Question 1

Benefits from trade would NOT include

Accepted Answer

Trade typically involves increased competition, which can be beneficial for consumers through lower prices and increased variety, and for producers who can specialize in certain goods/services. However, trade may not necessarily result in more employment for a country, as it may result in job displacement for certain industries. Therefore, the only answer that does not fit the benefits of trade is less competition.

Question 2

Coastal regions have stronger commercial fishing economies because they have a in the production of seafood.

Accepted Answer

Coastal regions naturally have a comparative advantage in the production of seafood due to their access to vast marine resources, enabling them to produce seafood more efficiently than regions without direct access to the sea.

Question 3

William can create 30 meals in one hour, or wash 90 dishes in the same time. Jeremy can create 25 meals in one hour, or wash 50 dishes in one hour. Using opportunity cost, who should specialize in what task?

Accepted Answer

Opportunity cost is the value of the next best alternative foregone. In this case, the opportunity cost of William creating meals is the number of dishes he could have washed in that same hour. Similarly, the opportunity cost of Jeremy washing dishes is the number of meals he could have created in that same hour.

Using this concept, we can determine that Jeremy's opportunity cost of washing dishes is lower than William's opportunity cost of washing dishes. This means that Jeremy has a comparative advantage in washing dishes, while William has a comparative advantage in creating meals. Therefore, Jeremy should specialize in washing dishes and William should specialize in creating meals.

Option E captures this by explaining that Jeremy gives up fewer dish washings per meal creation, meaning that his opportunity cost of creating meals is lower than William's opportunity cost of creating meals.

Question 4

Wages are higher in Country X than in Country Y. If the countries decide to trade, then who will benefit?

Accepted Answer

The country that can produce the product at a lower opportunity cost will benefit in a trade. This is because they can produce the product at a lower cost and thus sell it for a lower price, making it more attractive to the other country to import from them. Both countries will benefit from the increased trade, but the one with the lower opportunity cost will see a larger benefit.

Question 5

Explain why economics is not such a "dismal science."

Accepted Answer

The answer of Explain why economics is not such a...

Question 6

Using any of the five foundations of economic thought, explain why farms are not located in major metropolitan areas.

Accepted Answer

The answer of Using any of the five foundations of...

Question 7

List and briefly explain each of the five foundations of economic thought.

Accepted Answer

The answer of List and briefly explain each of the...

Question 8

What are opportunity costs, and why do economists spend so much time talking about them?

Accepted Answer

The answer of What are opportunity costs, and why do...

Question 9

If the United States creates a trade agreement with Vietnam, we know that

Accepted Answer

Trade agreements can benefit both parties involved. In this case, Vietnam can export its goods to the United States, which can increase its revenue and boost its economy. Conversely, the United States can import goods from Vietnam, which can reduce the cost of those goods for American consumers and businesses. Additionally, trade can lead to increased cultural exchange and cooperation between the two countries.

Question 10

The discipline of economics is largely based on encouraging individuals to engage in certain activities and discouraging them from engaging in others. Why is encouraging or discouraging individuals through incentives so important?

Accepted Answer

The answer of The discipline of economics is largely based...

Question 11

Due to the fact that firms concern themselves primarily with earning profits, a common complaint is that they often damage the environment in the process. More recently, markets have been set up so that firms can actually reduce their costs and profit more by damaging the environment less and selling their "right to pollute" to other companies. Discuss how this serves as a positive incentive for a firm to act in an environmentally responsible manner. What would be a way to discourage firms from polluting through the use of negative incentives?

Accepted Answer

The answer of Due to the fact that firms concern...

Question 12

Bea bakes pastries well, and Lucian raises great herbs. If Lucian trades parsley with Bea in exchange for cupcakes, then

Accepted Answer

Both Bea and Lucian are trading goods they have in abundance for goods they value more but have less of. This results in both parties being better off, as they are receiving a good they value more than the good they are giving up.

Question 13

Choosing to trade__________ specialization, _____opportunity costs.

Accepted Answer

Choosing to trade increases specialization, which in turn decreases opportunity costs. Specialization allows entities to focus on the production of goods or services where they have a comparative advantage, thus reducing the opportunity costs associated with producing goods or services for which they are less efficient.

Question 14

Economic growth in developed countries has been altered by the increased popularity of the Internet. How has the Internet, in terms of both negative and positive incentives, promoted but also discouraged economic growth?

Accepted Answer

The answer of Economic growth in developed countries has been...

Question 15

The two highest paid midcareer jobs with only a bachelor's degree are

Accepted Answer

According to the data provided by PayScale, the two highest paid midcareer jobs with only a bachelor's degree are economics and computer engineering.

Question 16

Trade makes costs of goods and services

Accepted Answer

Trade allows for specialization and economies of scale, which can lower the costs of producing goods and services. It also opens up access to a wider range of goods and services from different regions, increasing variety in markets.

Question 17

Health insurance companies have the goal of reducing payments to doctors and hospitals. One way they have done this is by requiring individuals to pay a deductible. For example, a $1,000 deductible means that individuals are responsible for the first $1,000 in health care expenses over the course of a year. In terms of incentives, explain how the presence of a deductible reduces expenses for the health insurance company.

Accepted Answer

The answer of Health insurance companies have the goal of...

Question 18

A dangerous habit among those who own cell phones is driving while talking or texting. Although a great deal has been done to inform drivers of the risks of doing multiple tasks while driving, this informational campaign has been ineffective in the face of increased ownership of cell phones. If you were a policymaker, what types of negative incentives would you suggest to discourage individuals from driving, talking, and texting at the same time?

Accepted Answer

The answer of A dangerous habit among those who own...

Question 19

One of the first major decisions that one faces after graduation is getting an apartment. Describe how someone might employ the concepts of trade-offs, opportunity costs, and making decisions at the margin in deciding which apartment to rent.

Accepted Answer

The answer of One of the first major decisions that...

Question 20

What is meant when one says that decisions are made at the margin? Provide an example of making a decision at the margin.

Accepted Answer

The answer of What is meant when one says that...

Quiz 1: Five Foundations of Economics