Economics Chapter 2

The Skinned Knee Corporation can produce either 600 skateboards each week or 900 snowboards each week. What is their opportunity cost of producing 900 snowboards each week? A) 600 skateboards B) 1500 skateboards C) 900 skateboards D) 900 snowboards

A) 600 skateboards

If John can wash a car in 75 minutes and wash a dog in 15 minutes, and Maria can wash a car in 40 minutes and wash a dog in 10 minutes, which of the following statements is true? A) The opportunity cost of washing a dog is greater for Maria. B) The opportunity cost of washing a car is three dog bath for John. C) Maria could wash half a car in the time it takes to wash a dog. D) The opportunity cost of washing a dog is greater for John. E) John has both a comparative and an absolute advantage in washing a dog.

A) The opportunity cost of washing a dog is greater for Maria.

George is an accomplished violin and viola maker. He can make either 15 violins or 15 violas each year, or a combination such as 8 violins and 8 violas. Which statement below is true? A) The opportunity cost of producing 1 violin is 8 viola. B) The opportunity cost of producing 1 violin is 1 violas. C) The opportunity cost of producing 1 violin is 15 violas. D) The opportunity cost of producing 1 violin is 7 violas.

B) The opportunity cost of producing 1 violin is 1 violas.

Any combination of two goods that lies beyond the production possibilities frontier A) is currently possible to produce, but not worth trying. B) is currently impossible to produce. C) represents economic waste. D) represents a more efficient combination of output than anything lying on the frontier

B) is currently impossible to produce.

According to your authors, "wealth = material things" A) is the correct definition of wealth. B) must be rejected. C) makes sense to economists, but not non-economists. D) helps us understand the foundations of what Adam Smith called the commercial society.

B) must be rejected.

A production possibilities frontier will be bowed out if A) there is scarcity B) resources are not perfectly adaptable to making each good C) production of one good involves an opportunity cost D) technology is improving E) resources are used efficiently

B) resources are not perfectly adaptable to making each good

Comparative advantage is A) the ability of an individual to specialize and produce a greater amount of some good than can another individual B) the ability of an individual to produce a good at a lower opportunity cost than other individuals can C) the number of units of one good given up in order to acquire something D) an expression for the amount of labor a particular individual needs to produce a fixed amount of capital goods E) a reference to an individual having the greatest opportunity cost of producing the good and produces it with the fewest resources

B) the ability of an individual to produce a good at a lower opportunity cost than other

With a good on each axis, the production possibilities frontier is downward-sloping, which suggests A) there is no limit to the amount of each good that can be produced. B) the production of one good ultimately means sacrificing production of the other. C) there are no opportunity costs of producing either of the goods. D) none of the above are true.

B) the production of one good ultimately means sacrificing production of the other.

Brown can brew 5 gallons of stout or 4 gallons of lager every three months, or any linear combination in between. Which statement is true? A) Brown sacrifices 1 1/4 gallons of stout for every gallon of lager brewed. B) Brown sacrifices 4/5 gallons of lager for every gallon of stout brewed. C) Both of the above are true. D) None of the above is true.

C) Both of the above are true.

Eileen has a comparative advantage over Jan in piano tuning but not in shoe polishing. Therefore, A) Jan must have an absolute advantage in piano tuning B) Eileen must have an absolute advantage in shoe polishing C) Jan must have a lower opportunity cost of shoe polishing D) Eileen must have an absolute advantage in shoe polishing and in piano tuning E) Eileen must have an absolute advantage in piano tuning

C) Jan must have a lower opportunity cost of shoe polishing

When we look at a production possibilities curve, the opportunity cost can be understood as A) The point of maximum production of one good B) The total cost of producing the good C) The amount of the other good that must be given up for one more unit of production D) The price people will pay for the additional amount produced

C) The amount of the other good that must be given up for one more unit of production

Helen gives up the opportunity to bake 40 cakes for each room she paints; Josh can paint one room in the time it takes him to bake 60 cakes. The opportunity cost of a cake for Josh is A) painting one room B) painting 1/40 of a room C) painting 1/60 of a room D) painting 2/3 of a room E) painting 3/2 of a room

C) painting 1/60 of a room

Which of the following is most appropriately measured along one axis of the production possibilities frontier diagram? A) society's welfare and satisfaction B) the price of a produced good C) the quantity of a good produced D) the state of technology E) the quantity of natural resources

C) the quantity of a good produced

The opportunity cost of a particular activity A) must be the same for everyone B) is the value of all alternative activities that are forgone C) varies from person to person D) has a maximum value equal to the minimum wage E) can usually be known with certainty

C) varies from person to person

According to your textbook, a "free" good is A) a good paid for by someone else. B) a stolen good. C) a good given away by charities. D) a good obtained without any sacrifice whatsoever.

D) a good obtained without any sacrifice whatsoever.

In a voluntary exchange, A) people trade goods of equal value. B) neither party can gain more than the other. C) one trader's gain must be the other's loss. D) both parties tend to receive more in value than they give up.

D) both parties tend to receive more in value than they give up.

The opportunity cost of an activity is A) the sum of benefits from all of the sacrificed alternatives B) the amount of money spent on the activity C) zero if you choose the activity voluntarily D) the value of the best alternative not chosen E) the difference between the benefits and the costs of that activity

D) the value of the best alternative not chosen

Your opportunity cost of choosing a particular activity 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 activity

D) varies, depending on time and circumstances

If Jason can chop up more carrots per minute than Sara can, then A) We can conclude nothing about absolute advantage B) Sara must have a comparative advantage in carrot chopping C) Sara has an absolute advantage in carrot chopping D) Jason must have a comparative advantage in carrot chopping E) Jason has an absolute advantage in carrot chopping

E) Jason has an absolute advantage in carrot chopping

On a given production possibilities frontier, which of the following is not assumed to be fixed? A) the amount of labor available B) the amount of capital available C) the level of technology D) the amount of land and natural resources available E) production of each item

E) production of each item

The law of comparative advantage says that A) whoever has an absolute advantage in producing a good also has a comparative advantage in producing that good B) comparative advantage exists only when one person has an absolute advantage in the production of two goods C) whoever has a comparative advantage in producing a good also has an absolute advantage in producing that good D) gains from trade are possible only when one person has the comparative advantage in producing both goods E) the individual with the lowest opportunity cost of producing a particular good should produce it

E) the individual with the lowest opportunity cost of producing a particular good should produce it

If Evan has an absolute advantage in cleaning and bookkeeping when compared to Gloria, then A) Evan must also have a comparative advantage in cleaning and bookkeeping B) Evan must have a comparative advantage in cleaning C) Evan must have a comparative advantage in bookkeeping D) Gloria has a comparative advantage in neither activity E) we can conclude nothing about comparative advantage

E) we can conclude nothing about comparative advantage

Fill in the blank: Wealth, in the economic way of thinking, is ________. A) any material thing B) owned financial assets C) impossible to study scientifically D) indefinable E) whatever people value

E) whatever people value

If one person has the absolute advantage in producing both of two goods, then that person A) must also have a comparative advantage in both goods B) cannot benefit from trade C) cannot have a comparative advantage in either good D) should specialize in the production of both goods E) will have the comparative advantage in only one good

E) will have the comparative advantage in only one good