Economics Exam 2

Figure: Market for TVs 2) According to the figure, if there is no international trade, the equilibrium price in this market is: a. $50. b. $60. c. $500. d. $600.

$600.

A trade cost is: a. the difference in price between a good that is bought or sold abroad rather than domestically. b. the cost associated with producing a good that is bought or sold abroad. c. an extra cost incurred as a result of buying or selling a good abroad rather than domestically. d. the price of a good that is bought or sold abroad.

. an extra cost incurred as a result of buying or selling a good abroad rather than domestically.

Which of the following is an argument for limiting international trade? An increase in international trade may: a. reduce specialization, which has national security benefits. b. lead to economic growth, stemming from specialization. c. reduce the amount of outsourcing by domestic firms. d. lead to anticompetitive practices, such as dumping.

. lead to anticompetitive practices, such as dumping.

Which of the following is a source of comparative advantage? a. high tariff rates b. small-scale production c. specialized skills d. scarce inputs

. specialized skills

Intergenerational mobility is the extent to which: a. the geographic dispersion of families occurs as children pursue economic opportunities. b. the income of children in a given family varies across the children. c. the economic status of children is independent of the economic status of their parents. d. children own more personal transportation vehicles (such as cars and motorcycles) than their parents did.

. the economic status of children is independent of the economic status of their parents

(Figure: Market for TVs 2) According to the figure, if there is international trade in this market, and the world price of televisions is $500, the quantity demanded is _____, and the quantity supplied is _____ at the world price. 40,000; 70,000 b. 80,000; 20,000 c. 70,000; 40,000 d. 20,000; 80,000

70,000; 40,000

The concept of equity focuses on: a. fairness. b. efficiency. c. profit. d. the level of economic surplus.

a. fairness.

In a market graph, consumer surplus is the area: a. above the price. b. below the demand curve. c. between the demand curve and the supply curve. d. above the price and below the demand curve.

above the price and below the demand curve.

On a market graph, producer surplus is the area that is: a. above the demand curve. b. above the demand curve and below the supply curve. c. above the supply curve and below the price. d. below the demand curve.

above the supply curve and below the price.

Market failure occurs when market forces lead to: a. an inefficient outcome. b. a marginal benefit that is equal to marginal cost. c. high price. d. high quantity.

an inefficient outcome.

Government-provided financial funding to households to compensate for bad outcomes such as unemployment, illness, disability, or outliving your savings is known as a: a. social safety net. b. social insurance system. c. disaster relief program. d. progressive tax system.

b. social insurance system.

A tariff is a: a. limit on the quantity of a good that can be exported. b. limit on the quantity of a good that can be imported. c. tax on imported products. d. tax on exported products.

c. tax on imported products.

Specialization will increase output when it is based on: a. comparative advantage. b. who can produce the fastest. c. absolute advantage. d. who can produce at the least comparative cost.

comparative advantage.

Positive analysis is based on identifying _____ and _____. a. facts; relationships b. priorities; scruples c. beliefs; options d. values; judgments

facts; relationships

To maximize production, people should a. learn all the skills so that they can perform any task needed. b. focus on improving their weakest skills. c. focus on the task in which they have a comparative advantage. d. focus on the task in which they have an absolute advantage.

focus on the task in which they have a comparative advantage.

An import is a good or service: a. purchased from a domestic seller. b. purchased from a foreign seller. c. sold to a domestic buyer. d. sold to a foreign buyer.

purchased from a foreign seller.

An export is a good or service: a. sold to a foreign buyer. b. purchased from a foreign seller. c. sold to a domestic buyer. d. purchased from a domestic seller.

sold to a foreign buyer.

When a manager uses comparative advantage to assign tasks in a workplace, then each a. task is assigned to the worker who is best at doing the task. b. worker is assigned to the tasks for which he or she has the highest aptitude and efficiency. c. task is assigned to the worker with the lowest opportunity cost for performing the task. d. worker learns how to do all tasks to increase flexibility in assignments.

task is assigned to the worker with the lowest opportunity cost for performing the task.

A market's deadweight loss is calculated as: a. the loss to consumers when a product malfunctions or fails to meet expectations. b. the price at equilibrium minus the price at actual quantity. c. the economic loss that a firm has when it is not producing its profit-maximizing output. d. the economic surplus at the efficient quantity minus the economic surplus at the actual quantity.

the economic surplus at the efficient quantity minus the economic surplus at the actual quantity.