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Sarah can wash, fold, and iron a basket of laundry in two hours and prepare a meal in one hour. HerHer roommate MonicaMonica can wash, fold, and iron a basket of laundry in three hours and prepare a meal in one hour.
The absolute advantage in laundry is held by
A.
Sarah
B.
Monica
C.
neither person.
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A. Sarah
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The comparative advantage in meal preparation is held by
A.
Monica
B.
Sarah
C.
neither person.
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A. Monica
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A production possibilities curve represents
A.
all possible combinations of output that could be produced at zero opportunity cost.
B.
all possible combinations of output that could be produced assuming fixed productive resources and their efficient use.
C.
all possible combinations of output that could be produced assuming changing technology.
D.
the notion that greater quantities of all goods may be produced.
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B. all possible combinations of output that could be produced assuming fixed productive resources and their efficient use.
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Which of the following statements about production possibilities curves is not true?
A.
A linear production possibility curve illustrates the concept of increasing opportunity costs.
.B.
A production possibilities curve illustrates the concept of scarcity.
C.
A linear production possibilities curve illustrates the concept of efficiency.
D.
A production possibilities curve illustrates the concept of opportunity cost.
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A. A linear production possibility curve illustrates the concept of increasing opportunity costs.
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The existence of scarcity requires
A.
greater scientific advancements occur to eliminate it.
B.
having unfulfilled wants during times of economic depression.
C.
that people must make choices and face trade-offs in using their resources.
D.
that the government allocates resources.
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C. that people must make choices and face trade-offs in using their resources.
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Opportunity cost
A.
only is considered for goods in short supply.
B.
is the value of all alternatives forgone as a result of choosing some given alternative.
C.
is the value of the next best alternative as a result of D.
either B or C.
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C. is the value of the next best alternative as a result of
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The division of labor increases the output of society by
A.
eliminating decreasing returns.
B.
allowing specialization based on the concept of absolute advantage.
C.
eliminating scarcity.
D.
allowing resources to specialize in the tasks for which they have a comparative advantage.
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D. allowing resources to specialize in the tasks for which they have a comparative advantage.
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Specialization and comparative advantage
A.
lead to international trade and overall gains for the nations involved.
B.
lead to greater output even if you can do everything better than someone else.
C.
lead to greater productivity.
D.
All of the above.
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D. All of the above.
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Factors of production include
A.
hydrogen, oxygen and carbon.
B.
land, labor, physical capital, human capital and entrepreneurship.
C.
materials, energy and organization.
D.
land, human capital, financial capital, and technology.
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B. land, labor, physical capital, human capital and entrepreneurship.
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Each individual must make choices because
A.
even if one’s wants are completely satisfied, insufficient time exists to fully enjoy all of them.
B.
wants are sometimes mixed up with needs.
C.
resources are limited and therefore cannot satisfy one’s many competing wants.
D.
needs are more important than wants.
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C. resources are limited and therefore cannot satisfy one’s many competing wants.
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Economic growth implies
A.
you can now have more of all goods.
B.
opportunity costs are decreasing.
C.
you can only have more of one good by having less of another.
D.
fewer resources are available.
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A. you can now have more of all goods.
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Whenever a society forgoes current consumption in order to invest in capital goods,
A.
the less society can consume next year.
B.
the easier it will be for the society to consume less in the future because people will become accustomed to less.
C.
the more the society can consume in the future.
D.
the less capital the society can produce in the future.
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C. the more the society can consume in the future.
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Why do economists avoid making the distinction between wants and needs?
A.
The term need is subjective making it difficult to distinguish between something someone wants and something they need.
B.
Individual needs do not exist so it is necessary to only consider individuals’ wants.
C.
Every individual has exactly the same set of needs. Economists consider individual wants because they differ from one individual to another.
D.
Individual wants are limited making it easier for economists to address this concept.
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A. The term need is subjective making it difficult to distinguish between something someone wants and something they need.
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Greater economic growth is shown as
A.
a steeper slope of the production possibilities curve.
B.
a closer distance to the origin of the production possibilities curve.
C.
a more curved (more bowed) production possibilities curve.
D.
the distance the production possibilities curve shifts outward.
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D. the distance the production possibilities curve shifts outward.
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Which of the following statements is true?
A.
Specialization affects international trade but not interstate trade.
B.
Comparative advantage applies to nations but not to people.
C.
Everyone can benefit when people specialize where they have a comparative advantage and then trade with each other.
D.
Specialization affects interstate trade but not international trade.
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C. Everyone can benefit when people specialize where they have a comparative advantage and then trade with each other.
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he following table lists the costs incurred by a student attending a public university for one semester.
Tuition and Fees $4,000
Room and Board $800
Books and supplies $ 300
Lost wages $4,000
What is the total opportunity cost that the student incurs by attending college for one semester?
A.
$4,800.
B.
$9,100
C.
$8,300.
D.
$4,300.
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C. $8,300.
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Opportunity cost is defined as
A.
the highest-valued, next-best alternative that must be given up to obtain something.
B.
the monetary cost of making a choice under conditions of scarcity.
C.
the variety of uses that a society has for all factors of production.
D.
the collection of all alternative goods that could be chosen at any point in time.
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A. the highest-valued, next-best alternative that must be given up to obtain something.
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Kyla is buying clothes. She can choose between a red dress, a blue sweater, and black jeans. She doesn’t like black jeans, and after some thought, she chooses a red dress. What is the opportunity cost of this choice?
A.
The a red dress, the a blue sweater, and the black jeans.
B.
The blue sweater and the black jeans.
C.
The blue sweater.
D.
The black jeans
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C. The blue sweater.
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When an individual proclaims the need for a new car, the person typically means
A.
they want something they currently do not have.
B.
that having such a possession would be nirvana.
C.
that without a new car, their life cannot go on.
D.
that their ability to get around will cease.
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A. they want something they currently do not have.
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Canada goes to considerable lengths to protect its television program and magazine producers from U.S. competitors. The United States often seeks protection from food imports from Canada. From an economywide viewpoint, these efforts are
A.
political motivations to impose government control over various aspects of the two economies.
B.
misguided because the enhanced output from specialization based upon comparative advantage is restricted.
C.
desirable since they protect the jobs of entertainment workers in Canada and farmers in the U.S.
D.
desirable since without them Canadian cultural identity will be weakened and the U.S. will suffer food shortages.
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B. misguided because the enhanced output from specialization based upon comparative advantage is restricted.
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The division of labor refers to
A.
workers performing multiple tasks.
B.
workers being assigned specific tasks.
C.
workers being prevented from forming unions.
D.
separating workers based on demographics.
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B. workers being assigned specific tasks.
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What is the difference between absolute advantage and comparative advantage?
A.
Absolute advantage is when someone can produce more of a good using a given quantity of inputs while comparative advantage is when someone can produce a good at a lower opportunity cost.
B.
Comparative advantage is when someone can produce more of a good using a given quantity of inputs while absolute advantage is when someone can produce a good at a lower opportunity cost.
C.
Absolute advantage is influenced by the law of increasing relative cost while comparative advantage is not.
D.
Comparative advantage applies to all of the resources while absolute advantage only applies to human capital.
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A. Absolute advantage is when someone can produce more of a good using a given quantity of inputs while comparative advantage is when someone can produce a good at a lower opportunity cost.
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The production possibilities curve will shift outward (upward, and or, to the right) when
A.
economic growth occurs.
B.
corporate profits increase.
C.
resources are used more efficiently.
D.
there is a reduction in labor.
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A. economic growth occurs
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Does the richest person in the world face the problem of scarcity?
A.
No, because having money means that you do not have to choose between present and future consumption.
B.
No, because having money means that you can buy whatever you want to buy.
C.
Yes, because even if you have money you will never be able to satisfy all of your wants and must therefore make choices.
D.
Yes, because if the rich were to purchase a lot of goods at one time shortages would result.
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C. Yes, because even if you have money you will never be able to satisfy all of your wants and must therefore make choices.
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A point inside the PPC means that
A.
resources are not being fully utilized due to unemployment or inefficiency.
B.
this particular economy has no comparative advantage in production any economic good.
C.
one good has no opportunity cost relative to another.
D.
economic growth has taken place.
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A. resources are not being fully utilized due to unemployment or inefficiency.
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You are investing your resources in a college education because
A.
there is no trade-off for you between current and future consumption.
B.
you have no opportunity cost for the use of your time.
C.
your personal PPC will grow faster by investing in human capital and you will be better off.
D.
there is no opportunity cost for money spent on tuition.
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C. your personal PPC will grow faster by investing in human capital and you will be better off.
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Many state governments claim a shortage of funds because there are "unmet needs." This claim is
A.
false because of scarcity.
.B.
true if most of the people in the state are rich and false if most of the people in the state are poor.
C.
true because with enough money you can eliminate shortages.
D.
true because higher taxes can eliminate the "unmet needs."
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A. false because of scarcity.
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Specialization of labor and trade yield greater economic efficiency when applied to interstate trade,
A.
but have no effect on efficiency when applied to international trade.
B.
but only when specialization is based on absolute advantage.
C.
and when applied to international trade.
D.
but do not yield greater economic efficiency when applied to international trade.
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C. and when applied to international trade.
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A production possibilities curve that is bowed outward (from the origin) represents the concept that
A.
opportunity costs are constant.
B.
production of additional units of one good requires that increasing quantities of the other good be given up.
C.
greater quantities of one good can be produced without reducing the production of other goods.
D.
resources are not scarce.
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B. production of additional units of one good requires that increasing quantities of the other good be given up.
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Which of the following is not a factor of production
A.
money.
B.
entrepreneurship.
C.
human capital.
D.
land.
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A. money.
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