AP Microeconomics unit 1
If Mike can make 2 surfboards per hour or 10 bikes per hour and Joe can produce 4 surfboards per hour and 12 bikes. Which of the following is true? A) Mike has an absolute advantage in the production of surfboards B) Mike's opportunity cost for producing one bike is 5 surfboards C) Joe has a comparative advantage in the production of both surfboards and bikes D) Mike has a comparative advantage in the production of surfboards E) .Joe's opportunity cost for producing one surfboard is 3 bikes
e
If resources were perfectly substitutable in all activities, which of the following would be true? A) Output of all goods could be increased at zero opportunity cost. B) The production possibilities curve would be a straight line. C) Specialization and mutually beneficial trade would be impossible. D) No country or individual would have a comparative advantage in any activity. E) Scarcity of resources would be eliminated.
e
Individual private property rights provide people incentives to A) meet societal goals rather than pursue their own self-interest B) produce goods and services regardless of market demand C) achieve equitable distribution of goods and services through competitive markets D) focus only on benefits without regard to costs E) produce goods and services that are valued in markets
e
Marginal analysis suggests that an individual will consume one additional unit of a good if the (A) sunk cost can be recovered (B) total benefit is less than the total cost (C) total benefit is greater than the total cost (D) additional benefit is less than the additional cost (E) additional benefit is greater than the additional cost
e
Marginal analysis suggests that an individual will consume one additional unit of a good if the A) sunk cost can be recovered B) total benefit is less than the total cost C) total benefit is greater than the total cost D) additional benefit is less than the additional cost E) additional benefit is greater than the additional cost
e
The allocation of resources in a market economy is described by which of the following statements? I. The government decides which goods will be produced and which consumers will receive them. II. Buyers and sellers exchange goods and services on a voluntary basis. III. Prices and costs help producers decide whether they are producing too little or too much of a good. A) I only. B) II only. C) III only. D) I and III only. E) II and III only.
e
The crucial problem of economics is a) Establishing a fair tax system. b) Providing social goods and services. C) Developing a price mechanism that reflects the relative scarcity of products and resources. d) Enacting a set of laws that protects resources from overuse. e) Allocating scarce productive resources to satisfy unlimited wants.
e
The marginal benefit of consuming a good is A) the change in average utility that results from consuming one more unit of the good B) the same as the total benefit C) equal to the marginal cost of the good D) the change in total expenditures as a result of buying one more unit of the good E) the maximum amount a consumer is willing to pay for one more unit of the good
e
To maximize utility, a consumer with a fixed budget will purchase quantites of goods so that the ratios of the marginal utility of each good to its A) total utility are the greatest B) total utility are the same C) price are the greatest D) price are equal to one E) price are equal
e
Which of the following best describes how a consumer maximizes total utility from the consumption of a bundle of goods and services? (A) By choosing the quantity of each good such that the quantity demanded of each good is equal to the quantity supplied B) By choosing the quantity of each good such that the marginal utility from each good is equal to zero C) By choosing the quantity of each good such that the price is equal to the marginal revenue D) By choosing the level of output where marginal revenue is equal to marginal cost E) By choosing the combination of goods such that the marginal utility per dollar spent on the last unit of each good is equal
e
Which of the following best describes how a consumer maximizes total utility from the consumption of a bundle of goods and services? A) By choosing the quantity of each good such that the quantity demanded of each good is equal to the quantity supplied B) By choosing the quantity of each good such that the marginal utility from each good is equal to zero C) By choosing the quantity of each good such that the price is equal to the marginal revenue D) By choosing the level of output where marginal revenue is equal to marginal cost E) By choosing the combination of goods such that the marginal utility per dollar spent on the last unit of each good is equal
e
Which of the following is associated with a command economy? A) Competitive product markets B) Use of resources for private gain C) Use of available resources to meet all the needs and wants of its citizens D) Entry of firms into industries with economic profit E) Public ownership of the means of production
e
A farmer in Country A can harvest 20 bushels of wheat or 10 bushels of corn in a day, while a farmer in Country B can harvest 8 bushels of wheat or 8 bushels of corn in a day. If Country A and Country B specialize and trade, Country A will A) export wheat and import corn B) export corn and import wheat C) export both wheat and corn D) import both wheat and corn E) benefit more from trade than will Country B
a
A linear production possibilities curve indicates which of the following? A) Constant opportunity costs B) Decreasing opportunity costs C) Increasing opportunity costs D) Diminishing marginal returns E) Labor-intensive production
a
A professor hires two aides, assigning them the tasks of reading student papers and of typing lecture notes on a computer. One of the aides, Ben, can read 1 page of a student paper per minute or type 50 words of lecture notes per minute, and the other aide, Ann, can read 3 pages of a student paper per minute or type 60 words of lecture notes per minute. Which of the following statements is true? A) Ann has a comparative advantage in reading student papers, and Ben has a comparative advantage in typing lecture notes. B) Ann has an absolute advantage in reading student papers, and Ben has an absolute advantage in typing lecture notes. C) Ben has a comparative advantage in reading student papers, and Ann has a comparative advantage in typing lecture notes. D) Ben has a comparative advantage in both reading student papers and typing lecture notes. E) Ben has an absolute advantage in both reading student papers and typing lecture notes.
a
According to the law of diminishing marginal utility, which of the following is true? (A) Total satisfaction decreases as more units of a good are consumed. B) The additional satisfaction received from consuming extra units of a good decreases as consumption of the good increases. C) The additional satisfaction received from consuming extra units of a good decreases as consumption of the good decreases. D) The additional satisfaction received from consuming extra units of a good increases as consumption of the good increases. (E) When marginal utility is decreasing, total utility is decreasing.
b
According to the law of diminishing marginal utility, which of the following is true? A) Total satisfaction decreases as more units of a good are consumed. B) The additional satisfaction received from consuming extra units of a good decreases as consumption of the good increases. C) The additional satisfaction received from consuming extra units of a good decreases as consumption of the good decreases. D) The additional satisfaction received from consuming extra units of a good increases as consumption of the good increases. E) When marginal utility is decreasing, total utility is decreasing.
b
According to the theory of comparative advantage, a good should be produced where A) It's explicit costs are least. B) Its opportunity costs are least. C) The cost of real resources used is least. D) Production can occur with the greatest increase in employment. E) Production can occur with the lowest increase in employment.
b
19. Garcia is currently spending his entire lunch budget on 3 sodas and 4 hot dogs. At his current level of consumption, Garcia's marginal utility for sodas is S utils and his marginal utility for hot dogs is 10 utils. In order to maximize his total utility, Garcia should (A) consume more sodas and fewer hot dogs regardless of the prices (B) consume more hot dogs and fewer sodas regardless of the prices (C) maintain his current level of consumption of sodas and hot dogs regardless of the prices (D) maintain his current level of consumption if the price of a soda is $1 and the price of a hot dog is $2 (E) maintain his current level of consumption if the price of a soda is $2 and the price of a hot dog is $1
d
All of the following are included in computing the opportunity cost of attending college EXCEPT A) interest paid on student loans B) wages the student gave up to attend college C) money spent on college tuition D) money spent on clothing expenses E) money spent on books and supplies
d
Assume that Larry spends his entire allowance on the purchase of pretzels and ice-cream cones. The price of a bag of pretzels is $1$1, and the price of an ice-cream cone is $2$2. At his current consumption combination, the marginal utility of pretzels is 2020 and of ice-cream cones is 6060. To maximize his utility, Larry should A) buy more of both goods B) buy less of both goods C) buy more pretzels and fewer ice-cream cones D) buy fewer pretzels and more ice-cream cones E) maintain his current consumption level
d
Assume that a consumer spends all her income on the purchase of two goods. If the consumer's income doubles and the prices of the two goods also double, the quantity of the two goods purchased will A) also double B)more than double C) increase, but it will be less than double (D) not change E) depend on the slope of the demand curve
d
Carlos has a van with 20 seats and charges $10 per person per ride to the airport from downtown. Carlos' cost of the trip is $140 for any number of passengers. On one trip, Carlos has 19 seats filled when a person offers him $5 for the last seat. Should Carlos accept the offer? (A) No, since the $5 fare offered is below his average cost of $7. B) No, since the average variable cost is greater than $5. (C) No, since it is illegal to charge different prices for the same service. D) Yes, since the marginal benefit exceeds the marginal cost. (E) Yes, since his total revenue exceeds his total cost by $5.
d
A production possibilities curve can shift inward if there is A) an increase in productivity B) an increase in unemployment C) an increase in the price of raw materials D) a misallocation of resources E) a natural disaster
e
A production possibilities curve is bowed out, indicating increasing opportunity cost because of A) the law of demand B) the law of diminishing marginal utility C) the existence of unemployment D) differences in consumer tastes E) imperfect adaptability of resources to alternative uses
e
All of the following would probably allow for an increase in economic growth EXCEPT.... a) Increasing the size of the workforce. b) Finding new coal deposits. C) Using more advanced technology. d) Improving the allocation (use) of resources. e) A natural disaster
e
As a factor of production, capital refers to the A) money available to start a business B) stocks and bonds issued by businesses to raise funds C) financial investment of businesses D) currency in circulation and deposits in financial institutions E) tools and machinery used to produce goods and services
e
Assume that Clark spends his entire income on the purchase of two goods, X and Y. If his income and the prices of good X and Y all double, Clark will A) double the purchase of goods X and Y B) buy more of good X and less of good Y C) buy less of good X and more of good Y D) buy less of both goods X and Y E) buy the same amounts of goods X and Y
e
A country can consume beyond its present production possibilities curve when it A) trades with other countries, thus taking advantages of different opportunity costs B) reduces unemployment, thus increasing output C) experiences decreasing opportunity costs. D) faces an upward-sloping production possibilities curve E) faces a downward-sloping production possibilities curve
a
Assume both Italy and Greece produce only two goods: wine and olive oil. If Italy holds a comparative advantage in the production of wine, then which of the following statements is NOT true? A) Italy must hold an absolute advantage in the production of wine. B) Greece holds a comparative advantage in the production of olive oil. C) Italy's opportunity cost of producing one additional unit of wine is lower than Greece's. D) Greece's opportunity cost of producing one additional unit of olive oil is lower than Italy's. E) If trade is open between them, these countries have an incentive to trade.
a
Assume that an economy produces televisions and shoes. Which of the following would cause the production possibilities curve for this economy to shift outward? A) An increase in the labor force B) An increase in the prices of both goods C) An increase in the prices of resources used to produce both goods D) A decrease in the demand for shoes E) A change in consumers' tastes in favor of televisions
a
Assume there are two goods in a market economy. The amount of each good produced is determined by A) buyers and sellers' interactions in the market for each good B) a central planning agency C) the desires of households only D) each citizen's minimum needs for survival E) popular voting with one vote per citizen
a
If a good is available free of charge, an individual will consume it until A) marginal utility is zero B) average utility is zero C) total utility is zero D) marginal utility equals average utility E) marginal utility equals total utility
a
Josephine is buying candy and gum. If she is maximizing her utility for the combination of candy and gum she buys, which of the following must hold? A) Marginal utility of candy : price of candy = marginal utility of gum: price of gum B) Total utility of candy : price of candy = total utility of gum ÷ price of gum (C) Marginal utility of candy : total utility of candy = marginal utility of gum : total utility of gum (D) Marginal utility of candy × price of candy = marginal utility of gum x price of gum (E) Total utility of candy X price of candy = total utility of gum X price of gum
a
Movement along a production possibilities curve shows which of the following? A) The trade-offs society faces B) The total amount of available resources C) The combination of inputs required for a given output D) The relationship between the price of an input and the quantity demanded E) The decrease in efficiency
a
The additional satisfaction received from consuming an additional unit of a good is called the A) marginal utility B) marginal product C) average product D) average utility E) total utility
a
The fundamental difference between a market economy and a command economy lies in which of the following? A) Property rights and protection of private property B) Absolute and comparative advantages C) Specialization and trade D) Taxes and subsidies E) Positive and negative externalities
a
Under which economic system would factors of production most likely be owned by the government? (a) Command system b) Market system c) Capitalism d)Traditional system e) mixed system
a
Where on a graph of a production possibilities curve would a point showing that an economy is using its resources efficiently be located? A) On the production possibilities curve B) Inside the production possibilities curve C) Beyond the production possibilities curve D) On the yy-axis and below the production possibilities curve E) On the xx-axis and below the production possibilities curve
a
Which of the following is true of all economies, regardless of their economic system? (a)every economy must determine what to produce and how to produce goods and services b) every economy must find a way to distribute income equally c) every economy must find ways to privatize markets to maximize efficiency /, d) every economy must prevent unemployment through government intervention e) every economy must open free trade with other economies
a
Which of the following statements describes an economy confronting scarcity? A) If more of one good is produced, less of another good must be produced. B) An economy can produce a limitless amount of all goods. C) All individuals are able to satisfy their consumption desires. D) Scarcity is eliminated by government provision of goods. E) Scarcity only exists as a problem when there is more than one good to produce.
a
Assume the price of a candy bar is $2 and the price of a bag of chips is $3. Assume Lilly's marginal utility from consuming an additional candy bar is 10 utils and her marginal utility from consuming an additional bag of chips is 12 utils. If Lilly is spending her fixed weekly allowance on candy bars and bags of chips, which of the following actions will maximize Lilly's total utility? (A) Buying more candy bars and bags of chips 2 (B) Buying more candy bars and fewer bags of chips (C) Buying fewer candy bars and more bags of chips (D) Buying fewer candy bars and bags of chips (E) Buying the same number of candy bars and bags of chips
b
Because Keyerra can type reports faster and more accurately than Jordan, Keyerra has a(n) A) Comparative advantage B) Absolute advantage C) Opportunity cost D) Specialization E)Circular flow model
b
Both Amy and Brad produce and consume apple pie and ice cream. In one hour, Brad makes five apple pies or ten gallons of ice cream while Amy makes fifteen apple pies or fifteen gallons of ice cream. Based on the above information, one can correctly conclude that A) Brad has an absolute advantage in making ice cream and will sell ice cream to Amy B) Brad has a comparative advantage in making ice cream and will sell ice cream to Amy C) Brad does not have a comparative advantage in making either good and will not trade with Amy D) Brad has an absolute advantage in making apple pies but a comparative advantage in making ice cream E) Brad's opportunity cost of making ice cream is higher than Amy's
b
If nations specialize according to their comparative advantage and engage in international trade with each other, each nation can A) produce outside its production possibilities curve B) consume outside its production possibilities curve C) shift its production possibilities curve to the right D) become more self-sufficient E) produce more of all goods
b
If the production possibilities curve is concave from the origin (or bowed out), then economists say that A) Resources are scarce in the economy B) Resources are not equally suited for the production of both goods C) Economic growth is occurring in the economy D) Resources are being inefficiently used in the economy E) Resources are equally suited for the production of either good
b
Improvements in technology for producing all goods must result in A) an inward shift in the production possibilities curve B) an outward shift in the production possibilities curve C) a flatter production possibilities curve D) a steeper production possibilities curve E) greater unemployment of labor
b
In which way does a straight-line production possibilities curve differ from a concave production possibilities curve? A) straight-line production possibilities curve has a decreasing opportunity cost. B) straight-line production possibilities curve has a constant opportunity cost. C) straight-line production possibilities curve has an increasing opportunity cost. D) A straight-line production possibilities curve does not show opportunity cost E) Upward-sloping production possibilities curve.
b
The United States, along with most other present day economies, can be best described as a) command system b) market system c) socialist d)traditional system e) mixed system
b
The basic economic problem of all countries is the existence of . . a) tax increases and budget deficits b) limited resources and unlimited wants c) unemployment and inflation d) government and private industry e) unions and monopoly firms
b
Which of the following is a key assumption of consumer choice theory? A) Consumers buy goods as long as implicit costs are greater than explicit costs. B) Consumers maximize their utility. C) As income rises, consumers buy more of all goods. D) Marginal utility is always increasing. (E) As more inputs are used, consumers get less and less additional output.
b
Which of the following is the defining characteristic of a capitalistic economy? A) Well-functioning capital markets B) Private ownership and protection of property rights C) Fair distribution of income and low income taxes D) Equality of opportunity E) Efficient allocation of resources
b
Which of the following is true of an economy's production possibilities curve? A) It shows the combinations of any two resources that can be used to produce an efficient level of output. B) It shows the alternative combinations of goods that can be produced by fully employing scarce resources. C) It must be a straight line when all resources are fully employed. D) It is bowed in (convex to the origin) because of changing levels of technology. E) It is bowed out (concave to the origin) when marginal opportunity costs are constant.
b
According to the theory of consumer behavior, which of the following decreases first as additional units of a product are consumed? A) Total utility B) Average utility C) Marginal utility D) Marginal physical product E) Total physical product
c
Assume a consumer is spending all her income on two goods: X and Y. At the current consumption combination of the two goods, if the marginal utility per dollar spent on the last unit of good X exceeds that of the marginal utility per dollar spent on the last unit of good Y, what should the consumer do to maximize utility? (A) Purchase more units of X and more units of Y. (B) Decrease the price of good X. C) Purchase more units of X and less units of Y. (D) Increase income to buy more of both good Y and good X. (E) Nothing; utility is maximized at current consumption bundles.
c
Assume a consumer is spending all her income on two goods: X and Y. At the current consumption combination of the two goods, if the marginal utility per dollar spent on the last unit of good X exceeds that of the marginal utility per dollar spent on the last unit of good Y, what should the consumer do to maximize utility? A) Purchase more units of X and more units of Y. B) Decrease the price of good X. C) Purchase more units of X and less units of Y. D) Increase income to buy more of both good Y and good X. E) Nothing; utility is maximized at current consumption bundles.
c
Assume an economy is using all its available resources efficiently to produce only two goods, X and Y. As more of good X is produced, what happens to the production of good Y? A) The production of good Y also increases. B) More resources will need to be devoted to producing good Y. C) Less of good Y is produced as resources move from producing good Y to producing good X. D) The economy can only produce more of good X if there is more labor available. E) There will be no loss of good Y produced.
c
At her current level of consumption, a consumer is willing to pay up to $1.50 for a bottle of water and up to $1,500 for a diamond ring because the (A) total utility of diamond rings is greater than the total utility of water B) total utility of water is less than the marginal utility of a diamond ring C) marginal utility of a bottle of water is less than the marginal utility of a diamond ring D)marginal utility of a bottle of water is greater than the marginal utility of a diamond ring E) BY consumer is irrational and does not understand that water is more important than a diamond
c
Command economies differ from capitalist economies mainly because of which of the following? A) Command economies have higher prices for oil. B) Capitalist economies have higher prices for oil. C) Command economies have higher degree of government ownership of resources. D) Capitalist economies have higher degree of government ownership of resources. E) Command economies rely on prices to allocate resources.
c
In a given time period, a person consumes more and more of a good or service and, as a result, enjoys each additional unit less and is willing to pay less for each additional unit. This behavior is consistent with the law of A) diminishing returns (B) diminishing marginal product C) diminishing marginal utility (D) increasing costs (E) scarce resources
c
Labor, human capital, entrepreneurship, and natural resources are all examples of which of the following? a) public goods b) inferior goods C) factors of production d) outputs e) substitutes
c
Suppose that in one week Sam can knit 5 sweaters or make 4 blankets and Rob can knit 10 sweaters or make 6 blankets. Which of the following is true? A) Sam has an absolute advantage in making blankets. B) Sam has an absolute advantage in knitting sweaters. C) Sam has a comparative advantage in making blankets. D) Sam has a comparative advantage in knitting sweaters. E) Sam has neither a comparative nor an absolute advantage in knitting sweaters or making blankets.
c
The opportunity cost of owning a business is equal to which of the following? I. The economic profits earned in the business II. The accounting profits earned in the business III. The profits that could be earned in another business using the same amount of resources A) I only B) II only C) III only D) I and III only E) I, II, and III
c
Using cost-benefit analysis, a local government would decide to build a new bridge if (A) The additional tax paid by an individual resident is greater than the additional benefit of building the bridge for all residents. B) The toll paid by an individual resident crossing the bridge is less than the resident's benefit from crossing the bridge. (C) The total costs of building the bridge are less than the total benefits from building the bridge. (D) The total costs of building the bridge are greater than the total benefits from building the bridge. (E) Total costs are at a minimum and total benefits are at a maximum.
c
Using cost-benefit analysis, a local government would decide to build a new bridge if A) The additional tax paid by an individual resident is greater than the additional benefit of building the bridge for all residents. B) The toll paid by an individual resident crossing the bridge is less than the resident's benefit from crossing the bridge. C) The total costs of building the bridge are less than the total benefits from building the bridge. D) The total costs of building the bridge are greater than the total benefits from building the bridge. E) Total costs are at a minimum and total benefits are at a maximum.
c
When total utility is at its maximum, marginal utility is A) increasing B) negative C) equal to zero D) at a maximum E) at minimum
c
Which of the following describes a factor of production that is not fully scarce and that can be used simultaneously in the production of more than one good? A) Machines that can produce both clothing and bedsheets B) Unskilled labor needed to produce all goods C) Basic knowledge that enhances the organization of all manufacturing assembly lines D) Land that is cultivated for two crops by more than one farmer E) Labor that has received enhanced training in assembly-line work
c
Which of the following is the best definition of "opportunity cost"? a) the amount, in dollars, spent to prepare for a career. b)The amount an individual spends on nonessential items. (C) What must be given up in order to get something else. d)What is paid to purchase something> e) The cost of purchasing a product.
c
Which of the following would cause an outward (or rightward) shift of the production possibilities curve? a) an increase in unemployment b) an increase in inflation Can increase in capital equipment d) a decrease in natural resources e) a decrease in the number of workers
c
Carlos has a van with 20 seats and charges $10 per person per ride to the airport from downtown. Carlos' cost of the trip is $140 for any number of passengers. On one trip, Carlos has 19 seats filled when a person offers him $5 for the last seat. Should Carlos accept the offer? A) No, since the $5 fare offered is below his average cost of $7. B) No, since the average variable cost is greater than $5. C) No, since it is illegal to charge different prices for the same service. D) Yes, since the marginal benefit exceeds the marginal cost. E) Yes, since his total revenue exceeds his total cost by $5.
d
Cindy and Martin both sew t-shirts in a small factory. Using the same resources, Martin can sew twelve t-shirts and Cindy can sew nine t-shirts in one day. Which of the following can be concluded from the given information? A) Martin has a higher opportunity cost of sewing t-shirts than Cindy does. B) Cindy has a comparative advantage in sewing t-shirts. C) Martin has a comparative advantage in sewing t-shirts. D) Martin has an absolute advantage in sewing t-shirts.
d
Dana and Robin produce smoothies and pizza. In one hour Dana can make 20 smoothies or 10 pizzas. In one hour Robin can make 18 smoothies or 6 pizzas. Which of the following statements is true? A) Robin has an absolute advantage in making smoothies and a comparative advantage in making pizzas. B) Robin has both an absolute advantage and a comparative advantage in making pizzas. C) Dana has a comparative advantage in making both smoothies and pizzas. D) Dana has a comparative advantage in making pizzas, and Robin has a comparative advantage in making smoothies. E) Dana has a comparative advantage in making smoothies, and Robin has a comparative advantage in making pizzas.
d
In contrast to a market economy, a command economy relies on which of the following? A) The private sector in deciding what goods will be produced B) Private ownership of resources C) Profits as incentives to make choices D) The government to allocate resources E) Supply and demand to determine prices
d
In reference to a nation's production possibilities frontier, a president's claim that the United States could increase its defense budget without sacrificing any of its domestic programs would be correct if A) the US economy were producing a its full potential. B) the US economy were operating on its production possibilities frontier. C) the US economy were centrally planned. D) some resources were not being fully employed. E) the production possibilities frontier for the US were to shift to the left.
d
In the country Beta it takes two hours of labor to produce a unit of tea and four hours of labor to produce a unit of bread. In the country Zeta it takes three hours of labor to produce a unit of tea and nine hours of labor to produce a unit of bread. Which of the following is true? A) Country Zeta has an absolute advantage in producing both tea and bread. B) Country Zeta has an absolute advantage and a comparative advantage in producing tea. C) Country Beta has an absolute advantage and a comparative advantage in producing tea. D) Country Beta has the lower opportunity cost in producing bread and therefore a comparative advantage in producing bread. E) Country Beta, with trade, will export both tea and bread to country Zeta.
d
Let MU, be the marginal utility of a sandwich, MUp be the marginal utility of a hot dog, Ps be the price of a sandwich, and Pr be the price of a hot dog. When the price of the goods is zero, Pat eats a sandwich. When Pat has to pay, she eats a hot dog. When Pat has to pay, which of the following is necessarily true? (A) MU, = MUn = Ps = Ph (B) (MUs / Ps) > (MUn / PA) (C) P. < Ph D) Ps > Ph (E) MUs=0
d
Using the same amount of time and resources, Jack can assemble either 10 bikes or 5 computers, whereas Sam can assemble either 5 bikes or 5 computers. Based on the data, which of the following statements is correct? A) Sam has an absolute advantage in assembling bikes. B) Sam has an absolute advantage in assembling computers. C) Sam has a comparative advantage in assembling bikes. D) Jack has a comparative advantage in assembling bikes. E) Jack has a comparative advantage in assembling both bikes and computers.
d
Which of the following is NOT a fundamental economic question? a) What to produce? b) For whom to produce? c) How much to produce? d) Who gets the goods/services produced? e) All of these are fundamental economic questions.
d
Which of the following is true if consuming one unit of a good yields 100 utils and consuming the second unit of the good increases satisfaction by 20 utils? (A) The marginal utility of the first unit is 20. (B) The marginal utility of the second unit is 80. (C) The marginal utility of the second unit is 120. The total utility of consuming two units is 120. (E) The total utility of consuming one unit is greater than the total utility of consuming two units.
d
Which of the following is true if consuming one unit of a good yields 100 utils and consuming the second unit of the good increases satisfaction by 20 utils? A) The marginal utility of the first unit is 20. B) The marginal utility of the second unit is 80. C) The marginal utility of the second unit is 120. D) The total utility of consuming two units is 120. E) The total utility of consuming one unit is greater than the total utility of consuming two units.
d
Which of the following statements regarding specialization and trade is true? A) With specialization and trade, a country's production possibilities curve shifts out, showing an increase in productive capacity B) With specialization and trade, a country will produce a combination of goods beyond its production possibilities curve. C) To gain from trade, countries specialize in producing goods and services in which they have an absolute advantage. D) With specialization and trade, a country can consume beyond its production possibilities curve. E) A country must have both the comparative and the absolute advantage in a product to specialize and gain from trade.
d
Which of the following statements regarding specialization and trade is true? A) With specialization and trade, a country's production possibilities curve shifts out, showing an increase in productive capacity. B) With specialization and trade, a country will produce a combination of goods beyond its production possibilities curve. C) To gain from trade, countries specialize in producing goods and services in which they have an absolute advantage. D) With specialization and trade, a country can consume beyond its production possibilities curve. E) A country must have both the comparative and the absolute advantage in a product to specialize and gain from trade.
d
