Chapter 1 reviews
1. Government policies designed to promote efficiency
A - usually do so at the expense of equity.
2. All of the following can be considered a student's costs of going to college, EXCEPT:
C - room and board (that costs her about the same as she was paying before entering college)
3. An airline's plane from Los Angeles to New York is about to take off, but it still has a few seats empty. If the average cost per seat is $500, what price should the airline charge passengers in standby to fill in those remaining seats? (Consider that quantitative decisions are made at the margin)
C - Any price above zero that will entice standby passengers to take the flight.
4. The Federal government enacted regulation in the 1960s requiring people to wear seatbelts in their cars. All of the following resulted from this regulation, EXCEPT:
C - fewer pedestrians were killed in car accidents.
5. When two persons trade goods:
B - both persons usually gain from the exchange.
6. In a market economy, the decisions of what and how much to produce are made by:
B - all producers and consumers.
7. Even though markets do a great job in organizing economic activity, governments are needed to do all of the following EXCEPT:
D - decide what and how much should be produced
8. Living standards in the United States have risen tremendously over the years, mainly due to:
A - relentless increases in the productivity of labor over the years.
9. Rapid and persistent inflation occurs mainly due to:
C - rapid increases in the quantity of money in the economy.
10 A government that implements a policy designed to reduce inflation can expect unemployment to:
A - increase in the short-run.
Chapter 2 review
1. Which of the following is FALSE, regarding economics as a science?
D - Economic theories represent irrefutable facts.
2. Economists use assumptions in order to:
C - simplify economic theories, so as to make it possible to answer economic questions.
3. Economic models are:
D - all of the other options are true.
4. All of the following are characteristics of the Circular Flow Model of the economy, EXCEPT:
C - the model describes two circular flows: one for inputs and one for resources.
5. The circular flow model of the economy demonstrates that:
B - dollars in the economy are used over and over in an endless cycle.
6. Which of the following is true regarding the Production Possibilities Frontier Model of the economy?
A - Any point along the PPF represents an efficient level of production.
7. Economic growth in the economy can be portrayed in the Production Possibilities Frontier model as a:
B - shift of the PPF away from the origin.
8. Microeconomics is the study of:
C - how households and firms make decisions and how they interact in markets.
9. Which of the following is an example of a normative statement?
B - The government should increase spending during recessions, so that the economy recovers quickly.
10. Economists tend to disagree with each because:
D - all the other options are true.Chapter 3 review
1. The production possibilities frontiers used to explain trade in the text are straight lines because:
A - the author assumes the farmers can switch at a constant rate from producing meat to producing potatoes.
2. The principle of Absolute Advantage refers to the situation in which one producer:
B - can produce a good using fewer resources than other producers.
3. The principle of Comparative Advantage refers to the situation in which one producer:
A - has a lower opportunity cost than other producers in the production of a good.
4. Which of the following is true regarding the principle of Absolute Advantage?
C - Nations should specialize in producing those goods for which they have an Absolute Advantage.
5. Which of the following is true regarding the principle of Comparative Advantage?
B - Nations should specialize in producing those goods for which they have the lowest opportunity cost.
6. The boy next door has offered to mow Tiger Woods' lawn. It will take this boy twice as long as Tiger Woods to mow the lawn. Would Tiger Woods let the boy mow his lawn, instead of doing it himself?
A - Yes, as long as the boy's opportunity cost is less than half of Tiger Woods' opportunity cost.
7. Suppose that engaging in free trade means we have to stop making cars, which will cause bankruptcies and will make people lose their jobs. Is it still worth having free trade?
B - Yes, because the gains outweigh the losses: new businesses and new jobs will flourish in other industries.
8. Suppose that Jill can type 10 pages per hour in the computer, while Jim can only type 8. Further suppose that Jill can review 5 articles per hour while Jim can only review 2. If they are working on a final project together, who should specialize in what task in order to be as productive as possible?
B - Jill should specialize in reviewing articles and Jim in typing.
9. Suppose that Jill can type 10 pages per hour in the computer, while Jim can only type 8. Further suppose that Jill can review 5 articles per hour while Jim can only review 2. Based on this, we can say that:
B - Jill has an absolute advantage over Jim in reviewing articles.
10. The principle of Comparative Advantage argues all of the following, EXCEPT:
C - free trade allows producers to specialize. 
AMAZING!
ReplyDeletescore:30/30=5pts.