Question 1

In her calculation of the cost of going to college, an economist would include the amount of forgone earnings over the years spent at college.

Accepted Answer

An economist would consider the opportunity cost of going to college, which includes the money that could have been earned during the years spent studying instead of working.

Question 2

It is not possible for both parties to gain in a voluntary trade.

Accepted Answer

Both parties can gain in a voluntary trade, as they are mutually agreeing to the exchange based on their own individual preferences and perceived benefits. If both parties did not see any potential gain, the trade would not occur in the first place.

Question 3

When controls over market prices are enacted, the consequences are always clear.

Accepted Answer

When controls over market prices are enacted, the consequences may not be clear and can have unintended and negative consequences on supply and demand, leading to shortages or surpluses. It can also lead to black markets and decreased competition.

Question 4

There are never any adverse consequences of government attempts to modify the laws of supply and demand.

Accepted Answer

There can be adverse consequences to government interference in the laws of supply and demand. For example, price controls on essential goods can lead to shortages, while subsidies for certain industries can result in a glut of supply and decreased efficiency.

Question 5

Opportunity cost is the value of the next best alternative to a given choice.

Accepted Answer

This is the definition of opportunity cost.

Question 6

In international trade, one country's gain is another country's loss.

Accepted Answer

In international trade, both countries can benefit from the exchange of goods and services through comparative advantage and specialization. This is known as mutual gain.

Question 7

In the calculation of the cost of going to college, an economist would always include the cost of room and board.

Accepted Answer

An economist would only include the cost of room and board if it is an additional expense incurred specifically because of attending college, not if it is a cost that would be incurred regardless of attending college.

Question 8

The marginal cost of an airline ticket is the total cost of operating a flight divided by the number of passengers who buy tickets.

Accepted Answer

The marginal cost of an airline ticket refers to the additional cost incurred by the airline for carrying one more passenger on a flight, not the total cost of operating the flight divided by the number of passengers.

Question 9

As a student, one of the costs of sleeping in rather than going to class is likely to be a lower grade in the class.

Accepted Answer

Sleeping in and missing class means missing out on valuable information, discussions and learning opportunities. This can lead to a lower grade in the class as a result.

Question 10

If Japan is twice as good at producing cameras and three times as good at producing TV sets as the United States, Japan is said to have a comparative advantage in TV sets and the United States has a comparative advantage in cameras.

Accepted Answer

According to the principle of comparative advantage, a country should specialize in and produce goods and services for which it has a lower opportunity cost, relative to other countries. In this scenario, Japan has a lower opportunity cost in producing TV sets (compared to cameras) as it is more efficient in producing them than the US (since it is twice as good as the US in cameras and three times as good in TV sets). Therefore, Japan has a comparative advantage in TV sets, while the US has a comparative advantage in cameras.

Question 11

When nations trade based upon comparative advantage, only one side of the transaction will benefit.

Accepted Answer

When nations trade based on comparative advantage, both sides can benefit from the exchange as they are each able to specialize in producing goods and services they are relatively better at producing, and obtaining goods and services they are relatively less efficient at producing from their trading partner. This leads to increased productivity and overall economic efficiencies for both nations involved.

Question 12

Government controls over market prices are often enacted to benefit a specific group.

Accepted Answer

Government controls over market prices are often enacted to benefit a specific group, such as consumers or producers, or to achieve a specific objective, such as price stability or income redistribution. However, these controls can also have unintended consequences and may lead to market inefficiencies.

Question 13

It is impossible for both nations to gain when trading with one other.

Accepted Answer

Trading between nations can benefit both parties through comparative advantage, economies of scale, and access to new markets. Both countries can gain from the exchange of goods and services as long as the terms are mutually beneficial.

Question 14

Opportunity cost is the highest possible price you can receive when you sell an object.

Accepted Answer

Opportunity cost refers to the value of the next best alternative that is given up when making a decision. It is not related to the selling price of an object.

Question 15

Comparative advantage explains how two nations can benefit from trade.

Accepted Answer

Comparative advantage refers to the ability of a country to produce a particular good or service at a lower opportunity cost than another country. When countries trade based on their comparative advantages, both nations can benefit from the exchange.

Question 16

If you go to the movies on Thursday night, the only cost to you is the price you pay for the movie ticket.

Accepted Answer

There may be additional costs such as parking fees, transportation costs, concessions, and possibly even surcharges for popular movies or special showings.

Question 17

Government controls over market prices frequently "backfire."

Accepted Answer

Government controls over market prices can often have unintended consequences and result in shortages, black markets, or other negative outcomes. Therefore, they frequently "backfire."

Question 18

In economics, the true cost of making a choice is the value of what must be given up.

Accepted Answer

This is the definition of opportunity cost in economics.

Question 19

Even though international trade is undertaken voluntarily, a country that engages in trade may not benefit from it.

Accepted Answer

The answer of Even though international trade is undertaken voluntarily,...

Question 20

Both parties gain in a voluntary exchange.

Accepted Answer

In a voluntary exchange, both parties agree to the terms and conditions of the exchange, which means that they both perceive that they are benefiting from the transaction in some way. Therefore, both parties gain something of value in a voluntary exchange.

Quiz 1: What Is Economics