econ ch. 2
Refer to the figure above. According to Moe's PPF, moving from a grade of 80 in economics to a grade of 90 in economics:CORRECT
comes at a lower opportunity cost than moving from a 90 to a 100 in economics.
If a nation can produce a good more quickly than any other nation, that nation has a(n):WRONG
comparative advantage.
In general, individuals and nations should specialize in producing those goods for which they have a(n):
comparative advantage.
When firms engage in outsourcing, ________ benefit and ______ are harmed
consumers; the firm's domestic employees
When firms engage in outsourcing, ________ benefit and ______ are harmed.
consumers; the firm's domestic employees
Refer to the figure above. When the other island's delegate offers to give you 1,000 fish in exchange for 500 coconuts, you: WRONG
counter, offering to give them 400 coconuts in exchange for 1,000 fish.
efer to the figure above. Increasing the quantity of medical care provided from 100 units to 300 units costs ______ increasing the quantity of medical care provided from 400 units to 600 units.
less than
Refer to the table above. Pat's opportunity cost of the delivery of an extra pizza is the production of _____ pizza(s).
2/3
Refer to the table above. Pat's opportunity cost of the delivery of an extra pizza is the production of _____ pizza(s).CORRECT
2/3
Assuming efficient production, If 500 cars are produced in Genovia:
25,000 tons of agricultural products are also being produced.
Refer to the table above. The opportunity cost of making an extra calculator for Smith is __________ and for Jones it is __________.WRONG
0.6 computers; 1.2 computers
For Joe, the opportunity cost of selling a truck is:
1 fewer cars sold.
For Joe, the opportunity cost of selling a truck is: THE RIGHT ANSWER
1 fewer cars sold.
Dent 'n' Scratch Used Cars and Trucks employs 3 salesmen. Data for their sales last month are shown in this table: For Larry, the opportunity cost of selling a truck is: WRONG
1/2 car not sold.
For Ralph, the opportunity cost of selling a truck is: (DENT N SCRATCH)
1/4 car not sold.
Refer to the figure above. Both islands specialize exclusively in the product for which they have a comparative advantage. You have agreed to sell the other island 350 coconuts in exchange for 1,300 fish. After the trade your island has a total of _____ coconuts and _____ fish.WRONG
150; 2,800
For Alex, the opportunity cost of cleaning one room is ____ meal(s); for Lou the opportunity cost of cleaning one room is _____ meal(s).
1; 4/5
Refer to the table above. Pat's opportunity cost of the production of an extra pizza is the delivery of ______ pizza(s).WRONG
2
Refer to the figure above. The opportunity cost to produce one bushel of corn is:
2 bushels of wheat.
Alex and Lou have worked out an efficient arrangement. Under that arrangement:WRONG
Alex and Lou do half of the cooking and half of the cleaning.
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:WRONG
3 cappuccinos
Refer to the table above. The daily opportunity cost of moving one miner from Scraping Bottom to Middle Drift is:
3 tons.
Refer to the table above. Pat's opportunity cost of the production of an extra pizza is the delivery of ______ pizza(s).CORRECT
3/2
Refer to the figure above. If this restaurant makes 75 salads in one hour, how many pizzas can it also make in that same hour, assuming efficient production?
30
Refer to the table above. The daily opportunity cost of moving one miner from Mother Lode to Scraping Bottom is:
4 tons.
Refer to the table above. Suppose Smith and Jones begin by producing 0 computers and 220 calculators per hour. If they wish to produce 2 computers and 200 calculators per hour, then Smith will spend __________ and Jones will spend __________.WRONG
48 minutes on computers and 12 minutes on calculators; 1 hour on calculators
Which of the following statements is always true?
Comparative advantage does not require absolute advantage.
Refer to the figure above. Moving from Point C to Point B, the opportunity cost of 25 more salads is:
5 fewer pizzas.
Refer to the table above. Corey's opportunity cost of the delivery of an extra pizza is the production of ______ pizza(s).WRONG
6
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:
7 points on the test.
Refer to the figure above. Suppose that this economy is currently producing at point B, but an aging population is demanding more medical care. Providing 400 additional units of medical care will cost this economy:WRONG
800 warheads
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:
Joe has a comparative advantage in walking the dog.
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:
shift outward.
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:CORRECT
Joe has a comparative advantage in walking the dog.
To say that an individual possesses an absolute advantage in the production of software means that individual:
can produce more and/or higher quality software in a given amount of time.
Refer to the figure above. If Pat and Chris were to specialize in the task for which each has a comparative advantage:
Chris would remove trash and Pat would plant bulbs.
Refer to the figure above. If Pat and Chris were to specialize in the task for which each has a comparative advantage:CORRECT
Chris would remove trash and Pat would plant bulbs.
Refer to the table above. The comparative advantage for pizza production belongs to __________ and the comparative advantage for pizza delivery belongs to __________.CORRECT
Corey; Pat
Refer to the table above. The comparative advantage for pizza production belongs to __________ and the comparative advantage for pizza delivery belongs to __________.WRONG
Corey; Pat
________ has an absolute advantage in selling cars and __________ has an absolute advantage in selling trucks.
Larry; Ralph
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:
Leslie has an absolute advantage.
Which of the following is true?
Lou has a comparative advantage over Alex in cleaning.
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:
Maryann should specialize in the activity for which she has a comparative advantage.
By taking the first tons from ______, Earth Movers & Shakers is producing consistent with the _____ Principle. WRONG
Middle Drift; Compromise
By taking the first tons from ______, Earth Movers & Shakers is producing consistent with the _____ Principle.CORRECT
Middle Drift; Low Hanging Fruit
The United States has a comparative advantage in producing books and movies because:WRONG
New York and Hollywood are the historic centers of book publishing and movie production.
Refer to the figure above. Compare the degree of efficiency at each point. Which is true? CORRECT
Points A, B, C and D are equally efficient.
Refer to the figure above. Compare the degree of efficiency at each point. Which is true?WRONG
Points A, B, and C are more efficient than Point D.
Refer to the figure above. Which of the following is true given the production possibilities shown?
Points B, C, and E are equally efficient.
Refer to the figure above. Suppose that the government requires that resources are used efficiently. Which of the following would the government definitely not allow?
Production at Point D.
Refer to the figure above. Suppose that the government requires that resources are used efficiently. Which of the following would the government definitely not allow? CORRECT
Production at Point D.
Which of the following factors would not contribute to increasing an existing comparative advantage?WRONG
Productivity improvements from greater experience.
Between the U.S. and Nepal, Nepal invests less in new factories and equipment. This will likely cause: CORRECT
The U.S.'s production possibilities curve to shift outward faster than Nepal
Between the U.S. and Nepal, Nepal invests less in new factories and equipment. This will likely cause:
The U.S.'s production possibilities curve to shift outward faster than Nepal's.
NAFTA helped ______ to exploit a comparative advantage in the production of goods made by unskilled labor. WRONG
The USA
Which of the following jobs is least likely to be outsourced?
VFlipping hamburgers
Refer to the figure above. For Chris, the opportunity to removing one bag of trash is: not planting 25 bulbs. not planting 5 bulbs. not planting 3 bulbs. not planting one-third of a bulb.
WRONG
The production possibilities curve is:WRONG
a graph illustrating supply curves for different combinations of output.
Refer to the figure above. According to Moe's PPF, moving from a grade of 80 in economics to a grade of 90 in economics:
comes at a lower opportunity cost than moving from a 90 to a 100 in economics.
If a nation has the lowest opportunity cost of producing a good, that nation has a(n):WRONG
absolute advantage
If a nation can produce a good more quickly than any other nation, that nation has a(n):CORRECT
absolute advantage.
If Jane can produce 3 pairs of shoes hourly, while Bob can produce 2, then one can infer that the __________ advantage belongs to __________.
absolute; Jane
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:WRONG
are an example of the difference between abstract models and the real world.
Any combination of goods that can be produced with currently available resources defines a(n):
attainable point on a production possibilities curve.
The benefits of specialization can be used to explain why:WRONG
big companies take advantage of smaller ones.
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:
decreases the longer Pat plays.
The PPC shown in this graph is characteristic of production that displays:WRONG
decreasing opportunity costs as production of a good increases.
According to the textbook, the largest factor explaining the variance in the performance of the economies of the world is the:
degree of specialization
Refer to the figure above. Sven could move from the bold PPC to the dashed PPC by:CORRECT
devoting fewer hours to sleeping and eating.
A job is most likely to be outsourced if it:
does not require complex communication.
If a given production combination is efficient, then it must be:WRONG
either an attainable or an unattainable point.
If a given production combination is known to be attainable, then it must be:
either an inefficient or efficient point.
The key to resolving the apparent paradox of international trade increasing total output yet facing much political opposition is noting that:
everyone does not benefit equally from trade.
When journalists write about outsourcing, they are referring to:
firms that hire low-wage workers in other countries to perform some of their work.
In general, individuals and nations should specialize in producing goods _________ other individuals or nations.
for which they have a lower opportunity cost compared to
Application of the Principle of Comparative Advantage leads to:
greater specialization of labor and other factors of production.
The __________ the difference between domestic opportunity costs and international opportunity costs, the __________ the potential benefits of trading with other countries.
greater; greater
Joe's opportunity cost of selling a car is ______ than Ralph's, and Joe's opportunity cost of selling a car is ______ than Larry's.WRONG
greater; less
Larry has a comparative advantage in writing a term paper if he:
has the lowest opportunity cost for writing a term paper.
Larry has a comparative advantage in writing a term paper if he:CORRECT
has the lowest opportunity cost for writing a term paper.
The main reason that firms outsource is that:
hiring low-wage workers reduces firms' costs.
Refer to the figure above. Moe's PPC is bowed out because:
his studying is subject to the principle of increasing opportunity costs.
Economic growth can result from a(n):
increase in the amount of productive resources.
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: CORRECT
increases the longer Pat plays.
Moe needs to earn at least an 80 in both economics and physics to keep his scholarship. Given his current PPC, an 80 in both classes is ______.
infeasible
Refer to the figure above. You have arrived with 300 coconuts to trade. The minimum number of fish you would be willing to accept in exchange for those coconuts:
is 901 fish, because that is just a little more than the opportunity cost of harvesting the coconuts.
Refer to the figure above. Point y ___________________________ point v. (BECKY'S CLOGS)WRONG
is more efficient than
An existing comparative advantage can be further magnified by specialization because:
it eliminates the need to switch from one task to another.
The benefits to specialization are enhanced when two trading partners have:
large comparative advantages in different goods.
Refer to the figure above. If Moe moved from Point A to Point C, his grade in Physics would go down by ______________ his grade in economics.
less than the increase in
Refer to the figure above. Relative to point x, at point y:WRONG
more clogs and fewer sandals are produced.
Points that lie below the production possibilities curve are inefficient because:
more of one or both goods could be produced using currently available resources without giving up production of another good.
Points that lie below the production possibilities curve are inefficient because:CORRECT
more of one or both goods could be produced using currently available resources without giving up production of another good.
In general, it is true that:WRONG
more specialization is always better.
The slope of the production possibilities curve must be:
negative.
Refer to the figure above. It is __________ for this farmer to grow 1,000 bushels of wheat and no corn relative to growing 500 bushels of corn and no wheat.WRONG
not efficient
Refer to the figure above. For Pat, the opportunity cost of removing one bag of trash is:
not planting 5 bulbs.
According to the textbook, the evidence indicates that NAFTA has: CORRECT
not reduced the employment of unskilled workers in the United States.
Refer to the figure above. Of the labeled points, ______________ are efficient.
only w, x, y, z, and v
Refer to the figure above. Of the labeled points, ______________ are attainable.
only w, x, y, z, v, and t
Refer to the table above. Based on their comparative advantages, Pat should specialize in _______ while Corey should specialize in _______.
pizza delivery; pizza production
Refer to the table above. According to the data, Pat has an absolute advantage in:
pizza production
Refer to the figure above. Suppose that during the summer Becky can sell more sandals than she can clogs. If she had been producing at point x in the winter, during the summer she will produce at:WRONG
point w.
Refer to the figure above. Suppose that during the summer Becky can sell more sandals than she can clogs. If she had been producing at point x in the winter, during the summer she will produce at:CORRECT
point z.
The slope of any production possibilities curve is __________ because __________.WRONG
positive; more production of one good means more production of the other
Refer to the table above. If Smith and Jones are dividing their time efficiently and producing more than 10 computers and fewer than 120 calculators per hour, Smith will __________ and Jones will __________.WRONG
produce only computers; produce only calculators
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):
production possibilities curve.
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):
production possibilities curve.
According to the textbook, the evidence indicates that NAFTA has:WRONG
reduced the employment of unskilled workers in the United States significantly.
When a government increases the cost of international trade, it is:
reducing the total amount of output available to domestic consumers.
Refer to the figure above. When the other island's delegate offers to give you 1,000 fish in exchange for 500 coconuts, you: CORRECT
refuse because the trade would leave you at a level of consumption that is less than what you could produce on your own.
The fundamental reason the production possibilities curve has a downward slope is:
resources are fixed and therefore tradeoffs must be made.
Refer to the figure above. This economy might be operating at Point B if:correct!
resources that are best suited for making movies are being used to herd cattle, while resources that are best used for herding cattle are being used to make movies.
The textbook notes that the last time a major league batter hit .400 was in 1941. This is because:
specialization by pitchers, infielders, and outfielders has made it harder for batters to hit.
In general, it is true that:CORRECT
specialization imposes costs as well as benefits.
Refer to the table above. If Smith and Jones are dividing their time efficiently and producing fewer than 10 computers and more than 120 calculators per hour, Smith will __________ and Jones will __________. WRONG
split his time between the two; split his time between the two
Refer to the figure above. Sven could move from the bold PPC to the dashed PPC by:WRONG
studying fewer hours but more effectively per hour.
Refer to the table above. Earth Movers & Shakers needs to fill an order for 100 tons of ore in a single day, and has no other orders to fill that day. It should:WRONG
take 75 tons from Middle Drift and 25 tons from Mother Lode.
Refer to the table above. Earth Movers & Shakers has just received an order for 60 tons of ore, to be filled in a single day. It has no other orders for that day. It should:
take it all from Middle Drift.
The United States has a comparative advantage in producing books and movies because:CORRECT
the English language is understood by many people all over the world.
It was expected that consumers in _____ would benefit from reduced prices of goods that will be freely traded under the NAFTA.
the United States
The production possibilities curve is:CORRECT
the boundary that divides all production combinations into attainable ones and unattainable ones.
Refer to the figure above. If this economy were currently operating at Point D, in order to make more movies:
the first cattle herders to switch to movie making would be the cattle herders with the highest opportunity cost of cattle herding.
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:WRONG
too little specialization.
Refer to the figure above. This economy might be operating at Point B if:WRONG
the low-hanging fruit principle applies.
The production possibilities curve shows:
the maximum production of one good for every possible production level of the other good.
The production possibilities curve shows:CORRECT
the maximum production of one good for every possible production level of the other good.
Refer to the figure above. At Point D:CORRECT
the opportunity cost of herding more cattle is high because resources that are better suited to movie production are being used to herd cattle.
Refer to the figure above. At Point D:WRONG
the opportunity cost of herding more cattle is low because the economy is specializing in cattle herding.
Refer to the table above. According to the data, Corey has an absolute advantage in:
the production of pizza.
Refer to the table above. According to the data, Corey has an absolute advantage in:CORRECT
the production of pizza.
Generally, on a linear two-good production possibilities curve, the opportunity cost of the good measured on the vertical axis is:
the reciprocal of the opportunity cost of the good measured on the horizontal axis.
Generally, on a linear two-good production possibilities curve, the opportunity cost of the good measured on the vertical axis is:CORRECT
the reciprocal of the opportunity cost of the good measured on the horizontal axis.
In a two-person, two-good economy, the benefits of labor specialization will be larger when:
there are large differences in the respective opportunity costs of the two individuals for both goods.
Refer to the figure above. If you offer to give the other island 400 coconuts in exchange for 1,500 fish:WRONG
they will refuse your offer because it makes them worse off than producing on their own.
Refer to the figure above. Point t is an __________ point in relation to the production possibilities curve. CLOGZWRONG
unattainable
Refer to the figure above. Point u is an __________ point in relation to the production possibilities curve. (BECKY'S CLOGS Q)
unattainable
Refer to the figure above. Becky's maximum production of clogs per hour is represented by point:
w
When U.S. companies open offices in Asia and hire workers there, it is evidence that:CORRECT
workers in Asian countries have a comparative advantage over American workers
When U.S. companies open offices in Asia and hire workers there, it is evidence that:
workers in Asian countries have a comparative advantage over American workers.
Having a comparative advantage in a particular task means that:
you give up less to accomplish that task than do others.
Refer to the figure above. As soon as you see the other island's PPC, you realize:
your island will have to specialize in coconuts if it wants to gain from trade.
Refer to the figure above. Becky's maximum production of sandals per hour is represented by point:WRONG
z