chapter 2

Which of the following is not considered as one of the factors of​ production?

Technology

in the circular flow model

the government buys goods and services from firms.

The most people live in​ ________ economies and the fewest people live in​ ________ economies. A. ​developing; advanced B. ​advanced; emerging market C. emerging​ market; developing D. ​developing; emerging market E. ​advanced; developing

​d. developing; emerging market

Which of the following is not considered a factor of​ production?

money

​________ the owners of the factors of​ production, while​ ________ what amounts of those factors to hire. A. Households​ are; firms determine B. Firms​ are; the government determines C. Firms​ are; households determine D. The government​ is; firms determine E. Households​ are; the government determines

A. Households​ are; firms determine

The functional distribution of income measures which of the​ following? A. The distribution of earnings by the factors of production. B. How federal tax revenues are related to the business function that employs taxpayers. C. The distribution of income among households. D. The distribution of income among nations. E. The proportion of income generated by the four types of expenditures on goods and services.

A. The distribution of earnings by the factors of production

A reason the production possibilities frontier exists is A. scarcity of resources. B. unlimited resources and technology. C. scarcity of resources and unlimited technology. D. that​ people's wants are unlimited. E. unemployment.

A. scarcity of resources.

During a time of high​ unemployment, a country can increase the production of one good or service A. without decreasing the production of something else. B. but the opportunity cost is infinite. C. and must increase the production of something else. D. but must decrease the production of something else. E. by using resources in the production process twice.

A. without decreasing the production of something else.

​________ choose the quantities of factors of production to hire and​ ________ choose the quantities of goods and services to produce. A. ​Firms; firms B. ​Markets; markets C. ​Entrepreneurs; firms D. ​Firms; households E. Factor​ markets; goods markets

A. Firms; firms

The table above gives four production possibilities for airplanes and cruise ships. In possibility​ A, how many resources are devoted to the production of​ airplanes? A. all B. most C. 0 D. few E. It is impossible to tell without more information about the prices of airplanes and cruise ships.

A. all

The difference between consumption and capital goods is that A. capital goods are used to produce additional goods while consumption goods are not. B. capital goods are provided by the government. C. consumption goods can be enjoyed by many people at the same time. D. only big corporations can afford capital goods. E. it is illegal to export capital goods.

A. capital goods are used to produce additional goods while consumption goods are not

The figure shows the production possibility frontier for a country. Suppose the country is producing at point D and increases production of rice to 15 tons. Given this​ change, what is the opportunity cost per ton of​ rice? A. 15 thousand bottles of wine B. 3 thousand bottles of wine C. ​Nothing, it is a free lunch D. 12 tons of rice E. 6 thousand bottles of wine

B. 3 thousand bottles of wine

On a typical acre of​ land, Iowa can produce either 300 pounds of beef or 100 pounds of soybeans in a year. On a typical acre of​ land, Nebraska can produce 150 pounds of beef or 200 pounds of soybeans. Which of the following is​ correct? A. Nebraska should produce soybeans because its opportunity cost of soybeans is higher. B. Nebraska should produce soybeans because its opportunity cost of soybeans is lower. C. Iowa should produce soybeans because its opportunity cost of soybeans is lower. D. Iowa should produce soybeans because its opportunity cost of soybeans is higher. E. Nebraska and Iowa should divide each acre evenly between soybean and beef production.

B. Nebraska should produce soybeans because its opportunity cost of soybeans is lower.

Which of the following is the best definition of economic​ growth? A. The opportunity cost of capital. B. The sustained expansion of production possibilities. C. The opportunity cost of consumption. D. The investment in capital and consumption goods by an economy. E. Increased development of land and entrepreneurship.

B. The sustained expansion of production possibilities.

Which factor of production does human capital​ enhance? i. land ii. labor iii. capital A. ​i, ii, and iii. B. ii only. C. iii only. D. i only. E. i and ii.

B. ii only.

In the circular flow​ model, the factor markets are the markets in which A. government goods and services are provided. B. ​land, labor,​ capital, and entrepreneurship are bought and sold. C. investment goods and services are bought and sold. D. consumption goods and services are bought and sold. E. governments impose all their taxes.

B. ​land, labor,​ capital, and entrepreneurship are bought and sold.

Payments to the factors of production are A. ​rent, interest,​ bonds, and profit or loss. B. ​rent, wages,​ interest, and profit or loss. C. ​land, labor,​ capital, and entrepreneurship. D. ​rent, mortgage,​ interest, and bonds. E. ​rent, wages, profit or​ loss, and bonus.

B. rent, wages, interest, and profit or loss

Huey and Steve can grow potatoes or tomatoes. The table above shows the pounds of potatoes and tomatoes Huey and Steve can grow in a week. Based on the​ table, Huey's opportunity cost of producing one pound of tomatoes is A. 1.0 pound of potatoes. B. ​0, because he has a comparative advantage in it. C. 1.5 pounds of potatoes. D. 0.66 pound of potatoes. E. ​0, because he has an absolute advantage in it.

C. 1.5 pounds of potatoes.

The United States can use all its resources to produce 250 DVDs or 500 shoes. China can use all of its resources to produce 30 DVDs or 300 shoes. The opportunity cost of producing a DVD in the United States is A. 20 shoes. B. 500 shoes. C. 2 shoes. D. 1 DVD. E. ​1/2 of a shoe.

C. 2 shoes.

The table above shows a​ nation's production possibilities frontier. The opportunity cost of a robot between combination D and E is A. 34 pizzas. B. ​1/4 of a pizza. C. 4 pizzas. D. 30 pizzas. E. undefined because neither point is production efficient.

C. 4 pizzas.

Deb and Pete have volunteered to help their favorite charity mail out fundraiser information. The figure shows their production possibilities frontiers for assembling packets and stuffing envelopes. Which of the following statements is​ correct? A. Deb has an absolute advantage in both assembling packets and stuffing envelopes. B. Pete has an absolute advantage in both assembling packets and stuffing envelopes. C. Deb has a comparative advantage in stuffing envelopes. D. Deb has a comparative advantage in assembling packets. E. Deb has a comparative advantage in both assembling packets and stuffing envelopes.

C. Deb has a comparative advantage in stuffing envelopes.

Mac can bake more cookies than Monica per hour. It must be true that A. Monica has an absolute advantage in cookie baking. B. Mac cannot benefit by trade between the two of them. C. Mac has an absolute advantage in baking cookies. D. Mac has a comparative advantage in baking cookies. E. Monica has a comparative advantage in baking cookies.

C. Mac has an absolute advantage in baking cookies.

Production efficiency is represented by​ ________ a production possibilities frontier. A. all points outside B. a movement along C. all points on D. only one point on E. all points inside

C. all points on

A point on the production possibilities frontier reflects an A. unattainable point without full employment of all resources. B. unattainable point with full employment of all resources. C. attainable point with full employment of all resources. D. attainable point without full employment of all resources. E. None of the above answers are correct.

C. attainable point with full employment of all resources.

The figure above shows the production possibilities frontier for a country. In order for it to produce at point ​E, the A. production of compact cars would need to decrease. B. country would need to determine that compact cars and SUVs are equally important to it. C. country would need to acquire more resources​ and/or more advanced technology. D. country would need to use its resources more efficiently. E. production of SUVs would need to decrease.

C. country would need to acquire more resources​ and/or more advanced technology.

To find the opportunity cost of producing one more unit of any product while on the production possibilities frontier requires A. setting the change in one product equal to the change in the other product. B. setting the amounts of the two products equal to each other. C. dividing the amount of the product forgone by the amount of the product gained. D. subtracting the change in the product whose production increased from the change in the product whose production decreased. E. None of these describe how to find opportunity cost.

C. dividing the amount of the product forgone by the amount of the product gained.

If there is unemployment in an​ economy, then the A. economy is operating at an unattainable point. B. production possibilities frontier must be bowed inward. C. economy is producing at a point inside the production possibilities frontier. D. production possibilities frontier will shift outwards. E. production possibilities frontier will shift inwards.

C. economy is producing at a point inside the production possibilities frontier.

Suppose that in a PPF​ graph, wheat is on the vertical axis and jets are on the horizontal axis. Moving down along the PPF​, the A. number of jets increases and the opportunity cost of jets decreases. B. opportunity cost of jets and wheat both increase. C. number of jets increases and the opportunity cost of jets increases. D. amount of wheat increases and the opportunity cost of wheat increases. E. amount of wheat increases and opportunity cost of wheat decreases.

C. number of jets increases and the opportunity cost of jets increases.

Of the​ following, the country with the highest average income per day in the world is A. China. B. Russia. C. the United States. D. India. E. Brazil.

C. the United States.

When drawing a production possibilities​ frontier, which of the following is held​ constant? A. the amount of money in the economy B. the quantity of the goods and services that are produced C. the available factors of production and the state of technology D. the prices of goods and services E. None of the above because nothing is held constant when drawing the production possibilities frontier.

C. the available factors of production and the state of technology

Huey and Steve can grow potatoes or tomatoes. The table above shows the pounds of potatoes and tomatoes Huey and Steve can grow in a week. Based on the​ table, which of the following statements is​ correct? A. Steve has an absolute advantage in both potatoes and tomatoes. B. Steve has a comparative advantage in both potatoes and tomatoes. C. Huey has an absolute advantage in potatoes only. D. Huey has an absolute advantage in both potatoes and tomatoes. E. Steve has an absolute advantage in potatoes only.

D. Huey has an absolute advantage in both potatoes and tomatoes.

An example of a U.S. export is A. a TV made in China sold to a buyer in Azerbaijan. B. pasta made in Italy sold to buyers in Spain. C. matchbooks made in Mexico sold to a buyer in New Jersey. D. a washing machine made in Indiana sold to a buyer in France. E. diamonds mined in Africa sold to buyers in South America.

D. a washing machine made in Indiana sold to a buyer in France.

Which of the following is NOT directly related to human​ capital? A. a college education B. knowledge of computer programing C. an understanding of real estate markets D. an MRI machine E. a summer internship

D. an MRI machine

If a country has A. an absolute advantage in producing a​ good, it definitely also has a comparative advantage in producing that good. B. a comparative advantage in production of a​ good, it must also have an absolute advantage in producing that good. C. an absolute advantage in producing a​ good, it definitely will not have a comparative advantage in producing that good. D. an absolute advantage in producing a​ good, it might or might not have a comparative advantage in producing that good. Your answer is correct. E. None of the above answers is correct.

D. an absolute advantage in producing a​ good, it might or might not have a comparative advantage in producing that good.

The charitable organization Creating Hope International trains women in Afghanistan to become tailors. This effort reduces A. entrepreneurship differences between advanced and developing economies. B. physical capital differences between advanced and developing economies. C. agricultural differences between advanced and developing economies. D. human capital differences between advanced and developing economies. E. manufacturing differences between advanced and developing economies.

D. human capital differences between advanced and developing economies.

According to the functional distribution of​ income, in the United States A. entrepreneurs earned most of the income. B. the income earned by capital and labor are approximately equal. C. capital earns most of the income. D. labor earns most of the income. E. land earns most of the income.

D. labor earns most of the income.

Households receive transfers from​ ________ and firms receive transfers from​ ________. A. ​firms; households B. ​government; no one C. ​government; government and households D. ​government; government E. firms and​ government; government

D. ​government; government

Which factor of production is paid​ "interest"? A. land B. human capital C. entrepreneurship D. capital E. labor

D. capital

Suppose that​ Germany, France,​ Estonia, and India all have the same production​ possibilities, illustrated in the figure. Based on the production points in the​ figure, Germany is most likely to expand its PPF to A. PPF1. B. PPF3 or PPF2. C. PPF2. D. PPF1. or PPF2. E. PPF3.

E. PPF3.

Assume that an association of young workers has lobbied Congress to require that all workers retire once they reach the age of fifty. What impact would this law have on the​ nation's production possibilities​ frontier? A. no impact at all B. The level of unemployment would decrease so the production possibilities frontier would shift outward. C. The nation would move to a new position on its production possibilities frontier but the frontier itself would not shift. D. The number of young workers would increase so the production possibilities frontier would shift outward. E. The production possibilities frontier would shift inward.

E. The production possibilities frontier would shift inward.

A country has a comparative advantage in the production of a good if it can A. tradeoff producing the good for another good. B. produce more of the good most efficiently. C. produce more of the good than another country. D. produce the good on and remain on its production possibilities frontier. E. produce the good at the lowest opportunity cost.

E. produce the good at the lowest opportunity cost.

Production possibilities frontiers usually curve out and away from the origin. The implication is A. that the opportunity cost of producing a good stays the same regardless of how much of that good is produced. B. that the opportunity cost of producing a good goes down as more of that good is produced. C. technological change is present. D. that as resources are used to produce one​ good, fewer resources are available to produce another good. E. some resources are better at producing one good while other resources are better at producing alternative goods.

E. some resources are better at producing one good while other resources are better at producing alternative goods.

What determines the income flows that households​ receive? A. an agency of the Federal government B. financial institutions such as banks C. what they choose to consume D. what they choose to​ produce, how much is​ sold, and the price received when sold E. their ownership of factors of​ production, how much they sell in the factor​ markets, and the prices received when sold

E. their ownership of factors of​ production, how much they sell in the factor​ markets, and the prices received when sold

In the United​ States, the poorest 20 percent of households receive roughly​ ________ percent of total income. A. 20 B. 15 C. 0.5 D. 10 E. 3

E. 3

Items bought by businesses to help produce other goods and services are called A. government goods and services. B. consumption goods and services. C. productive goods. D. exports of goods and services. E. capital goods.

E. capital goods

In the circular flow​ model, there are two types of​ markets: the​ ________ market and the​ ________ market. A. ​producers; consumers B. ​supply; demand C. ​service; goods D. ​households; firms E. ​goods; factor

E. goods; factor

In the circular flow​ model, which of the following is on the selling side in the goods​ market? A. ​federal, state, and local governments B. both firms and households C. only households D. exporters E. only firms

E. only firms

The table above shows the production possibilities for an economy. The opportunity cost of a loaf of bread is​ ________ when moving from possibility B to possibility C. A. 200 books B. ​1/2 of a book C. 2 books D. 1 loaf of bread E. 100 loaves of bread

c. 2 books

Economists classify energy and water as part of which factor of​ production? A. entrepreneurship B. land if undeveloped and capital if developed C. labor D. capital E. land

e. land

The emerging market economies are

in transition from stateminus owned production to free markets.