Honors Econ. Ch 2

If Poland decides to increase the production of steel—and decrease the production of vodka—the bowed-out production possibility frontier would suggest that there will be ________ opportunity cost of producing more steel. a. increasing b. decreasing c. nonexistent d. unchanged

A

If an economy has to sacrifice only one unit of good X for each unit of good Y produced then its production possibility frontier is: a. bowed out from origin b. bowed in toward the origin c. a straight line d. a vertical line

A

The fact that a society's production possibility frontier is bowed out or concave to the origin of a graph demonstrates the law of: a. increasing opportiunity costs b. decreasing opportunity cost c. constant opportunity cost d. concave opportunity cost

A

Which of the following statements is a positive statement? Which is the normative? X. the federal minimum wage is increasing to $6.50 Y. the minimum wage should be high enough that families will not live in poverty a. x is positive and y is normative b. y is positive and x is normative

A

If an economy has to sacrifice only one unit of good X for each unit of good Y produced throughout the relevant range, then its production possibility frontier has: a. zero slope b. constant negative slope c. increasing negative slope d. decreasing negative slope

B

The opportunity cost of production: a. is the price of a good b. is what you give up to produce a good c. decreases as production increases d. is what you gain by producing the good

B

If LeRoyce trades two cookies for one of Amir's brownies, we say that they are engaging in: a. exploitation b. benevolence c. barter d. a zero-sum game

C

If the production possibility frontier were a straight line sloping down from left to right, this would suggest that: a. More of both goods could be produced b. the two products must have the same price c. the opportunity costs of the products are constant d. there are no opportunity costs

C

In the simplest circular flow model, households supply ___ and demand _____ a. capital, barter b. wages and income, capital markets c. factors of production, goods and services d. firms, markets

C

The simplest circular flow model shows the interaction between households and firms. In this model: a. only barter transactions take place b. households and firms interact in the market for goods and services, but firms are the only participants in fact market c. firms supply goods and services to households; households in turn supply factors of production to firms d. attention is focused on "real" flows or goods, services, and factors of production, but money flows between households and firms are ignored for simplicity

C

The two flows represented in the circular-flow diagram are: a. the flow of goods and services and flow of factors b. the flow of households and firms c. the flow of money and flow of goods and services d. the flow of factors and flow of money

C

An economy is said to have a comparative advantage in the production of a good if it can produce that good: a. with more resources than another economy b. with a higher opportunity cost than another economy c. outside its production possibility frontier d. at a lover opportunity cost than another economy

D

As long as people have different ________, everyone has a comparative advantage in something. a. direct costs b. benefits c. utility d. opportunity costs

D

Free trade between countries: a. should be based on absolute advantage b. will allow wealth countries to exploit less developed nations c. will shift the production possibility frontier to the right d. will allow for greater levels of compumption

D

If the opportunity cost of manufacturing machinery is lower in the United States than in Britain and the opportunity cost of manufacturing sweaters is higher in the United States than in Britain, then the United States will: a. export both sweaters and machinery to Britain b. import both sweaters and machinery from Britain c. export sweaters to Britain and import machinery from Britain d. import sweaters to Britain and export machinery from Britain

D

In one hour, The US can produce 25 Tons of steel or 250 Automobiles. In one hour, Japan can produce 30 tons of steel or 275 automobiles. This information implies that: a. Japan has a comparative advantage in the production of automobiels b. the US has an absolute advantage in the production of steel c. Japan has a comparative advantage in both goods d. US has a comparative advantage in production of automobiles

D

Which of the following is a normative statement? a. Women's labor force participation rate has increased during the last 100 years b. Gas prices have increased over the past few months c. The federal minimum wage has increased over the last 100 years d. The best way to correct income tax system is to replace it with a Value Added Tax

D

Which of the following statements is true? a. Some very talented people have a comparative advantage in everything b. Some very untalented people have a comparative advantage in nothing c. Some very talented people have a very low opportunity cost in everything they do d. It is possible to have an absolute disadvantage in doing something but still have a comparative advantage in the same thing

D