Question 1

Which of the following is a factor of production?

Accepted Answer

A)   an oven in a bakery
B)   a share of General Motors' stock
C)   a credit card
D)   a $500 Treasury bondE) A) and B)
F) All of the above

Question 2

Figure 2-1 
-Refer to Figure 2-1. ________ is (are)  technically efficient.

Accepted Answer

A)   Point A
B)   Point B
C)   Point C
D)   Points B and CE) A) and D)
F) None of the above

Question 3

All of the following are examples of spending on goods and services in the circular flow model except

Accepted Answer

A)   Amanda purchases a new electric guitar to pursue her hobby seriously.
B)   Chaitanya buys a new spa pedicure chair for her expanding nail salon business.
C)   Hernan buys a pizza at Papa C's.
D)   Lenny buys a new digital camera to take pictures at his son's graduation.E) A) and B)
F) None of the above

Question 4

In a two-good, two country world, if one country has an absolute advantage in the production of both goods, it must also have a comparative advantage in the production of both goods.

Accepted Answer

A) True 
 B)False

Question 5

A worker is hired in a

Accepted Answer

A)   goods and services market.
B)   product market.
C)   government market.
D)   factor market.E) B) and C)
F) B) and D)

Question 6

Figure 2-4  Figure 2-4 shows various points on three different production possibilities frontiers for a nation.
-Refer to Figure 2-4. Consider the following events:
a.	a reduction in the patent protection period to no more than 2 years
b.	a war that destroys a substantial portion of a nation's capital stock
c.	the lack of secure and enforceable property rights system

Which of the events listed above could cause a movement from W to V?

Accepted Answer

A)   a only
B)   a and b only
C)   a and c only
D)   b and c only
E)   a, b, and cF) A) and D)
G) B) and E)

Question 7

What is meant by the term "opportunity cost"?

Accepted Answer

Opportunity cost is ...

Question 8

In the circular flow model, households demand resources such as labor services in the factor market.

Accepted Answer

A) True 
 B)False

Question 9

Specializing in the production of a good or service in which one has a comparative advantage enables a country to do which of the following?

Accepted Answer

A)   never have to engage in trade with other nations
B)   increase the variety of products that it can produce with a decrease in resources
C)   consume a combination of goods that lies outside its own production possibilities frontier
D)   produce a combination of goods that lies outside its own production possibilities frontierE) A) and B)
F) C) and D)

Question 10

The primary purpose of patents and copyrights is to

Accepted Answer

A)   provide owners with large profit forever.
B)   protect firms from being taken advantage of by competing firms.
C)   protect domestic firms from foreign competition.
D)   encourage the expenditure of funds on research and development to create new products.E) C) and D)
F) None of the above

Question 11

If a nation changes its laws to more actively enforce intellectual property rights, all of the following will most likely take place except

Accepted Answer

A)   more software companies will choose to export their products to that country.
B)   more film makers will choose to do business in that country.
C)   the black market for intellectual property will become more prosperous in that country.
D)   foreign investment in that country will increase.E) B) and C)
F) B) and D)

Question 12

Figure 2-8  Figure 2-8 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids.
-Refer to Figure 2-8. 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) C) and D)
F) All of the above

Question 13

An increase in the unemployment rate may be represented as a movement from a point on the production possibilities frontier to a different point on the frontier.

Accepted Answer

A) True 
 B)False

Question 14

Table 2-11
  Table 2-11 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea.
-Refer to Table 2-11. Does either China or South Korea have an absolute advantage and if so, in what product?

Accepted Answer

A)   South Korea only has an absolute advantage in wheat.
B)   China only has an absolute advantage in wheat.
C)   South Korea has an absolute advantage in both products.
D)   China only has an absolute advantage in digital cameras.E) B) and C)
F) A) and B)

Question 15

"An Inquiry into the Nature and Causes of the Wealth of Nations" published in 1776 was written by

Accepted Answer

A)   John Maynard Keynes.
B)   Karl Marx.
C)   Alfred Marshall.
D)   Adam Smith.E) B) and D)
F) A) and C)

Question 16

Figure 2-2  Figure 2-2 above shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables.
-Refer to Figure 2-2. The linear production possibilities frontier in the figure indicates that

Accepted Answer

A)   Mendonca has a comparative advantage in the production of vegetables.
B)   Mendonca has a comparative disadvantage in the production of meat.
C)   the tradeoff between meat and vegetables is constant.
D)   it is progressively more expensive to produce meat.E) B) and D)
F) None of the above

Question 17

In the circular flow model, households supply resources such as labor services in the product market.

Accepted Answer

A) True 
 B)False

Question 18

What is a circular flow diagram and what does it demonstrate?

Accepted Answer

A circular flow diagram is a model that ...

Question 19

Consider a country that produces only two goods: kayaks and coconuts. Suppose it is possible for this country to increase its production of kayaks without producing fewer coconuts. In this case, its current output combination is efficient.

Accepted Answer

A) True 
 B)False

Question 20

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) B) and C)
F) A) and D)

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

Table 2-11 Table 2-11 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea. -Refer to Table 2-11. Does either China or South Korea have an absolute advantage and if so, in what product?

Correct Answer
verified

All of the following are examples of spending on goods and services in the circular flow model except

Correct Answer
verified

Specializing in the production of a good or service in which one has a comparative advantage enables a country to do which of the following?

Correct Answer
verified

Figure 2-1 -Refer to Figure 2-1. ________ is (are) technically efficient.

Correct Answer
verified

The primary purpose of patents and copyrights is to

Correct Answer
verified

Which of the following is a factor of production?

Correct Answer
verified

What is meant by the term "opportunity cost"?

Correct Answer
verified
Opportunity cost is ...
View Answer

An increase in the unemployment rate may be represented as a movement from a point on the production possibilities frontier to a different point on the frontier.

Correct Answer
verified

"An Inquiry into the Nature and Causes of the Wealth of Nations" published in 1776 was written by

Correct Answer
verified

Consider a country that produces only two goods: kayaks and coconuts. Suppose it is possible for this country to increase its production of kayaks without producing fewer coconuts. In this case, its current output combination is efficient.

Correct Answer
verified

If a nation changes its laws to more actively enforce intellectual property rights, all of the following will most likely take place except

Correct Answer
verified

Households

Correct Answer
verified

What is a circular flow diagram and what does it demonstrate?

Correct Answer
verified
A circular flow diagram is a model that ...
View Answer

Figure 2-2 Figure 2-2 above shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables. -Refer to Figure 2-2. The linear production possibilities frontier in the figure indicates that

Correct Answer
verified

In the circular flow model, households demand resources such as labor services in the factor market.

Correct Answer
verified

A worker is hired in a

Correct Answer
verified

Correct Answer
verified

In the circular flow model, households supply resources such as labor services in the product market.

Correct Answer
verified

In a two-good, two country world, if one country has an absolute advantage in the production of both goods, it must also have a comparative advantage in the production of both goods.

Correct Answer
verified

Figure 2-8 Figure 2-8 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. -Refer to Figure 2-8. What is the opportunity cost of one dozen orchids?

Correct Answer
verified

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

Table 2-11 Table 2-11 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea. -Refer to Table 2-11. Does either China or South Korea have an absolute advantage and if so, in what product?

Correct AnswerverifiedShow Answer

All of the following are examples of spending on goods and services in the circular flow model except

Correct AnswerverifiedShow Answer

Specializing in the production of a good or service in which one has a comparative advantage enables a country to do which of the following?

Correct AnswerverifiedShow Answer

Figure 2-1 -Refer to Figure 2-1. ________ is (are) technically efficient.

Correct AnswerverifiedShow Answer

The primary purpose of patents and copyrights is to

Correct AnswerverifiedShow Answer

Which of the following is a factor of production?

Correct AnswerverifiedShow Answer

What is meant by the term "opportunity cost"?

Correct AnswerverifiedOpportunity cost is ...View AnswerShow Answer

An increase in the unemployment rate may be represented as a movement from a point on the production possibilities frontier to a different point on the frontier.

Correct AnswerverifiedShow Answer

"An Inquiry into the Nature and Causes of the Wealth of Nations" published in 1776 was written by

Correct AnswerverifiedShow Answer

Consider a country that produces only two goods: kayaks and coconuts. Suppose it is possible for this country to increase its production of kayaks without producing fewer coconuts. In this case, its current output combination is efficient.

Correct AnswerverifiedShow Answer

If a nation changes its laws to more actively enforce intellectual property rights, all of the following will most likely take place except

Correct AnswerverifiedShow Answer

Households

Correct AnswerverifiedShow Answer

What is a circular flow diagram and what does it demonstrate?

Correct AnswerverifiedA circular flow diagram is a model that ...View AnswerShow Answer

Figure 2-2 Figure 2-2 above shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables. -Refer to Figure 2-2. The linear production possibilities frontier in the figure indicates that

Correct AnswerverifiedShow Answer

In the circular flow model, households demand resources such as labor services in the factor market.

Correct AnswerverifiedShow Answer

A worker is hired in a

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the circular flow model, households supply resources such as labor services in the product market.

Correct AnswerverifiedShow Answer

In a two-good, two country world, if one country has an absolute advantage in the production of both goods, it must also have a comparative advantage in the production of both goods.

Correct AnswerverifiedShow Answer

Figure 2-8 Figure 2-8 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. -Refer to Figure 2-8. What is the opportunity cost of one dozen orchids?

Correct AnswerverifiedShow Answer

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Opportunity cost is ...
View Answer

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A circular flow diagram is a model that ...
View Answer

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