ECON MACRO 2301

7. People are likely to respond to a policy change

if the policy changes either the cost or benefits of their behavior.

If Korea is capable of producing either shoes or soccer balls or some combination of the two, then

Korea's opportunity cost of shoes is the inverse of its opportunity cost of soccer balls.

3. When society cannot produce all the goods and services people wish to have, it is said that the economy is experiencing?

A. Scarcity

To increase living standards, public policy should

A. ensure that workers are well educated and have the necessary tools and technology.

6. Economists are particularly adept at understanding that people respond to? a. Laws b. Incentives c. punishments more than rewards. d. rewards more than punishment.

B. Incentives

Comparative advantage is related most closely to which of the following?

B. Opportunity cost

4. The adage,"There is no such thing as a free lunch," is used to illustrate the principle that...?

B. People face trade offs

1. Economics deals with primarily with the concept of...?

B. Scarcity

Total output in an economy increases when each person specializes because

B. each person spends more time producing that product in which he or she has comparative advantage.

What is the most important factor that explains differences in living standards across countries?

C. Productivity

5. The principle that "people face tradeoffs" applies to a. individuals. b. families. c. societies. d. All of the above are correct.

D. All of the above are correct.

2. The phenomenon of scarcity stems from the fact that...?

D. Resources are limited

Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 5 bushels of corn or 50 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. Which of the following is true?

Neither country could gain from trade with each other because neither one has comparative advantage.

Which of the following is not correct?

When studying the relationship between two economic variables, graphs allow economists to draw indisputable conclusions about causes and effects.