 |
| 1 | |
If you move along the production possibility curve and the opportunity cost of producing one good in terms of another never changes, it follows that the production possibility curve: |
| | A) | must be a straight line. |
| | B) | must be bowed in. |
| | C) | must be bowed out. |
| | D) | has an indeterminate shape. |
|
|
|
| 2 | |
Comparative advantage arises because: |
| | A) | not all resources are equally effective in the production of all goods. |
| | B) | all resources are equally effective in the production of all goods. |
| | C) | specialization and the division of labor increases efficiency. |
| | D) | specialization and the division of labor help markets function more effectively. |
|
|
|
| 3 | |
When you produce wheat, it is relatively inexpensive to produce it initially, but then per unit costs tend to increase as more is produced. This is an example of: |
| | A) | increasing marginal opportunity costs. |
| | B) | decreasing marginal opportunity costs. |
| | C) | constant marginal opportunity costs. |
| | D) | none of the above. |
|
|
|
| 4 | |
Points inside the production possibilities curve are: |
| | A) | unattainable and inefficient. |
| | B) | unattainable and efficient. |
| | C) | attainable and efficient. |
| | D) | attainable and inefficient. |
|
|
|
| 5 | |
An increase in productive resources available for use in an economy will: |
| | A) | imply that the law of increasing costs no longer applies. |
| | B) | shift the production possibilities curve inward. |
| | C) | shift the production possibilities curve outward. |
| | D) | have no effect on the production possibilities curve. |
|
|
|
| 6 | |
A country's pattern of comparative advantage: |
| | A) | does not change over time. |
| | B) | can change over time. |
| | C) | determines whether or not it gains from trade. |
| | D) | does not depend on the cost of its inputs. |
|
|
|
| 7 | |
The phenomenon of outsourcing is the result of the force of which law? |
| | A) | Law of diminishing marginal product. |
| | B) | Law of one price. |
| | C) | Law of the equality of exchange. |
| | D) | Law of unintended consequences. |
|
|
|
| 8 | |
Suppose country A can produce either 200 cars or 100 tractors, or any combination thereof while country B can produce either 400 cars or 100 tractors, or any combination thereof and both countries consume both goods. Which of the following is a combination of goods that can be produced only if the countries specialize and trade? |
| | A) | 600 cars, 0 tractors. |
| | B) | 0 cars, 200 tractors. |
| | C) | 400 cars, 100 tractors. |
| | D) | 600 cars, 200 tractors. |
|
|
|
| 9 | |
If the hourly wage of U.S. workers is $12, the hourly wage of Mexican workers is $3, and U.S. workers produce 3 times as much output per hour as Mexican workers, then it would be efficient to locate production facilities in: |
| | A) | the U.S. since the cost per unit of output will be lower. |
| | B) | the U.S. since the cost per unit of output will be higher. |
| | C) | Mexico since the cost per unit of output will be lower. |
| | D) | Mexico since the cost per unit of output will be higher. |
|
|
|
| 10 | |
Globalization: |
| | A) | eliminates old jobs without creating new jobs. |
| | B) | creates new jobs but also eliminates jobs. |
| | C) | creates new jobs without eliminating jobs. |
| | D) | neither creates nor eliminates jobs. |
|
|
.