MicroEcon Prepare Chapter 2-

According to the theory of comparative advantage, specialization and free trade will benefit:

all trading partners who specialize in goods where they have comparative advantage

Ms. Boulware is the best lawyer and the best secretary in town. She has:

an absolute advantage in both jobs

In the United States, property rights:

are guaranteed by two amendments to the U.S. Constitution

In what type of economy does the government decide how most economic resources will be allocated?

centrally planned economy

What is the name given to the highest-valued alternative that must be given up to engage in any activity?

opportunity costs

When nations specialize in their comparative advantage and engage in trade:

overall standards of living increase

In the circular flow model, which of the following refers to markets where goods such as computers or services such as medical treatment are offered?

product markerts

In his 1776 book, "An Inquiry into the Nature and Causes of the Wealth of Nations," Adam Smith notes that specialization increases productivity. Which of the following was the cause of this phenomenon?

the division of labor

Which of the following is critical to the success of the market system?

To allow individuals or firms to have exclusive use of their property

The role of the entrepreneur always involves:

taking risks