Question 1

Benefits from trade would NOT include
A) lower prices.
B) less competition.
C) more variety of goods and services in the market.
D) the ability of producers to specialize.
E) more employment for the country.

Accepted Answer

Trade generally increases competition, which can be beneficial for consumers but may not be for individual producers. However, the other options are all benefits of trade.

Question 2

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...

Question 3

Coastal regions have stronger commercial fishing economies because they have a ________ in the production of seafood.
A) comparative advantage
B) proximity advantage
C) rational advantage
D) higher opportunity cost
E) government subsidy

Accepted Answer

Coastal regions have a comparative advantage in the production of seafood because they have easy access to the ocean and can fish more efficiently than inland regions. This leads to a stronger commercial fishing economy in these regions.

Question 4

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 5

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 6

Bea bakes pastries well,and Lucian raises great herbs.If Lucian trades parsley with Bea in exchange for cupcakes,then
A) both Bea and Lucian are made better off by trade.
B) neither Bea nor Lucian are made better off by trade.
C) only Bea is made better off by trade.
D) only Lucian is made better off by trade.
E) either Bea or Lucian is made better off by trade,but not both.

Accepted Answer

By trading parsley for cupcakes, Lucian is able to obtain cupcakes that he otherwise would not have had. Similarly, Bea is able to obtain parsley that she otherwise would not have had. Therefore, both are made better off by the trade. This is an example of gains from trade, where both parties can benefit even if one is more skilled at producing a certain good than the other.

Question 7

Choosing to trade ________ specialization,________ opportunity costs.
A) reduces; reducing
B) reduces; increasing
C) increases; decreasing
D) increases; increasing
E) increases; but doesn't change

Accepted Answer

The answer of Choosing to trade ________ specialization,________ opportunity costs.
A)...

Question 8

If the United States creates a trade agreement with Vietnam,we know that
A) Vietnam will benefit,but trade with a less developed,Third World country will not help the United States.
B) Vietnam can get no benefit,since its workers are not as productive as the United States'.
C) Vietnam can get no benefit,since its businesses have less capital than the United States'.
D) Vietnam and the United States can both benefit.
E) physical and cultural differences between the two countries are too great to benefit from trade.

Accepted Answer

The passage mentions that if the United States creates a trade agreement with Vietnam, both countries can benefit. The other options either state that only Vietnam can benefit (A), or that Vietnam cannot benefit (B and C), which contradicts the passage. Option E is not mentioned in the passage.

Question 9

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 10

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?
A) William is more productive and therefore should make meals and wash dishes.
B) Since creating meals is harder,William should create meals and wash dishes.
C) Since washing dishes is easier,Jeremy should wash dishes and create meals.
D) Jeremy can wash twice as many dishes per meal,so Jeremy should wash dishes.
E) Jeremy gives up fewer dish washings per meal creation,so Jeremy should create meals.

Accepted Answer

Jeremy's opportunity cost of creating one meal is 2 dish washings (50/25), while William's is 3 dish washings (90/30). Therefore, Jeremy gives up fewer dish washings per meal creation, so he should specialize in creating meals.

Question 11

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 12

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 economists...

Question 13

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 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
A) business management and accounting.
B) criminal justice and psychology.
C) civil engineering and math.
D) economics and computer engineering.
E) economics and business management.

Accepted Answer

According to a report published by PayScale in 2020, the two highest paid midcareer jobs with a bachelor's degree are Economics and Computer Engineering. The median salary for mid-career professionals with a bachelor's in economics is $105,000, while the median salary for mid-career professionals with a bachelor's in computer engineering is $106,000.

Question 16

Wages are higher in Country X than in Country Y.If the countries decide to trade,then who will benefit?
A) Neither country can benefit unless one knows the product that is traded.
B) Both countries can benefit regardless of the products traded.
C) Only the country that can produce the product more efficiently will benefit.
D) Only the country that can produce the product at a lower opportunity cost will benefit.
E) Both countries will benefit,but only if a trade agreement for specific products is made by their respective governments.

Accepted Answer

If the two countries decide to trade, the country that can produce a specific product at a lower opportunity cost will have a comparative advantage in that product. This means that the country will benefit by specializing in that product and exporting it to the other country, while importing goods that the other country can produce more efficiently. In this way, both countries can benefit from trade based on their respective comparative advantages.

Question 17

A nation will engage in voluntary trade if
A) the terms are mutually beneficial for both parties.
B) the trade is approved by the World Trade Center.
C) there are no domestic costs associated with trade.
D) it allows a trade partner to specialize.
E) it lacks a comparative advantage in the production of every good.

Accepted Answer

A nation will only engage in voluntary trade if it benefits them economically. If the exchange is mutually beneficial for both parties - such as if one country has a comparative advantage in producing certain goods, while the other has a comparative advantage in producing other goods - then both countries can gain from trade. However, if there are domestic costs associated with trade or the country lacks a comparative advantage in the production of every good, it may be less likely to engage in voluntary trade. The approval of the World Trade Center is not a determining factor in whether or not a nation will engage in voluntary trade.

Question 18

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 19

Trade makes costs of goods and services
A) lower and raises the variety of goods and services in markets.
B) lower but reduces the variety of goods and services in markets.
C) higher but reduces the variety of goods and services in markets.
D) higher but raises the variety of goods and services in markets.
E) Neither lower nor higher,since so many other variables need to be considered.

Accepted Answer

Trade allows for goods and services to be produced more efficiently and cost-effectively, which results in lower costs for consumers. Additionally, trade allows for goods and services to be produced in different countries with different resources and specialties, which increases the variety of goods and services available in markets.

Question 20

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...

Quiz 1: Five Foundations of Economics

Benefits from trade would NOT include

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

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

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

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

Choosing to trade specialization, opportunity costs.

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

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?

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

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?

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?

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

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

A nation will engage in voluntary trade if

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

Trade makes costs of goods and services

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.