Question 1

Which is the best example of specialization?

Accepted Answer

An assistant in a tailoring shop only replaces zippers.

Answer

A surf shop lowers the price on swimsuits.

Answer

An online clothing outlet offers customized monograms.

Answer

A dry cleaner spends extra time on grease spots.

Question 2

How does division of labor increase productivity?

Accepted Answer

Workers become experts at one task.

Answer

Workers can be paid a lower wage.

Answer

Workers require minimal training.

Answer

Workers move o/en from job to job.

Question 3

What is the main reason Americans specialize more today than the early pioneers did?

Accepted Answer

We have more access to markets.

Answer

We live in less crowded conditions.

Answer

We have more vocational training.

Answer

We depend less on transportation.

Question 4

In a voluntary exchange, why do people give something up?

Accepted Answer

to get something they want more

Answer

to comply with state requirements

Answer

to increase their self-sufficiency

Answer

to allocate scarce resources fairly

Question 5

How does the Commerce Clause promote economic interdependence? "the Congress shall have Power to . . . regulate Commerce . . . among the several States" -Article I, Section 8, U.S. Constitution

Accepted Answer

It keeps states from creating trade barriers.

Answer

It discourages local markets.

Answer

It defines legislative powers vaguely.

Answer

It puts pressure on states to increase production.

Question 6

What does it mean to say that Jen has a comparative advantage over Julian for weeding people's gardens?

Accepted Answer

Jen's opportunity cost for weeding is lower than Julian's.

Answer

Jen weeds more quickly than Julian does.

Answer

Jen's experience at weddings is greater than Julian's.

Answer

Jen can charge more for weeding than Julian can.

Question 7

Which of these is the main reason for national differences in comparative advantage in producing raw materials?

Accepted Answer

differences in allocations of natural resources

Answer

differences in local business practices

Answer

differences in monetary systems

Answer

differences in cultural traditions

Question 8

Why has much clothing manufacturing moved from the United States to other countries?

Accepted Answer

Nations with large, low-skilled workforces have a comparative advantage for assembly-line production.

Answer

Education in this country has not kept up with the needs of the 21st-century economy.

Answer

Most of the market for textile products has shifted overseas.

Answer

American workers have a weaker work ethic today than in the past.

Question 9

How does trade increase the value of an item?

Accepted Answer

It transfers the item to someone who values it more.

Answer

It provides work for storekeepers and truckers.

Answer

It puts more different goods into competition.

Answer

It makes the item more expensive to buy.

Question 10

Which term best describes the fact that we depend on others to produce most of the goods and services we want?

Accepted Answer

economic interdependence

Answer

absolute advantage

Answer

commercial productivity

Answer

division of technology

Question 11

Which of the following would likely discourage specialization in an area?

Accepted Answer

a lack of good transportation

Answer

an extremely dense population

Answer

a flat terrain with vegetation

Answer

a large city with many people

Question 12

The development of skills in one aspect of a job is called

Accepted Answer

specialization.

Answer

interdependence.

Answer

entrepreneurship.

Answer

globalization.

Question 13

Which of the following is true of self-sufficient societies?

Accepted Answer

Self-sufficient societies are less productive than specialized societies.

Answer

Self-sufficient societies are often the cause of poverty in certain areas.

Answer

all of the above

Answer

Self-sufficient societies are inefficient with the production of goods.

Question 14

An athletic person picks fruit, and their sociable friend sells the fruit. This is an example of

Accepted Answer

division of labor.

Answer

interdependence.

Answer

absolute advantage.

Answer

specialization.

Question 15

An economy can produce more with the same inputs of land, labor, and capital when people

Accepted Answer

specialize in a specific task or skill.

Answer

focus on local trade and economies.

Answer

use their skills to be self-sufficient.

Answer

are interdependent with their tasks.

Question 16

According to James Gwartney, Richard Stroup, and Dwight Lee in "Common Sense Economics," what is the foundation of trade?

Accepted Answer

mutual gain

Answer

bartering

Answer

cash flow

Answer

specialization

Question 17

When people specialize and trade, they

Accepted Answer

become economically interdependent.

Answer

gain financial economic independence.

Answer

automatically become very wealthy.

Answer

are better off, but severely inefficient.

Question 18

Why did the United State's founding fathers set up trade barriers to limit interstate trade?

Accepted Answer

They wanted to promote self-sufficiency.

Answer

They wanted to get rid of local industries.

Answer

all of the above

Answer

They wanted to increase trade among states.

Question 19

Susan can score seven goals, whereas Rob can score five. Susan has

Accepted Answer

an absolute advantage.

Answer

a domestic advantage.

Answer

a comparative advantage.

Answer

a specialized advantage.

Question 20

When does a person have a comparative advantage?

Accepted Answer

when they have a higher opportunity cost than others

Answer

when they can produce a good using fewer resources

Answer

when they have a lower opportunity cost than others

Answer

when they buy a good for less than its production cost

Question 21

How do you start calculating a person's comparative advantage?

Accepted Answer

You calculate their opportunity cost associated with an activity.

Answer

You calculate their interdependent advantage in an economy.

Answer

You calculate their absolute advantage compared to another's.

Answer

You calculate their specialized advantage for producing a good.

Question 22

________ based on comparative advantage benefits both trading partners.

Accepted Answer

Specialization

Answer

Voluntary exchange

Answer

Interdependence

Answer

Division of Labor

Question 23

Which of the following could contribute to a na on having a compara ve advantage over another nation?

Accepted Answer

all of the above

Answer

better education

Answer

a warmer climate

Answer

lots of forests

Question 24

Economist Michael Bade defined wealth as

Accepted Answer

the total value of everything a person owns.

Answer

money and the various things money can buy.

Answer

the monetary value of a person's belongings.

Answer

the marginal benefit of accumulating goods.

Question 25

What is one reason trade makes people wealthier?

Accepted Answer

It lowers the cost of goods.

Answer

It decreases competition.

Answer

all of the above

Answer

It raises the price of goods.

Question 26

How does trade increase the value of goods?

Accepted Answer

Trade moves goods from people who value them less, to people who value them more.

Answer

Trade decreases the production cost of goods, causing buyers to value them more highly.

Answer

Trade creates a less competitive economy, which causes the value of goods to increase.

Answer

Trade increases the prices of goods, which simultaneously increases these goods' value.

Question 27

Which of the following is true of the American economy and trade?

Accepted Answer

Most Americans experience benefits from global trade.

Answer

Global trade increases the prices of non-American goods.

Answer

Most Americans are hurt economically by global trade.

Answer

Global trade causes most Americans to lose their jobs.

Question 28

How can global trade function as a disadvantage for some people?

Accepted Answer

It can take business away from local producers.

Answer

It can decrease the competition between markets.

Answer

It can create a surplus of available job openings.

Answer

It can discourage promotion of larger markets.

Question 29

How does trade increase the variety and quantity of goods available?

Accepted Answer

Trade provides access to goods from around the globe.

Answer

Trade reduces the risks accompanying mass production.

Answer

Trade helps nations have larger absolute advantages.

Answer

Trade makes nations want to compete with each other.

Question 30

Because trade expands the market for products, it can

Accepted Answer

lower the cost of goods by using mass production.

Answer

eliminate competition for the production of goods.

Answer

reduce the absolute advantage of production.

Answer

increase the opportunity cost of producing goods.

Question 31

How do people and nations gain from specialization and trade?

Accepted Answer

comparative advantage

Answer

division of labor

Answer

absolute advantage

Answer

economic independence

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