Question 1

The study of economics is primarily concerned with

Accepted Answer

allocating scarce resources to meet society wants

Answer

managing money and financial assets

Answer

promoting economic equality and crating a just society

Answer

enacting laws that protect the environment

Question 2

What is the difference between physical capital and human capital?

Accepted Answer

Physical capital are tangible resources used to produce goods and serve while human capital is intangible knowledge and skills

Answer

Physical capital is used in the modern production process while human capital is no longer used in modern economies

Answer

Physical capital is money while human capital is labor done by workers

Answer

Physical capital can only be sed in market economies

Question 3

The next best alternative given up when a decision is made is called.

Accepted Answer

an opportunity cost

Answer

a trade off

Answer

comparative advantage

Answer

a scarce resource

Question 4

The production possibilities curve (or frontier) shows

Accepted Answer

the different combinations of two goods or services that can by produced given a fixed number of resources

Answer

that resources are not scarce as long as they are used efficiently

Answer

that producing consumer goods leads to more economic growth in the long run than producing capital goods

Answer

the number of goods and services a country should produce to meet society's needs

Question 5

For the production possibilities above, the opportunity cost of moving from combination "D" to combination "C" is

Accepted Answer

1 Hat

Answer

2 Hats

Answer

15 Shoes

Answer

10 Shoes

Question 6

Which of the following is true if the individual with these production possibilities above was producing 20 shoes and 2 hats?

Accepted Answer

Their scarce resources would not be used efficiently

Answer

They could be producing beyond their production possibilites

Answer

They would be producing too many shoes

Answer

They would maximize their sales and profit

Question 7

A point outside the production possibilities frontier represents

Accepted Answer

an unattainable combination

Answer

an efficient use of resources

Answer

future output if producers become more efficient

Answer

full employment in an economy

Question 8

Which of the following is true if a production possibilities curve for two goods is straight rather than bowed outward?

Accepted Answer

Resources are equally suited for the production of either good

Answer

Resources are not equally suited for the production of both goods

Answer

Resources are not scarce

Answer

Economic growth is occurring in the economy

Question 9

A bowed-out production possibilities curve shows

Accepted Answer

increasing opportunity costs because resources are not easily adaptable

Answer

decreasing opportunity cost because resources are not easily adaptable

Answer

increasing opportunity costs because resources are easily adaptable

Answer

constant opportunity cost because resources are easily adaptable

Question 10

Which of the following will NOT result in an outward (rightward) shift of the production possibilities curve.

Accepted Answer

a decrease in unemployment

Answer

an increase in the quantity of a society's resources

Answer

an improvement in the quality of a nation's human capital

Answer

a technological breakthrough that improves productivity

Question 11

Whic of the following statements is true?

Accepted Answer

Producing combination B will result in greater future growth than producing combination A

Answer

Combination C is inefficient

Answer

The entire curve will shift outward if this economy becomes more efficient

Answer

Combination E is attainable but undesirabe

Question 12

Which of the following best summarized the main difference between command economies and free market economies?

Accepted Answer

Free arket economies proote private ownership of resources

Answer

Command economies don't allow workers to specialize in specific industries

Answer

Production in free market economies is always efficient

Answer

Command economies promote the production of capital goods

Question 13

Whicn of the following is true according toeh the circular flow model?

Accepted Answer

Firms are demanders in the reource market and suppliers in the product market

Answer

Households are demanders in boh the resource and factor market

Answer

Households are demanders in the resource market and suppliers in the product market

Answer

Firms are suppliers in both the product market and factor market

Question 14

Assume that Brazil can produce 30 tons of sugar or 20 tons of wheat and Peru can produce 20 tons of sugar or 10 tons of wheat.  Which of the following is true?

Accepted Answer

For Brazil, the opportunity cost of producing one ton of wheat is 1.5 tons of sugar

Answer

Peru has a comparative advantage in the production of wheat

Answer

Brazil cannot benefit from trading with Peru

Answer

For Peru, the opportunity cost of producing one ton of sugar is 2 tons of wheat

Question 15

Assume that Brazil can produce 30 tons of sugar or 20 tons of wheat and Peru can produce 20 tons of sugar or 10 tons of wheat.  Given the information...

Accepted Answer

Peru should specialize in the production of sugar

Answer

Brazil should specialize in the production of sugar

Answer

Brazil should produce both sugar and wheat

Answer

There are no transaction costs if they decided to trade

Question 16

Hannah takes 20 minutes to wash dishes and 40 minutes to vacuum the house.  Kevin take 15 minutes to wash dishes and 30 minutes to vacuum.  Which of the following is true?

Accepted Answer

Kevin has an absolute advantage in vacuuming

Answer

Hannah has an absolute advantage in washing dishes

Answer

Kevin is faster at other jobs like washing windows

Answer

Kevin has a comparative advantage in vacuuming

Question 17

Hannah takes 20 minutes to wash dishes and 40 minutes to vacuum the house.  Kevin take 15 minutes to wash dishes and 30 minutes to vacuum.      According to the theory of comparative advantage, how should these two individuals divide the work to minimize the amount of time it takes to get both jobs done?

Accepted Answer

Hannah should vacuum and Kevin should wash dishes

Answer

Kevin should wash dished and vacuum

Answer

Hannah should wash dishes and vacuum

Answer

Hannah should wash dishes and Kevin should vacuum

Question 18

If the price of asparagus is below the equilibrium price, there is a shortage of asparagus and the price of asparagus will rise until the shortage disappears

Accepted Answer

true

Answer

false

Question 19

Gasoline refiners expect the price of oil will fall next month.  If the supply of oil does not change, the equilibrium price of oil today falls and the equilibrium quantity today decreases.

Accepted Answer

true

Answer

false

Question 20

The equilibrium price of a good occurs if the

Accepted Answer

quantity of the goo demanded equals the quantity of the good supplied

Answer

quantity of the good demanded is less than the quantity of the good supplied

Answer

quantity of the good demanded is greater than the quantity of the good supplied

Answer

demand for the good is equal to the supply of the good

Question 21

Which of the following is the best explanation for why the price of gasoline increases during the summer months?

Accepted Answer

There is increased driving by families goin on vacation

Answer

Sellers have to earn profits during the summer to cover losses in the winter.

Answer

There is less competition among oil refineries in the summer

Answer

Oil priducers have higher costs of production in the summer

Question 22

The supply of a good will increase and ther will be a movement up along the supply curve of the good if the price of one of its substitutes in production falls.

Accepted Answer

false

Answer

true

Question 23

The shift of the supply curve of pizza illustrated in Figure 4.8 could be he result of

Accepted Answer

an increase in the productivity of the firms producing pizza

Answer

a rise in the price of a substitute in production

Answer

a rise in the price of pizza

Answer

a rise in the price of cheese used to produce pizza

Question 24

The shift of the supply curve of pizza illustraed in Figure 4.8 could be the result of

Accepted Answer

an increase in the number of firms producing pizza

Answer

a rise in the wage paid the workers who make pizza

Answer

a rise in the price of a pizza

Answer

a rise in income if pia is a normal good

Question 25

The "law of demand" indicates that if the University of Maine icreases its tuition, all other things remaining the same

Accepted Answer

the quantity of classes demande will decrease at the University of Maine

Answer

the demand for classes will decrease at the University of Maine

Answer

the demand for classes will increase at the University of Maine

Answer

both the demand for and and the quantity of classes demanded will decrease at the University of maine

Question 26

When moving along a demand curve, which of the following changes?

Accepted Answer

the price of the good

Answer

the consumers' preferences

Answer

the prices of other goods

Answer

the consumers' incomes

Question 27

when Sue's income increases, her demand for movies increases.  For Sue, movies are a normal good.

Accepted Answer

true

Answer

false

Question 28

A rise in the price of a computer increases the demand for computers because a computer is a normal good.

Accepted Answer

false

Answer

true

Question 29

A person has an absolute advantage in an activity if the person can perform the activity at lower opportunity cost than someone else.

Accepted Answer

false

Answer

true

Question 30

To achieve the gains from trade, a producer specialized in the product in which he or she has a comparative advantage and then trades with others.

Accepted Answer

true

Answer

false

Question 31

"Comparative advantage" is defined as a situation in which one person can produce

Accepted Answer

a good for a lower opportunity cost than another person

Answer

more of a good than another person.

Answer

more of all goods than another person

Answer

all goods for lower opportunity costs than another person

Question 32

In one hour John can produce 20 loaves of bread or 8 cakes.  In one hour Phyllis can produce 30 loaves of brad or 15 cakes.  Which of the following statements is true?

Accepted Answer

Phyllis has an absolute advantage in both goods

Answer

Phyllis has a comparative advantage in producing both cakes and bread

Answer

John has an absolute advantage in both goods

Answer

Phyllis has a comparative advantage in producing bread

Question 33

Production possibilities per person in the United States have remained constant during the last 30 years.

Accepted Answer

false

Answer

true

Question 34

Moving from one point on the PPC (F) to another point of the PPC (F) has no opportunity cost.

Accepted Answer

false

Answer

true

Question 35

Moving between two points on a PPF, a country gains 6 automobiles and forgoes 3 trucks.  Tge opportunity cost of 1 automobile is

Accepted Answer

1/2 of a truck

Answer

3 trucks

Answer

2 trucks

Answer

1 automobile

Question 36

A country produces only cans of soup and ink pens.  If the country produces on its bowed outward PPC and increases the production of cans of soup, the opportunity cost of additional

Accepted Answer

cans of soup is increasing

Answer

cans of soup is decreasing

Answer

cans of soup remain unchanged

Answer

ink pens is increasing

Question 37

A point outside the production possibilities curve is unattainable

Accepted Answer

true

Answer

false

Question 38

Moving from one point on the PPC to another point on the PPC illustrates a free lunch

Accepted Answer

false

Answer

true

Question 39

Firms or businesses owns the factors of production

Accepted Answer

false

Answer

true

Question 40

Which of the following correctly lists the factors of production?

Accepted Answer

land, labor capital, and entrepreneurship

Answer

machines, buildings, land, and money

Answer

capital, money and labor

Answer

hardware, software, land and money

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