Econ Quizzes

_____ is the ability to make something using fewer resources than other producers use. a. Absolute advantage b. Comparative advantage c. Specialization d. Division of labor

A. Absolute advantage

Which of the following is true of absolute advantage? a. Absolute advantage focuses on the use of fewer resources. b. Absolute advantage focuses on the opportunity cost of using resources. c. A person should specialize in the production of a good if she has an absolute advantage in producing that good. d. Absolute advantage and not comparative advantage is a better guide to division of labor.

A. Absolute advantage focuses on the use of fewer resources.

Which of the following is true of comparative advantage? a. Comparative advantage focuses on the opportunity cost of using resources. b. Comparative advantage focuses on the use of fewer resources. c. The law of comparative advantage states that people with the resources and skill to produce an output should specialize in the production of that output. d. The law of comparative advantage states that a person with a higher opportunity cost of producing an output should specialize in the production of that output.

A. Comparative advantage focuses on the opportunity cost of using resources.

Which of the following is true of specialization and exchange? a. Specialization and exchange creates more interdependence in an economy. b. Specialization and exchange causes an increase in the price of the products being traded. c. Specialization and exchange causes inefficiency in the allocation of resources across a country. d. Specialization and exchange creates a more independent economic environment.

A. Specialization and exchange creates more interdependence in an economy.

We can say that a firm is practicing division of labor if: a. each worker in the firm specializes in and performs a particular task in the production process. b. each worker in the firm carries out all the tasks in the production process. c. it hires only skilled laborers. d. it constantly organizes training programs for its workers.

A. each worker in the firm specializes in and performs a particular task in the production process.

_____ involves the direct exchange of one good for another without the use of money. a. Export b. Barter c. Economic growth d. Import

B. Barter

The _____ states that the individual, firm, region, or country with the lowest opportunity cost of producing a particular good should specialize in producing that good. a. law of absolute advantage b. law of comparative advantage c. law of diminishing marginal utility d. law of increasing opportunity cost

B. law of comparative advantage.

When you specialize in a task that you do best, you are applying the: a. law of supply. b. law of comparative advantage. c. law of demand. d. law of absolute advantage.

B. law of comparative advantage.

The total production of goods and services in the world economy will increase if: a. nations trade and specialize in the production of a good in which they have an absolute advantage. b. nations trade and specialize in the production of a good in which they have a comparative advantage. c. there are widespread barriers on trade. d. there is a fall in the price of resources.

B. nations trade and specialize in the production of a good in which they have a comparative advantage.

Quiz 2-02

Comparative Advantage, Specialization, and Exchange

Which of the following is an advantage of specialization of laborers? a. It increases the cost of production by increasing the training cost of a firm. b. It provides equal opportunity of growth to both skilled and unskilled laborers. c. It leads to an increase in the demand for skilled workers. d. It allows workers to develop more experience at a particular task.

D. It allows workers to develop more experience at a particular task.