Test Bank for Macroeconomics Private and Public Choice 15th Edition Gwartney, Stroup, Sobel, MacpherMacroeconomics Chapter 2 A—Some Tools of the
... [Show More] Economist MULTIPLE CHOICE 1. Which of the following sayings best reflects the concept of opportunity cost? a. "You can't teach an old dog new tricks." b. "Time is money." c. "I have a baker's dozen." d. "There's no business like show business." ANS: B PTS: 1 DIF: Easy NAT: BUSPROG: Analytic STA: DISC: Scarcity, tradeoffs, and opportunity cost TOP: What Shall We Give Up? KEY: Bloom's: Knowledge MSC: Suggested Quiz 2. If an economy is operating at a point inside the production possibilities curve, a. its resources are not being used efficiently. b. the curve will begin to shift inward. c. the curve will begin to shift outward. d. This is a trick question because an economy cannot produce at a point inside the curve. ANS: A PTS: 1 DIF: Easy NAT: BUSPROG: Analytic STA: DISC: Scarcity, tradeoffs, and opportunity cost TOP: Production Possibilities Curve KEY: Bloom's: Knowledge MSC: Suggested Quiz 3. The primary benefit that results when a nation employs its resources in accordance with the principle of comparative advantage is a. an expansion in investment resulting from a reallocation of resources away from consumption. b. a larger output resulting from a more efficient use of resources. c. greater equality of income resulting from an increase in the number of workers. d. an increase in the profitability of business enterprises resulting from an increase in investment. ANS: B PTS: 1 DIF: Easy NAT: BUSPROG: Analytic STA: DISC: Gains from trade, specialization and trade TOP: Trade, Output, and Living Standards KEY: Bloom's: Comprehension MSC: Suggested Quiz 4. Suppose the price of an airline ticket from Dallas to Boston costs $600. A bus ticket costs $150. Traveling by plane takes 6 hours compared with 51 hours by bus. Other things constant, an individual would gain by choosing air travel if, and only if, his time were valued at more than a. $6 per hour. b. $8 per hour. c. $10 per hour. d. $15 per hour. ANS: C PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic STA: DISC: Scarcity, tradeoffs, and opportunity cost TOP: What Shall We Give Up? KEY: Bloom's: Comprehension MSC: Suggested Quiz 5. With voluntary exchange, download full file at http://testbankcafe.com ECON A170 download full file at http://testbankcafe.com a. both the buyer and seller will be made better off. b. the buyer will be made better off, while the seller will be made worse off. c. the seller will be made better off, while the buyer will be made worse off. d. both the buyer and the seller will be made worse off. ANS: A PTS: 1 DIF: Easy NAT: BUSPROG: Analytic STA: DISC: Gains from trade, specialization and trade TOP: Human Ingenuity and the Creation of Wealth KEY: Bloom's: Knowledge MSC: Suggested Quiz 6. "Now that Terrance paints the broad surfaces and I do the trim work, we can paint a house in threefourths the time that it took for each of us to do both." This statement most clearly reflects a. the importance of secondary effects. b. the fallacy of composition. c. the law of comparative advantage. d. behavior inconsistent with economizing. ANS: C PTS: 1 DIF: Easy NAT: BUSPROG: Analytic STA: DISC: Gains from trade, specialization and trade TOP: Trade, Output, and Living Standards KEY: Bloom's: Comprehension MSC: Suggested Quiz 7. Which of the following will most likely occur under a system of clearly defined and enforced private property rights? a. Resource owners will fail to conserve vital resources, even if they expect their supply to be highly limited in the future. b. Resource owners will ignore the wishes of others, including others who would like to use the resource that is privately owned. c. Resource owners will fail to consider the wishes of potential future buyers when they decide how to employ privately owned resources. d. Resource owners will gain by discovering and employing their resources in ways that are highly valued by others. ANS: D PTS: 1 DIF: Easy NAT: BUSPROG: Analytic STA: DISC: The role of government TOP: The Importance of Property Rights KEY: Bloom's: Comprehension MSC: Suggested Quiz 8. Three basic decisions must be made by all economies. What are they? a. how much will be produced, when it will be produced, and how much it will cost b. what the price of each good will be, who will produce each good, and who will consume each good c. what will be produced, how goods will be produced, and for whom goods will be produced d. how the opportunity cost principle will be applied, if and how the law of comparative advantage will be utilized, and whether the production possibilities constraint will apply ANS: C PTS: 1 DIF: Easy NAT: BUSPROG: Analytic STA: DISC: Gains from trade, specialization and trade TOP: Economic Organization KEY: Bloom's: Knowledge MSC: Suggested Quiz 9. If a firm or a nation desires to maximize its output, each productive assignment should be carried out by those persons who a. have the highest opportunity cost. download full file at http://testbankcafe.com download full file at http://testbankcafe.com b. have a comparative advantage in the productive activity. c. can complete the productive activity most rapidly. d. least enjoy performing the productive activity. ANS: B PTS: 1 DIF: Moderate NAT: BUSPROG: Analytic STA: DISC: Gains from trade, specialization and trade TOP: Trade, Output, and Living Standards KEY: Bloom's: Comprehension MSC: Suggested Quiz 10. The opportunity cost of an option a. measures the undesirable aspects of the option. b. includes only the monetary cost of the option. c. is the highest-valued alternative that must be given up as the result of choosing the option. d. is objective, and it will be the same for all individuals. ANS: C PTS: 1 DIF: Easy NAT: BUSPROG: Analytic STA: DISC: Scarcity, tradeoffs, and opportunity cost TOP: What Shall We Give Up? KEY: Bloom's: Knowledge MSC: Suggested Quiz 11. Opportunity cost is defined a. only in terms of money spent b. as the value of all alternatives not chosen c. as the value of the best alternative not chosen d. as the difference between the benefits from a choice and the benefits from the next best alternative e. as the difference between the benefits from a choice and the costs of that choice ANS: C PTS: 1 DIF: Easy NAT: BUSPROG: Analytic STA: DISC: Scarcity, tradeoffs, and opportunity cost TOP: What Shall We Give Up? KEY: Bloom's: Knowledge [Show Less]