ECON 2000 Ch.2 (missing graphs)

A graph that illustrates the maximum amount of one good that can be produced for every possible level of production of the other good is called a(n): A. production possibilities curve. B. consumption possibilities curve. C. production function. D. supply curve.

A

According to the textbook, the largest factor explaining the variance in the performance of the economies of the world is the: A. degree of specialization. B. technological sophistication. C. location of the country. D. type of government.

A

An existing comparative advantage can be further magnified by specialization because: A. it eliminates the need to switch from one task to another. B. repetition results in boredom. C. a variety of tasks will rise. D. small tasks will be merged into larger tasks.

A

An inefficient point on a production possibilities curve is: A. necessarily also an attainable point. B. not necessarily an attainable point. C. necessarily an unattainable point. D. possibly an unattainable point.

A

Any combination of goods that can be produced with currently available resources defines a(n): A. attainable point on a production possibilities curve. B. efficient point on a production possibilities curve. C. inefficient point on a production possibilities curve. D. attainable and efficient point on a production possibilities curve.

A

Application of the Principle of Comparative Advantage leads to: A. greater specialization of labor and other factors of production. B. less specialization of labor and other factors of production. C. societies without any specialization of labor. D. lower total output.

A

Economic growth can result from a(n): A. increase in the amount of productive resources. B. increase in number of the minimum wage jobs. C. increase in the amount of consumer goods produced. D. decrease in the number of workers available.

A

If Jane can produce 3 pairs of shoes hourly, while Bob can produce 2, then one can infer that the __________ advantage belongs to __________. A. absolute; Jane B. comparative; Jane C. comparative; Bob D. comparative and absolute; Jane

A

If a nation has the lowest opportunity cost of producing a good, that nation has a(n): A. comparative advantage. B. absolute advantage. C. comparative advantage and an absolute advantage. D. absolute advantage and possibly a comparative advantage.

A

Points that lie below the production possibilities curve are inefficient because: A. more of one or both goods could be produced using currently available resources without giving up production of another good. B. producers are not specializing. C. producers face scarcity. D. too many goods are being produced.

A

The core principle that is illustrated by the production possibilities curve is: A. the Scarcity Principle. B. the Cost-Benefit Principle. C. the Incentive Principle. D. The Principle of Comparative Advantage.

A

The slope of any production possibilities curve is __________ because __________. A. negative; more production of one good means less production of the other B. constant; the tradeoff in production never changes C. positive; more production of one good means more production of the other D. positive; more production of one good means less production of the other

A

Which of the following jobs is least likely to be outsourced? A. Flipping hamburgers B. Technical assistance over the phone for your computer C. Transcription of physicians' records D. Software design

A

Generally, on a linear two-good production possibilities curve, the opportunity cost of the good measured on the vertical axis is: A. one minus the opportunity cost of the good measured on the horizontal axis. B. the reciprocal of the opportunity cost of the good measured on the horizontal axis. C. the slope of the production possibilities line. D. the negative of the opportunity cost of the good measured on the horizontal axis.

B

If Leslie can produce two pairs of pants in an hour while Eva can make one pair an hour, then it must be the case that: A. Leslie has a comparative advantage. B. Leslie has an absolute advantage. C. Eva has a comparative advantage. D. Leslie has both comparative and absolute advantage.

B

If a given production combination is efficient, then it must be: A. beyond the production possibilities curve. B. on the production possibilities curve. C. either an attainable or an unattainable point. D. the best combination out of all possible combinations.

B

If a nation can produce a good more quickly than any other nation, that nation has a(n): A. comparative advantage. B. absolute advantage. C. relative advantage. D. specialization advantage.

B

If a point on a production possibilities curve is attainable: A. it must be efficient. B. it might or might not be efficient. C. it is efficient only if it does not exhaust all currently available resources. D. it must completely exhaust all currently available resources.

B

If a producer is operating at an inefficient point on a production possibilities curve using currently available resources, that producer: A. cannot produce more of one good without giving up some of the other good. B. can produce more of one good without producing less of the other good. C. must be at an unattainable point on the production possibilities curve. D. must be specializing in activities for which it has a comparative advantage.

B

If your linear, two-good production possibilities graph has a slope steeper than -1: A. you would have to give up more than one unit of the good measured on the horizontal axis to gain an additional unit of the good measured on the vertical axis. B. you would have to give up less than one unit of the good measured on the horizontal axis to gain an additional unit of the good measured on the vertical axis. C. by specializing in the good measured on the horizontal axis you would be able to make more total units than you would if you specialized in the good measured on the vertical axis. D. you have a comparative advantage in the good measured on the vertical axis.

B

In general, individuals and nations should specialize in producing those goods for which they have a(n): A. absolute advantage. B. comparative advantage. C. absolutely comparative advantage. D. absolute advantage and a comparative advantage.

B

In the long-run, if the production of all goods increases for a society (there is economic growth), it will cause the production possibility curve to: A. shift inward. B. shift outward. C. first shift inward and then shift outward. D. stay the same.

B

It was expected that consumers in _____ would benefit from reduced prices of goods that will be freely traded under the NAFTA. A. Canada B. the United States C. China D. Mexico

B

Pat has 4 hours to spend either studying for a test or playing a new video game. If Pat spends all of that time studying, Pat can score a 92 on the test. If Pat plays for 1 hour, Pat's test score falls 5 points. For playing a second hour, Pat's score falls by another 7 points. Playing for a third hour will lower Pat's score by another 10 points. Refer to the information above. Pat's PPC for test score versus hours playing a new video game is: A. upward-sloping. B. downward-sloping. C. first upward- and then downward-sloping. D. first downward- and then upward-sloping.

B

Pat has 4 hours to spend either studying for a test or playing a new video game. If Pat spends all of that time studying, Pat can score a 92 on the test. If Pat plays for 1 hour, Pat's test score falls 5 points. For playing a second hour, Pat's score falls by another 7 points. Playing for a third hour will lower Pat's score by another 10 points. Refer to the information above. The intercept on the test score axis of Pat's PPC is: A. 100 B. 92 C. 5 hours D. 4 hours

B

Pat has 4 hours to spend either studying for a test or playing a new video game. If Pat spends all of that time studying, Pat can score a 92 on the test. If Pat plays for 1 hour, Pat's test score falls 5 points. For playing a second hour, Pat's score falls by another 7 points. Playing for a third hour will lower Pat's score by another 10 points. Refer to the information above. The opportunity cost of playing video games: A. decreases the longer Pat plays. B. increases the longer Pat plays. C. is greater than the value of earning a higher grade on the test. D. is equal to the value of earning a higher grade on the test.

B

Suppose that a further increase in specialization allows a country to increase total output by 10%, but afterward it was discovered that work absenteeism increased by 30%. This is likely an example of: A. modern production. B. too much specialization. C. too little specialization. D. inefficiencies caused by labor unions.

B

The Principle of Increasing Opportunity Costs implies that: A. productive people do the hardest tasks first, while they are fresh. B. to increase production, you should use the resources with the lowest opportunity cost first. C. the cost-benefit principle does not apply to increasing productivity. D. specialization increases productivity.

B

The United States generally has a comparative advantage in the development of technology because of: A. larger amounts of natural resources. B. a high concentration of the best research universities. C. tax incentives. D. the existence of patent law, which no other country provides.

B

The __________ the difference between domestic opportunity costs and international opportunity costs, the __________ the potential benefits of trading with other countries. A. smaller; greater B. greater; greater C. greater; smaller D. larger; more insignificant

B

The main reason that firms outsource is that: A. low-wage workers in other countries are more productive than are U.S. workers. B. hiring low-wage workers reduces firms' costs. C. hiring low-wage workers provides a tax deduction to firms. D. U.S. workers cannot perform the tasks performed by workers in other countries.

B

To say that an individual possesses an absolute advantage in the production of software means that individual: A. has a lower opportunity cost of producing software. B. can produce more and/or higher quality software in a given amount of time. C. was the first to create the software. D. charges the lowest price for software.

B

When U.S. companies open offices in Asia and hire workers there, it is evidence that: A. workers in Asian countries have an absolute advantage over American workers. B. workers in Asian countries have a comparative advantage over American workers. C. American workers have already picked all of the low-hanging fruit in the US, forcing companies to look elsewhere. D. all of the resources with low opportunity costs have been depleted.

B

Which of the following statements is always true? A. Absolute advantage implies comparative advantage. B. Comparative advantage does not require absolute advantage. C. Absolute advantage requires comparative advantage. D. Comparative advantage requires absolute advantage.

B

You have noticed that your next-door neighbor, Mary, always works in the garden and her husband, Joe, always walks the dog. Based on this observation, you conclude that: A. Mary has an absolute advantage in gardening. B. Joe has a comparative advantage in walking the dog. C. Mary does not understand the principle of low-hanging fruit. D. Joe experiences increasing opportunity costs when he gardens, but not when he walks the dog.

B

37. The production possibilities curve shows: A. the minimum production of one good for every possible production level of the other good. B. how increasing the inputs used for one good increases the production of the other good. C. the maximum production of one good for every possible production level of the other good. D. how increasing the production of one good allows production of the other good to also rise.

C

A job is most likely to be outsourced if it: A. involves face-to-face contact. B. cannot be done by a computer. C. does not require complex communication. D. does not require use of computers or other technology.

C

Between the U.S. and Nepal, Nepal invests less in new factories and equipment. This will likely cause: A. Nepal's production possibilities curve to shift outward faster than the U.S.'s. B. The U.S.'s production possibilities curve to shift inward faster than Nepal's. C. The U.S.'s production possibilities curve to shift outward faster than Nepal's. D. Nepal's production possibilities curve to shift inward faster than the U.S's.

C

Ginger and Maryann are lost in the jungle, where the only things to eat are mangoes and fish. Ginger can gather mangoes faster than Maryann and can also catch more fish per hour than can Maryann. Therefore: A. Ginger should specialize in fishing because it is harder than gathering mangoes, and Maryann should specialize in gathering mangoes. B. Ginger should strike out on her own, because Maryann reduces their combined productivity. C. Maryann should specialize in the activity for which she has a comparative advantage. D. Ginger should specialize in the activity for which she has an absolute advantage.

C

Having a comparative advantage in a particular task means that: A. you are better at it than other people. B. you give up more to accomplish that task than do others. C. you give up less to accomplish that task than do others. D. you have specialized in that task, while others have not.

C

In general, individuals and nations should specialize in producing goods _________ other individuals or nations. A. that they can produce more quickly than B. that they can produce less quickly than C. for which they have a lower opportunity cost compared to D. for which they have a higher opportunity cost compared to

C

In general, it is true that: A. more specialization is always better. B. less specialization is always better. C. specialization imposes costs as well as benefits. D. more specialization is always worse.

C

Large developed countries can produce more of practically everything than can small, less developed countries. Which of the following statements is true? A. The large country has no incentive to trade with the smaller country. B. It would be impossible for the smaller country to have a comparative advantage in making any products that the larger country wants to buy. C. Trade will benefit both countries if each country has a comparative advantage in a traded product. D. Trade between the countries is more likely to benefit the small country and harm the larger country.

C

NAFTA helped ______ to exploit a comparative advantage in the production of goods made by unskilled labor. A. Canada B. Cuba C. Mexico D. The USA

C

Pat has 4 hours to spend either studying for a test or playing a new video game. If Pat spends all of that time studying, Pat can score a 92 on the test. If Pat plays for 1 hour, Pat's test score falls 5 points. For playing a second hour, Pat's score falls by another 7 points. Playing for a third hour will lower Pat's score by another 10 points. Refer to the information above. The opportunity cost of the 2nd hour of playing the video game is: A. 10 points on the test. B. 5 points on the test. C. 7 points on the test. D. 2.5 points on the test.

C

Point A on a linear production possibilities curve represents a combination of 12 coffees and 3 cappuccinos, and point B represents 3 coffees and 6 cappuccinos. Suppose coffees are on the vertical axis and cappuccinos are on the horizontal axis. The absolute value of the slope of the production possibilities curve between points A and B equals: A. 6 B. 4 C. 3 D. 1/3

C

Point A on a linear production possibilities curve represents a combination of 12 coffees and 3 cappuccinos, and point B represents 3 coffees and 6 cappuccinos. Suppose coffees are on the vertical axis and cappuccinos are on the horizontal axis. The opportunity cost of a cup of coffee is: A. 3 cappuccinos B. 9 cappuccinos C. 1/3 of a cappuccino D. 6 cappuccinos

C

Production possibilities curves for large economies generally have an outward bow shape because: A. specialization gives some producers a comparative advantage. B. opportunity costs tend to decrease with increases in production. C. opportunity costs tend to increase with increases in production. D. as more resources are used to produce the same good, those resources become less and less expensive.

C

The United States has a comparative advantage in producing books and movies because: A. New York and Hollywood are the historic centers of book publishing and movie production. B. wages for workers who print books and make movies are lower in the United States than elsewhere. C. the English language is understood by many people all over the world. D. the United States gives generous tax breaks to publishers and movie producers.

C

The benefits of specialization can be used to explain why: A. workers prefer to work on a variety of tasks during the day. B. machines are more productive than human workers. C. trade can make both parties to the trade better off. D. big companies take advantage of smaller ones.

C

The fundamental reason the production possibilities curve has a downward slope is: A. workers are inefficient. B. resources are of low quality. C. resources are fixed and therefore tradeoffs must be made. D. it has empirical support but why it is so is still a mystery.

C

The production possibilities curve is: A. the boundary that divides all production combinations into efficient and inefficient ones. B. a graph illustrating the production combinations society would like to choose. C. the boundary that divides all production combinations into attainable ones and unattainable ones. D. a graph illustrating supply curves for different combinations of output.

C

The textbook notes that the last time a major league batter hit .400 was in 1941. This is because: A. the average quality of batters has fallen. B. the league imposes harsh penalties for steroid use. C. specialization by pitchers, infielders, and outfielders has made it harder for batters to hit. D. baseball diamonds have become larger.

C

When a government increases the cost of international trade, it is: A. helping domestic consumers. B. hurting all domestic producers. C. reducing the total amount of output available to domestic consumers. D. keeping all domestic prices artificially low.

C

When firms engage in outsourcing, ________ benefit and ______ are harmed. A. the firms; consumers B. consumers; the firms C. consumers; the firm's domestic employees D. the firms; the firms' foreign employees

C

Which of the following factors would not contribute to increasing an existing comparative advantage? A. Productivity improvements from greater experience. B. Less time lost by switching tasks. C. Import restrictions. D. Efficiency improvements due to learning.

C

Which of the following is true? A. Lou has both an absolute advantage and a comparative advantage over Alex in both tasks. B. Alex has a comparative advantage over Lou in cleaning. C. Lou has a comparative advantage over Alex in cleaning. D. Lou has a comparative advantage over Alex in cooking.

C

Working efficiently, Jordan can write 3 essays and outline 4 chapters each week. It must be true that: A. 6 essays and 0 chapter outlines would be unattainable. B. 2 essays and 3 chapter outlines would be efficient. C. 3 essays and 5 chapter outlines would be unattainable. D. 4 essays and 3 chapter outlines would be both attainable and efficient.

C

A country may have a comparative advantage in the production of cars if: A. it imports most of the raw materials necessary to produce cars. B. its citizens prefer driving cars to other forms of transportation. C. it has strict environmental protection laws governing automobile emissions. D. it has the natural resources needed to produce steel.

D

According to the principle of increasing opportunity cost, expanding production requires using resources in which order? A. In random order. B. Starting with the resource with the highest opportunity cost and progressing to the lower opportunity cost resources. C. Starting with the resource closest to the average opportunity cost, then progressing to higher opportunity cost resources. D. Starting with the resource with the lowest opportunity cost and proceeding to the higher opportunity cost resources.

D

According to the textbook, the evidence indicates that NAFTA has: A. reduced the wages of skilled workers in the United States. B. reduced the employment of unskilled workers in the United States significantly. C. stopped illegal immigration from Mexico. D. not reduced the employment of unskilled workers in the United States.

D

If Scout has an absolute advantage over Dill: A. Scout has more money than Dill. B. the problem of scarcity applies to Dill, but not to Scout. C. the problem of scarcity applies to Scout, but not to Dill. D. Scout can accomplish more in a given period of time than can Dill.

D

If a given production combination is known to be attainable, then it must be: A. on the production possibilities curve. B. an inefficient point. C. an efficient point. D. either an inefficient or efficient point.

D

In a two-person, two-good economy, the benefits of labor specialization will be larger when: A. one person has an absolute advantage in both goods. B. neither person has an absolute advantage. C. there are small differences in the respective opportunity costs of the two individuals for both goods. D. there are large differences in the respective opportunity costs of the two individuals for both goods.

D

Larry has a comparative advantage in writing a term paper if he: A. can write a paper faster than the other students in class. B. has an absolute advantage in writing a term paper. C. always earns an A on his papers. D. has the lowest opportunity cost for writing a term paper.

D

The United States was unable to maintain its dominance in the production of televisions because: A. the highly technical skills necessary to produce televisions are greater in other countries. B. the raw materials necessary to build televisions became scarce in the United States. C. the product designs evolved too rapidly for United States engineers to keep up. D. automated production allowed production to be outsourced to countries with less-skilled workers.

D

The benefits to specialization are enhanced when two trading partners have: A. absolute advantages in producing the same goods. B. similar consumption preferences. C. very similar opportunity costs. D. large comparative advantages in different goods.

D

The key to resolving the apparent paradox of international trade increasing total output yet facing much political opposition is noting that: A. economists are mistaken about the increase in output. B. only the wealthy benefit from trade. C. no one benefits from trade. D. everyone does not benefit equally from trade.

D

The political concern expressed about the North American Free Trade Agreement (NAFTA) was that: A. prices to U.S. consumers would fall. B. wages in Mexico would rise. C. highly skilled workers in the United States would lose their jobs. D. unskilled workers in the United States would lose their jobs.

D

The principle of comparative advantage states that specialization increases productivity, but the principle of increasing opportunity costs states that, when you increase production of a single good, you must use increasingly costly resources. These two principles: A. are evidence that economic theory is internally inconsistent. B. are an example of the difference between abstract models and the real world. C. cannot be true at the same time. D. together account for the outward bow shape of production possibility curves.

D

The slope of the production possibilities curve must be: A. positive. B. decreasing. C. increasing. D. negative.

D

When journalists write about outsourcing, they are referring to: A. firms that hire illegal immigrants at wages less than the minimum wage. B. firms that import raw materials in order to produce more cheaply in the United States. C. exports. D. firms that hire low-wage workers in other countries to perform some of their work.

D

Which of the following statements is NOT true about specialization? A. Total economic output is larger due to specialization. B. After specialization, worker skills are better matched with tasks. C. Specialization focuses experience and increases comparative advantage. D. The variety of tasks associated with a particular job grows over time due to specialization.

D