Question 1

Money facilitates trade because:
A)it eliminates the need for specialization.
B)it prevents people from taking advantage of each other.
C)it serves as a medium of exchange.
D)the division of labor allows money to be produced at a lower cost.
E)people do not benefit from barter unless money is used.

Accepted Answer

Money serves as a medium of exchange, making trade easier and more efficient. Bartering goods and services without money can be difficult, as parties may not have what the other wants or needs. Money eliminates this problem by providing a universally accepted means of payment.

Question 2

Barter is:
A)illegal in the United States.
B)an efficient system of exchange.
C)most useful when there is much specialization and international trade.
D)only possible if money is used as a medium of exchange.
E)the direct exchange of goods without the use of money.

Accepted Answer

Barter is the direct exchange of goods or services between two parties without the use of money. It was a common system of exchange before the invention of money, and still occurs today in some parts of the world. While it can be a useful system, it is not considered as efficient as a monetary system of exchange, which allows for greater specialization and international trade. It is not illegal in the United States.

Question 3

In one week,Mohammed can knit 5 sweaters or bake 240 cookies.In one week,Aisha can knit 15 sweaters or bake 480 cookies.Mohammed's opportunity cost of knitting one sweater is:
A)480 cookies.
B)240 cookies.
C)48 sweaters.
D)1/48 of a cookie.
E)48 cookies.

Accepted Answer

Mohammed's opportunity cost of knitting one sweater is the amount of cookies he could have baked instead. Since he can bake 240 cookies or knit 5 sweaters in one week, the opportunity cost of knitting one sweater is 240 cookies / 5 sweaters = 48 cookies per sweater.

Question 4

Which of the following provides the best evidence of the specialization of labor?
A)A firm that produces a line of related products,such as eight kinds of breakfast cereal
B)An architect who is willing to practice in only one geographic area
C)A physician who practices in a specialty area such as cardiology or orthopedic surgery
D)A family that eats at Wendy's every Thursday night
E)A retailer who sells goods but provides no services

Accepted Answer

The answer of Which of the following provides the best...

Question 5

In one week,Mohammed can knit 5 sweaters or bake 240 cookies.In one week,Aisha can knit 15 sweaters or bake 480 cookies.Aisha's opportunity cost of baking one cookie is:
A)5 sweaters.
B)15 sweaters.
C)32 sweaters.
D)1/32 of a sweater.
E)480 sweaters.

Accepted Answer

Aisha's opportunity cost of baking one cookie is the amount of sweaters she could have knitted in the time it takes to bake 1 cookie. 
From the information given, we know that Aisha can knit 15 sweaters or bake 480 cookies in one week. Therefore, to find the opportunity cost of baking one cookie, we can set up a proportion:

15 sweaters / 480 cookies = x sweaters / 1 cookie

Solving for x, we get:

x = (15/480) sweaters per cookie 
x = 1/32 of a sweater per cookie

Therefore, the answer is D, Aisha's opportunity cost of baking one cookie is 1/32 of a sweater.

As for the best choice, it depends on the context and what the goal is. If the goal is to maximize the number of sweaters produced, Mohammed should focus on knitting sweaters since he can produce 5 in a week, while Aisha should focus on baking cookies since she can produce 480 in a week. If the goal is to minimize opportunity cost, Mohammed should focus on knitting since his opportunity cost of knitting one sweater is lower (1/5 of baking 240 cookies), while Aisha should focus on baking since her opportunity cost of baking one cookie is lower (1/32 of knitting 15 sweaters).

Question 6

A medium of exchange must be:
A)approved by the government.
B)universally acceptable in exchange for goods and services.
C)easy to reproduce.
D)used to eliminate the specialization and division of labor.
E)used when a system of barter exists.

Accepted Answer

A medium of exchange must be universally acceptable in exchange for goods and services, meaning it must be widely recognized and trusted as a means of conducting transactions. Approval by the government is not necessary for a medium of exchange to function, and ease of reproduction would lead to inflationary issues. The use of a medium of exchange does not eliminate specialization and division of labor, but rather facilitates it by allowing individuals to specialize in their respective areas and still be able to obtain other goods and services through trade. A system of barter could exist without a medium of exchange, but the use of a widely-accepted medium of exchange makes trade much more efficient.

Question 7

In one week,Mohammed can knit 5 sweaters or bake 240 cookies.In one week,Aisha can knit 15 sweaters or bake 480 cookies.Which of the following is correct?
A)Mohammed has an absolute and comparative advantage in both tasks.
B)Aisha has an absolute and comparative advantage in both tasks.
C)Mohammed has an absolute advantage in both tasks and a comparative advantage in knitting sweaters.
D)Aisha has an absolute advantage in both tasks and a comparative advantage in knitting sweaters.
E)Mohammed has an absolute advantage in both tasks and a comparative advantage in baking cookies.

Accepted Answer

Aisha can produce more of both goods in a week, giving her an absolute advantage. She also has a lower opportunity cost for knitting sweaters, giving her a comparative advantage in that task.

Question 8

The division of labor refers to:
A)discrimination in labor markets.
B)separating a job into smaller tasks completed by different people.
C)one worker who divides his time among different jobs and duties.
D)defining a job according to the appropriate sex of the worker.
E)the fact that two 20-year-olds are more productive than one 40-year-old.

Accepted Answer

The division of labor refers to breaking a larger job into smaller, more specialized tasks, and then assigning those tasks to different people or groups. This allows for greater efficiency and productivity as each worker can focus on their specific task and become more skilled at it over time.

Question 9

The specialization of labor:
A)increases productivity without creating any problems.
B)reduces productivity and is usually eliminated by business firms.
C)can create problems of boredom and repetitive motion injuries.
D)prevents the introduction of more sophisticated and efficient production techniques.
E)ignores individual preferences and natural abilities.

Accepted Answer

While specialization of labor can increase productivity, it can also create problems such as boredom and repetitive motion injuries, especially if an individual is performing the same task over and over again. This can lead to decreased job satisfaction and potentially lower overall productivity.

Question 10

The division of labor:
A)allows more people to be employed.
B)allows tasks to be performed more efficiently.
C)makes people happier on the job.
D)means that less management is required.
E)means that less equipment will be used.

Accepted Answer

The division of labor allows tasks to be performed more efficiently because workers can specialize in specific tasks and become skilled at them, leading to increased productivity and output.

Answer: A is also correct as it allows more people to be employed as tasks are divided and assigned to different workers, creating more job opportunities. However, it is not as directly related to the benefits of the division of labor on productivity and efficiency.

C, D, and E are incorrect as there is no direct correlation between the division of labor and worker happiness, management requirements, or equipment usage.

Question 11

The division of labor increases productivity because:
A)tasks can be assigned according to individual abilities.
B)workers who repeatedly perform the same tasks become bored.
C)each worker must learn each of the numerous tasks in the total production process.
D)the specialization of labor allows for the introduction of cheaper,less sophisticated production techniques.
E)managers can force workers to produce goods that are valued higher than the costs of producing them.

Accepted Answer

By assigning tasks according to individual abilities, each worker can specialize in a particular task and become more efficient at it. This leads to an increase in overall productivity.

Question 12

In one week,Mohammed can knit 5 sweaters or bake 240 cookies.In one week,Aisha can knit 15 sweaters or bake 480 cookies.Aisha's opportunity cost of knitting one sweater is:
A)240 cookies.
B)480 cookies.
C)32 cookies.
D)1/32 of a cookie.
E)16 cookies.

Accepted Answer

Aisha's opportunity cost of knitting one sweater is the number of cookies she could have baked instead of knitting a sweater. This is calculated as follows:

Opportunity cost of knitting one sweater = Number of cookies Aisha can bake ÷ Number of sweaters Aisha can knit 
= 480 ÷ 15 
= 32

Therefore, Aisha's opportunity cost of knitting one sweater is 32 cookies.

To determine the best choice, we need to look at who has the comparative advantage in each activity. Mohammed can knit 5 sweaters or bake 240 cookies in one week, which means he can produce 1 sweater by giving up 48 cookies.

Aisha, on the other hand, can knit 15 sweaters or bake 480 cookies in one week, which means she can produce 1 sweater by giving up 32 cookies.

This shows that Aisha has a lower opportunity cost of knitting a sweater than Mohammed, which means she has a comparative advantage in knitting sweaters. Therefore, it would be best for Aisha to knit as many sweaters as possible while Mohammed focuses on baking cookies.

So, the best choices would be: 
- For Aisha, knit 15 sweaters and don't bake any cookies (since her opportunity cost of knitting a sweater is lower than her opportunity cost of baking cookies, she should focus solely on knitting sweaters) 
- For Mohammed, bake 240 cookies and don't knit any sweaters (since his opportunity cost of baking cookies is lower than his opportunity cost of knitting sweaters, he should focus solely on baking cookies)

Question 13

All of the following are evidences of specialization except:
A)a carpenter who builds an entire bedroom set without any help from others.
B)a restaurant that provides continental and oriental food in all its outlets.
C)the credits at the end of a movie.
D)professional mourners in Taiwan.
E)online sellers.

Accepted Answer

Specialization refers to focusing on a narrow area of expertise or production. A carpenter building an entire bedroom set alone demonstrates a broad skill set rather than specialization in a specific task.

Question 14

In one week,Mohammed can knit 5 sweaters or bake 240 cookies.In one week,Aisha can knit 15 sweaters or bake 480 cookies.Mohammed's opportunity cost baking one cookie is:
A)1 sweater.
B)5 sweaters.
C)48 sweaters.
D)1/48 of a sweater.
E)48 cookies.

Accepted Answer

To calculate the opportunity cost of baking one cookie for Mohammed, we need to determine how many sweaters he would have to give up to bake one cookie.

From the given information, we know that Mohammed can either knit 5 sweaters or bake 240 cookies in one week. Therefore, his opportunity cost of knitting 1 sweater is:

240 cookies ÷ 5 sweaters = 48 cookies per sweater

Therefore, Mohammed's opportunity cost of baking one cookie is:

1 cookie ÷ 48 cookies per sweater = 1/48 of a sweater

Question 15

The division of labor facilitates productivity increases for all of the following reasons,except one.Which is the exception?
A)It allows people to do those tasks for which they have the greatest natural ability.
B)Workers get better at tasks the more they repeat them.
C)The more experience workers gain by specializing in a task,the more likely they will enjoy that task.
D)More sophisticated production techniques are introduced.
E)It often permits the introduction of labor-saving machinery.

Accepted Answer

The division of labor increases productivity primarily through specialization, efficiency in task repetition, and the introduction of advanced techniques and machinery. The likelihood of workers enjoying their tasks more due to specialization is not a direct factor in facilitating productivity increases.

Question 16

Which of the following is not a gain from division of labor?
A)Workers' abilities are matched to tasks.
B)Workers gain experience from the repetition of the tasks.
C)Workers save time by not moving to different tasks.
D)Workers' morale increases as tasks become more specialized.
E)The introduction of labor-saving machinery is possible.

Accepted Answer

Division of labor can sometimes lead to boredom and monotony, which can have a negative impact on workers' morale.

Question 17

In one week,Mohammed can knit 5 sweaters or bake 240 cookies.In one week,Aisha can knit 15 sweaters or bake 480 cookies.Mohammed and Aisha would produce the maximum quantities of both cookies and sweaters if:
A)Mohammed knitted and baked and Aisha did nothing.
B)Aisha knitted and baked and Mohammed did nothing.
C)Mohammed knitted and Aisha baked.
D)Aisha knitted and Mohammed baked.
E)Mohammed knitted and baked and Aisha just knitted.

Accepted Answer

If Mohammed only bakes, he can make 240 cookies in a week. If Aisha only bakes, she can make 480 cookies in a week. Therefore, Aisha is more productive when it comes to baking cookies.

If Mohammed only knits, he can make 5 sweaters in a week, while Aisha can make 15 sweaters in a week. Therefore, Aisha is more productive when it comes to knitting sweaters.

By choosing option D, Aisha will bake 480 cookies and knit 15 sweaters. Mohammed will bake no cookies and knit no sweaters. This will result in the highest combined output of cookies and sweaters.

Question 18

The figure below shows the production possibilities frontiers for rice and T-shirts for two countries,Costa Rica and United States.According to the figure below,in Costa Rica,the opportunity cost of 1 ton of rice is:

A)1/2 of a T-shirt.
B)3/4 of a T-shirt.
C)1 T-shirt.
D)11/2 T-shirts.
E)2 T-shirts.

Accepted Answer

In Costa Rica, the opportunity cost of 1 ton of rice is the slope of the production possibilities frontier for rice, which is 2/3 of a T-shirt. Therefore, the best choice is to produce rice and trade with the United States to obtain T-shirts.

Question 19

Bill trades a ginger snap for a chocolate chip cookie.This is an example of:
A)barter.
B)specialization.
C)absolute advantage.
D)privatization.
E)the division of labor.

Accepted Answer

Barter is the exchange of goods or services without the use of money, which is exactly what is happening when Bill trades his ginger snap for a chocolate chip cookie.

Question 20

Barter occurs when:
A)two people share everything.
B)one product is exchanged directly for another product.
C)money is used to buy goods.
D)money is exchanged directly for other money.
E)goods are used to buy money.

Accepted Answer

Barter occurs when products are exchanged directly for other products without the use of money.

Quiz 2: Some Tools of Economic Analysis

Money facilitates trade because:

Barter is:

In one week,Mohammed can knit 5 sweaters or bake 240 cookies.In one week,Aisha can knit 15 sweaters or bake 480 cookies.Mohammed's opportunity cost of knitting one sweater is:

Which of the following provides the best evidence of the specialization of labor?

In one week,Mohammed can knit 5 sweaters or bake 240 cookies.In one week,Aisha can knit 15 sweaters or bake 480 cookies.Aisha's opportunity cost of baking one cookie is:

A medium of exchange must be:

In one week,Mohammed can knit 5 sweaters or bake 240 cookies.In one week,Aisha can knit 15 sweaters or bake 480 cookies.Which of the following is correct?

The division of labor refers to:

The specialization of labor:

The division of labor:

The division of labor increases productivity because:

In one week,Mohammed can knit 5 sweaters or bake 240 cookies.In one week,Aisha can knit 15 sweaters or bake 480 cookies.Aisha's opportunity cost of knitting one sweater is:

All of the following are evidences of specialization except:

In one week,Mohammed can knit 5 sweaters or bake 240 cookies.In one week,Aisha can knit 15 sweaters or bake 480 cookies.Mohammed's opportunity cost baking one cookie is:

The division of labor facilitates productivity increases for all of the following reasons,except one.Which is the exception?

Which of the following is not a gain from division of labor?

In one week,Mohammed can knit 5 sweaters or bake 240 cookies.In one week,Aisha can knit 15 sweaters or bake 480 cookies.Mohammed and Aisha would produce the maximum quantities of both cookies and sweaters if:

The figure below shows the production possibilities frontiers for rice and T-shirts for two countries,Costa Rica and United States.According to the figure below,in Costa Rica,the opportunity cost of 1 ton of rice is:

Bill trades a ginger snap for a chocolate chip cookie.This is an example of:

Barter occurs when: