Quiz 2 Flashcards
Because you can get more of one good only by giving up some of another good, the shape of a production possibility curve is:
a. Upward-sloping
b. Perfectly vertical
c. Perfectly horizontal
d. Downward-sloping
d. Downward sloping
England has a relatively cool and cloudy climate that is ill suited for grape growing. It can produce 200 units of wine for every 400 units of cloth. Portugal, in contrast, has a relatively warm and sunny climate that is good for growing grapes. It can produce 200 units of wine for every 100 units of cloth. Which country has the higher opportunity cost of producing cloth?
a. Portugal: 2 units of wine for every unit of cloth
b. England: 2 units of wine for every unit of cloth
c. Portugal: ½ unit of wine for every unit of cloth
d. England: ½ unit of cloth for every unit of wine
a. Portugal: 2 units of wine for every unit of cloth
Increasing marginal opportunity cost means that the production possibility curve is:
a. bowed in so that for every additional unit of one good given up, you get fewer and fewer units of the other good.
b. bowed in so that for every additional unit of one good given up, you get more and more units of the other good.
c. bowed out so that for every additional unit of a good given up, you get fewer and fewer units of the other good.
d. bowed out so that for every additional unit of one good given up, you get more and more units of the other good.
c. bowed out so that for every additional unit of a good given up, you get fewer and fewer units of the other good.
If you move from a point inside the production possibility curve to a point on the production possibility curve, it follows that efficiency is:
a. increased because the economy is now on the production possibility curve.
b. increased only if production of both goods increases.
c. increased as long as the combined output of both goods increases.
d. reduced if less of one good is produced.
a. increased because the economy is now on the production possibility curve.
President Obama often promises more of everything (e.g., more health care and more education). What would help the president fulfill his promises?
a. The economy becomes more efficient.
b. Government provided health care is made freely available to everyone.
c. Every high school graduate is given a $40,000 grant by the government to attend college.
d. A minimum wage of $100 per hour is imposed.
a. The economy becomes more efficient.
According to Adam Smith, individuals are directed to do those things for which they have a comparative advantage by:
a. their self interest.
b. corporate management.
c. government policy.
d. the educational system.
a. their self interest.
Colander attributes the growth of economies over the last 200 years largely to:
a. the development of markets.
b. the discovery of additional resources.
c. a decrease in the size of the world population.
d. laissez-faire policies.
a. the development of markets.
According to the law of one price,
a. it is illegal to pay different people different amounts for the same work.
b. it is illegal to charge different people different amounts for the same product.
c. competition, combined with transferable goods and resources, drives the prices of similar goods toward equality.
d. there is a tendency for wages to equalize wages across institutionally similar countries.
c. competition, combined with transferable goods and resources, drives the prices of similar goods toward equality.
Adam Smith argued that greater specialization and division of labor are likely to:
a. improve standards of living.
b. reduce standards of living.
c. reduce worker productivity.
d. replace workers with machines, resulting in massive unemployment.
a. improve standards of living.
According to the law of one price, for wages of textile workers to be higher in the U.S. than in China, U.S. textile workers must be more productive?
a. True
b. False
a. True
If “ObamaCare” results in 2.0 million full-time employees being changed to part-time employees, then:
a. the economy will move closer to achieving productive efficiency.
b. the economy will move away from the PPC curve.
c. the distribution of income will become more efficient.
d. “ObamaCare” is a bad idea.
b. the economy will move away from the PPC curve.
The restaurant, While Castle, has noted that:
a. without changes to “ObamaCare,” its healthcare costs will increase dramitically.
b. all future hires would be part-time only.
c. “ObamaCares” definition of full-time employment is not consistent with historical business practices.
d. All of the above are correct.
d. All of the above are correct.
