Econ 2305 Ch.2
Econ 2305 Ch.2 ECON 2305
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This 6 page Class Notes was uploaded by JenJen Notetaker on Saturday February 6, 2016. The Class Notes belongs to ECON 2305 at University of Texas at Arlington taught by Jane Himarios in Winter 2016. Since its upload, it has received 974 views. For similar materials see Principles of Macroeconoomics in Economcs at University of Texas at Arlington.
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Date Created: 02/06/16
1. Which of the following would be MOST likely to cause the production possibilities frontier to shift to the left? A. an increase in population B. a decrease in the size of the labor force C. a decrease in taxes D. a technological advance 2. A production possibilities frontier with constant opportunity cost is considered: A. a straight line. B. horizontal. C. convex. D. concave. 3. Human capital is: A. included in entrepreneurial ability. B. included in the land resource. C. the improvement to labor capabilities from training, education, and apprenticeship programs. D. the equipment that companies use in the production process. 4. The theory of comparative advantage says that countries: A. should export those goods they can produce at a lower opportunity cost than another country. B. should restrict trade by cutting off all imports. C. should import those goods they can produce at a lower opportunity cost than another country. D. can never benefit from specialization in trade. 5. When an economy is producing the mix of goods and service MOST desired by society, that economy is considered to be: A. productively efficient. B. allocatively equitable. C. productively equitable. D. allocatively efficient. 6. When society produces the mix of goods and services that are most desired and produces them at the lowest cost possible: A. production efficiency is achieved. B. production and allocative efficiency are achieved. C. inefficiency occurs. D. allocative efficiency is achieved. 7. The derivation of a production possibilities frontier assumes: A. some resources are not being produced efficiently. B. technology is free. C. there is a fixed quantity of resources and technology available. D. some resources are not being used. 8. In economics, the payment to capital is called: A. factor payment. B. capitalization. C. profit. D. interest. 9. One of the major limits to trade is: A. comparative advantage. B. opportunity cost. C. transaction costs. D. absolute advantage. 10. “The economic wealth of this country was built primarily by some individuals profiting from a transaction, whereas others were harmed by that transaction.” This statement indicates the author: A. fails to understand the significance of the PPF. B. fails to understand the fallacy of composition. C. uses sound economic thinking. The statement is essentially correct. D. fails to understand that all voluntary trades benefit both parties involved. 11. Given the production possibilities schedules for the United States and Chile, which product should the United States produce if it is to produce the good for which it has a comparative advantage? A. bread B. avocados C. neither bread nor avocados D. both bread and avocados 12. An increase in the quantity and/or quality of labor available could be due to each of the following, EXCEPT: A. an increase in the college graduation rate. B. an increase in the working age population. C. more women entering the workforce. D. strict immigration policy enforcement. 13. Production levels to the left of the PPF are: A. unattainable and inefficient. B. attainable but inefficient. C. unattainable and efficient. D. attainable but efficient. 14. Which is NOT a source of economic growth? A. increasing business investment B. reducing the variability of inflation C. increasing research and development D. reducing the level of international trade 15. If an economy is operating at a point that is inside of its production possibilities frontier, then it can be assumed that its resources are: A. overutilized. B. underutilized. C. misallocated. D. fully utilized. 16. Which of the following situations would MOST likely lead to an import of copper? A. an absolute disadvantage in the production of copper compared to other nations B. a tariff placed on copper C. an absolute advantage in the production of copper by other nations D. a comparative advantage in the production of copper by other nations 17. Technological improvements in the U.S. economy have: A. reduced the costs of production for U.S. companies. B. increased production levels in the United States. C. shifted the U.S. PPF to the right. D. They have resulted in all of these. 18. A country can use its given resources to produce capital goods or consumer goods. This implies that: A. there is a conflict between capitalists and consumers. B. more consumption in the present leads to higher economic growth for future generations. C. an economy can “have it all.” D. there is a tradeoff between the current and the future standard of living. 19. Which is considered a land resource? A. a sewing machine B. an apprentice C. mineral deposits D. a copier 20. Which shaped curve reflects the reality that most goods are better suited for specific sorts of production? A. downward-sloping PPF B. concave PPF C. straight line PPF D. convex PPF 21. ___________ occurs when the mix of goods society decides to produce is produced at the lowest possible resource or opportunity cost. A. Opportunity cost B. Cost allocation C. Production efficiency D. Allocative efficiency 22. Which of the following is NOT an economic factor of production? A. labor B. land C. money D. entrepreneurial ability 23. Which of the following does NOT represent an increase in the level of human resources available to an economy? A. higher birth rate B. more people entering the labor force C. immigration D. decrease in the unemployment rate 24. When a country is operating at its full potential output, it is producing at a point: A. There is not enough information to answer this question. B. below and to the left of the PPF. C. above and to the right of the PPF. D. on the PPF. 25. Land: A. is only agricultural. B. earns rent. C. is not a scarce resource. D. earns interest. 26. In a pure market economy, the government's primary roles do NOT include: A. protecting property rights. B. providing public goods such as national defense. C. enforcing contracts between private parties. D. reallocating resources across the economy. 27. If an economy faces increasing opportunity costs with respect to the production of two goods, then the production possibilities frontier between the two goods will be: A. bowed inward. B. a positively sloped curve. C. bowed outward. D. a straight downward-sloped curve. 28. The practical constraints on trade include all of the following, EXCEPT: A. every international transaction involves costs. B. production possibilities frontiers for nations are linear. C. production possibilities frontiers exhibit increasing costs and diminishing returns. D. some industries and individuals in a country may be hurt by an expansion of trade. 29. If a producer does NOT face increasing opportunity cost, then the production possibilities frontier is: A. bowed inward. B. bowed outward. C. a positively sloped curve. D. a straight downward-sloped curve. 30. Most trade is based on specialization according to: A. absolute advantage. B. location advantage. C. comparative advantage. D. brand recognition advantage.
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