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5 - Albert adores collecting tins and metallic boxes. He wants as many as possible and thus has many of them. Nonetheless, Alberto is willing to give up to 10 tins for a metallic box. Rosa, however, only wants tins. But Rosa has a machine that can convert tins into metallic boxes, in particular, it converts four tins into a metallic box. a) Alberto and Rosa can improve trading at a rate of one box per six tins. b) Alberto and Rosa cannot gain by trading because Alberto wants both tins and metallic boxes and Rosa only wants tins. c) Rosa has comparative advantage in the production of tins. d) None of the previous answers is correct.
5 - Hern´an can answer 2 macro questions and 3 micro questions in an hour. Ana can answer 20 macro questions and 29 micro questions in an hour: a) Ana has an absolute advantage in everything and comparative advantage in micro. b) Hern´an has a comparative advantage in macro. c) Ana has comparative advantage in micro. d) None of the above answers is correct.
- In an economy, only two goods are produced: bicycles and motorbikes. The two goods are produced under the following combinationsof respective units:
What is the opportunity cost for a motorbike? a) One bicycle. b) Three bicycles.
c) Six bicycles. d) Twelve bicycles.
- Getafe and Leganés produce the same two goods: bicycles and motorbikes. In each town there are 100 workers. In Getafe, these workers can produce daily 10 bicycles or 2 motorbikes. In Leganés, they can produce daily 30 bicycles or 5 motorbikes. The opportunity cost of bicycles in Getafe and the opportunity cost of motorbikes in Leganés are, respectively: a) 0.2 motorbikes, 6 bicycles b) 5 motorbikes, 0.16 bicycles c) 5 bicycles, 20 motorbikes d) 0.2 bicycles, 0.05 motorbikes
- A typical society strives to get the most it can from its scarce resources. At the same time, the society attempts to distribute the benefits of those resources to the members of the society in a fair manner. In other words, the society faces a tradeoff between
a. guns and butter. b. efficiency and equity. c. inflation and unemployment. d. work and leisure
- Which of the following is true?
a. Efficiency refers to the size of the economic pie; equity refers to how the pie is divided. b. Government policies usually improve upon both equity and efficiency. c. As long as the economic pie continually gets larger, no one will have to go hungry. d. Efficiency and equity can both be achieved if the economic pie is cut into equal pieces.
- Which of the following statements does not apply to a market economy?
a. Firms decide whom to hire and what to produce. b. No one is looking out for the economic well-being of society as a whole. c. Households decide which firms to work for and what to buy with their incomes.
because they increased simultaneously and coordinately the price of the gasoline in all the Spanish petrol stations.
a. It is a Macro event; it has consequences for almost all Spanish people. b. It is a Micro event, two firms have been fined because they behaved in such a way that damaged consumers’ rights. c. It is a Micro event because the change in gasoline prices has effects on the other markets; and thus, the prices in all the economy get affected. d. I do not know if it is Micro or Macro, it depends on the volume of sales of both firms.
- Which of the following affirmations is part of a positive analysis in economics?
a. Increasing the minimum wage increases the unemployment. b. Increasing the minimum wage is not a good action since it increases the unemployment. c. Increasing the minimum wage is a good action since helps in preserving a society without inequalities. d. All of the above.
- The term market failure refers to
a. a situation in which the market on its own fails to allocate resources efficiently. b. an unsuccessful advertising campaign which reduces demand for a product. c. a situation in which competition among firms becomes ruthless. d. a firm which is forced out of business because of losses. From problem set
10. Scarce resources imply that:
e. There are people with needs.
f. Each resource has a specific use.
g. A criterion is needed to determine the usage of each resource.
h. Once they were unlimited but they are finishing in the long run.
11. Suppose that only two goods are produced in an economy:
video cameras and radios with following figures.
Video-cameras Radios
If one video-camera was already being produced, what is the opportunity cost to produce one more?
e. One unit of radio.
f. Three units of radio.
g. Six units of radio.
h. Nine units of radio.
12. Microeconomics is concerned with topics such as:
e. Why a tortilla de patatas costs more or less than a bocadillo de
calamares.
f. The effects of exports on the national economy.
g. The percentage of national income spent by the public sector.
h. The effect of taxes on production and employment.
13. The Spanish “Tribunal de Defensa de la Competencia
(Competition Policy Institution)” heavily fines the distributors of
“Petrampsa” and “Espetrol” because they increased
simultaneously and coordinately the price of the gasoline in all the
Spanish petrol stations.
e. It is a Macro event; it has consequences for almost all Spanish
people.
f. It is a Micro event, two firms have been fined because they
behaved in such a way that damaged consumers’ rights.
g. It is a Micro event because the change in gasoline prices has
effects on the other markets; and thus, the prices in all the
economy get affected.
h. I do not know if it is Micro or Macro, it depends on the volume of
sales of both firms.
14. Which of the following affirmations is part of a positive analysis
in economics?
b. equal distribution c. minimum waste d. equitable outcome
- When the government redistributes income from the wealthy to the poor, a. efficiency is improved, but equality is not. b. equality is improved, but efficiency is not. c. both efficiency and equality are improved. d. neither efficiency nor equality are improved.
- A certain state legislature is considering an increase in the state gasoline tax. Representative Campbell argues that an increase in the gasoline tax would harm low-income drivers disproportionately. Representative Richards responds by saying that low-income drivers own smaller cars that use less gasoline, and that low-income drivers therefore would not be harmed disproportionately. a. Representative Campbell’s argument is based primarily on efficiency, while Representative Richards’ argument is based primarily on equality. b. Representative Campbell’s argument is based primarily on equality, while Representative Richards’ argument is based primarily on efficiency. c. Both representatives’ arguments are based primarily on efficiency. d. Both representatives’ arguments are based primarily on equality.
- Senator Jackson argues that replacing the federal income tax with a national sales tax would increase the level of output. Senator Feldman objects that this policy would benefit the rich at the expense of the poor. a. Both senators’ arguments are primarily about equality. b. Both senators’ arguments are primarily about efficiency. c. Senator Jackson’s argument is primarily about equality, while Senator Feldman’s argument is primarily about efficiency. d. Senator Jackson’s argument is primarily about efficiency, while Senator Feldman’s argument is primarily about equality.
- The opportunity cost of an item is
a. the number of hours needed to earn money to buy the item. b. what you give up to get that item. c. usually less than the dollar value of the item. d. the dollar value of the item.
- In economics, the cost of something is a. the dollar amount of obtaining it. b. always measured in units of time given up to get it. c. what you give up to get it. d. often impossible to quantify, even in principle.
- Melody decides to spend three hours working overtime rather than going to the park with her friends. She earns $20 per hour for overtime work. Her opportunity cost of working is a. the $60 she earns working. b. the $60 minus the enjoyment she would have received from going to the park. c. the enjoyment she would have received had she gone to the park. d. nothing, since she would have received less than $60 worth of enjoyment from going to the park.
- Which of the following is not an example of the opportunity cost of going to school? a. The money a student could have earned by working if he had not gone to college. b. The nap a student could have enjoyed if he had not attended class. c. The party a student could have enjoyed if he had not stayed in to study for his exam. d. The money a student spends on rent for his apartment while attending school.
- For a college student who wishes to calculate the true costs of going to college, the costs of room and board a. should be counted in full, regardless of the costs of eating and sleeping elsewhere. b. should be counted only to the extent that they are more expensive at college than elsewhere. c. usually exceed the opportunity cost of going to college.
a. $32,000. b. $42,000. c. $50,000. d. $58,000.
- Consider Noah’s decision to go to college. If he goes to college, he will spend $80, on tuition, $15,000 on room and board, and $4,000 on books. If he does not go to college, he will earn $22,000 working in a store and he will spend $13,000 on room and board. Noah’s cost of going to college is a. $99,000. b. $103,000. c. $108,000. d. $121,000.
- Consider Paul’s decision to go to college. If he goes to college, he will spend $90, on tuition, $15,000 on room and board, and $7,000 on books. If he does not go to college, he will earn $22,000 working at a construction job and he will spend $11,000 on room and board. Paul’s cost of going to college is a. $96,000. b. $110,000. c. $114,000. d. $123,000.
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- You have driven 800 miles on a vacation and then you notice that you are only 15 miles from an attraction you hadn’t known about, but would really like to see. In computing the opportunity cost of visiting this attraction you had not planned to visit, you should include a. both the cost of driving the first 800 miles and the next 15 miles. b. the cost of driving the first 800 miles, but not the cost of driving the next 15 miles. c. the cost of driving the next 15 miles, but not the cost of driving the first 800 miles. d. neither the cost of driving the first 800 miles nor the cost of driving the next 15 miles.
- Barb’s aunt gave her $100 for her birthday with the condition that Barb buy herself something. In deciding how to spend the money, Barb narrows her options down to four choices: Option A, Option B, Option C, and Option D. Each option costs $100. Finally she decides on Option B. The opportunity cost of this decision is a. the value to Barb of the option she would have chosen had Option B not been available. b. the value to Barb of Options A, C and D combined. c. the average of the values to Barb of Options A, C, and D. d. $100.
- Trade between the United States and Guatemala a. benefits both the United States and Guatemala. b. is a losing proposition for the United States because Guatemalan labor is less expensive than U.S. labor. c. is a losing proposition for Guatemala because capital is much more abundant in the U.S. than in Guatemala. d. is a losing proposition for Guatemala because U.S. workers are more productive than Guatemalan workers.
- England can benefit from trade a. only with nations that can produce goods England cannot produce. b. only with less developed nations. c. only with nations outside of Europe. d. with any nation.
- If Switzerland chooses to engage in trade, it a. will only benefit if it trades with countries that produce goods Switzerland cannot produce. b. cannot benefit if it trades with less developed countries. c. should first attempt to produce the good itself. d. can benefit by trading with any other country.
- Suppose a gardener produces both tomatoes and squash in his garden. If he must give up 8 bushels of squash to get 5 bushels of tomatoes, then his opportunity cost of 1 bushel of tomatoes is 1.e. 0.63 bushels of squash. 1.f. 1.6 bushels of squash. 1.g. 3 bushels of squash. 1.h. 5 bushels of squash.
- Suppose a gardener produces both tomatoes and squash in his garden. If the opportunity cost of one bushel of squash is 2/5 bushel of tomatoes, then the opportunity cost of 1 bushel of tomatoes is 1.i. 2/5 bushel of squash. 1.j. 5/2 bushels of squash. 1.k. 2 bushels of squash. 1.l. 5 bushels of squash.
- Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that the opportunity cost of 1 chair is 1.m. 1/6 table for Ken and 1/3 table for Traci. 1.n. 1/6 table for Ken and 3 tables for Traci. 1.o. 6 tables for Ken and 1/3 table for Traci. 1.p. 6 tables for Ken and 3 tables for Traci.
- Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that the opportunity cost of 1 table is 1.q. 1/6 chair for Ken and 1/3 chair for Traci. 1.r. 1/6 chair for Ken and 3 chairs for Traci. 1.s. 6 chairs for Ken and 1/3 chair for Traci. 1.t. 6 chairs for Ken and 3 chairs for Traci.
- If he devotes all of his available resources to cantaloupe production, a farmer can produce 120 cantaloupes. If he sacrifices 1.5 watermelons for each cantaloupe that he produces, it follows that 1.u. if he devotes all of his available resources to watermelon production, then he can produce 80 watermelons. 1.v. he cannot have a comparative advantage over other farmers in producing cantaloupes. 1.w. his opportunity cost of one watermelon is 2/3 of a cantaloupe. 1.x. his production possibilities frontier is bowed-out.
- If Shawn can produce more donuts in one day than Sue can produce in one day, then 1.y. Shawn has a comparative advantage in the production of donuts. 1.z. Sue has a comparative advantage in the production of donuts.
1.aa. Shawn has an absolute advantage in the production of donuts. 1.bb. Sue has an absolute advantage in the production of donuts.
- Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that 1.cc. Ken has an absolute advantage in chairs. 1.dd. Ken has a comparative advantage in tables. 1.ee. Traci has an absolute advantage in chairs. 1.ff. Traci has a comparative advantage in chairs.
- Travis can mow a lawn in two hours or he can trim a tree in one hour. Ricardo can mow a lawn in three hours or he can trim a tree in two hours. 1.gg. Travis has an absolute advantage over Ricardo in trimming trees. 1.hh. Travis has a comparative advantage over Ricardo in mowing lawns. 1.ii. Ricardo has a comparative advantage over Travis in trimming trees. 1.jj. All of the above are correct.
- Suppose Susan can wash three windows per hour or she can iron six shirts per hour. Paul can wash two windows per hour or he can iron five shirts per hour. 1.kk. Susan has an absolute advantage over Paul in washing windows. 1.ll. Susan has a comparative advantage over Paul in washing windows. 1.mm. Paul has a comparative advantage over Susan in ironing shirts. 1.nn. All of the above are correct.
- Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 20 bushels of corn or 5 bushels of oats per year. There are 20 workers in Cornland and 20 workers in Oatland. Which of the following statements is true? 1.oo. (^) Both countries could gain from trade with each other. 1.pp. Neither country could gain from trade with each other because Cornland has an absolute advantage in both goods. 1.qq. Neither country could gain from trade with each other because neither one has a comparative advantage. 1.rr. Oatland could gain from trade between the two countries, but Cornland definitively would lose.
- Suppose that the country of Xenophobia chose to isolate itself from the rest of the world. Its ruler proclaimed that Xenophobia should become self-sufficient, so it would not engage in foreign trade. From an economic perspective, this idea would 1.ss. make sense if Xenophobia had an absolute advantage in all goods. 1.tt. make sense if Xenophobia had no absolute advantages in any good. 1.uu. not make sense as long as Xenophobia had a comparative advantage in some good.
