Q&A Hero

Q: The usual purpose of an experiment is to a. test a model that is based on a hypothesis. b. turn a hypothesis into a theory. c. observe an interesting phenomenon. d. construct a model based on a hypothesis. e. formulate a hypothesis that explains a phenomenon.

Q: Refer to the following figures to answer the following questions.Which allocation point in the short-run production possibilities frontier (PPF) will lead to the most significant growth in the long-run PPF?a. point A b. point B c. point Cd. point De. point E

Q: Which of the following would NOT lead to an outward shift of a future production possibilities frontier (PPF)?a. population growth b. increased investment today c. an increase in technologyd. the discovery of new resourcese. a decline in life expectancy

Q: Greater investment in capital goods today leads to a. greater growth in the production possibilities frontier (PPF) in the future. b. greater consumption today. c. the end of scarcity. d. less opportunity cost. e. scarcity.

Q: Is there an opportunity cost to increased investment in capital goods today? a. Yes, increased production of capital goods means fewer consumer goods today. b. Yes, increased production of capital goods today means less economic growth in the future. c. No, increased production of capital goods today does not mean fewer consumer goods today. d. No, increased production of capital goods today guarantees more consumption today. e. No, if society is producing at an efficient point on the production possibilities frontier (PPF), then there is no opportunity cost to investment in capital goods.

Q: Over the last 20 years, countries such as India and China have a. consumed heavily with little regard for the future. b. invested heavily and enjoyed significant economic growth. c. eliminated the problem of scarcity. d. produced outside their production possibilities frontiers (PPFs). e. produced wholly for current consumption.

Q: The opportunity cost of every investment in capital goods is a. current consumption (consumer goods). b. future consumption (capital goods today). c. absolute advantage. d. comparative advantage. e. scarcity.

Q: The process of using current resources to create new capital isa. absolute advantage. b. comparative advantage. c. specialization.d. investment.e. free.

Q: The process of using current resources to create or buy new capital is calleda. absolute advantage. b. comparative advantage. c. investment.d. the law of increasing relative cost.e. economic growth.

Q: Forgoing current consumption so that those resources can be used to produce new capital is calleda. absolute advantage. .b. comparative advantage. c. investment.d. scarcitye. saving.

Q: Goods that are produced today in order to make other valuable goods and services in the future are called ________ goods. a. normal d. capital b. inferior e. personal c. consumer

Q: Goods that are produced for current consumption are called ________ goods.a. capital b. consumer c. investmentd. normale. opportunity

Q: Goods that are produced now so that they can be used to produce other goods in the future are called ________ goods.a. capital b. consumer c. investmentd. normale. opportunity

Q: Consumer goods a. are produced today to be used to produce more goods in the future. b. are produced today to be consumed at some point in the future. c. are invested today in order to consume more today. d. are produced today to be consumed today. e. generate economic growth.

Q: Suppose that Leslie and Hussein can either make salads or grill steaks. Their maximum outputs per hour are listed in the following table. Given the same quantity of resources, at what terms of trade (relative price ratio) could they specialize and trade so that both consume outside their own production possibilities frontiers (PPFs)? Maximum Number of SaladsOpportunityCost of 1 SaladMaximum Number of SteaksOpportunity Costof 1 SteakLeslie 91/3 steak33 saladsHussein121/2 steak62 saladsa. 1 salad per 1 steak b. 2 salads per 1 steak c. 2.5 salads per 1 steakd. 3 salads per 1 steake. 3.5 salads per 1 steak

Q: Suppose that Lo and Manuel can either run errands or wash dishes. Their maximum outputs per hour are listed in the following table. Given the same quantity of resources, at what terms of trade (relative price ratio) could they specialize and trade so that both consume outside their own production possibilities frontiers (PPFs)? Errands RunOpportunity Cost of 1 ErrandDishes WashedOpportunity Cost of 1 Dish WashedLo160 dishes601/60 errandManuel315 dishes451/15 erranda. 1 errand run per 75 dishes washed b. 1 errand run per 30 dishes washed c. 1 errand run per 12 dishes washedd. 1 errand run per 10 dishes washede. 1 errand run per 6 dishes washed

Q: For both parties to benefit from specialization and trade, the trading parties must agree on a. a price somewhere between their opportunity costs of production. b. a plan not to trade with other parties. c. who has the absolute advantage in production. d. the appropriate level of investment for the future. e. the source of comparative advantage.

Q: Suppose Hoda is a brilliant attorney who can draft especially persuasive legal briefs. She also happens to possess some excellent administrative skills such as typing, filing, assembling binders and notes, and making reservations. Which best describes whether Hoda should hire an administrative assistant to help her? a. Hoda should not hire an administrative assistant because she has an absolute advantage in performing administrative functions. b. Hoda should not hire an administrative assistant because she likely has a comparative advantage in performing administrative functions. c. Hoda should hire an administrative assistant because the assistant would likely have an absolute advantage in writing legal briefs. d. Hoda should hire an administrative assistant because the assistant would likely have a comparative advantage in performing administrative functions. e. Hoda should hire an administrative assistant because the assistant would likely have a comparative advantage in writing legal briefs.

Q: If Kingsley can sell paper at a lower opportunity cost than Todrick, then ________ has a(n) ________ advantage in paper sales.a. Kingsley; absolute b. Todrick; absolute c. Kingsley; positived. Kingsley; comparativee. Todrick; comparative

Q: Mrs. Abel has a comparative advantage in producing cabbage if, in comparison to Mr. Lace, Mrs. Abel can grow cabbagea. with less labor. b. with fewer inputs. c. at a lower equilibrium.d. at a lower opportunity cost.e. with less technology.

Q: Someone has a comparative advantage in producing a good whenever a. one enjoys producing that good. b. one can produce more of the good than someone else using the same resources. c. ones opportunity cost is constant. d. ones opportunity cost of producing that good is lower than that of other producers. e. one has specific training in the production of that good.

Q: To determine which of two producers has a comparative advantage, one would need to know their a. increasing relative costs. b. opportunity costs of production for both goods. c. normative beliefs. d. zero-sum games. e. levels of investment.

Q: The ability of one producer to produce a good at a lower opportunity cost than another producer is calleda. a normative statement. b. a zero-sum game. c. absolute advantage.d. comparative advantage.e. the law of increasing relative cost.

Q: When one producer has a comparative advantage in production, he or she a. can produce more output than someone else using the same quantity of resources. b. can produce a good at a lower opportunity cost than someone else. c. does not benefit from trade with other producers. d. is unable to reach his or her production possibilities frontier (PPF). e. trades only with others who have the same comparative advantage.

Q: If Lola can produce more output from a set amount of resources than Kevin, ________ has a(n) ________ advantage.a. Lola; comparative b. Kevin; comparative c. Lola; absoluted. Kevin; absolutee. Lola; normative

Q: Consider the following scenario to answer the following questions: On a particular Saturday, Mark Zuckerberg and Bill Gates can either plant trees or spread mulch in their gardens. Their maximum output per day is listed in the following table, along with spaces where you can calculate the opportunity cost. Trees PlantedOpportunity Cost of 1 TreeAmount of Mulch Spread (in cubic yards)Opportunity Cost of Spreading 1 Cubic Yard of MulchZuckerberg20 30 Gates15 30 At what terms of trade (relative price ratio) could they specialize and trade with one another so that both have more trees planted and mulch spread than they could accomplish on their own?a. 12 trees planted per 12 cubic yards of mulch spreadb. 10 trees planted per 12 cubic yards of mulch spreadc. 9 trees planted per 12 cubic yards of mulch spreadd. 7 trees planted per 12 cubic yards of mulch spreade. 5 trees planted per 12 cubic yards of mulch spread

Q: Benefits from trade would NOT include a. lower prices. b. less competition. c. more variety of goods and services in the market. d. the ability of producers to specialize. e. more employment for the country.

Q: Wages are higher in Country X than in Country Y. If the countries decide to trade, then who will benefit? a. Neither country can benefit unless one knows the product that is traded. b. Both countries can benefit regardless of the products traded. c. Only the country that can produce the product more efficiently will benefit. d. Only the country that can produce the product at a lower opportunity cost will benefit. e. Both countries will benefit, but only if a trade agreement for specific products is made by their respective governments.

Q: Choosing to trade ________ specialization, ________ opportunity costs.a. reduces; reducing b. reduces; increasing c. increases; decreasingd. increases; increasinge. increases; but doesnt change

Q: Trade makes costs of goods and services a. lower and raises the variety of goods and services in markets. b. lower but reduces the variety of goods and services in markets. c. higher but reduces the variety of goods and services in markets. d. higher but raises the variety of goods and services in markets. e. Neither lower nor higher, since so many other variables need to be considered.

Q: Bea bakes pastries well, and Lucian raises great herbs. If Lucian trades parsley with Bea in exchange for cupcakes, then a. both Bea and Lucian are made better off by trade. b. neither Bea nor Lucian are made better off by trade. c. only Bea is made better off by trade. d. only Lucian is made better off by trade. e. either Bea or Lucian is made better off by trade, but not both.

Q: If the United States creates a trade agreement with Vietnam, we know that a. Vietnam will benefit, but trade with a less developed, Third World country will not help the United States. b. Vietnam can get no benefit, since its workers are not as productive as the United States. c. Vietnam can get no benefit, since its businesses have less capital than the United States. d. Vietnam and the United States can both benefit. e. physical and cultural differences between the two countries are too great to benefit from trade.

Q: William can create 30 meals in one hour, or wash 90 dishes in the same time. Jeremy can create 25 meals in one hour, or wash 50 dishes in one hour. Using opportunity cost, who should specialize in what task? a. William is more productive and therefore should make meals and wash dishes. b. Since creating meals is harder, William should create meals and wash dishes. c. Since washing dishes is easier, Jeremy should wash dishes and create meals. d. Jeremy can wash twice as many dishes per meal, so Jeremy should wash dishes. e. Jeremy gives up fewer dish washings per meal creation, so Jeremy should create meals.

Q: Coastal regions have stronger commercial fishing economies because they have a ________ in the production of seafood.a. comparative advantage b. proximity advantage e. government subsidyc. rational advantaged. higher opportunity cost

Q: A nation will engage in voluntary trade if a. the terms are mutually beneficial for both parties. b. the trade is approved by the World Trade Center. c. there are no domestic costs associated with trade. d. it allows a trade partner to specialize. e. it lacks a comparative advantage in the production of every good.

Q: A possible opportunity cost of NOT engaging in free trade is a. a loss of domestic jobs. b. a smaller variety of goods and services. c. higher prices. d. economic growth. e. import tariffs.

Q: Disparities in opportunity cost among competitors are the cause ofa. optimization. b. comparative advantage. c. trade-offs.d. command economies.e. marginal benefits.

Q: If specialization and outsourcing can harm domestic workers, why do countries still engage in trade? a. Most workers have little influence on politicians and are ignored. b. The gains from trade far outweigh the costs, and the economy benefits overall. c. Domestic workers can move to a country with a greater need for their skills. d. Welfare programs can support unemployed workers. e. Shipping companies have a powerful lobby in Congress.

Q: Which is NOT a benefit of trade? a. reaping the rewards of specialization b. creation of value for all parties involved c. equivalent gains for all parties involved d. improved allocation of resources e. More wants are satisfied.

Q: ________ involves individuals trading goods they already have or providing services in exchange for something they want.a. Circular flow model b. Circular flow model with money c. Optimizationd. Bartere. Cash exchange

Q: ________ avoids the double coincidence of wants.a. Bartering b. Mandated trade c. Government ownershipd. Moneye. Demand

Q: A double coincidence of wants means that a. each party in an exchange transaction has what the other party desires. b. one party in an exchange transaction wants twice what the other party is offering. c. both parties desire the same good or service, making exchange impossible. d. desires in the marketplace are always unpredictable, so it takes at least two exchanges for every market participant to be satisfied. e. both parties in an exchange have a desire, but no means by which to pay for it.

Q: ________ show(s) how resources and final goods and services flow through the economy.a. Money b. Government c. Allocationd. Trade-offse. Circular flow

Q: Decision makers engage in marginal thinking by a. comparing the average cost and benefit of all units produced. b. comparing the sum of the cost and benefit of all units produced. c. ignoring benefits, which are a subjective determination. d. comparing the benefit of one additional unit with its cost to produce. e. focusing on mass production, which often keeps costs down.

Q: The U.S. federal government imposes a tariff on cheaper steel arriving from other countries. When producers make the decision to purchase domestic steel, what must first occur? a. Producers always purchase domestic steel because the quality is superior to foreign products. b. The price of domestic steel must be at least equal to or greater than that of foreign steel. c. Producers never purchase domestic steel because it cant be produced as efficiently as foreign products. d. The government must subsidize the manufacturing costs of domestic steel. e. The price of foreign steel must be at least equal to or greater than that of domestic steel.

Q: It is crucial to recognize that ________ and ________ are separate evaluations made at the margin.a. costs; benefits b. buying; selling c. incentives; trade-offsd. economics; accountinge. trade-offs; opportunity costs

Q: At any quantity, when the marginal benefit equals the marginal cost, that quantity is said to bea. excessive. b. inadequate. c. optimal.d. equivalent.e. allocated.

Q: People often clean cabinet doors, but do not regularly clean inside the cabinet. The insides of cabinets arent visible and require the removal of contents in order to clean. This is an example of ________ thinking.a. conscientious b. deferential c. dismald. incentivee. marginal

Q: Rodrigo operates a dry-cleaning service and charges customers $5 per article of clothing. Based on his knowledge of operations, the 1,000 th piece of clothing costs him $4.95 to dry-clean. If he takes additional business, however, the 1,001st piece will cost $5 for the service. Does he take the additional business? a. No, he has hidden costs that far exceed his estimate of $5, so he loses money. b. No, taking on additional business doesnt earn him any money. c. Yes, if he turns away business, his service will be forced to close. d. Maybe. If a competitor is accepting that many customers, he must at least equal that amount. e. Yes. At a $5 cost, he breaks even and is indifferent. He necessarily turns away business when the cost of the additional unit exceeds the income.

Q: Shoppers at supermarkets often abandon their empty shopping carts at various locations in the parking lot, despite the risk of damage to vehicles or the additional labor cost of retrieving those carts. How might an economist explain this behavior? a. People go to the supermarket when they have the energy to shop only, without considering the cost of returning their carts. b. The perceived potential benefit of going to a cart return location is less than the time and energy cost to the shopper. c. People are generally lazy and gravitate toward any decision with the lowest cost. d. Once a shopper leaves the parking lot, the abandoned cart becomes someone elses problem. e. Because food prices are always subsidized by the government, shoppers are ignorant of additional costs.

Q: ________ is value added by making additional effort.a. Income b. Money c. Marginal benefitd. Optimizatione. Opportunity benefit

Q: According to marginal thinking, an individual will continue to consume until after the benefit of additional consumption ________ its cost.a. is equal to b. totals c. is greater thand. is less thane. marginalizes

Q: ________ is the process of breaking down decisions into smaller parts.a. Economics b. Marginal analysis c. Divisional analysisd. Segmentatione. Reduction

Q: Marginal decisions are said to be made on the ________ unit(s) under consideration.a. total b. additional c. average ofd. sum ofe. previous

Q: An economist would argue that the true cost of a college education exceeds the cost of tuition, housing, and books because ofa. opportunity cost. b. invisible costs. c. inflation.d. tax credits.e. scholarships.

Q: What is the opportunity cost of purchasing a college textbook? a. the price paid at the university bookstore b. the cost savings from not purchasing a book c. the prospect of failing homework assignments and quizzes d. the trade-in value at the end of the semester e. the cost of the course minus the cost of the textbook

Q: What is NOT a possible opportunity cost of attending a four-year college following high school graduation? a. the experience of traveling throughout Europe and staying in hostels b. the income earned at a full-time job c. the cost of tuition at a four-year college d. job training learned at a vocational school e. the cost savings from attending a community college

Q: Which statement represents a rational application of opportunity cost? a. The value of the choice must be greater than or equal to the cost of the next-best alternative. b. The value of the next-best alternative must be greater than or equal to the cost of the choice. c. Opportunity cost is useful for evaluating a decision after the fact, but not during the decision-making process. d. The value of the choice must be greater than the sum of all available alternatives. e. The value of the next-best alternative is irrelevant since the alternative was not selected.

Q: Isaac has four potential jobs to consider, each with different salary offers. From highest to lowest, the salaries are: $47,500, $46,000, $45,000, and $42,000. Based on the information provided, if Isaac accepts the highest-paying position, what is his opportunity cost of this position?a. $46,000 b. $42,000 c. $47,500d. $133,000e. $1,500

Q: Dexter decides to buy a new smartphone and offset the cost by selling his old phone to one of his friends. His friend has no money and wants to barter for the old phone. Dexters preference for the items offered is in this order: laser printer, television, headphones, and bicycle. If Dexter accepts the laser printer as payment, what is his opportunity cost of this exchange? a. the total value of the television, headphones, and bicycle b. the difference between the value of the old phone and that of the new smartphone c. There is no opportunity cost in a consensual trade. d. the value of the laser printer e. the value of the television

Q: Laura leaves her job as an accountant, where she earns $80,000 per year, to start her own business. After the first year, her business earns a profit of $60,000. How would an economist describe the profitability of Lauras career change?a. Laura had a profit of $140,000. b. Laura had a loss of $20,000. c. Laura had a profit of $20,000.d. Laura had a profit of $60,000.e. Laura had a loss of $80,000.

Q: The presence of scarcity means that no choices come withouta. shortages. b. trade-offs. c. regret.d. incentives.e. consumption.

Q: During a job search, individuals will sometimes accept the lower of two competing salary offers. What would best explain this decision? a. Individuals never accept a salary that exceeds their personal values. b. A person may accept a lower starting salary in order to receive greater future pay increases. c. The total benefits of the higher paying job are greater than the total benefits of the lower paying job. d. The total benefits of the lower paying job are greater than the total benefits of the higher paying job. e. The lower salary is still better than the salary earned at the previous job.

Q: Trade-offs occur in all of the following scenarios EXCEPT a. a student has two exams on the following day and must divide study time between the classes. b. a couple chooses between two equally appealing vacation destinations for the following weekend. c. a shopper wants to buy two equally appealing shirts totaling $50, and has $35 to spend on each. d. a caterer selects from two potential jobs, both paying $2,500 on a Saturday night. e. consumers are often forced to make a compromise between quality and price.

Q: The concept of ________ explains that making one choice means an individual will not have the time, resources, or energy to do something else.a. scarcity b. negative incentives c. trade-offsd. opportunity coste. marginal benefit

Q: The proliferation of BitTorrent and other file sharing media have threatened the copyright system. Based on an understanding of incentives and opportunity cost, how are the decisions of musicians likely impacted?a. They will spend more time in court, reducing the amount of music they produce.b. They will illegally download the music of other artists to balance the impact across the industry.c. Since music theft cannot be stopped, musicians will stop trying to sell their music.d. Most musicians will be forced to take a second job in order to support themselves.e. If more money can be made in alternative professions, individuals will choose not to pursue music.

Q: Corporate leadership sometimes waits until after presidential elections in order to make major business decisions. An economist would maintain that this is in anticipation of futurea. forecasting. b. fear. c. scarcity.d. incentives.e. taxes.

Q: The ________ system encourages innovation by creating a powerful financial reward for creativity.a. direct incentive b. indirect incentive c. patentd. trade-offe. tax credit

Q: Which of the following is an example of an unintended consequence? a. Competition between two businesses causes each to lower prices. b. A tax rebate on electric cars results in increased household electricity consumption. c. A tax cut leads to a spike in consumer spending. d. Low interest rates encourage businesses to borrow money from banks. e. A welfare program causes individuals to purchase necessities and seek employment.

Q: A new tax on gasoline causes a reduction in the purchase of new vehicles with poor fuel economy. This is an example of what type of incentive? a. negative direct b. positive direct c. negative indirect d. positive indirect e. The tax does not provide an incentive.

Q: Clarice must choose between reading the next chapter in her economics textbook or streaming the next episode of her favorite show. In her experience, she does well on exams, but even better when she reads the textbook. If she chooses to watch the show, what can be said of incentives? a. Adding a negative incentive (e.g., her parents block access to streaming services) would more likely result in Clarice choosing to read the textbook. b. Positive incentives are always more effective than negative incentives. c. Negative incentives are always more effective than positive incentives. d. Only marginal incentives play a role in this example. e. Clarice is motivated by the stronger of two negative incentives.

Q: Hassan enjoys lifting weights in his spare time, but his gain in strength has come to a plateau. He is considering giving up weight lifting altogether, unless he experiences significant gains in the near future. Hassan is seeking a ________ incentive.a. power b. reasonable c. negatived. positivee. neutral

Q: A mother takes her daughter on an outing and promises her ice cream if she behaves. In addition, she warns her that if she misbehaves, she wont be allowed to play with her toys at home. The latter is an example of a(n) ________ incentive and reinforces the efficacy of the ice cream, a(n) ________ incentive.a. direct; indirect b. indirect; direct c. negative; positived. positive; negativee. negative; direct

Q: When an individual chooses to act, he or she is said to be motivated bya. scarcity. b. incentives. c. disincentives.d. indifference.e. ambivalence.

Q: Why do incentives matter to economists? a. People make poor decisions when theyre given money they didnt earn. b. Governments are the source of all incentives and there is value in studying the actions of government. c. Incentives are often the guiding principle behind greed and exploitation. d. Incentives explain how people make decisions, and are the key to understanding economics. e. Without incentives, the distinction between microeconomics and macroeconomics would be unclear.

Q: Decisions by individuals and firms are the domain ofa. microeconomics. b. macroeconomics. c. consumption economics.d. median economics.e. choice economics.

Q: Macroeconomics would be concerned with a. a familys decision to finance the purchase of a home. b. the consequence of a massive layoff by a major corporation. c. a local government issuing bonds to build a new sporting arena. d. a single national government choosing to implement trade tariffs. e. the opening of an auto plant in a county with high unemployment.

Q: Which is NOT one of the five foundations of economics?a. innovation b. incentives c. trade-offsd. opportunity coste. marginal thinking

Q: A recession has crippled the national economy, producing a high rate of unemployment. Which of the following would be a microeconomic decision? a. Congress decides to institute a tax cut and encourage consumer spending. b. The United States negotiates a new trade agreement with Japan, hoping to bolster exports. c. The federal government extends the duration of unemployment benefits. d. A Congresswoman decides to delay the purchase of a new car. e. The Federal Reserve lowers interest rates in an effort to stimulate business activity.

Q: Low prices for water in the developed world may lead individuals to believe it is NOT a ________ resource.a. desired b. scarce c. plentifuld. controllede. economic