MACRO 1

If Jane can produce 3 pairs of shoes hourly, while Bob can produce 2, then one can infer that the __________ advantage belongs to __________. A. absolute; Jane B. comparative; Jane C. comparative; Bob D. comparative and absolute; Jane

A. absolute; Jane

Having a comparative advantage in a particular task means that: A. you are better at it than other people. B. you give up more to accomplish that task than do others. C. you give up less to accomplish that task than do others. D. you have specialized in that task, while others have not.

C. you give up less to accomplish that task than do others.

Suppose there are two parallel highways between two cities with approximately equal traffic. What would you expect to happen if the state began charging tolls to drive on one of those highways? A. More drivers would drive on the non-toll road, making the toll road less congested. B. More drivers would drive on the toll road making the non-toll road less congested. C. Traffic would remain evenly divided between the two roads as drivers continuously sought the less-congested route. D. Traffic would decrease on both roads.

A. More drivers would drive on the non-toll road, making the toll road less congested.

If a nation has the lowest opportunity cost of producing a good, that nation has a(n): A. comparative advantage. B. absolute advantage. C. comparative advantage and an absolute advantage. D. absolute advantage and possibly a comparative advantage.

A. comparative advantage.

Studying how Pat allocates her time between teaching classes and assisting undergraduate students is an example of: A. microeconomics. B. macroeconomics. C. individual economics. D. economic naturalism.

A. microeconomics.

Corey can make 12 Pizzas per hour or deliver 6 pizzas per hour. Pat can make 10 Pizzas per hour or deliver 15 pizzas per hour. Based on their comparative advantages, Pat should specialize in _______ while Corey should specialize in _______. A. pizza delivery; pizza production B. pizza production; pizza delivery C. neither pizza production nor pizza delivery; both pizza production and pizza delivery D. both pizza production and pizza delivery; neither pizza production nor pizza delivery

A. pizza delivery; pizza production

The core principle that is illustrated by the production possibilities curve is: A. the Scarcity Principle. B. the Cost-Benefit Principle. C. the Incentive Principle. D. The Principle of Comparative Advantage.

A. the Scarcity Principle.

Corey can make 12 Pizzas per hour or deliver 6 pizzas per hour. Pat can make 10 Pizzas per hour or deliver 15 pizzas per hour. According to the data, Corey has an absolute advantage in: A. the production of pizza. B. neither the production of pizza nor the delivery of pizza. C. delivering pizza. D. both the production of pizza and the delivery of pizza.

A. the production of pizza.

Which of the following statements is always true? A. Absolute advantage implies comparative advantage. B. Comparative advantage does not require absolute advantage. C. Absolute advantage requires comparative advantage. D. Comparative advantage requires absolute advantage.

B. Comparative advantage does not require absolute advantage.

Several years ago there were two systems for viewing movies at home: Sony's BetaMax machines and VCR machines that played VHS tapes. Despite the higher quality of BetaMax video, VHS became the dominant format. Once VHS tapes were the dominant format, BetaMax virtually disappeared from consumer markets. Why? A. Movie producers preferred VHS to BetaMax. B. Consumers gained more benefit by using the same system that others used, allowing them to share movies. C. Movie rental stores boycotted all Sony products. D. BetaMax technology was obsolete.

B. Consumers gained more benefit by using the same system that others used, allowing them to share movies.

Every time you go to the grocery store, you try to choose the shortest line. But all of the lines always seem to be the same length. Why? A. The store manager tells the cashiers to speed up or slow down to maintain equal line lengths. B. Everyone else is trying to choose the shortest line too. C. The cashiers all work at the same speed. D. Cashiers do not have an incentive to work faster.

B. Everyone else is trying to choose the shortest line too.

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: A. Leslie has a comparative advantage. B. Leslie has an absolute advantage. C. Eva has a comparative advantage. D. Leslie has both comparative and absolute advantage.

B. Leslie has an absolute advantage.

During times of high unemployment, colleges often observe an increase in enrollment even if tuition remains unchanged. Why? A. Students do not know about the decision pitfalls and go to college even though the net benefit is negative. B. The opportunity cost of attending college is lower because students are less likely to have good full-time jobs. C. The opportunity cost of attending college is higher because good jobs are harder to find. D. The benefit of attending college is lower because college graduates are less likely to find jobs upon graduation.

B. The opportunity cost of attending college is lower because students are less likely to have good full-time jobs.

Some states have started giving tax credits to homeowners who install solar panels. This is an example of: A. A decision pitfall because homeowners will not properly account for the costs and benefits of installing solar panels. B. Using the incentive principle to encourage homeowners to switch to solar energy. C. Normative economics, because people should use clean sources of energy. D. Macroeconomic policy because it involves government tax policy.

B. Using the incentive principle to encourage homeowners to switch to solar energy.

If a nation can produce a good more quickly than any other nation, that nation has a(n): A. comparative advantage. B. absolute advantage. C. relative advantage. D. specialization advantage.

B. absolute advantage.

To say that an individual possesses an absolute advantage in the production of software means that individual: A. has a lower opportunity cost of producing software. B. can produce more and/or higher quality software in a given amount of time. C. was the first to create the software. D. charges the lowest price for software.

B. can produce more and/or higher quality software in a given amount of time.

If the government wanted to use the incentive principle to discourage smoking, it could: A. publicize the health risks associated with second-hand smoke. B. increase taxes on cigarettes, effectively raising the price. C. subsidize hospitals treating lung disease. D. invest more money in health research.

B. increase taxes on cigarettes, effectively raising the price.

The impact of government policies on the building of new roads and highways would be studied in the field of: A. microeconomics. B. macroeconomics. C. government economics. D. marginal economics.

B. macroeconomics

Last year interest rates fell. The field of economics that would be most concerned with this is: A. microeconomics. B. macroeconomics. C. economic naturalism. D. marginal economics.

B. macroeconomics.

A study that deals with the salaries of university professors would be considered: A. macroeconomics B. microeconomics C. economic naturalism D. marginal benefit

B. microeconomics

Normative economics is concerned with how people _____ make decisions while positive economics is concerned with how people _____ make decisions. A. in the real world; in models B. should; do C. in power; in ordinary life D. in ordinary life; in power

B. should; do

The incentive principle states that a person is more likely to do something if: A. the opportunity costs are high. B. the benefits from doing it increase. C. everyone else is doing the same thing. D. he is paid to do it.

B. the benefits from doing it increase.

Corey can make 12 Pizzas per hour or deliver 6 pizzas per hour. Pat can make 10 Pizzas per hour or deliver 15 pizzas per hour. Corey's opportunity cost of the delivery of an extra pizza is the production of______ pizza(s). A. 6 B. 12 C. 2 D. 1/2

C. 2

Corey can make 12 Pizzas per hour or deliver 6 pizzas per hour. Pat can make 10 Pizzas per hour or deliver 15 pizzas per hour. Pat's opportunity cost of the production of an extra pizza is the delivery of______ pizza(s). A. 3 B. 2 C. 3/2 D. 2/3

C. 3/2

Which of the following questions would not be answered in macroeconomics? A. What caused the Great Depression? B. At what rate does the US economy typically grow? C. Did the sharp increase in gasoline prices alter SUV sales? D. How does government spending affect the economy?

C. Did the sharp increase in gasoline prices alter SUV sales?

The last time gas prices increased drastically, sales of large Sport Utility Vehicles (SUVs) fell. What economic reason would explain this decrease in sales? A. SUVs were a fad and were no longer popular. B. People who liked SUVs had already purchased one. C. Higher gas prices increased the cost of owning a SUV. D. The price of SUVs increased because it cost more to build them.

C. Higher gas prices increased the cost of owning a SUV.

Curly used his frequent flyer miles to fly to visit Moe. Curly told Moe that it didn't cost him anything to visit. Is Curly correct? A. Yes, because Curly's frequent flyer miles made the trip free. B. Yes, because Curly could stay at Moe's house for free. C. No, because Curly could have used his frequent flyer miles to go somewhere else, but chose to visit Moe. D. No, because Curly had to pay for earlier trips in order to earn the frequent flyer miles.

C. No, because Curly could have used his frequent flyer miles to go somewhere else, but chose to visit Moe.

The incentive principle is an example of: A. an economic decision-making pitfall. B. over-estimating the benefits of an action. C. a positive economic principle. D. a normative economic principle.

C. a positive economic principle.

An economic naturalist is described as someone who: A. uses economic arguments to protect forests and wetlands from development. B. has a natural talent for drawing graphs. C. applies economic insights to everyday life. D. studies the process of natural selection in a marginal cost and marginal benefit framework.

C. applies economic insights to everyday life.

The number of US households with access to the Internet and those with broadband connections is growing rapidly. As an economic naturalist, one could predict that when a major purchase is being considered, families will: A. always buy online. B. never buy online. C. collect more information before making the purchase because the cost of finding and acquiring it is lower. D. collect more information before making the purchase because the benefit of information is now larger.

C. collect more information before making the purchase because the cost of finding and acquiring it is lower.

By convention, there are two major divisions of economics, called: A. marginal benefit and marginal cost. B. reservation price and opportunity cost. C. microeconomics and macroeconomics. D. rational economics and irrational economics.

C. microeconomics and macroeconomics.

An editorial in the paper argues that students should only be allowed to attend school so long as the marginal cost of educating that student is less than the marginal benefit of that student's education. The writer's reasoning is an application of: A. positive economics. B. negative economics. C. normative economics. D. economic naturalism.

C. normative economics.

One thing that distinguishes normative principles from positive principles is that: A. normative principles are pessimistic and positive principles are optimistic. B. normative principles reflect the social norms of the community, and positive principles reflect universal truths. C. normative principles tell us how people should make economic decisions, and positive principles tell us how people actually do make decisions. D. normative principles tell us how people actually make economic decisions, and positive principles tell us how people should make decisions.

C. normative principles tell us how people should make economic decisions, and positive principles tell us how people actually do make decisions

The production possibilities curve is: A. the boundary that divides all production combinations into efficient and inefficient ones. B. a graph illustrating the production combinations society would like to choose. C. the boundary that divides all production combinations into attainable ones and unattainable ones. D. a graph illustrating supply curves for different combinations of output.

C. the boundary that divides all production combinations into attainable ones and unattainable ones.

With ATMs, it is possible to retrieve cash from the bank at any time. One hundred years ago, one could only get cash from the bank during business hours, say, 9 am to 3 pm. The difference has arisen because: A. flexibility was not valued 100 years ago. B. it was impossible to provide 24-hour service 100 years ago. C. the cost of providing 24-hour service is much lower today. D. government forced banks to become more convenient.

C. the cost of providing 24-hour service is much lower today.

The production possibilities curve shows: A. the minimum production of one good for every possible production level of the other good. B. how increasing the inputs used for one good increases the production of the other good. C. the maximum production of one good for every possible production level of the other good. D. how increasing the production of one good allows production of the other good to also rise.

C. the maximum production of one good for every possible production level of the other good.

Corey can make 12 Pizzas per hour or deliver 6 pizzas per hour. Pat can make 10 Pizzas per hour or deliver 15 pizzas per hour. Corey's opportunity cost of the production of an extra pizza is the delivery of ______ pizza(s). A. 2 B. 3/2 C. 2/3 D. 1/2

D. 1/2

Corey can make 12 Pizzas per hour or deliver 6 pizzas per hour. Pat can make 10 Pizzas per hour or deliver 15 pizzas per hour. Pat's opportunity cost of the delivery of an extra pizza is the production of _____ pizza(s). A. 12 B. 10 C. 3/2 D. 2/3

D. 2/3

If Scout has an absolute advantage over Dill: A. Scout has more money than Dill. B. the problem of scarcity applies to Dill, but not to Scout. C. the problem of scarcity applies to Scout, but not to Dill. D. Scout can accomplish more in a given period of time than can Dill.

D. Scout can accomplish more in a given period of time than can Dill.

Which of the following would not be analyzed in microeconomics? A. How to make the largest profit? B. Whether to study or watch TV tonight. C. How an early freeze in California will affect the price of fruit? D. Whether the federal budget should always be balanced.

D. Whether the federal budget should always be balanced.

Larry has a comparative advantage in writing a term paper if he: A. can write a paper faster than the other students in class. B. has an absolute advantage in writing a term paper. C. always earns an A on his papers. D. has the lowest opportunity cost for writing a term paper.

D. has the lowest opportunity cost for writing a term paper.

According to the incentive principle: A. it is irrational to perform volunteer services. B. people will always take the highest-paying job. C. benefits are more important than costs in making a decision. D. people tend to do more of something when the benefits are greater.

D. people tend to do more of something when the benefits are greater.

Positive economic principles are those that: A. are always correct. B. are influenced by political ideology. C. predict how people should behave. D. predict how people will behave.

D. predict how people will behave.