown will gain from the transaction, while Mr. Bartolini will lose.
D)   the well-being of both parties will be unchanged.

Question 16

When resources are being used wastefully or inefficiently, the

Accepted Answer

A)   production possibilities curve shifts inward.
B)   production possibilities curve shifts outward.
C)   economy is operating at a point inside its production possibilities constraint.
D)   economy is operating at a point outside its production possibilities constraint.

Question 17

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.

Question 18

Figure 2-5 
In Figure 2-5, which of the following is true?

Accepted Answer

A)   Point A is inefficient.
B)   Point B is efficient.
C)   Point C is unattainable.
D)   All of the above are true.

Question 19

With time, which one of the following strategies will most likely result in an outward shift in an economy's production possibilities curve?

Accepted Answer

A)   passage of legislation reducing the workweek to 30 hours
B)   institution of a tax policy encouraging research that advances technology
C)   institution of a tax policy encouraging consumption at the expense of investment
D)   passage of a law requiring the minimum wage to increase every year

Question 20

Use the production possibilities data below to answer the following question(s) .
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.

Exam 2: Some Tools of the Economist

Which of the following statements about exchange is false ?

Correct Answer
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Economic thinking suggests that a nation in which middlemen are considered to be unproductive seekers of profit, and where their activities are heavily restricted by law, will

Correct Answer
verified

A production possibilities curve indicates that when resources are being used efficiently,

Correct Answer
verified

An economics professor points to a student in the front row and announces that "sitting in class is the thing you value most during this time period." Is the professor correct? Why or why not?

Correct Answer
verified
If the student is rational (and this is ...
View Answer

Figure 2-5 In Figure 2-5, which of the following is true?

Correct Answer
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Correct Answer
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Use the production possibilities data below to answer the following question(s) . Table 2-3 Refer to Table 2-3. The opportunity cost of 1 pound of potatoes for the farmer is

Correct Answer
verified

With time, which one of the following strategies will most likely result in an outward shift in an economy's production possibilities curve?

Correct Answer
verified

If Harry Bartolini's Ford dealership sells Rosa Brown a new automobile for $30,000, economic analysis indicates that

Correct Answer
verified

Correct Answer
verified

The law of comparative advantage implies that a nation, individual, or region should trade for those economic goods for which it

Correct Answer
verified

In order to prosper, entrepreneurs must

Correct Answer
verified

When an entrepreneur like Bill Gates makes $10 billion through creating and selling new products,

Correct Answer
verified

Use the production possibilities data below to answer the following question(s) . Table 2-3 Refer to Table 2-3. The rancher has a comparative advantage in

Correct Answer
verified

Use the production possibilities data below to answer the following question(s) . Table 2-3 Refer to Table 2-3. The opportunity cost of 1 pound of meat for the farmer is

Correct Answer
verified

When private ownership of a resource is clearly defined and enforced, the private owner

Correct Answer
verified

The production possibilities curve illustrates the basic principle that

Correct Answer
verified

Land used to grow corn could also be used to grow soybeans. Which of the following is true when the farmer plants soybeans and the market price of corn rises?

Correct Answer
verified

When resources are being used wastefully or inefficiently, the

Correct Answer
verified

The law of comparative advantage explains why

Correct Answer
verified

Exam 2: Some Tools of the Economist

Which of the following statements about exchange is false ?

Correct AnswerverifiedShow Answer

Economic thinking suggests that a nation in which middlemen are considered to be unproductive seekers of profit, and where their activities are heavily restricted by law, will

Correct AnswerverifiedShow Answer

A production possibilities curve indicates that when resources are being used efficiently,

Correct AnswerverifiedShow Answer

An economics professor points to a student in the front row and announces that "sitting in class is the thing you value most during this time period." Is the professor correct? Why or why not?

Correct AnswerverifiedIf the student is rational (and this is ...View AnswerShow Answer

Figure 2-5 In Figure 2-5, which of the following is true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Use the production possibilities data below to answer the following question(s) . Table 2-3 Refer to Table 2-3. The opportunity cost of 1 pound of potatoes for the farmer is

Correct AnswerverifiedShow Answer

With time, which one of the following strategies will most likely result in an outward shift in an economy's production possibilities curve?

Correct AnswerverifiedShow Answer

If Harry Bartolini's Ford dealership sells Rosa Brown a new automobile for $30,000, economic analysis indicates that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The law of comparative advantage implies that a nation, individual, or region should trade for those economic goods for which it

Correct AnswerverifiedShow Answer

In order to prosper, entrepreneurs must

Correct AnswerverifiedShow Answer

When an entrepreneur like Bill Gates makes $10 billion through creating and selling new products,

Correct AnswerverifiedShow Answer

Use the production possibilities data below to answer the following question(s) . Table 2-3 Refer to Table 2-3. The rancher has a comparative advantage in

Correct AnswerverifiedShow Answer

Use the production possibilities data below to answer the following question(s) . Table 2-3 Refer to Table 2-3. The opportunity cost of 1 pound of meat for the farmer is

Correct AnswerverifiedShow Answer

When private ownership of a resource is clearly defined and enforced, the private owner

Correct AnswerverifiedShow Answer

The production possibilities curve illustrates the basic principle that

Correct AnswerverifiedShow Answer

Land used to grow corn could also be used to grow soybeans. Which of the following is true when the farmer plants soybeans and the market price of corn rises?

Correct AnswerverifiedShow Answer

When resources are being used wastefully or inefficiently, the

Correct AnswerverifiedShow Answer

The law of comparative advantage explains why

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
If the student is rational (and this is ...
View Answer

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