Question 1

The Sultan of Brunei, one of the world's richest people, does not face the problem of scarcity.

Accepted Answer

A) True 
 B)False

Question 2

In one week, Mohammed can knit 5 sweaters or bake 240 cookies. In one week, Tetah can knit 15 sweaters or bake 480 cookies. In this example,

Accepted Answer

A)  Mohammed has the absolute and comparative advantage in both tasks
B)  Tetah has the absolute and comparative advantage in both tasks
C)  Mohammed has the absolute advantage in both tasks and the comparative advantage in knitting sweaters
D)  Tetah has the absolute advantage in both tasks and the comparative advantage in knitting sweaters
E)  Mohammed has the absolute advantage in both tasks and the comparative advantage in baking cookiesF) All of the above
G) D) and E)

Question 3

Which of the following would shift the production possibilities frontier outward?

Accepted Answer

A)  a reduction in inefficiency
B)  a reduction in the size of the labor force
C)  an improvement in technology
D)  a change in the combination of goods produced
E)  increasing opportunity costsF) B) and E)
G) A) and E)

Question 4

If Robin has an absolute advantage in both gardening and baking when compared to Robert, then

Accepted Answer

A)  Robin cannot benefit by trading with Robert
B)  Robin can benefit by specializing in gardening if Robert specializes in baking
C)  Robin can benefit by specializing in baking if Robert specializes in gardening
D)  Robin and Robert may benefit from trading, but there is insufficient information to determine who should specialize in what
E)  neither Robin nor Robert can benefit from trading with the otherF) B) and E)
G) A) and E)

Question 5

The law of comparative advantage says that a person should produce a good if she

Accepted Answer

A)  has the greatest desire to consume that good
B)  has the lowest opportunity cost of producing that good
C)  has an absolute advantage in a related activity
D)  has a comparative advantage in a related activity
E)  is equally good at producing this good as someone else isF) C) and D)
G) A) and B)

Question 6

Absolute advantage is based on opportunity cost.

Accepted Answer

A) True 
 B)False

Question 7

Exhibit 2-1
 
-According to Exhibit 2-1, Maria's opportunity cost of doing a load of laundry is

Accepted Answer

A)  4 pages
B)  6 pages
C)  2/3 of a page
D)  3/2 of a page
E)  impossible to computeF) None of the above
G) A) and D)

Question 8

Which of the following would not shift the production possibilities frontier?

Accepted Answer

A)  an increase in worker training
B)  a war that destroyed many buildings
C)  a technological improvement that improved fuel efficiency in cars
D)  a decrease in the size of the labor force
E)  a change to a more inefficient production processF) A) and D)
G) A) and B)

Question 9

Points inside the production possibilities frontier represent

Accepted Answer

A)  full and efficient use of all resources
B)  inefficiency or unemployment (or both) 
C)  currently unattainable combinations of outputs
D)  currently unattainable combinations of resources
E)  the most desirable combinations of outputsF) C) and E)
G) A) and E)

Question 10

Exhibit 2-3
 
-Which of the following points in Exhibit 2-3 represents an inefficient use of the economy's resources?

Accepted Answer

A)  g
B)  i
C)  f
D)  d
E)  hF) A) and B)
G) D) and E)

Question 11

A rational decision maker engages in an activity if that activity is more attractive than the best alternative.

Accepted Answer

A) True 
 B)False

Question 12

Your opportunity cost of choosing a particular activity

Accepted Answer

A)  can be easily and accurately calculated
B)  cannot even be estimated
C)  does not change over time
D)  varies, depending on time and circumstances
E)  is measured by the money you spend on the activityF) B) and E)
G) A) and E)

Question 13

Which of the following is a characteristic of pure capitalism?

Accepted Answer

A)  all resources are owned communally
B)  economic activity is coordinated by government decision makers
C)  the price system is used to guide resources to their highest-valued uses
D)  centralized economic planning is used to answer the basic economic questions
E)  individual choices are reflected only through collective decisionsF) A) and B)
G) A) and C)

Question 14

A PPF will not shift because of an increase in

Accepted Answer

A)  the stability of the rules of the game
B)  capital stock
C)  resource availability
D)  unemployment
E)  technological changeF) B) and D)
G) None of the above

Question 15

Just as resources are scarce for the individual,

Accepted Answer

A)  they are also scarce for the economy as a whole
B)  they are never scarce for the economy as a whole
C)  they are randomly abundant for other individuals
D)  there will be zero resources available for the economy as a whole
E)  the economy a whole is never faced with having to make rational choices about using resourcesF) A) and E)
G) A) and C)

Question 16

A point inside the production possibilities curve illustrates a situation in which resources are not fully employed

Accepted Answer

A) True 
 B)False

Question 17

Exhibit 2-9
    
-Refer to Exhibit 2-9. Which of the graphs best illustrates the impact on the production possibilities frontier of a dramatic increase in the rate of immigration into a country?

Accepted Answer

A)  a
B)  b
C)  c
D)  d
E)  b and cF) A) and E)
G) A) and D)

Question 18

The U.S. economy is best characterized as

Accepted Answer

A)  pure capitalism
B)  a command economy
C)  socialism
D)  a mixed capitalist economy
E)  market socialismF) C) and D)
G) A) and D)

Question 19

The "division of labor" refers to

Accepted Answer

A)  discrimination in labor markets
B)  separating a job into smaller tasks completed by different people
C)  one worker who divides his time among different jobs and duties
D)  defining a job according to the appropriate sex
E)  the fact that two 20-year-olds are more productive than one 40-year-oldF) A) and E)
G) A) and D)

Question 20

The production possibilities frontier represents all desirable combinations of two goods

Accepted Answer

A) True 
 B)False

Exam 3: Economic Tools and Economics Systems

If Robin has an absolute advantage in both gardening and baking when compared to Robert, then

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Exhibit 2-1 -According to Exhibit 2-1, Maria's opportunity cost of doing a load of laundry is

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The law of comparative advantage says that a person should produce a good if she

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Exhibit 2-9 -Refer to Exhibit 2-9. Which of the graphs best illustrates the impact on the production possibilities frontier of a dramatic increase in the rate of immigration into a country?

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Exhibit 2-3 -Which of the following points in Exhibit 2-3 represents an inefficient use of the economy's resources?

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In one week, Mohammed can knit 5 sweaters or bake 240 cookies. In one week, Tetah can knit 15 sweaters or bake 480 cookies. In this example,

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Absolute advantage is based on opportunity cost.

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Points inside the production possibilities frontier represent

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Your opportunity cost of choosing a particular activity

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A point inside the production possibilities curve illustrates a situation in which resources are not fully employed

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The "division of labor" refers to

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A PPF will not shift because of an increase in

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The U.S. economy is best characterized as

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The Sultan of Brunei, one of the world's richest people, does not face the problem of scarcity.

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Which of the following is a characteristic of pure capitalism?

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A rational decision maker engages in an activity if that activity is more attractive than the best alternative.

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Just as resources are scarce for the individual,

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Which of the following would shift the production possibilities frontier outward?

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Which of the following would not shift the production possibilities frontier?

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The production possibilities frontier represents all desirable combinations of two goods

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