Question 1

Figure 2-7
  
Figure 2-7 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts.
-Refer to Figure 2-7.What is the opportunity cost of producing 1 ton of coconuts in Costa Rica?

Accepted Answer

A)   3/8 of a ton of pineapples
B)   2/3 of a ton of pineapples
C)   1 1/2 tons of pineapples
D)   100 tons of pineapplesE) A) and C)
F) All of the above

Question 2

Figure 2-9
 
-Refer to Figure 2-9. In the circular flow diagram,who are economic agents A and who are economic agents B?

Accepted Answer

A)   A = firms; B = households
B)   A = households; B = firms
C)   A = households; B = factor markets
D)   A= firms; B = product marketsE) A) and B)
F) B) and C)

Question 3

The slope of a production possibilities frontier measures the ________ of producing one more unit of a good.

Accepted Answer

A)   marginal revenue
B)   total revenue
C)   marginal cost
D)   opportunity costE) None of the above
F) A) and D)

Question 4

Figure 2-7
  
Figure 2-7 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts.
-Refer to Figure 2-7.Which country has a comparative advantage in the production of pineapples?

Accepted Answer

A)   Guatemala
B)   They have equal productive abilities.
C)   Costa Rica
D)   neither countryE) B) and D)
F) None of the above

Question 5

In the desire to have a celebrity's image protected to prevent it from being used in ways he would not approve,a celebrity's estate

Accepted Answer

A)   will probably not be successful, since there are no laws regulating this kind of use in the United States.
B)   will have to be granted a patent declaring the celebrity's image a new product, and this will give the estate protection for 7 years.
C)   can rely on U.S. laws that protect intellectual property rights to prevent the unauthorized use of his image.
D)   will most likely be more successful in developing countries than in high-income countries, since property regulations are better enforced in developing countries.E) C) and D)
F) A) and B)

Question 6

Should countries specialize in producing goods and services based on having a comparative advantage or an absolute advantage? Why?

Accepted Answer

Countries should specialize in...

Question 7

Households

Accepted Answer

A)   purchase final goods and services in the factor market.
B)   purchase final goods and services in the product market.
C)   purchase resources in the product market.
D)   purchase resources in the factor market.E) All of the above
F) A) and B)

Question 8

Figure 2-2
  
Figure 2-2 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids.
-Refer to Figure 2-2. What is the opportunity cost of one dozen orchids?

Accepted Answer

A)   0.4 dozen roses
B)   2.5 dozen roses
C)   7.25 dozen roses
D)   16 dozen rosesE) A) and D)
F) A) and C)

Question 9

Increasing opportunity cost along a bowed out production possibilities frontier occurs because

Accepted Answer

A)   of inefficient production.
B)   of ineffective management by entrepreneurs.
C)   some factors of production are not equally suited to producing both goods or services.
D)   of the scarcity of factors of production.E) A) and B)
F) A) and C)

Question 10

A successful market economy requires well defined property rights and

Accepted Answer

A)   balanced supplies of all factors of production.
B)   an independent court system to adjudicate disputes based on the law.
C)   detailed government regulations.
D)   a safety net to ensure that those who cannot participate in the market economy can earn an income.E) A) and B)
F) All of the above

Question 11

Firms

Accepted Answer

A)   have no influence on the circular flow in a market economy.
B)   purchase resources in the product market.
C)   sell goods in the product market.
D)   sell resources in the factor market.E) C) and D)
F) All of the above

Question 12

Figure 2-6
  
General Motors recently approved for production the Cadillac Converj, an electric car based on its Chevy Volt. The Converj will feature a "Generation 1.5 Voltec" powertrain, with a hybrid engine that runs on a combination of electricity and gasoline. Suppose GM chooses to produce both a coupe version and an SUV version of this hybrid-engine vehicle for its Cadillac brand. Figure 2-6 shows changes to its production possibilities frontier in response to new developments and different strategic production decisions.
-Refer to Figure 2-6. In response to changing consumer demands,Cadillac cuts back on the production of SUVs and increases its production of coupes.This strategy is best represented by

Accepted Answer

A)   movement from E to F in Graph A.
B)   movement from G to H in Graph B.
C)   movement from K to L in Graph C.
D)   movement from H to J in Graph B.E) B) and C)
F) B) and D)

Question 13

If society decides it wants more of one good and ________,then it has to give up some of another good and incur some opportunity costs.

Accepted Answer

A)   technology advances
B)   resources are underutilized
C)   all resources are fully utilized
D)   new resources are discoveredE) C) and D)
F) A) and B)

Question 14

Figure 2-7
  
Figure 2-7 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts.
-Refer to Figure 2-7.Which country has a comparative advantage in the production of coconuts?

Accepted Answer

A)   Guatemala
B)   They have equal productive abilities.
C)   Costa Rica
D)   neither countryE) All of the above
F) A) and B)

Question 15

Table 2-3
  
Table 2-3 shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens.
-Refer to Table 2-3.Which of the following statements is true?

Accepted Answer

A)   Jack has a comparative advantage in both tasks.
B)   George has a comparative advantage in both tasks.
C)   Jack has a comparative advantage in lawn mowing and George in garden cultivating.
D)   Jack has a comparative advantage in garden cultivating and George in lawn mowing.E) None of the above
F) B) and C)

Question 16

Adam Smith's ________ refers to the process by which individuals acting in their own self-interest bring about a market outcome that benefits society as a whole.

Accepted Answer

A)   Utopian society
B)   comparative advantage model
C)   invisible hand
D)   survival of the fittest theoryE) All of the above
F) B) and C)

Question 17

Any output combination inside a production possibility frontier is associated with unused or underutilized resources.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not a flow in the circular flow model?

Accepted Answer

A)   the flow of goods and services and the flow of resources to produce goods and services
B)   the flow of profit and the flow of revenue
C)   the flow of income earned by households and the flow of expenditures incurred by households
D)   the flow of revenue received by producers and the flow of payments to resource ownersE) All of the above
F) None of the above

Question 19

Figure 2-11
 
-Refer to Figure 2-11. Which two arrows in the diagram depict the following transaction: Lizzie Haxem hires "The Paint Pros," a professional painting company,to paint her home.

Accepted Answer

A)   J and M
B)   K and G
C)   K and M
D)   J and GE) None of the above
F) B) and D)

Question 20

The production possibilities frontier model assumes all of the following except

Accepted Answer

A)   labor, capital, land and natural resources are fixed in quantity.
B)   the economy produces only two products.
C)   any level of the two products that the economy produces is currently possible.
D)   the level of technology is fixed and unchanging.E) A) and B)
F) None of the above

Exam 2: Trade-Offs, comparative Advantage, and the Market System

Figure 2-2 Figure 2-2 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. -Refer to Figure 2-2. What is the opportunity cost of one dozen orchids?

Correct Answer
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The slope of a production possibilities frontier measures the ________ of producing one more unit of a good.

Correct Answer
verified

Adam Smith's ________ refers to the process by which individuals acting in their own self-interest bring about a market outcome that benefits society as a whole.

Correct Answer
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Which of the following is not a flow in the circular flow model?

Correct Answer
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Households

Correct Answer
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The production possibilities frontier model assumes all of the following except

Correct Answer
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Figure 2-11 -Refer to Figure 2-11. Which two arrows in the diagram depict the following transaction: Lizzie Haxem hires "The Paint Pros," a professional painting company,to paint her home.

Correct Answer
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Figure 2-9 -Refer to Figure 2-9. In the circular flow diagram,who are economic agents A and who are economic agents B?

Correct Answer
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Firms

Correct Answer
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Table 2-3 Table 2-3 shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens. -Refer to Table 2-3.Which of the following statements is true?

Correct Answer
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Figure 2-7 Figure 2-7 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts. -Refer to Figure 2-7.Which country has a comparative advantage in the production of coconuts?

Correct Answer
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Figure 2-7 Figure 2-7 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts. -Refer to Figure 2-7.Which country has a comparative advantage in the production of pineapples?

Correct Answer
verified

In the desire to have a celebrity's image protected to prevent it from being used in ways he would not approve,a celebrity's estate

Correct Answer
verified

Should countries specialize in producing goods and services based on having a comparative advantage or an absolute advantage? Why?

Correct Answer
verified
Countries should specialize in...
View Answer

Any output combination inside a production possibility frontier is associated with unused or underutilized resources.

Correct Answer
verified

Correct Answer
verified

A successful market economy requires well defined property rights and

Correct Answer
verified

Figure 2-7 Figure 2-7 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts. -Refer to Figure 2-7.What is the opportunity cost of producing 1 ton of coconuts in Costa Rica?

Correct Answer
verified

If society decides it wants more of one good and ________,then it has to give up some of another good and incur some opportunity costs.

Correct Answer
verified

Increasing opportunity cost along a bowed out production possibilities frontier occurs because

Correct Answer
verified

Exam 2: Trade-Offs, comparative Advantage, and the Market System

Figure 2-2 Figure 2-2 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. -Refer to Figure 2-2. What is the opportunity cost of one dozen orchids?

Correct AnswerverifiedShow Answer

The slope of a production possibilities frontier measures the ________ of producing one more unit of a good.

Correct AnswerverifiedShow Answer

Adam Smith's ________ refers to the process by which individuals acting in their own self-interest bring about a market outcome that benefits society as a whole.

Correct AnswerverifiedShow Answer

Which of the following is not a flow in the circular flow model?

Correct AnswerverifiedShow Answer

Households

Correct AnswerverifiedShow Answer

The production possibilities frontier model assumes all of the following except

Correct AnswerverifiedShow Answer

Figure 2-11 -Refer to Figure 2-11. Which two arrows in the diagram depict the following transaction: Lizzie Haxem hires "The Paint Pros," a professional painting company,to paint her home.

Correct AnswerverifiedShow Answer

Figure 2-9 -Refer to Figure 2-9. In the circular flow diagram,who are economic agents A and who are economic agents B?

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Firms

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Table 2-3 Table 2-3 shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens. -Refer to Table 2-3.Which of the following statements is true?

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Figure 2-7 Figure 2-7 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts. -Refer to Figure 2-7.Which country has a comparative advantage in the production of coconuts?

Correct AnswerverifiedShow Answer

Figure 2-7 Figure 2-7 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts. -Refer to Figure 2-7.Which country has a comparative advantage in the production of pineapples?

Correct AnswerverifiedShow Answer

In the desire to have a celebrity's image protected to prevent it from being used in ways he would not approve,a celebrity's estate

Correct AnswerverifiedShow Answer

Should countries specialize in producing goods and services based on having a comparative advantage or an absolute advantage? Why?

Correct AnswerverifiedCountries should specialize in...View AnswerShow Answer

Any output combination inside a production possibility frontier is associated with unused or underutilized resources.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A successful market economy requires well defined property rights and

Correct AnswerverifiedShow Answer

Figure 2-7 Figure 2-7 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts. -Refer to Figure 2-7.What is the opportunity cost of producing 1 ton of coconuts in Costa Rica?

Correct AnswerverifiedShow Answer

If society decides it wants more of one good and ________,then it has to give up some of another good and incur some opportunity costs.

Correct AnswerverifiedShow Answer

Increasing opportunity cost along a bowed out production possibilities frontier occurs because

Correct AnswerverifiedShow Answer

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Countries should specialize in...
View Answer

Correct Answer
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