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| 1.
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If Leslie can produce two pairs of pants in an hour while Eva can make one pair an hour, then |
| | A) | Leslie has a comparative advantage. |
| | B) | Eva has an absolute advantage. |
| | C) | Leslie has an absolute advantage. |
| | D) | Eva has a comparative advantage. |
| | E) | Leslie has a comparative disadvantage. |
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| 2.
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If a given production combination is known to be attainable, then it must be |
| | A) | on the production possibilities curve. |
| | B) | beyond the production possibilities curve. |
| | C) | an efficient point. |
| | D) | an inefficient point. |
| | E) | either an inefficient or efficient point. |
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| 3.
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The textbook notes that the last time a major league batter hit .400 was in 1941. It's |
| | A) | because the average quality of batters has fallen. |
| | B) | because the spitball was banned. |
| | C) | because specialization by pitchers and fielders has greatly improved the defense. |
| | D) | because all changes in the rules of the game have favored defense. |
| | E) | because large contracts for players have reduced the incentive to give 110%. |
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| 4.
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The graph below show’s a country’s production possibilities curve for corn and wheat:
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The opportunity cost to this country of producing an bushel of corn is |
| | A) | -.5 units of A. |
| | B) | -2 units of A. |
| | C) | .5 units of A. |
| | D) | 2 units of A. |
| | E) | -2/5 units of A. |
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| 5.
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Application of the Principle of Comparative Advantage leads to |
| | A) | greater and greater specialization of labor and other factors of production. |
| | B) | lesser and lesser specialization of labor. |
| | C) | societies where everyone can do a little of everything. |
| | D) | lower total output. |
| | E) | misallocation of resources. |
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| 6.
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According to the textbook, the largest factor explaining the variance in the performance of the economies of the world is the |
| | A) | degree of specialization. |
| | B) | size of government. |
| | C) | location of the country. |
| | D) | type of government. |
| | E) | amount of average rainfall. |
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| 7.
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The Low-Hanging Fruit Principle means that if one want to gather apples, |
| | A) | one should avoid the ones closest to the ground. |
| | B) | one will start by collecting the ones furthest from the ground. |
| | C) | one will start by collecting the ones closest to the ground and proceed up. |
| | D) | it is never worthwhile to pick the high-hanging fruit. |
| | E) | one will pick only the low-hanging ones and then wait until the new ones grow in. |
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| 8.
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Increased specialization in the production of goods |
| | A) | always increases net benefits. |
| | B) | never increases net benefits. |
| | C) | has benefits, but no costs. |
| | D) | has costs, but no benefits. |
| | E) | has costs and benefits. |
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| 9.
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Professor N. Gregory Mankiw has a comparative advantage in the production of economics textbook and a neighbor's child has a comparative advantage in mowing the lawn. Professor Mankiw |
| | A) | should never mow his own lawn. |
| | B) | should only write economics textbooks. |
| | C) | may be better off mowing his lawn if he felt like taking a break from writing textbooks. |
| | D) | will always be better off hiring the neighbor's child to mow his lawn. |
| | E) | may be better off hiring the neighbor's child to write his economics textbook if his lawn needs mowing. |
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| 10.
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By specializing in accordance with its comparative advantage and trading with other nations, the small nation of Islandia will benefit: |
| | A) | less than that of larger nations. |
| | B) | more than that larger nations. |
| | C) | only if its trading partners suffer losses. |
| | D) | more or less, depending on the combination of goods it chooses to consume. |
| | E) | regardless of the combination of goods it chooses to consume. |
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