economics chapter 2
Which of the following is NOT true about an outward shift of the PPF?
A sudden and unexpected decrease in the capital stock is the most effective method of shifting the PPF outward.
Which of the following is NOT true about the mixed economic system in the United States?
Government spending accounts for over 90% of the total economy.
Which of the following is correct about Opportunity Cost?
Opportunity Cost is highly subjective and varies according to the personal perspective of each individual.
Which of the followig is NOT true of the production possibilities frontier (PPF)?
Points between the PPF curve and the X and Y axes are not attainable.
Which of the following is true about points inside and outside of the PPF?
Points outside the PPF are not attainable with the given level of resources the given state of technology being used.
Which of the following is correct about a Production Possibilities Frontier?
Points outside the PPF curve are not attainable with the given level of resources and the current state of technology. Points inside the curve are attainable but not efficient. To shift the PPF outwards, increase total resources or improve technology (or both).
Which concept reflects the benefit gained from having people do a specific task in a production process rather than every single step in that process?
Specialization
Which of the following is NOT true about specialization?
Specialization degrades the skill set of workers forced to work under a specialized system of production.
Which of the following is true about comparative advantage?
The Law of Comparative Advantage indicates that the person or country with the lower opportunity cost of making a good should specialize in making that good
What is the effect on the PPF from an increase in natural resources, labor and capital?
The PPF line will shift outwards.
Which of the following provides the correct definition of "opportunity cost?"
The best single alternative given up in order to buy a good or to spend an hour doing a particular activity.
Which of the following is the correct method to determine comparative advantage?
The country with the lower opportunity cost of making steel is said to have the comparative advantage in making steel.
Which of the following is NOT true about a Production Possibilities Frontier?
The curve on a PPF cannot be shifted outward even if more resources are used or if existing technology is vastly improved.
What factor is key to determining which good a person or country should specialize in producing?
The person or country with the comparative advantage in making a good should specialize in making that good. The comparative advantage is based on having the lower opportunity cost.
Which of the following statements correctly states the relationship between Comparative Advantage and Specialization?
The person or country with the comparative advantage in making a good should specialize in making that good. The comparative advantage is based on having the lower opportunity cost.
Which of the following indicates that the U.S. has a Mixed Economic System?
While most production is achieved through profit seeking private firms, Federal agencies regulate safety in the workplace, safety of food and medicines, water standards, and ensure maximum competitiveness in the overall economy.
