basic economic concepts post

Basic Economic Concepts Post-Test Question 11 out of 1 points

Mike and Sandy are two woodworkers who both make tables and chairs. In one month, Mike can make 4 tables or 20 chairs, while Sandy can make 6 tables or 18 chairs. Given this, we know that:

Selected Answer:b.Mike has an absolute advantage in chairs.

Correct Answer:b.Mike has an absolute advantage in chairs.

Response Feedback:RATIONALE: The firm that can produce the good with a smaller quantity of economic resources (e.g., labor, land, capital) is said to have anabsolute advantagein producing the good. In one month, Mike can produce more chairs with the same amount of labor. For more information, see lesson on Topic 4: Comparative Advantage and Specialization; subtopic The Benefits of Trading.

Question 21 out of 1 points

TABLE A*

Minutes Needed to Make 1

Bushel of WheatPound of Beef

Andia2012

Zardia1510

* Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate.

Refer to Table A.Assume that Andia and Zardia each has 360 minutes available. If each person divides his time equally between the production of wheat and beef, then total production is:

Selected Answer:c.21 bushels of wheat and 33 pounds of beef.

Correct Answer:c.21 bushels of wheat and 33 pounds of beef.

Response Feedback:RATIONALE: In 360 minutes, Andia can produce 9 bushels of wheat and 15 pounds of beef. Zardia can produce 12 bushels of wheat and 18 pounds of beef. The total production of both individuals is 21 bushels of wheat and 33 pounds of beef. For more information, see lesson on Topic 4: Comparative Advantage and Specialization; subtopic The Benefits of Trading.


FIGURE 1

Refer to Figure 1. If the production possibilities frontiers shown are each for one day of production, then which of the following combinations of tacos and burritos could Arturo and Dina together produce in a given day?

Selected Answer:b.600 tacos and 150 burritos

Correct Answer:b.600 tacos and 150 burritos

Response Feedback:RATIONALE: Dina could make 400 tacos if she spent all day focused on taco production. Arturo could split his day between tasks, making 200 tacos and 150 burritos. Together, they could make 600 tacos and 150 burritos. For more information, see lesson on Topic 4: Comparative Advantage and Specialization; subtopic The Benefits of Trading.


As a student, Anne spends 40 hours per week writing term papers and completing homework assignments. On one axis of her production possibilities frontier is the number of term papers written per week. On the other axis is the number of homework assignments completed per week. Annes production possibilities frontier is a straight line if:

Selected Answer:a.she can switch between writing term papers and completing homework assignments at a constant rate.

Correct Answer:a.she can switch between writing term papers and completing homework assignments at a constant rate.

Response Feedback:RATIONALE: The PPF is a straight line if the production of one good as opposed to another is at a constant rate. For more information, see lesson on Topic 4: Comparative Advantage and Specialization; subtopic The Benefits of Trading.


The degree of government involvement in the economy is greatest in a _____ economy.

Selected Answer:a.command

Correct Answer:a.command

Response Feedback:RATIONALE: Incommand economies, resource allocation is determined by central planners rather than in the market. Decisions about what is produced are largely determined by a government official or a committee associated with the central planning organization. For more information, see lesson on Topic 2: Economic Systems, subtopic Market Economies versus Central Planning.


In most societies, dollar price acts as the main rationing device. If dollar price werenotthe main rationing device, would there still be a need for some rationing device to take its place?

Selected Answer:b.Yes, because there is a need for a rationing device as long as scarcity exists.

Correct Answer:b.Yes, because there is a need for a rationing device as long as scarcity exists.

Response Feedback:RATIONALE: Scarcity creates the need for a rationing device, or a means to decide who gets what of the resources available. Examples of other rationing devices are distributing equal shares, first-come-first-served, or even by age. For more information, see Lesson on Topic 1: Scarcity and Opportunity Cost; subtopic Decisions and Their Costs.


The opportunity cost of attending college:

Selected Answer:d.varies from person to person.

Correct Answer:d.varies from person to person.

Response Feedback:RATIONALE: Opportunity costs vary from person to person. An individual who decided to go to college instead of playing professional basketball, for example, has a much higher opportunity cost than a person who decided to go to college instead of being a dog groomer. For more information, see Lesson on Topic 1: Scarcity and Opportunity Cost; subtopic Decisions and Their Costs.


Both country 1 and country 2 are located on their respective production possibilities frontiers (PPFs), but country 1 produces twice the output that country 2 produces. It follows that:

Selected Answer:a.country 1's PPF lies further to the right than country 2's PPF.

Correct Answer:a.country 1's PPF lies further to the right than country 2's PPF.

Response Feedback:RATIONALE: A country with a greater output would have a PPF further to the right of one with lower economic output. For more information, see lesson on Topic 3: Production Possibilities Frontier; subtopic The Production Possibilities Frontier (PPF), Efficiency, and Inefficiency.


The economy moves from point A, where it produces 100X and 200Y, to point B, where it produces 200X and 150Y. It follows that:

Selected Answer:d.b and c

Correct Answer:d.b and c

Response Feedback:RATIONALE: There is not enough information to determine whether point A falls on the PPF, where the economy would be producing efficiently. For more information, see lesson on Topic 3: Production Possibilities Frontier; subtopic The Production Possibilities Frontier (PPF), Efficiency, and Inefficiency.


Jose has one evening in which to prepare for two exams and can employ two possible strategies:StrategyScore in EconomicsScore in Statistics

A9479

B7790

The opportunity cost of receiving a 94 on the economics exam in terms of the number of points on the statistics exam is:

Selected Answer:c.11.

Correct Answer:c.11.

Response Feedback:RATIONALE: The opportunity cost of anything is what you must give up to obtain it. Since Jose might have scored a 90 on his statistics exam, he loses 11 points by choosing strategy A. For more information, see lesson on Topic 3: Production Possibilities Frontier; subtopic The Production Possibilities Frontier (PPF), Efficiency, and Inefficiency.


FIGURE 2

Refer to Figure 2.Both Alice and Betty:

Selected Answer:a.face a constant trade-off between producing pitchers of lemonade and pizzas.

Correct Answer:a.face a constant trade-off between producing pitchers of lemonade and pizzas.

Response Feedback:RATIONALE: Alice and Betty each have straight line PPFs, meaning they face a constant trade-off between the two choices of production. For more information, see lesson on Topic 4: Comparative Advantage and Specialization; subtopic The Benefits of Trading.


FIGURE 1

Refer to Figure 1.If Dina must work 0.25 hour to produce each taco, then her production possibilities frontier is based on how many hours of work?

Selected Answer:d.100 hours

Correct Answer:d.100 hours

Response Feedback:RATIONALE: 400 tacos x 0.25 hour = 100 hours. The PPF represents 100 hours of Dinas labor. For more information, see lesson on Topic 4: Comparative Advantage and Specialization; subtopic The Benefits of Trading.


FIGURE 1

Refer to Figure 1. If Arturo and Dina both spend all of their time producing tacos, then total production is:

Selected Answer:c.800 tacos and 0 burritos.

Correct Answer:c.800 tacos and 0 burritos.

Response Feedback:RATIONALE: When focused soley on taco production, Arturo and Dina can each make 400 tacos, or 800 total. For more information, see lesson on Topic 4: Comparative Advantage and Specialization; subtopic The Benefits of Trading.


FIGURE 1

Refer to Figure 1. If Arturo and Dina each divides his/her time equally between the production of tacos and burritos, then total production is:

Selected Answer:c.400 tacos and 250 burritos.

Correct Answer:c.400 tacos and 250 burritos.

Response Feedback:RATIONALE: Spending equal time on each, Arturo can produce 150 burritos and 200 tacos. Dina can produce 100 burritos and 200 tacos. Their total production is 400 tacos and 250 burritos. For more information, see lesson on Topic 4: Comparative Advantage and Specialization; subtopic The Benefits of Trading.


Workers building railroads by hand in the 1800s was an example of a(n) ____ intensive form of production.

Selected Answer:d.labor

Correct Answer:d.labor

Response Feedback:RATIONALE: Each nation tends to use the production processes that conserve its relatively scarce (and thus relatively more expensive) resources and use more of its relatively abundant resources. The best method is the least-cost method. Labor-intensive methods will be used where capital is relatively scarce, and capital-intensive methods will be used where labor is relatively scarce. For more information, see lesson on Topic 2: Economic Systems, subtopic Market Economies versus Central Planning.


In most societies, dollar price acts as the main rationing device. If dollar price werenotthe main rationing device, would there still be a need for some rationing device to take its place?

Selected Answer:b.Yes, because there is a need for a rationing device as long as scarcity exists.

Correct Answer:b.Yes, because there is a need for a rationing device as long as scarcity exists.

Response Feedback:RATIONALE: Scarcity creates the need for a rationing device, or a means to decide who gets what of the resources available. Examples of other rationing devices are distributing equal shares, first-come-first-served, or even by age. For more information, see Lesson on Topic 1: Scarcity and Opportunity Cost; subtopic Decisions and Their Costs.


The headline in the newspaper reads "County Supervisors Debate Building New Schools." The headline relates closest to which economic concept?

Selected Answer:d.Choice

Correct Answer:d.Choice

Response Feedback:RATIONALE: Because goods and services are scarce, people must make choices. Making decisions requires comparing the costs and benefits of alternative choices. For more information, see Lesson on Topic 1: Scarcity and Opportunity Cost; subtopic Decisions and Their Costs.


In an eight-hour day, Andy can produce either 24 loaves of bread or 8 pounds of butter. In an eight-hour day, John can produce either 8 loaves of bread or 8 pounds of butter. The opportunity cost of producing 1 pound of butter is:

Selected Answer:c.3 loaves of bread for Andy and 1 loaf of bread for John.

Correct Answer:c.3 loaves of bread for Andy and 1 loaf of bread for John.

Response Feedback:RATIONALE: The opportunity cost of producing a good is what you must give up to obtain it. To produce 1 pound of butter, Andy must give up 3 loaves of bread (24 / 8 = 3). John must give up 1 loaf of bread to produce 1 pound of butter. For more information, see lesson on Topic 3: Production Possibilities Frontier; subtopic The Production Possibilities Frontier (PPF), Efficiency, and Inefficiency.


Which one of the following is an illustration of the law of increasing opportunity costs?

Selected Answer:a.As more cars are produced, the opportunity cost of each additional car is greater than for the preceding unit.

Correct Answer:a.As more cars are produced, the opportunity cost of each additional car is greater than for the preceding unit.

Response Feedback:RATIONALE: The basic reason for increasing opportunity cost is that some resources and skills cannot be easily adapted from their current uses to alternative uses. Easily adaptable resources are soon exhausted, and resources and workers that are less well suited or appropriate (those with a relatively greater opportunity cost) must then be employed to increase output further. For more information, see lesson on Topic 3: Production Possibilities Frontier; subtopic The Production Possibilities Frontier (PPF), Efficiency, and Inefficiency.


The economy moves from point A, where it produces 100X and 200Y, to point B, where it produces 200X and 150Y. It follows that:

Selected Answer:e.b and c

Correct Answer:e.b and c

Response Feedback:RATIONALE: There is not enough information to determine whether point A falls on the PPF, where the economy would be producing efficiently. For more information, see lesson on Topic 3: Production Possibilities Frontier; subtopic The Production Possibilities Frontier (PPF), Efficiency, and Inefficiency.

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