Reference no: EM13181683

1. A worker in Equador can earn $3 per day making cotton cloth on a hand loom. A worker in the United States can earn $70 per day making cotton cloth with a mechanical loom. What accounts for the difference in wages?

A. U.S. textile workers belong to a union.
B. There is little demand for cotton cloth in Equador and great demand in the U.S.
C. Labor is more productive making cotton cloth with a mechanical loom than with a hand loom.
D. Equador has a low-wage policy to make its textile industry more competitive in world markets.

2. Unemployment would cause an economy to

A. produce inside its production possibilities frontier.
B. produce on its production possibilities frontier.
C. produce outside its production possibilities frontier.
D. experience an inward shift of its production possibilities frontier.

3. Any point on a country's production possibilities frontier represents a combination of two goods that an econ-omy

A. will never be able to produce.
B. can produce using all available resources and technology.
C. can produce using some portion, but not all, of its resources and technology.
D.may be able to produce in the future with more resources and/or superior technology.

4. Market power refers to the

A. power of a single person or small group to influence market prices.
B. ability of a person or small group to successfully market new products.
C. power of the government to regulate a market.
D. importance of a certain market in relation to the overall economy.

5. The English word that comes from the Greek word for "one who manages a household" is

A. market
B consumer
C. producer
D. economy

6. The marginal benefit Colin gets from eating a fourth slice of pizza is

A. the total benefit Colin gets from eating four slices of pizza minus the total benefit Colin gets from eating three slices of pizza.
B. the same as the total benefit of eating four slices of pizza.
C. less than the marginal cost of eating the fourth slice of pizza since he chose to eat the fourth slice.
D. the total benefit Colin gets from eating five slices of pizza minus the total benefit Colin gets from eating four slices of pizza.

7. Denise decides to spend three hours working overtime rather than watching a video with her friends. She earns $10 an hour. Her opportunity cost of working is

A. the $30 she earns working.
B. the $30 minus the enjoyment she would have received from watching the video.
C.the enjoyment she would have received had she watched the video.
D.nothing, since she would have received less than $30 of enjoyment from the video.

8. For which of the following individuals would the opportunity cost of going to college be highest?

A. a promising young mathematician who will command a high salary once she earns her college degree
B. a student with average grades who has never held a job
C. a famous, highly-paid actor who wants to take time away from show business to finish college and earn a degree
D. a student who is the best player on his college basketball team, but who lacks the skills necessary to play professional basketball

9. The phenomenon of scarcity stems from the fact that

A. most economies production methods are not very good.
B. in most economies, wealthy people consume disproportionate quantities of goods and services.
C. governments restrict production of too many goods and services.
D. resources are limited.

10. Which of the following concepts cannot be illustrated by the production possibilities frontier?

A. efficiency
B. opportunity cost
C. equality
D. trade-offs