Macroeconomics 201 E1

34 Questions | Total Attempts: 159

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Macroeconomics Quizzes & Trivia

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Questions and Answers
  • 1. 
    Recall Chapter 1's opening story about the British sea captains and the convicted felons. In what way were incentives used to solve the problem of the high mortality rate on board the ships?
    • A. 

      Payment (to ship captains) was to be offered for each prisoner that was taken aboard the ships.

    • B. 

      Payment (to ship captains) was made independent of the regulations passed for prisoner welfare.

    • C. 

      Regulations were passed so that prisoners could get better food, water, and medical care.

    • D. 

      Payment (to ship captains) was made dependent on the survival rate of prisoners.

  • 2. 
    Recall Chapter I's opening story about the British sea captains and the convicted felons. Instead of paying the sea captains for each prisoner placed on board the ships in Great Britain, an economist suggested: 
    • A. 

      Paying for each prisoner who walked off the ship in Australia.

    • B. 

      Paying for food and water to reduce costs of caring for prisoners during the transit.

    • C. 

      Doing nothing, since the suggested change would not matter.

    • D. 

      That new regulations be passed to require prisoner safety and health.

  • 3. 
    In several cities around the country, schools are paying cash awards to students who do well on English and Math tests. This practice highlights the idea of: 
    • A. 

      Pedagogical economics the continuous assessment of student performance in an effort to maximize student efficiency.

    • B. 

      Hidden costs—the costs borne by taxpayers in the form of wasteful school spending.

    • C. 

      Incentives the rewards and penalties that motivate behavior.

    • D. 

      Screening theory—the identification of individuals or groups based on various performance measures.

  • 4. 
    The basic postulate of economics indicates that changes in incentives influence the: 
    • A. 

      Actions of producers but not consumers.

    • B. 

      Actions of consumers but not producers.

    • C. 

      Choices of individuals only when they buy and sell goods in the marketplace.

    • D. 

      Choices of individuals with regard to a wide range of activities, including those generally perceived as social or political.

  • 5. 
    Which financing method for transporting prisoners from point A to B will result in the greatest number of prisoners surviving the trip? Assume there are 50 prisoners being transported. 
    • A. 

      The ship's captain is paid $100 by the government for every live prisoner that is loaded on board at Point A.

    • B. 

      The ship's captain is paid $100 by the government for every live prisoner that is unloaded at Point B.

    • C. 

      The ship's captain is paid $400 by the government for every live prisoner that is loaded on board at Point A.

    • D. 

      The ship's captain is paid a flat rate of $3,000 for the trip, rather than being paid per prisoner.

  • 6. 
    Many companies pay their sales employees based on commissions—the more they sell, the more they get paid. This practice highlights the role of:
    • A. 

      Marginal thinking.

    • B. 

      Incentives.

    • C. 

      Trade-offs.

    • D. 

      Sunk costs.

  • 7. 
    Based on the ideas of Adam Smith, it is--------- dentists clean and repair teeth, but 
    • A. 

      Not out of benevolence that; from their regard for their own self-interest

    • B. 

      Out of benevolence that; sometimes from their regard for their own self-interest

    • C. 

      Not out of self-interest that; out of their benevolence

    • D. 

      From charity and good will that; only if they can charge high prices

  • 8. 
    When markets don't align self-interest with social interest:
    • A. 

      Markets will still manage to reach an efficient outcome.

    • B. 

      Governments may improve the situation by changing incentives.

    • C. 

      Societal costs will always exceed individual benefits.

    • D. 

      Individual benefits will exceed societal benefits.

  • 9. 
    Self-interest can be aligned with the social interest by: 
    • A. 

      The enactment of government policies that increase incentives to work and trade.

    • B. 

      Increasing international trade.

    • C. 

      Promoting benevolence.

    • D. 

      Banning free markets by the government.

  • 10. 
    Which of the following is an example of self-interest that attempts to promote the public interest? 
    • A. 

      A mother prevents her children from becoming vaccinated against measles, mumps, and rubella because of fears of autism.

    • B. 

      The President of the United States restricts American consumers from buying foreign-made products.

    • C. 

      The New York Yankees beat the Boston Red Sox.

    • D. 

      An entrepreneur risks his life savings to open up a grocery store in an underserved area.

  • 11. 
    Most people do not buy the safest car they can find. Why not? 
    • A. 

      Other factors matter besides safety, such as comfort, cost, and fuel economy.

    • B. 

      People do not take the time to understand the safety features of cars.

    • C. 

      Consumers are unaware of the risks of different cars.

    • D. 

      The statement is false. People do buy the safest car they can find.

  • 12. 
    Air travel from Chicago to Los Angeles costs $800 and takes four hours. A bus ticket between the cities costs $100 and takes 104 hours. Other things constant, the minimum value of one's time that would induce a rational individual to fly rather than drive would be:
    • A. 

      $1 per hour.

    • B. 

      $7 per hour.

    • C. 

      $12 per hour.

    • D. 

      $120 per hour.

  • 13. 
    A grocery store is running a "buy-one-get-another-at-one-half-off' promotion on a dozen doughnuts. So the first dozen is $6 and the second would be $3. A person would buy the second dozen if their marginal benefit from the second dozen doughnuts is:
    • A. 

      Greater than $3

    • B. 

      Greater than $6

    • C. 

      Greater than $9

    • D. 

      Less than $3

  • 14. 
    One benefit of trade is that it: 
    • A. 

      Increases the division of knowledge because trade makes people more self-sufficient, producing more of what they consume.

    • B. 

      Allows for increased specialization and mass-production techniques that lower per unit costs of production.

    • C. 

      Lowers productivity, leading to greater domestic employment.

    • D. 

      Decreases economies of scale, making production more efficient.

  • 15. 
    Which of the following statements is TRUE about trade? 
    • A. 

      Everyone can benefit from trade, even people who trade with someone from a foreign country.

    • B. 

      Comparative advantage is based on specializing in products that have a high opportunity cost of production.

    • C. 

      If a person can do everything better than anyone else, there is no reason for that person to trade with others.

    • D. 

      Trade makes one party better off but the other party worse off, so there is no net gain to society.

  • 16. 
    As the United States becomes more productive at manufacturing chemicals and pharmaceutical drugs, the opportunity cost of producing other items such as textiles--------  , leading to------ demand for foreign textiles. 
    • A. 

      Increases; increased

    • B. 

      Decreases; increased

    • C. 

      Increases; decreased

    • D. 

      Decreases; decreased

  • 17. 
    EBay creates value by: 
    • A. 

      Helping sellers trick buyers into purchasing broken items.

    • B. 

      Moving goods like broken laser pointers from people who don't want them to people who do.

    • C. 

      Helping people with the same preferences find each other.

    • D. 

      Moving toys from children who want them to children who don't.

  • 18. 
    Which of the following situations would lead to more starvation? 
    • A. 

      A world where everyone grows his or her own food and there is no trade

    • B. 

      A world with trade and lots of specialization

    • C. 

      A world with immense division of knowledge

    • D. 

      A world where only some people specialize in food and everyone else produces something else

  • 19. 
    Specialization and trade can --------- the per-unit cost of production because  ---------
    • A. 

      Decrease; it allows for more small-scale production.

    • B. 

      Decrease; it creates economies of scale associated with large-scale production

    • C. 

      Increase; it requires more expensive, specialized equipment

    • D. 

      Increase; more expensive labor is needed.

  • 20. 
    • A. 

      Canada has an absolute advantage in producing both iPhones and iPods.

    • B. 

      The United States has an absolute advantage in producing both iPhones and iPods.

    • C. 

      Canada has an absolute advantage in producing iPhones, and the United States has an absolute advantage in producing iPods.

    • D. 

      The United States has an absolute advantage in producing iPhones, and Canada has an absolute advantage in producing iPods.

  • 21. 
    (Table: iPhone and iPod Production) According to the table on iPhone and iPod production, the opportunity cost of producing one iPhone is:
    • A. 

      4/3 of one iPod for Canada, and two iPods for the United States.

    • B. 

      Two iPods for Canada, and four iPods for the United States.

    • C. 

      3/4 of one iPod for Canada, and one iPod for the United States.

    • D. 

      One iPod for Canada, and 3/4 of one iPod for the United States.

  • 22. 
    • A. 

      Canada has a comparative advantage in producing both iPhones and iPods.

    • B. 

      The United States has a comparative advantage in producing both iPhones and iPods.

    • C. 

      Canada has a comparative advantage in producing iPhones, and the United States has a comparative advantage in producing iPods.

    • D. 

      Canada has a comparative advantage in producing iPods, and the United States has a comparative advantage in producing iPhones.

  • 23. 
    (Figure: PPF Goods X & Y) Refer to the figure. Which of the points representing various consumption possibilities for the country portrayed above isonly attainable through foreign trade? 
    • A. 

      Point A

    • B. 

      Point B

    • C. 

      Point C

    • D. 

      Both points C and B

  • 24. 
    (Figure: PPF Goods X & Y) Refer to the figure. Point A represents an allocation of resources that is: 
    • A. 

      Efficient.

    • B. 

      Inefficient.

    • C. 

      Impossible.

    • D. 

      The result of trade.

  • 25. 
    (Table: Production Possibilities for the United States and Mexico) According to the table on production possibilities for the United States and Mexico, Mexico has an absolute advantage in ----------- and a comparative advantage in  ---------
    • A. 

      Neither good; corn

    • B. 

      Corn; potatoes

    • C. 

      Potatoes; corn

    • D. 

      Neither good; potatoes

  • 26. 
    (Table: Production Possibilities for the United States and Mexico) According to the table on production possibilities for the United States and Mexico, the United States has an absolute advantage in  --------- and a comparative advantage in   --------
    • A. 

      Both goods; corn

    • B. 

      Both goods; potatoes

    • C. 

      Potatoes; corn

    • D. 

      Nothing; potatoes

  • 27. 
    (Table: Production Possibilities for the United States and Mexico) According to the table on production possibilities for the United States and Mexico, Mexico's opportunity cost of producing each ton of potatoes is ------- while the United States' opportunity cost of producing each ton of potatoes is -------
    • A. 

      0.125 tons of potatoes; 0.2 tons of potatoes

    • B. 

      Eight tons of corn; 0.2 tons of potatoes

    • C. 

      Eight tons of corn; five tons of corn

    • D. 

      Five tons of corn; 0.2 tons of corn

  • 28. 
    • A. 

      0.2 potato for one corn < Trade price < five corns for one potato

    • B. 

      0.125 potato for one corn,< Trade price < eight potatoes for one corn

    • C. 

      Five corns for one potato < Trade price < eight corns for one potato

    • D. 

      0.125 potato for one corn < Trade price < five potatoes for one corn

  • 29. 
    (Table: Production in the United States and Germany) According to the table, the opportunity cost of producing one sofa in the United States is  , and the opportunity cost of producing one sofa in Germany is  
    • A. 

      Two clocks; three clocks

    • B. 

      10 clocks; 27 clocks

    • C. 

      0.4 clocks; 0.33 clocks

    • D. 

      2.5 clocks; three clocks

  • 30. 
    (Table: Production in the United States and Germany) According to the table, the opportunity cost of producing one clock in the United States is --------- , and the opportunity cost of producing one clock in Germany is  --------
    • A. 

      Five sofas; nine sofas

    • B. 

      0.4 sofas; 0.33 sofa

    • C. 

      Five clocks; nine clocks

    • D. 

      2.5 clocks; three clocks

  • 31. 
    • A. 

      The United States has a comparative advantage in clocks.

    • B. 

      Germany has an absolute advantage in clocks and sofas.

    • C. 

      The United States has a comparative advantage in sofas.

    • D. 

      The United States has a comparative advantage in clocks and sofas.

  • 32. 
    • A. 

      Brazil has a comparative advantage in sugar cane production and an absolute advantage in iPod production.

    • B. 

      Both countries have a comparative in sugar cane production.

    • C. 

      China has an absolute advantage in production of both goods.

    • D. 

      Brazil has both a comparative advantage and an absolute advantage in sugar cane production.

  • 33. 
    Brazil can produce one unit of sugar cane for one unit of labor and one iPod for eight units of labor, and China can produce one unit of sugar cane for two units of labor and one iPod for four units of labor. What are each country's opportunity costs of producing iPods?
    • A. 

      Brazil: 4 units of sugar cane; China: 2 units of sugar cane

    • B. 

      Brazil: 8 units of sugar cane; China: 2 units of sugar cane

    • C. 

      Brazil: 1/8 unit of sugar cane; China: 1/2 unit of sugar cane

    • D. 

      Brazil: 1/2 unit of sugar cane; China: 1/2 unit of sugar cane

  • 34. 
    Brazil can produce one unit of sugar cane for one unit of labor and one iPod for eight units of labor, and China can produce one unit of sugar cane for two units of labor and one iPod for four units of labor. Which of the following is true? 
    • A. 

      Before trade, China's opportunity cost of one unit of sugar cane is two iPods.

    • B. 

      China has an absolute advantage in sugar cane production.

    • C. 

      Both parties benefit if they specialize and trade at terms of one unit of sugar cane for two iPods.

    • D. 

      With trade, Brazil should specialize in sugar cane and China in iPods.