Question 1

People (and all resources) :

Accepted Answer

A)  tend to specialize in those activities in which their opportunity costs are minimized.
B)  tend to specialize in those activities in which their opportunity costs are maximized.
C)  never consider opportunity costs before specializing in a particular activity.
D)  consider only direct costs while choosing to specialize in a particular activity.
E)  do not act in their own self-interest but specialize in those activities which benefit others.

Question 2

Economic growth can be illustrated by an outward shift of the PPC.

Accepted Answer

A) True 
 B)False

Question 3

If society begins by producing 3 units of X and 4 units of Y and then alters production so that it is now producing 4 units of X and 4 units of Y, and we know that the quantity and quality of resources were unchanged and that technology did not change, then:

Accepted Answer

A)  3 units of X and 4 units of Y are a combination best represented by a point inside the production possibilities curve [PPC].
B)  society has moved along the PPC.
C)  resources were being fully utilized at 3 units of X and 4 units of Y.
D)  resources were being efficiently utilized at 3 units of X and 4 units of Y.
E)  3 units of X and 4 units of Y are a combination best represented by a point outside the PPC.

Question 4

Opportunity cost is best defined as:

Accepted Answer

A)  the sum of all alternatives given up when a choice is made.
B)  the money spent once a choice is made.
C)  the highest-valued alternative given up when a choice is made.
D)  the difference between the cost price and the selling price of a good.
E)  the cost of capital resources used in the production of additional capital.

Question 5

Voluntary free trade results in:

Accepted Answer

A)  population growth.
B)  inflation.
C)  higher living standards.
D)  income disparity.
E)  unemployment.

Question 6

Which of the following best describes a tradeoff?

Accepted Answer

A)  An office executive enrolling into a management course to develop her skills.
B)  An investor buying stocks of a start-up company.
C)  A businessman investing a portion of company profits in research and development.
D)  A college student sacrificing a few hours of study time to work at the town cafeteria.
E)  A worker purchasing a new car with her bonus earnings.

Question 7

The concept of comparative advantage applies to:

Accepted Answer

A)  only people with at least a high school diploma.
B)  only people who are currently employed.
C)  situations in which you have information about the salary levels of those with whom you are competing for a job.
D)  every case of trade or exchange.
E)  about half of all cases of trade or exchange.

Question 8

Specialization and trade do not allow individuals, firms, or even nations to acquire goods that lie beyond their production capabilities.

Accepted Answer

A) True 
 B)False

Question 9

Public property rights refer to the right of ownership that is absolutely necessary for trade to occur and are ensured by a legal system of laws and courts.

Accepted Answer

A) True 
 B)False

Question 10

If using the same resources, the U.S.workers can produce more of any good than Mexican workers, then the United States should produce every good.

Accepted Answer

A) True 
 B)False

Question 11

According to economists, human activity is unresponsive to changes in costs.

Accepted Answer

A) True 
 B)False

Question 12

Marginal opportunity cost refers to the:

Accepted Answer

A)  amount of one good or service that must be given up to obtain one additional unit of another good or service.
B)  temporary unemployment created in an economy when resources are transferred from one industry to another.
C)  additional input cost borne by producers to increase production.
D)  economies of scope realized by firms through efficient allocation of resources.
E)  economies of scale experienced by firms post specialization.

Question 13

Assume that the United States uses 20 worker-hours to produce 1 computer and 5 worker-hours to produce 1 unit of food;assume also that Japan uses 10 worker-hours to produce 1 computer and 30 worker-hours to produce 1 unit of food.Which of the following statements is true?

Accepted Answer

A)  Japan has the comparative advantage in food production.
B)  The United States has the comparative advantage in food production.
C)  The United States has the comparative advantage in the production of computers.
D)  The United States has a lower opportunity cost for making computers.
E)  Japan has a lower opportunity cost for making food.

Question 14

One of the reasons for China's real per capita GDP being far lower than that of Taiwan in 2000 was the lack of private property rights in the former nation.

Accepted Answer

A) True 
 B)False

Question 15

Individuals, firms, and nations should specialize in those activities which have the highest marginal cost.

Accepted Answer

A) True 
 B)False

Question 16

Consider a nation with an endowment of iron ore and petroleum.If the nation specializes in the production of aluminum and gasoline instead of steel we can say that it is operating:

Accepted Answer

A)  on its production possibilities curve.
B)  outside its production possibilities curve.
C)  inside its production possibilities curve.
D)  on the highest achievable production possibilities curve.
E)  on the lowest production possibilities curve.

Question 17

The figure given below represents an economy producing corn and planes under different economic situations. Figure 2.2  Refer to Figure 2.2.Assume that the economy experiences a 20% drop in the work force.Which of the following graph(s) in the figure describe(s) the change in the economy's production possibilities curve [PPC]?

Accepted Answer

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

Question 18

The giving up of a good or activity in order to obtain some other good or activity is called:

Accepted Answer

A)  a tradeoff.
B)  a cost analysis.
C)  a random choice.
D)  an opportunity cost.
E)  a sunk cost.

Question 19

The figure given below represents the production possibilities curve for goods and services in an economy. Figure 2.3  Refer to Figure 2.3.The movement from Curve X to Curve Y indicates:

Accepted Answer

A)  contraction in the production of goods.
B)  contraction in the production of services.
C)  expansion in the ability to produce both goods and services.
D)  expansion in the ability to produce goods.
E)  expansion in the ability to produce services.

Question 20

Which of the following would not cause any kind of an outward shift of a nation's production possibilities curve [PPC]?

Accepted Answer

A)  An improvement in the general level of education
B)  Technological innovation
C)  Discovery of a new source of energy
D)  An increase in the size of the labor force
E)  A flood that renders thousands of acres of farmland unusable

Exam 2: Choice, Opportunity Costs, and Specialization

Assume that the United States uses 20 worker-hours to produce 1 computer and 5 worker-hours to produce 1 unit of food;assume also that Japan uses 10 worker-hours to produce 1 computer and 30 worker-hours to produce 1 unit of food.Which of the following statements is true?

Correct Answer
verified

Consider a nation with an endowment of iron ore and petroleum.If the nation specializes in the production of aluminum and gasoline instead of steel we can say that it is operating:

Correct Answer
verified

People (and all resources) :

Correct Answer
verified

If society begins by producing 3 units of X and 4 units of Y and then alters production so that it is now producing 4 units of X and 4 units of Y, and we know that the quantity and quality of resources were unchanged and that technology did not change, then:

Correct Answer
verified

If using the same resources, the U.S.workers can produce more of any good than Mexican workers, then the United States should produce every good.

Correct Answer
verified

Individuals, firms, and nations should specialize in those activities which have the highest marginal cost.

Correct Answer
verified

Which of the following best describes a tradeoff?

Correct Answer
verified

According to economists, human activity is unresponsive to changes in costs.

Correct Answer
verified

Which of the following would not cause any kind of an outward shift of a nation's production possibilities curve [PPC]?

Correct Answer
verified

One of the reasons for China's real per capita GDP being far lower than that of Taiwan in 2000 was the lack of private property rights in the former nation.

Correct Answer
verified

Marginal opportunity cost refers to the:

Correct Answer
verified

The giving up of a good or activity in order to obtain some other good or activity is called:

Correct Answer
verified

Opportunity cost is best defined as:

Correct Answer
verified

The concept of comparative advantage applies to:

Correct Answer
verified

Public property rights refer to the right of ownership that is absolutely necessary for trade to occur and are ensured by a legal system of laws and courts.

Correct Answer
verified

The figure given below represents the production possibilities curve for goods and services in an economy. Figure 2.3 Refer to Figure 2.3.The movement from Curve X to Curve Y indicates:

Correct Answer
verified

Voluntary free trade results in:

Correct Answer
verified

Economic growth can be illustrated by an outward shift of the PPC.

Correct Answer
verified

Specialization and trade do not allow individuals, firms, or even nations to acquire goods that lie beyond their production capabilities.

Correct Answer
verified

Correct Answer
verified

Exam 2: Choice, Opportunity Costs, and Specialization

Assume that the United States uses 20 worker-hours to produce 1 computer and 5 worker-hours to produce 1 unit of food;assume also that Japan uses 10 worker-hours to produce 1 computer and 30 worker-hours to produce 1 unit of food.Which of the following statements is true?

Correct AnswerverifiedShow Answer

Consider a nation with an endowment of iron ore and petroleum.If the nation specializes in the production of aluminum and gasoline instead of steel we can say that it is operating:

Correct AnswerverifiedShow Answer

People (and all resources) :

Correct AnswerverifiedShow Answer

If society begins by producing 3 units of X and 4 units of Y and then alters production so that it is now producing 4 units of X and 4 units of Y, and we know that the quantity and quality of resources were unchanged and that technology did not change, then:

Correct AnswerverifiedShow Answer

If using the same resources, the U.S.workers can produce more of any good than Mexican workers, then the United States should produce every good.

Correct AnswerverifiedShow Answer

Individuals, firms, and nations should specialize in those activities which have the highest marginal cost.

Correct AnswerverifiedShow Answer

Which of the following best describes a tradeoff?

Correct AnswerverifiedShow Answer

According to economists, human activity is unresponsive to changes in costs.

Correct AnswerverifiedShow Answer

Which of the following would not cause any kind of an outward shift of a nation's production possibilities curve [PPC]?

Correct AnswerverifiedShow Answer

One of the reasons for China's real per capita GDP being far lower than that of Taiwan in 2000 was the lack of private property rights in the former nation.

Correct AnswerverifiedShow Answer

Marginal opportunity cost refers to the:

Correct AnswerverifiedShow Answer

The giving up of a good or activity in order to obtain some other good or activity is called:

Correct AnswerverifiedShow Answer

Opportunity cost is best defined as:

Correct AnswerverifiedShow Answer

The concept of comparative advantage applies to:

Correct AnswerverifiedShow Answer

Public property rights refer to the right of ownership that is absolutely necessary for trade to occur and are ensured by a legal system of laws and courts.

Correct AnswerverifiedShow Answer

The figure given below represents the production possibilities curve for goods and services in an economy. Figure 2.3 Refer to Figure 2.3.The movement from Curve X to Curve Y indicates:

Correct AnswerverifiedShow Answer

Voluntary free trade results in:

Correct AnswerverifiedShow Answer

Economic growth can be illustrated by an outward shift of the PPC.

Correct AnswerverifiedShow Answer

Specialization and trade do not allow individuals, firms, or even nations to acquire goods that lie beyond their production capabilities.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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