Economics - Chapter 2

Which of the following play a role in determining where oranges will be produced in the U.S.? A. Self interest. B. Economic decision rule. C. Adam Smith's Invisible Hand. D. All of the above are correct.

D. All of the above are correct

Adam Smith was of the opinion that which of the following was a source of national wealth? A. A policy of laissez faire. B. Specialization based on comparative advantage. C. Trade and markets. D. All of the above are correct.

D. All of the above are correct.

If President Biden argues that trade with China is killing the U.S. economy, he: A. Probably doesn't appreciate the concept of comparative advantage. B. Is wrong if he means the U.S. as a whole is hurt by trade. C. He may be correct if he means that trade with China is hurting some U.S. workers. D. All of the above are correct.

D. All of the above are correct.

The principle of increasing marginal opportunity cost does not hold in which of the following cases? A. All inputs are equally useful in the production of all goods. B. Some inputs are more useful in the production of certain goods. C. Some inputs are less useful in the production of certain goods. D. Each input is useful in the production of a limited number of goods.

???

Trade: A. Is based on voluntary exchange. B. Requires coercion. C. Allows the world to solve the scarcity problem. D. All of the above are correct.

A. Is based on voluntary exchange

Two countries that specialize their production based on comparative advantage and then trade with each other will be able to: A. both produce and consume more. B. produce more and consume less. C. produce less and consume more. D. both produce and consume less.

A. both produce and consume more.

If the hourly wage of U.S. workers is $16, the hourly wage of Mexican workers is $4, and U.S. workers produce 5 times as much output per hour as Mexican workers, then, other things equal, it would be efficient to locate production facilities in: A. the United States since the cost per unit of output will be higher. B. the United States since the cost per unit of output will be lower. C. Mexico since the cost per unit of output will be higher. D. Mexico since the cost per unit of output will be lower.

A. the United States since the cost per unit of output will be higher??

The text attributes the growth of economies over the last 200 years largely to: A. the development of markets. B. the discovery of additional resources. C. a decrease in the size of the world population. D. Government social policies.

A. the development of markets.

California will have a comparative advantage in producing oranges compared to Alaska if, A. California is good at producing oranges B. California has a lower opportunity cost of producing oranges. C. California has warm, sunny weather. D. Alaska has cold weather.

B. California has a lower opportunity cost of producing oranges.

A point outside of an existing PPC: A. Is presently possible. B. Could become possible with better technology. C. Likely will never be possible. D. None of the above are correct.

B. Could become possible with better technology.

Countries gain from trade by producing: A. the goods they produce at the highest opportunity cost. B. the goods they can produce at the lowest opportunity cost. C. where the production possibility curve has a slope of -1. D. all goods in equal amounts.

B. the goods they can produce at the lowest opportunity cost.

Which of the following is/are true concerning trade and specialization. For two states to benefit from specialization and trade? A. All that is required is a differences in goods. B. All that is required is a differences in resources. C. Both differences in goods and resources are required. D. All of the above are correct

C. Both differences in goods and resources are required.

Which of the following best describes the source of comparative advantage among individuals? A. All individuals have about the same set of talents. B. Different activities or goods require different skills. C. Individuals have different skills and different goods require different skills. D. Some individuals are good at everything.

C. Individuals have different skills and different goods require different skills.

Why doesn't Utah produce cars? A. Technologically impossible. B. Too far from big markets. C. Opportunity cost is too high. D. Both A and B are correct.

C. Opportunity cost is too high

Which explains why average income per capita in the world started to increase rapidly around 1750? A. Broader adoption of specialization and trade. B. Broader adoption of markets as the system for answering the questions of what, how, and for whom. C. Smarter Kings and Queens. D. Both A and B are correct but not C.

D. Both A and B are correct but not C.

Why do farmers in Idaho produce potatoes not oranges? A. It is in their self interest to do so. B. Tradition. C. Potato production is profitable, Oranges would not be. D. Both A and C are correct.

D. Both A and C are correct.

If both Utah and Colorado specialize in the good in which it has a comparative advantage and then trade with the other state, A. joint production will decrease. B. joint consumption will increase. C. joint production will increase. D. Both B and C are correct.

D. Both B and C are correct

The pattern of specialization and trade that happens between Idaho and Florida: A. Is based on social forces. B. Is based on laissez faire. C. Requires markets. D. Both B and C are correct.

D. Both B and C are correct.

If there were decreasing marginal opportunity costs, the production possibility curve would be: A. flat. B. straight. C. bowed out. D. bowed in.

D. bowed in

Which of the following will shift the PPC out? A. Less technology. B. Less capital. C. More labor. D. Both A and B are correct.

c. More Labor??