Question 1

What is the relationship among economic interaction, specialization, comparative advantage, and gains from trade?

Accepted Answer

Economic interaction enables people to e...

Question 2

Is it possible for an economy to make tradeoffs in the present in order to attain what is currently unattainable? Explain.

Accepted Answer

Yes, it is possible for an economy to ma...

Question 3

Gains from trade occur when there are differences in opportunity cost.

Accepted Answer

A) True 
 B)False

Question 4

Suppose increased production of CD players in Asia causes the price of CD players to decline all over the world. Explain how this change in price signals information to U.S. producers, provides incentives to U.S. producers, and affects the distribution of income.

Accepted Answer

A decrease in the price of CD players si...

Question 5

The government can improve market conditions in case of a market failure.

Accepted Answer

A) True 
 B)False

Question 6

The concept of scarcity refers to

Accepted Answer

A)  a situation in which an item is very expensive.
B)  a situation in which an item is available only in very small quantities.
C)  a situation in which a resource is nonrenewable.
D)  a situation in which people face a shortage in a particular market.
E)  a situation in which the available resources are not enough to satisfy the wants of the people.

Question 7

Suppose you have two hotdog sausages and your friend has two hotdog buns. Explain how you can both gain from trade. Is this gain from trade through better allocation or greater production?

Accepted Answer

You can trade one of your hotdog sausage...

Question 8

A market is

Accepted Answer

A)  a place where firms meet to set prices.
B)  an arrangement by which economic exchanges take place.
C)  an organization controlled by a government.
D)  a place where goods are produced.
E)  anywhere people come close to each other.

Question 9

Exhibit 1-9 
-Refer to Exhibit 1-9. Suppose the amount of energy available to the economy declines. Which of the following is the most likely to happen?

Accepted Answer

A)  A movement from Point D to Point C along the curve
B)  A movement from Point C to Point D along the curve
C)  A shift to Point B
D)  A shift to Point A
E)  A shift from Point A to Point B

Question 10

Without property rights,

Accepted Answer

A)  people would have more of an incentive to specialize, and the economy would become more efficient.
B)  there would be more inventions.
C)  people would not have an incentive to specialize.
D)  a market economy would become more efficient.
E)  people would have more of an incentive to specialize.

Question 11

The three essential questions that every economy must solve are

Accepted Answer

A)  what, how many, and for whom?
B)  how, what, and where?
C)  what, how, and for whom?
D)  what, how much, and for whom?
E)  where, how, and for whom?

Question 12

The table below depicts the choices George and Sarah face when deciding whether to cook, wait on tables, or both.

Accepted Answer

The answer of The table below depicts the choices George...

Question 13

From an economic perspective, people make decisions because of

Accepted Answer

A)  social custom.
B)  genetics.
C)  scarcity.
D)  their own habit.
E)  religion.

Question 14

Economic interactions occur only in the presence of government.

Accepted Answer

A) True 
 B)False

Question 15

Choices are made whenever

Accepted Answer

A)  money is limited.
B)  there are too many alternatives.
C)  resources are limited relative to human wants.
D)  the society has abundant resources.
E)  different people in an economy want different things.

Question 16

In a pure market economy, the what, how, and for whom problems are determined by

Accepted Answer

A)  consumers only.
B)  firms only.
C)  the government.
D)  both consumers and firms.
E)  no one.

Question 17

Exhibit 1-2 
-____ must exist in order for gains from trade to be realized.

Accepted Answer

A)  Governments
B)  Markets
C)  An increase in production
D)  Economic interaction
E)  Firms

Question 18

Does the production possibilities curve represent the economy in which some people win only if others lose? Explain.

Accepted Answer

There are two reasons why the production...

Question 19

Property rights are not necessary for a market economy to function.

Accepted Answer

A) True 
 B)False

Question 20

A point outside the production possibilities curve

Accepted Answer

A)  represents inefficient use of resources.
B)  may be due to unemployment.
C)  represents more resources than are currently available.
D)  is attainable if all resources are used efficiently.
E)  is not attainable regardless of the amount of resources.

Exam 1: The Central Idea

Choices are made whenever

Correct AnswerverifiedShow Answer

Suppose you have two hotdog sausages and your friend has two hotdog buns. Explain how you can both gain from trade. Is this gain from trade through better allocation or greater production?

Correct AnswerverifiedYou can trade one of your hotdog sausage...View AnswerShow Answer

Does the production possibilities curve represent the economy in which some people win only if others lose? Explain.

Correct AnswerverifiedThere are two reasons why the production...View AnswerShow Answer

The table below depicts the choices George and Sarah face when deciding whether to cook, wait on tables, or both.

Correct AnswerverifiedShow Answer

Economic interactions occur only in the presence of government.

Correct AnswerverifiedShow Answer

Is it possible for an economy to make tradeoffs in the present in order to attain what is currently unattainable? Explain.

Correct AnswerverifiedYes, it is possible for an economy to ma...View AnswerShow Answer

From an economic perspective, people make decisions because of

Correct AnswerverifiedShow Answer

Without property rights,

Correct AnswerverifiedShow Answer

Suppose increased production of CD players in Asia causes the price of CD players to decline all over the world. Explain how this change in price signals information to U.S. producers, provides incentives to U.S. producers, and affects the distribution of income.

Correct AnswerverifiedA decrease in the price of CD players si...View AnswerShow Answer

The concept of scarcity refers to

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The government can improve market conditions in case of a market failure.

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The three essential questions that every economy must solve are

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A point outside the production possibilities curve

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Exhibit 1-9 -Refer to Exhibit 1-9. Suppose the amount of energy available to the economy declines. Which of the following is the most likely to happen?

Correct AnswerverifiedShow Answer

In a pure market economy, the what, how, and for whom problems are determined by

Correct AnswerverifiedShow Answer

Exhibit 1-2 -____ must exist in order for gains from trade to be realized.

Correct AnswerverifiedShow Answer

What is the relationship among economic interaction, specialization, comparative advantage, and gains from trade?

Correct AnswerverifiedEconomic interaction enables people to e...View AnswerShow Answer

A market is

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Property rights are not necessary for a market economy to function.

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Gains from trade occur when there are differences in opportunity cost.

Correct AnswerverifiedShow Answer

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You can trade one of your hotdog sausage...
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There are two reasons why the production...
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Yes, it is possible for an economy to ma...
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Correct Answer
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Correct Answer
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A decrease in the price of CD players si...
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Correct Answer
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Correct Answer
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Correct Answer
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Economic interaction enables people to e...
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Correct Answer
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