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| 1 | |
According to the graph, if production is occurring at point A, the opportunity cost of producing 10 more shirts is
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| | A) | 105 pairs of pants. |
| | B) | 110 pairs of pants. |
| | C) | 1 pair of pants per shirt. |
| | D) | 5 pairs of pants. |
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| 2 | |
When resources are better suited for some productive uses than for others, this causes the PPC to be |
| | A) | bowed out. |
| | B) | upward sloping. |
| | C) | downward sloping. |
| | D) | straight. |
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| 3 | |
Which of the following reflects the principle of increasing marginal opportunity cost? |
| | A) | Two hamburgers cost twice as much as one hamburger. |
| | B) | A large soda costs more than a small soda. |
| | C) | Two more hours studying per week could raise your grade from a C to a B, but to raise it from a B to an A, would require 7 hours more studying per week. |
| | D) | Marginal costs increase whenever marginal benefits do. |
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| 4 | |
When trade is voluntary, |
| | A) | only the seller benefits. |
| | B) | only the buyer benefits. |
| | C) | either the buyer or the seller can benefit, but not both. |
| | D) | both the buyer and the seller benefit. |
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| 5 | |
If online economics courses can be created and administered in the United States for $1500 per pupil but equivalent courses can be created and administered in India for $150 per pupil, then the law of one price suggests |
| | A) | there will be strong economic pressure to outsource such courses to India. |
| | B) | the eventual price of such courses will be $1625. |
| | C) | there will be strong economic pressure to insource such courses to the US. |
| | D) | Americans will be made worse off by outsourcing. |
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| 6 | |
Economists argue that the key benefit of countries engaging in trade based on comparative advantage, is that it |
| | A) | allows both counties to consume beyond their individual PPCs because each of the traded goods is produced in the country with the lowest opportunity cost. |
| | B) | allows countries to produce efficiently inside their individual PPCs. |
| | C) | is the only way both countries can consume on their individual PPCs. |
| | D) | allows both countries to maximize the opportunity costs of each of the goods they produce. |
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| 7 | |
If all of society's resources are fully and efficiently employed, then it must be producing |
| | A) | At the lower right of the PPC. |
| | B) | At some point on the PPC. |
| | C) | Above the PPC. |
| | D) | below the PPC. |
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| 8 | |
Refer to the graph. Given the production possibility curve for sweaters and jeans, which point is unattainable?
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| | A) | A |
| | B) | B |
| | C) | C |
| | D) | D |
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| 9 | |
Refer to the graphs. The discovery of a new supply of resources used in the production of guns and butter can be shown by which movement?
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| | A) | From A-B to C-D in diagram A. |
| | B) | From C-D to A-B in diagram A. |
| | C) | From X-Y to X-Z in diagram B. |
| | D) | From X-Z to X-Y in diagram B. |
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| 10 | |
Which of the following is an example of the law of one price? |
| | A) | Exchange rates tend to have equivalent values. For example, one Japanese Yen equals one U.S. dollar. |
| | B) | Because their countries have similar institutions, engineers in France and Germany are paid about the same. |
| | C) | Because wages are so much lower in China, eventually all U.S. jobs will be outsourced to China leaving the U.S. to import all goods at one price. |
| | D) | Because people have essentially the same basic needs wherever they live, they tend to buy the same bundle of goods. |
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