Macroeconomics (chpt.2)

If a nation has the lowest opportunity cost of producing a good, that nation has a(n): _____________ in the production of that good.

comparative advantage

In general, individuals and nations should specialize in producing those goods for which they have a(n):

comparative advantage

If a given production combination is known to be attainable, then it:

could be either an inefficient or efficient point

The principle of increasing opportunity cost states that:

when increasing production, resources with the lowest opportunity costs should be used first

On a graph of production possibilities curve, an inefficient point is:

necessarily an attainable point

The benefits of specialization can be used to explain why:

individuals and nations benefit from trade

The Principle of Increasing Opportunity Cost is referred in the fact that the opportunity cost going from 70 to 80 in economics is:

lower than the opportunity cost of going from 80 to 90 in economics

On a graph of a production possibilities curve, if a point is attainable, then it:

might or might not be efficient

The slope of a production possibilities curve is ____________ because ______________

negative; producing more of one good requires producing less of the other

A graph that illustrates the maximum amount of one good that can be produced for every possible level of production of the other good is called a(n):

production possibilities curve

Consider a graph of a production possibilities curve. If a producer is operating at an inefficient point then that producer: A). can produce more of one good without producing less of the other good B). must be at an unattainable point on the production possibilities curve C). must be specializing in activities for which it has a comparative advantage D). cannot produce more of one good without giving up some of the other good

A). can produce more of one good without producing less of the other good

Which of the following jobs is least likely to be outsourced? A). flipping hamburgers B). technical assistance over the phone for your computer C). software design D). transcription of physicians' records

A). flipping hamburgers

A country is most likely to have a comparative advantage in the production of cars if: A). it has a relative abundance in the natural resources needed to produce cars B). it imports most of the raw materials necessary to produce cars C). it has strict environmental protection laws governing automobile emissions D). its citizens prefer driving cars to other forms of transportation

A). it has a relative abundance in the natural resources needed to produce cars

Which of the following is not a reason why there are gains to specialization? A). it increases the amount of productive resources in the economy B). it allows individuals to concentrate in the activities in which they have a comparative advantage C). it further improves skills through experience and practice D). it eliminates many of the costs of switching from one task to another

A). it increases the amount of productive resources in the economy

Outsourcing is a term increasingly used to refer to the set of: A). replacing relatively expensive American workers with low-wage workers overseas B). importing raw materials into the U.S from other countries C). hiring illegal immigrants D). exporting final goods to other countries

A). replacing relatively expensive American workers with low-wage workers overseas

If Al has an absolute advantage over Beth in preparing meals then: A). the problem of scarcity applies to Beth but not to Al B). Al can prepare more meals in a given period than Beth C). it takes Al more time to prepare a meal than Beth D). Al's opportunity cost of preparing a meal is lower than Beth's

B). Al can prepare more meals in a given period than Beth

An individual has an absolute advantage in producing pizzas if that individual: A). has a lower opportunity cost of producing pizzas than anyone else B). can produce more pizzas in a given amount of time than anyone else C). charges the lowest price for pizzas D). has a higher opportunity cost of producing pizzas than anyone else

B). can produce more pizzas in a given amount of time than anyone else

In a two-person, two-good economy, the benefits of labor specialization will be larger when: A). one-person has an absolute advantage in both goods B). there are large differences between the individuals in their opportunity costs of producing the two goods C). there are small differences between the individuals in their opportunity costs of producing the two goods D). neither person has an absolute advantage

B). there are large differences between the individuals in their opportunity costs of producing the two goods

Ginger and Maryann are lost in the jungle, where the only things to eat are mangoes and fish. Ginger can gather mangoes faster than Maryann and can also catch more fish per hour than can Maryann. Therefore: A). There are no gains to specialization and trade for Maryann B). Ginger should specialize in the activity for which she has an absolute advantage C). Maryann should specialize in the activity for which she has a comparative advantage D). There are no gains to specialization and trade for Ginger

C). Maryann should specialize in the activity for which she has a comparative advantage

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

If Les can produce two pairs of pants per hour while Eva can produce one pair per hour, then it must be true that: A). Les has both comparative and absolute advantage in producing pants B). Les has a comparative advantage in producing pants C). Eva has a comparative advantage in producing pants D). Les has an absolute advantage in producing pants

D). Les has an absolute advantage in producing pants

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

D). comparative advantage does not require absolute advantage

If a nation restricts imports it will: A). increase the total value of goods and services produced in that nation B). harm each individual citizen in that nation C). benefit each individual citizen in that nation D). decrease the total value of goods and services produced in that nation

D). decrease the total value of goods and services produced in that nation

Larry has a comparative advantage over his classmates in writing term papers if he: A). can write term papers faster than his classmates B). always earns an A on his term papers C). has an absolute advantage in writing term papers D). has a lower opportunity cost of writing term papers than his classmates

D). has a lower opportunity cost of writing term papers than his classmates

If Jane can produce 3 pairs of shoes hourly, while Bob can produce 2, then one can infer that __________ has an advantage in producing __________.

Jane; absolute

You have noticed that your next-door neighbor, Mary, always works in the garden and her husband, Joe, always walks the dog. Based on this observation, you conclude that:

Joe has a comparative advantage in walking the dog

The downward slope of the production possibilities curve illustrates the:

Scarcity principle

Suppose that Nepal invests less in new factories and equipment than does the United States. This will likely cause:

The U.S's production possibilities curve to shift outward faster than Nepal's

If a nation can produce more computers per year than any other nation, the nation has an __________ advantage in the production of computers

absolute

Points that lie beneath the production possibilities curve are:

attainable but inefficient

Any combination of goods that can be produced with currently available resources is an:

attainable point

If a country is producing at point where an increase in the production of one good requires a reduction in the production of another good, then it must be producing at an:

efficient point

In general, individuals and nations should specialize in producing goods ___________ other individuals or nations

for which they have a lower opportunity cost compared to

The emergence of English as the de facto world language has _________ a comparative advantage in the production of books, movies and popular music

given non-English speaking countries

According to the Principle of Increasing Opportunity Cost, in expanding the production of any good, we should start by utilizing the resources that:

have the lowest opportunity cost

The fundamental reason firms outsource is that:

hiring low-wage workers overseas reduces firms costs

As the differences in opportunity costs between the U.S and its trading partners increase, the potential gains from specialization and trade _______________

increase

Economic growth can result from an:

increase in the amount of productive resources

Suppose Colin brews beer and makes cheese. If Colin can increase his production of beer without decreasing his production of cheese, then he is producing at an:

inefficient point

The benefits to specialization are even greater when two trading partners have:

larger differences in opportunity costs

Points that lie below the production possibilities curve are inefficient because:

more of one good could be produced without producing less of the other

One reason there is political opposition to international trade is that:

not everyone benefits from trade

If a given production combination is efficient, then it must be:

on the production possibilities curve

Production possibilities curves for large economics are generally bow-shaped because:

opportunity costs tend to increase with increases in production

An increase in an economy's productive resources will lead the production possibilities curve to:

shift outward

Regarding specialization, it is generally true that:

specialization imposes costs as well as benefits

When a U.S. firm engages in outsourcing, it benefits ______ and harms ______.

the U.S consumers of the firm's products; the firm's U.S employees

The idea that tradeoffs have to be made when resources are scarce is reflected in the fact that:

the production possibilities curve has a negative slope

Generally, on a linear two-good production possibilities curve, the opportunity cost of the good measured on the vertical axis is:

the reciprocal of the opportunity cost of the good measured on the horizontal axis

When a nation reduces the barriers to international trade:

the total value of all goods and services produced by the nation rises

Points that lie outside the production possibilities curve are ____________ and points that lie inside the production possibilities curve are ___________

unattainable; attainable

One concern regarding the NAFTA was that it would lead:

unskilled workers in the U.S to lose their jobs

If you have a comparative advantage in a particular task then:

you give up less to accomplish that task than others