Question : Multiple Choice – Section 00: Introduction 1.Peoplewhoprovideyouwithgoodsandservices a.areactingoutofgenerosity. b.dosobecausetheygetsomethinginreturn. c.havechosennottobecom : 1262242

Multiple Choice – Section 00: Introduction

1.Peoplewhoprovideyouwithgoodsandservices

a.areactingoutofgenerosity.

b.dosobecausetheygetsomethinginreturn.

c.havechosennottobecomeinterdependent.

d.arerequiredtodosobythegovernment.

2.Whenaneconomistpointsoutthatyouandmillionsofotherpeopleareinterdependent,heorsheisreferringtothefactthatweall

a.relyuponthegovernmenttoprovideuswiththebasicnecessitiesoflife.

b.relyupononeanotherforthegoodsandservicesweconsume.

c.havesimilartastesandabilities.

d.areconcernedaboutoneanother’swell­being.

Multiple Choice – Section 01: A Parable for the Modern Economy

1.Whichofthefollowingisnotareasonpeoplechoosetodependonothersforgoodsandservices?

a.toimprovetheirlives

b.toallowthemtoenjoyagreatervarietyofgoodsandservices

c.toconsumemoreofeachgoodwithoutworkinganymorehours

d.toallowpeopletoproduceoutsidetheirproductionpossibilitiesfrontiers

2.Whencantwocountriesgainfromtradingtwogoods?

a.whenthefirstcountrycanonlyproducethefirstgoodandthesecondcountrycanonlyproducethesecondgood

b.whenthefirstcountrycanproducebothgoods,butcanonlyproducethesecondgoodatgreatcost,andthesecondcountrycanproducebothgoods,butcanonlyproducethefirstgoodatgreatcost

c.whenthefirstcountryisbetteratproducingbothgoodsandthesecondcountryisworseatproducingbothgoods

d.Twocountriescouldgainfromtradingtwogoodsunderalloftheaboveconditions.

3.Tomproducesbaseballglovesandbaseballbats.Stevealsoproducesbaseballglovesandbaseballbats,butTomisbetteratproducingbothgoods.Inthiscase,tradecould

a.benefitbothSteveandTom.

b.benefitSteve,butnotTom.

c.benefitTom,butnotSteve.

d.benefitneitherStevenorTom.

4.OliviabakescakesandAndrewgrowscorn.OliviaandAndrewbothliketoeatcakeandeatcorn.InwhichofthefollowingcasesisitimpossibleforbothOliviaandAndrewtobenefitfromtrade?

a.OliviacannotgrowcornandAndrewcannotbakecakes.

b.OliviaisbetterthanAndrewatbakingcakesandAndrewisbetterthanOliviaatgrowingcorn.

c.OliviaisbetterthanAndrewatbakingcakesandatgrowingcorn.

d.BothOliviaandAndrewcanbenefitfromtradeinalloftheabovecases.

5.AbbybakesbrowniesandLiamgrowsflowers.InwhichofthefollowingcasesisitimpossibleforbothAbbyandLiamtobenefitfromtrade?

a.AbbydoesnotlikeflowersandLiamdoesnotlikebrownies.

b.AbbyisbetterthanLiamatbakingbrowniesandLiamisbetterthanAbbyatgrowingflowers.

c.LiamisbetterthanAbbyatbakingbrowniesandatgrowingflowers.

d.BothAbbyandLiamcanbenefitfromtradeinalloftheabovecases.

6.Theproductionpossibilitiesfrontierillustrates

a.thecombinationsofoutputthataneconomyshouldproduce.

b.thecombinationsofoutputthataneconomyshouldconsume.

c.thecombinationsofoutputthataneconomycanproduce.

d.Alloftheabovearecorrect.

7.Aneconomy’sproductionpossibilitiesfrontierisalsoitsconsumptionpossibilitiesfrontier

a.underallcircumstances.

b.undernocircumstances.

c.whentheeconomyisself-sufficient.

d.whentherateoftradeoffbetweenthetwogoodsbeingproducedisconstant.

8.Aproductionpossibilitiesfrontierisbowedoutwardwhen

a.themoreresourcestheeconomyusestoproduceonegood,thefewerresourcesithasavailabletoproducetheothergood.

b.aneconomyisself-sufficientinsteadofinterdependentandengagedintrade.

c.therateoftradeoffbetweenthetwogoodsbeingproducedisconstant.

d.therateoftradeoffbetweenthetwogoodsbeingproduceddependsonhowmuchofeachgoodisbeingproduced.

9.Aproductionpossibilitiesfrontierisastraightlinewhen

a.themoreresourcestheeconomyusestoproduceonegood,thefewerresourcesithasavailabletoproducetheothergood.

b.aneconomyisinterdependentandengagedintradeinsteadofself-sufficient.

c.therateoftradeoffbetweenthetwogoodsbeingproducedisconstant.

d.therateoftradeoffbetweenthetwogoodsbeingproduceddependsonhowmuchofeachgoodisbeingproduced.

10.Consider two individuals — Marquis and Serena — each of whom would like to wear sweaters and eat tasty food. The gains from trade between Marquis and Serena are most obvious in which of the following cases?

a.Marquisisverygoodatknittingsweatersandatcookingtastyfood,butSerena’sskillsinbothoftheseactivitiesareverypoor.

b.MarquisandSerenabothareverygoodatcookingtastyfood,butneitherhasthenecessaryskillstoknitasweater.

c.Marquis’scookingandknittingskillsareverypoor,andSerena’scookingandknittingskillsarealsoverypoor.

d.Marquis’sskillsaresuchthathecanproduceonlysweaters,andSerena’sskillsaresuchthatshecanproduceonlytastyfood.