Question 1

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year.Country A has 200 workers.Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year.Country B has 400 workers.The workers in Country A should specialize in __________________ because they possess the ___________________ in the production of that good.

Accepted Answer

A)  bananas;comparative advantage
B)  tomatoes;comparative advantage
C)  bananas;absolute advantage
D)  tomatoes;absolute advantageE) A) and C)
F) None of the above

Question 2

An increase in productivity as a result of a new technology would cause the production possibilities frontier to:

Accepted Answer

A)  shift in.
B)  shift out.
C)  not move until society chose to move it.
D)  become more meaningful in policy decisions.E) A) and B)
F) B) and C)

Question 3

A production possibilities frontier is a line or curve that:

Accepted Answer

A)  shows all the possible combinations of outputs that can be produced using all available resources.
B)  shows what can be produced when all available resources are efficiently used.
C)  shows the best combinations of outputs that can be produced using all available resources.
D)  explains why societies make the choices they do.E) B) and C)
F) A) and D)

Question 4

The concept of the invisible hand was first introduced to economics by:

Accepted Answer

A)  David Ricardo.
B)  Adam Smith.
C)  Thomas Malthus.
D)  Milton Friedman.E) A) and D)
F) B) and D)

Question 5

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year.Country A has 200 workers.Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year.Country B has 400 workers.For a worker in Country A,the trade-off of making one tomato is:

Accepted Answer

A)  2 bananas.
B)  3 bananas.
C)  4 bananas.
D)  5 bananas.E) A) and B)
F) A) and D)

Question 6

The invisible hand refers to:

Accepted Answer

A)  the coordination that occurs from everyone working in their own self-interest.
B)  the coordination that occurs from a government agency finding efficiencies.
C)  the coordination that occurs from everyone working for the overall good of society.
D)  the coordination that occurs from a government coordinating economic activity.E) C) and D)
F) All of the above

Question 7

Two countries will choose to specialize and trade only if:

Accepted Answer

A)  the terms of trade fall between their opportunity costs for producing the goods on their own.
B)  the opportunity costs are the same between the two nations.
C)  the opportunity costs are astronomically high for producing the goods on their own.
D)  one country possesses the absolute advantage in both goods,but the comparative advantage in only one good.E) All of the above
F) A) and C)

Question 8

The slope of a production possibilities frontier measures:

Accepted Answer

A)  the opportunity cost of producing one good in terms of the other.
B)  the trade-off inherent in the production of one good versus the other.
C)  how much of one good that must be given up in order to produce the other.
D)  All of these statements are true.E) A) and D)
F) All of the above

Question 9

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year.Country A has 200 workers.Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year.Country B has 400 workers.For a worker in Country B,the trade-off to making one tomato is:

Accepted Answer

A)  2 bananas.
B)  3 bananas.
C)  4 bananas.
D)  5 bananas.E) B) and D)
F) All of the above

Question 10

Choosing to produce at any point within a production possibilities frontier:

Accepted Answer

A)  is inefficient,meaning the society would not be using all its available resources in their best possible use.
B)  is efficient,meaning the society would be using all its available resources in their best possible use.
C)  is unobtainable,meaning the society cannot produce that combination of goods.
D)  is efficient,meaning the society would be using all its available resources,though not in their best use.E) None of the above
F) All of the above

Question 11

Suppose England has a comparative advantage over the United States in producing tea.If this is true,then:

Accepted Answer

A)  England should produce more tea than it needs and sell the rest to the United States.
B)  England should produce a small amount of tea and buy the rest of the tea it wants from the United States.
C)  England should not produce tea,and should instead buy it all from the United States.
D)  the United States has nothing to gain from buying tea from England.E) B) and C)
F) C) and D)

Question 12

People choose to specialize because:

Accepted Answer

A)  it can lead to more consumption than being self-sufficient.
B)  it can lead to consumption beyond the production possibilities frontier.
C)  it allows people to acquire goods at a lower opportunity cost.
D)  All of these statements are true.E) B) and D)
F) B) and C)

Question 13

If we consider the reality that each worker has different skills,then the production possibilities frontier:

Accepted Answer

A)  would have a convex shape.
B)  would have a concave shape.
C)  would be a straight line.
D)  would shift outward.E) A) and B)
F) A) and C)

Question 14

Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.Country A has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.Country B would be working efficiently if they were producing:

Accepted Answer

A)  (200 iPods,1,750 tablets) .
B)  (200 iPods,1,500 tablets) .
C)  (200 iPods,1,000 tablets) .
D)  (200 iPods,750 tablets) .E) C) and D)
F) A) and B)

Question 15

Tom and Jerry have two tasks to do all day: set traps and build bombs.If Tom spends all day setting traps,he will have set 16 traps.If he instead devotes his day to building bombs,Tom will build 4 bombs.If Jerry spends his day setting traps,he will set 14 traps;if he spends the day building bombs,he will build 7 bombs.At the end of the day,Jerry could have produced:

Accepted Answer

A)  14 traps and 7 bombs.
B)  12 traps and 6 bombs.
C)  10 traps and 5 bombs.
D)  6 traps and 4 bombs.E) None of the above
F) All of the above

Question 16

Trade:

Accepted Answer

A)  increases total production,which can benefit everyone involved.
B)  increases total production,which benefits only the more wealthy nation.
C)  decreases total production across nations,but increases it for some.
D)  decreases total production across nations,but benefits everyone because they are individually more productive.E) A) and B)
F) A) and C)

Question 17

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day.A Canadian worker,on the other hand,can produce 10 pairs of shoes or grow 20 apples per day.Which of the following statements is true?

Accepted Answer

A)  The United States has the absolute advantage in the production of both shoes and apples.
B)  Canada has the absolute advantage in the production of both shoes and apples.
C)  The United States has the absolute advantage in the production of shoes and Canada has the absolute advantage in the production of apples.
D)  Canada has the absolute advantage in the production of shoes and the United States has the absolute advantage in the production of apples.E) B) and C)
F) None of the above

Question 18

Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.Country A has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.A bundle of goods that Country B could potentially make would be:

Accepted Answer

A)  (400 iPods,2,000 tablets) .
B)  (300 iPods,500 tablets) .
C)  (200 iPods,1,500 tablets) .
D)  (100 iPods,2,000 tablets) .E) All of the above
F) A) and B)

Question 19

When a producer has the ability to produce a good or service at a lower opportunity cost than others,economists say the producer:

Accepted Answer

A)  has an absolute advantage at producing that good.
B)  has a comparative advantage at producing that good.
C)  has no reason to trade with others.
D)  is efficient.E) All of the above
F) B) and C)

Question 20

Tom and Jerry have two tasks to do all day: set traps and build bombs.If Tom spends all day setting traps,he will have set 16 traps.If he instead devotes his day to building bombs,Tom will build 4 bombs.If Jerry spends his day setting traps,he will set 14 traps;if he spends the day building bombs,he will build 7 bombs.Jerry has a comparative advantage in:

Accepted Answer

A)  trap production because he has the lower opportunity cost of a trap.
B)  trap production because he has the higher opportunity cost of a trap.
C)  bomb production because he has the lower opportunity cost of a bomb.
D)  bomb production because he has the higher opportunity cost of a bomb.E) A) and B)
F) A) and C)

Exam 2: Specialization and Exchange

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year.Country A has 200 workers.Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year.Country B has 400 workers.For a worker in Country B,the trade-off to making one tomato is:

Correct Answer
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An increase in productivity as a result of a new technology would cause the production possibilities frontier to:

Correct Answer
verified

Correct Answer
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The concept of the invisible hand was first introduced to economics by:

Correct Answer
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Suppose England has a comparative advantage over the United States in producing tea.If this is true,then:

Correct Answer
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The invisible hand refers to:

Correct Answer
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The slope of a production possibilities frontier measures:

Correct Answer
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Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.Country A has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.Country B would be working efficiently if they were producing:

Correct Answer
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If we consider the reality that each worker has different skills,then the production possibilities frontier:

Correct Answer
verified

Trade:

Correct Answer
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Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.Country A has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.A bundle of goods that Country B could potentially make would be:

Correct Answer
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Correct Answer
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When a producer has the ability to produce a good or service at a lower opportunity cost than others,economists say the producer:

Correct Answer
verified

A production possibilities frontier is a line or curve that:

Correct Answer
verified

Two countries will choose to specialize and trade only if:

Correct Answer
verified

Correct Answer
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Choosing to produce at any point within a production possibilities frontier:

Correct Answer
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People choose to specialize because:

Correct Answer
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Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day.A Canadian worker,on the other hand,can produce 10 pairs of shoes or grow 20 apples per day.Which of the following statements is true?

Correct Answer
verified

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year.Country A has 200 workers.Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year.Country B has 400 workers.For a worker in Country A,the trade-off of making one tomato is:

Correct Answer
verified

Exam 2: Specialization and Exchange

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year.Country A has 200 workers.Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year.Country B has 400 workers.For a worker in Country B,the trade-off to making one tomato is:

Correct AnswerverifiedShow Answer

An increase in productivity as a result of a new technology would cause the production possibilities frontier to:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The concept of the invisible hand was first introduced to economics by:

Correct AnswerverifiedShow Answer

Suppose England has a comparative advantage over the United States in producing tea.If this is true,then:

Correct AnswerverifiedShow Answer

The invisible hand refers to:

Correct AnswerverifiedShow Answer

The slope of a production possibilities frontier measures:

Correct AnswerverifiedShow Answer

Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.Country A has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.Country B would be working efficiently if they were producing:

Correct AnswerverifiedShow Answer

If we consider the reality that each worker has different skills,then the production possibilities frontier:

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Trade:

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Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year.Country A has 100 workers.Suppose a worker in Country B can make either 2 iPods or 10 tablets each year.Country B has 200 workers.A bundle of goods that Country B could potentially make would be:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a producer has the ability to produce a good or service at a lower opportunity cost than others,economists say the producer:

Correct AnswerverifiedShow Answer

A production possibilities frontier is a line or curve that:

Correct AnswerverifiedShow Answer

Two countries will choose to specialize and trade only if:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Choosing to produce at any point within a production possibilities frontier:

Correct AnswerverifiedShow Answer

People choose to specialize because:

Correct AnswerverifiedShow Answer

Suppose an American worker can make 20 pairs of shoes or grow 100 apples per day.A Canadian worker,on the other hand,can produce 10 pairs of shoes or grow 20 apples per day.Which of the following statements is true?

Correct AnswerverifiedShow Answer

Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year.Country A has 200 workers.Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year.Country B has 400 workers.For a worker in Country A,the trade-off of making one tomato is:

Correct AnswerverifiedShow Answer

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Correct Answer
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