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Looks like you are currently in Finland but have requested a page in the Yemen site. Would you like to change to the Yemen site? Brown , Peter M. Cook, Current Issues in Fiscal Policy. Undetected location. NO YES. Public Sector Economics, 4th Edition. Selected type: Paperback. Added to Your Shopping Cart. This is a dummy description. Since it was first published Public Sector Economics has become the most widely adopted undergraduate textbook in its field.

Major revisions have been made to this fourth edition while preserving the central objective of the book, which is to explain the relevant principles and the relationships between public expenditure, taxation and the behaviour of economic agents such as individuals, households and firms. A thoroughly revised edition of the standard UK text in the area All statistics bought up to date A wealth of new material, particularly on taxation. About the Author C.

Brown is Professor of Economics at the University of Stirling. Table of contents 1. Introduction to the Scope of Public Sector Economics. D there are no opportunity costs. The production of 14 units of consumer goods and 1 unit of capital goods per period would result in: A full employment. B no unused resources. C some unused or inefficiently used resources. D an increase in economic growth. In movement along a production possibility frontier, the opportunity cost to society of getting more of one good: A is always constant.

B is measured in dollar terms. C is measured by the amount of the other good that must be given up. D usually decreases. If an economy has to sacrifice increasing amounts of good X for each additional unit of good Y produced, then its production possibility frontier is: A bowed out. B bowed in. C a straight line. D a vertical line. A increasing B decreasing C constant D concave. The economy's factors of production are not equally suitable for producing different types of goods. This principle generates: A economic growth. B technical efficiency. C underuse of resources.

D the law of increasing opportunity cost. Suppose the economy is operating at point G. This implies that: A the economy can move to a point such as C only if it improves its technology. C the economy lacks the resources to achieve a combination such as C. D people in this economy don't really like strawberries or submarines. As the economy moves from point A toward point D, it will find that the opportunity cost of each additional submarine: A falls.

B rises. C remains unchanged. D doubles. Suppose the economy now operates at point C. Moving to point E would require that the economy: A achieve full employment and an efficient allocation of resources. B eliminate its production of strawberries. C reduce its production of submarines. D improve its technology or increase its quantities of factors of production. If an economy is producing a level of output that is on its production possibility frontier, the economy has: A idle resources. B idle resources but is using resources efficiently.

C no idle resources but is using resources inefficiently. D no idle resources and is using resources efficiently. The movement from curve 1 to curve 2 indicates: A economic growth. B a change from unemployment to full employment. C a decrease in the level of technology. D instability. Point Z: A is unattainable, all other things unchanged. B is attainable if the economy is able to reach full employment. D will be attained as soon as the economy becomes efficient and moves to curve 2. Technological improvements will: A leave the production possibility frontier unchanged.

B shift the production possibility frontier inward. C shift the production possibility frontier outward. D necessarily lead to increased unemployment. A prices; sells B trade-offs; produces C trade-offs; sells D shortages; produces. Suppose Oklahoma decides to produce only two goods, oil and football helmets. If Oklahoma is producing on its production possibility frontier, as oil production increases, the production of football helmets will: A increase.

B not change. C decrease at a decreasing rate. D decrease. One of the controversies surrounding the United States' energy markets is the trade-off between energy production and clean air. Assuming clean air has value, the United States will be on its production possibility frontier if and only if: A resources used to produce clean air and energy are not being fully used. B pollution is eliminated.

C the price of energy is relatively low. D resources used to produce clean air and energy are being fully used. If an economy is producing at a point on its production possibilities frontier, it is: A efficient in production and allocation. B efficient in production but not necessarily in allocation. C efficient in allocation but not necessarily in production. D not necessarily efficient in production or allocation. Consider a production possibility frontier for Iraq. A inside B outside C near the bottom D near the top.

All points inside the production possibility frontier represent: A efficient production points. B inefficient production points. C infeasible production points. D economic growth. All points on the production possibility frontier are: A efficient. B inefficient. C infeasible. All points outside the production possibility frontier are: A efficient. If Tealand is producing 10 million scones and 10 million cups of tea point A , we know that the economy: A is using its resources efficiently. B is using its resources inefficiently.

C is fully employing its resources. D has found new resources. Tealand is producing at point C on its production possibility frontier. What is the opportunity cost of increasing the production of tea from 20 million cups to 30 million cups? A 10 million cups of tea B 5 million scones C 10 million scones D The answer is impossible to determine from the information given. Tealand can produce at point E only if the government: A eliminates unemployment. B raises taxes. C permits more immigration.

D increases the cost of production by decreasing the use of technology. The production possibility frontier is bowed out because: A resources are not equally suited for the production of both goods. B resources are scarce. C economic growth leads to inefficiency.

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D resources are inefficiently used. The opportunity cost of production: A is the price of a good. B is what you give up to produce the good. C decreases as production increases. D is what you gain by producing the good. Suppose Poland is producing on its production possibilities frontier, and it decides to increase the production of steel and decrease the production of vodka.

A increasing B decreasing C nonexistent D unchanged. Economists usually assume that production is subject to increasing opportunity costs because: A higher production usually results in more inflation. B not all resources are equally suited to producing every good. C individuals desire constantly increasing opportunities to make themselves better off.

D if production is efficient, it is not possible to increase the production of all goods simultaneously. The production possibility frontier will shift outward because of: A a decrease in the labor force. B an upgrade of capital to the best available technology. C better technology that improves worker productivity. D a decrease in the unemployment rate. In terms of the production possibility frontier, inefficient use of available resources is shown by: A an increase in the labor force growth rate. B a movement from one point to another along the production possibility frontier.

C an inward shift of the production possibility frontier due to the lack of opportunity. D production at a point inside the production possibility frontier. The production possibility frontier will shift outward for all of the following reasons EXCEPT: A an increase in the unemployment rate. B an increase in the labor force. C an improvement in technology. D an increase in worker productivity. The effect of an increase in productive inputs such as labor and capital can be shown by: A a point inside of the production possibility frontier.

B an outward shift of the production possibility frontier. C a movement from one point to another along the production possibility frontier. D an inward shift of the production possibility frontier. A a point inside of B an outward shift of C a movement from one point to another along D an inward shift of. An inward shift in the U. B workers moving from New Jersey to Massachusetts. C economic growth. D economic growth as workers move to different states. If the production possibility frontier is a straight line: A opportunity costs are constant.

B the firm faces increasing costs. C the firm faces decreasing costs. D there is no trade-off between the two goods represented. Which point or points represent s a combination of coconuts and fish that is efficient in production? Which point or points represent s an inefficient combination of coconuts and fish? Which point or points represent s an infeasible combination of coconuts and fish? Which point or points represent s a feasible combination of coconuts and fish? The opportunity cost for Tom to move from point A on the curve to point B is: A 10 coconuts.

B 10 fish. C 5 coconuts. D 5 fish. The opportunity cost for Tom to move from point B on the curve to point A is: A 10 coconuts. The opportunity cost for Tom to move from point C on the curve to point A is: A 10 coconuts. B 30 fish. D There is no opportunity cost. A production possibility frontier B circular-flow diagram C all else equal assumption D income distribution. A student sleeps 8 hours per day and divides the remaining time between study time and leisure time. The table shows the combinations of study and leisure time that can be produced in the 16 waking hours of each day.

If a student decides to consume one additional hour of leisure time, how many hours of study time must she give up? A student sleeps 8 hours per day and divides the remaining time between study and leisure time. Suppose this student is studying 4 hours and spending 10 hours doing leisure activities. This point is: A outside the production possibility frontier. B inside the production possibility frontier. C on the production possibility frontier. D both efficient and feasible. Suppose the student completes a speed-reading course that allows him to do the same amount of studying in half as many hours.

His opportunity cost: A of leisure has increased. B of studying has increased. C of leisure has decreased. D has not changed. If a production possibility frontier is a straight line, it tells us that the opportunity cost of producing one more unit of good X: A is an increasing amount of good Y. B is a decreasing amount of good Y. C is equal to the inverse of the amount of good Y. D is a constant amount of good Y. Suppose Indiana produces only steel and corn, with fixed amounts of land, labor, and capital resources.

Which of the following best sets the stage for economic growth? B The Midwest has a devastating drought. D The United States imports more and more low-cost steel from Asian countries. The production possibility frontier illustrates: A the maximum quantity of one good that can be produced given the quantity of the other good produced. B that when markets don't achieve efficiency, government intervention can improve society's welfare. C the inverse relation between price and quantity of a particular good. D that people usually exploit opportunities to make themselves better off.

If this economy is producing 12 tons of wheat and 9, bottles of wine, we know the economy: A is using its resources efficiently. C is producing at an unattainable point. D has unemployment. If this economy is producing at point A, we know the economy is: A using its resources efficiently. B using its resources inefficiently. C producing at an unattainable point. D trading with another country. If this economy is producing at point A and wants to produce at point B, it must: A trade with another country. B increase its resources. C decrease production. D use its existing resources efficiently.

If this economy is producing on the production possibility frontier, what would allow it to produce at point C? A an improvement in technology B a decrease in resources C a decrease in production D elimination of unemployment. The U. A shift in B shift out C not change D The answer cannot be determined from the information provided. In Kessy's old kitchen, he could bake 10 cookies or mix 15 glasses of lemonade in one day.

Now Kessy has a larger oven and refrigerator. How does this affect his production possibility frontier? A It shifts his production possibility frontier out. B It shifts his production possibility frontier in. C He will be less efficient. D He will not be able to produce as much as before. A two B four C six D eight. Points A, B, E, and F: A indicate combinations of cars and computers that society can produce using all of its resources efficiently.

B show that the opportunity cost of cars increases as more cars are produced but that of more computers decreases as more computers are produced. C indicate that society wants computers more than cars. D indicate constant opportunity costs for cars and increasing opportunity costs for computers. C bowed in because of constant cost of cars and computers. If the economy is operating at point B, producing 16 cars and 12 computers per period, a decision to move to point E and produce 18 computers: A indicates that you can have more computers and more cars simultaneously.

C entails a loss of 8 cars per period. D entails a loss of 4 cars per period. The combination of cars and computers at point H: A can be attained but would cost too much. B cannot be attained given the level of technology and the resources available. C has no meaning, since it is not what consumers want. If the economy is producing 8 cars and 12 computers per period: A unemployment or inefficiency will ensue.

B the notion of increasing opportunity cost is invalidated. C the economy is still efficient but has made a decision not to buy as much as it could. D something must be done to reduce the amount of employment. A gain; 4; loss; 4 B gain; 2; loss; 4 C gain; 4; loss; 6 D loss; 2; gain; 4. Which of the following is NOT an efficient rate of production per period? A 18 cars and no computers B no cars and 20 computers C 16 cars and 12 computers D no cars and 18 computers.

The slope of a typical production possibility frontier is: A 0. B vertical. C positive. D negative. The production of eight units of consumer goods and two units of capital goods per period would result in: A full employment. D increased economic growth. It shows the production possibility frontiers for two countries that produce only radishes and bicycles. The axes of the two graphs are measured in equivalent units. Country A is operating at point M, and country B is operating at point N. The opportunity cost of producing an additional ton of radishes would be greater in: A country A.

B country B. C neither; the opportunity cost would be the same in both countries. D There is not enough information to answer the question. It shows production possibility frontiers for two countries that produce only radishes and bicycles. Suppose country A discovers a new technology that greatly increases its ability to produce bicycles but has no effect on its ability to produce radishes. This would: A lower the opportunity cost of producing radishes in country A. B increase the opportunity cost of producing radishes in country A.

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C not affect the opportunity cost of producing radishes in country A. D increase the opportunity cost of producing radishes in country B.


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The country depicted in this figure is operating at point M. It could achieve production at point I only if it: A used its resources more efficiently. B devoted more resources to radish production. C devoted more resources to bicycle production. D increased the quantities of capital, natural resources, or labor available or improved its technology. Suppose the economy is operating at point B. Suppose the economy is operating at point C. The opportunity cost of producing the fourth freight train would be: A 19 tons of sugar.

B 45 tons of sugar. C 80 tons of sugar. D 3 freight trains. Point F: A is unattainable, all other things unchanged. C is attainable if the economy is able to reach full employment. D is feasible but not efficient. Suppose the economy is operating at point A. Assume that the economy is operating at point A.

The downward slope of the production possibility frontier implies that resources: A must be used efficiently. B are scarce. C should not be wasted. D should be allocated so that approximately equal amounts of both goods are produced. Achieving production at point F would require that the economy: A achieve full employment and an efficient allocation of resources. B reduce its production of strawberries.

D improve its technology or increase its resources. Efficient production occurs when the economy is: A operating inside its production possibility frontier. B operating on its production possibility frontier. C operating outside its production possibility frontier. D moving beyond its production possibility frontier. Assume an economy is operating on its production possibility frontier, which shows the production of military and civilian goods. If the output of military goods is increased, the output of civilian goods: A will increase, too.

B will not change. C must decrease. D may increase or decrease. The process observed when an economy's production possibility frontier shifts outward is: A comparative advantage. B economic growth. C full employment. D specialization. Increases in resources or improvements in technology will tend to cause a society's production possibility frontier to: A shift inward.

B shift outward. C remain unchanged. D become vertical. If the economy is operating at point Y and its relevant production possibility frontier is curve 1: A the economy is at full employment and is efficient. B the economy is less than fully employed. C the economy is not efficient.

D economic growth is not possible in the future. The movement from curve 1 to curve 2 indicates: A a growing ability of the economy to produce capital and consumer goods. B going from unemployment to full employment. C a decrease in the factors of production. D a shift of the production possibility frontier toward producing fewer goods. Technological improvements will likely: A shift the production possibility frontier inward to curve 1.

B shift the production possibility frontier outward to curve 2. C lead to increased unemployment. D leave the production possibility frontier unchanged. Abe starts exercising regularly, and after a few months he can do twice as much of everything. In a single day Abe can now make 10 hamburgers or 8 milkshakes rather than the 5 hamburgers and 4 milkshakes he made in the past.

A shifted right; are unchanged B shifted right; have decreased C not changed; have increased D not changed; have decreased. When a nation's economy grows: A its production possibility frontier shifts outward. B its production possibility frontier shifts inward. C it has been able to reach full employment. D it has moved to a more consumer-oriented position on its production possibility frontier. A direct costs B benefits C utility D opportunity costs. Because of trade, a country may: A consume outside its production possibility frontier.

B consume inside its production possibility frontier. C find its production possibility frontier shifting outward. An economy is said to have a comparative advantage if it: A can produce more of all goods than another economy.

B can produce less of all goods than another economy. C has the highest cost of producing a particular good. D has the lowest cost of producing a particular good. The economy with the lowest opportunity cost of producing a particular good is said to have: A a technological advantage. B a comparative advantage.

C a production possibility frontier. D an increasing opportunity cost. An economy is said to have a comparative advantage in the production of a good if it can produce that good: A with more resources than another economy. B with a higher opportunity cost than another economy.

C outside its production possibilities curve. D at a lower opportunity cost than another economy. Table: Fish and Coconut Production Possibilities The table shows the maximum amount of fish and coconuts that Tom and Hank can produce if they produce only one good. Tom produces and consumes nine fish and two coconuts, and Hank produces and consumes three fish and two coconuts. Now they decide to engage in trade. A For both to become better off, each should specialize in the production of some good.

However, since Hank is equally productive in both goods, it doesn't matter which good each specializes in. B For both to become better off, each should specialize completely in the production of the good in which he has a comparative advantage. C After trade it is possible for Tom to consume 9 fish and 2. D For each individual, the consumption point after trade will lie outside that individual's production possibility frontier. In one hour, the United States can produce 25 tons of steel or automobiles. In one hour, Japan can produce 30 tons of steel or automobiles. This information implies that: A Japan has a comparative advantage in the production of automobiles.

B the United States has an absolute advantage in the production of steel. C Japan has a comparative advantage in the production of both goods. D the United States has a comparative advantage in the production of automobiles. The table shows the maximum amounts of coffee and salmon that Brazil and Alaska can produce if they just produce one good.

The opportunity cost of producing 1 unit of coffee for Brazil is: A 2 salmon. C 1 salmon. The opportunity cost of producing 1 unit of salmon for Alaska is: A 2 coffees. C 1 coffee. Free trade between countries: A should be based on absolute advantage. B will allow wealthy countries to exploit less developed nations. C will shift the domestic production possibility frontier to the right. D will allow for greater levels of consumption than without trade.

If they spend all night writing computer programs, Laurence can write 10 programs, and Carrie Anne can write 5. If they spend all night making sunglasses, Laurence can make 6 pairs, and Carrie Anne can make 4. A Laurence; programs but not in sunglasses. B Laurence; both programs and sunglasses. C Carrie Anne; programs but not in sunglasses.

D Carrie Anne; both programs and sunglasses. We know that: A Laurence's opportunity cost of writing programs is less than Carrie Anne's. B Laurence's opportunity costs of writing programs and of making sunglasses are less than Carrie Anne's. C Carrie Anne's opportunity costs of writing programs and of making sunglasses are less than Laurence's. D Carrie Anne's opportunity cost of writing programs is less than Laurence's. Which of the following statements is TRUE? A Some very talented people have a comparative advantage in everything they do.

B Some very untalented people have a comparative advantage in nothing they do. C Some very talented people have a very low opportunity cost in everything they do. D It is possible to have an absolute disadvantage but a comparative advantage in something. In a single day, Sarah can produce 10 hamburgers, and Abe can produce 5 hamburgers. If they produce only hamburgers, in a single day Sarah can produce 10 hamburgers, and Abe can produce 5 hamburgers. If they make milkshakes only, in a single day Sarah can produce 10 milkshakes, and Abe can produce 4 milkshakes.

Roommates Sarah and Zoe are hosting a Halloween party and have to make food for their guests and costumes for themselves. To finish both tasks as quickly as possible, Sarah and Zoe know that each of them should focus on just one task, but they don't know who should do what. Sarah and Zoe should determine which roommate: A has the absolute advantage in cooking. B has the comparative advantage in cooking. C can cook the most in a given amount of time. D can complete the cooking in the least amount of time.

Economists generally believe that a country should specialize in the production of a good or service if: A the production possibility frontier is further from the origin than that of any other country. B the production possibility frontier is closer to the origin than that of any other country. C the country can produce the product using more resources than any other country. D the country can produce the product while forgoing fewer alternative products than any other country. This table shows the maximum amounts of coffee and salmon, both measured in pounds, that Brazil and Alaska can produce if they just produce one good.

Brazil has an absolute advantage in producing: A coffee only. B salmon only. C both coffee and salmon. D neither coffee nor salmon. Alaska has an absolute advantage in producing: A coffee only. Brazil has a comparative advantage in producing: A coffee only. An economy is said to have a comparative advantage in the production of one good if it: A can produce more of all goods than another economy. C has the highest opportunity cost of producing a particular good.

D has the lowest opportunity cost of producing a particular good. An economy that has the lowest opportunity cost of producing a particular good is said to have: A an absolute advantage in production of that good. B a comparative advantage in production of that good. D an increasing opportunity cost in production of that good.

The concept of comparative advantage is based upon: A absolute labor productivity. B relative labor costs. C dollar prices of labor. D relative opportunity costs. C outside its production possibility frontier. If the opportunity cost of manufacturing machinery is lower in the United States than in Britain and the opportunity cost of manufacturing sweaters is higher in the United States than in Britain, then the United States will: A export both sweaters and machinery to Britain. B import both sweaters and machinery from Britain.

C export sweaters to Britain and import machinery from Britain. D import sweaters from Britain and export machinery to Britain. If the opportunity cost of manufacturing machinery is higher in the United States than in Britain and the opportunity cost of manufacturing sweaters is lower in the United States than in Britain, then the United States will: A export both sweaters and machinery to Britain. Trade can be beneficial to an economy because: A it results in a more efficient use of the combined resources of some of the trading countries, even though it reduces efficiency in others.

B more goods and services can be obtained at lower opportunity cost. C it prevents specialization in activities in which countries have a comparative advantage. D it prevents unemployment. A automobile; coffee B coffee; automobiles C coffee; coffee D automobile; automobiles. If countries engage in international trade: A they give up the ability to specialize in production. B worldwide levels of production are lower. C they will be consuming inside their production possibility frontiers. D they will be consuming outside their production possibility frontiers.

Sweden has an absolute advantage in producing: A cell phones only. B herring only. C both cell phones and herring. D neither cell phones nor herring. Finland has an absolute advantage in producing: A cell phones only. Sweden has a comparative advantage in producing: A cell phones only.

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Finland has a comparative advantage in producing: A cell phones only. Use the following to answer questions Figure: Comparative Advantage Eastland and Westland produce only two goods, boxes of peaches and boxes of oranges, and this figure shows each nation's production possibility frontier for the two goods. Eastland has an absolute advantage in producing: A oranges only. B peaches only.

C both oranges and peaches. D neither oranges nor peaches. Westland has an absolute advantage in producing: A oranges only.

D neither oranges or peaches. Eastland has a comparative advantage in producing: A oranges only. Westland has a comparative advantage in producing: A oranges only. A Very talented people may have a comparative advantage in everything they do. B Very untalented people have a comparative advantage in something they do. C Very talented people may have a low opportunity cost in most things they do. D Very untalented people may have a high opportunity cost in most things they do.

In a single day, George can bake 10 cakes and Greta can bake 5 cakes. If they bake only cakes, in a single day George can bake 10 cakes and Greta can bake 5 cakes. If they make only pies, in a single day George can bake 10 pies while Greta can bake 4 pies. Greta starts using a new baking technique, and she can now do twice as much of everything. In a single day Greta can now make 10 cakes or 8 pies, rather than the 5 cakes and 4 pies she could previously bake. Coworkers Yvonne and Rodney are washing dishes and sweeping the floors of the store. They know that to finish both tasks as quickly as possible, each of them should focus on just one task, but they don't know who should do what.

Yvonne and Rodney should determine which one: A has the absolute advantage in dishwashing. B has the comparative advantage in dishwashing. C has the production possibility frontier that is farthest from the origin in dishwashing. D can wash the dishes faster. To achieve the gains from trade, each nation should specialize in the production of a good or service if: A its production possibility frontier is farther from the origin than that of any other country.

B its production possibility frontier is closer to the origin than that of any other country. C the country can make the product using fewer resources than any other country. D the country can make the product while forgoing fewer alternative products than any other country.

Colgate is a dentist who employs an assistant, Ms. If Dr. Colgate worked all day at the front desk, she could answer 40 phone calls. If she worked all day with patients, she could clean the teeth of 40 patients. If Ms. Crest worked all day at the front desk, she could answer 60 phone calls. If she worked all day with patients, she could clean the teeth of 20 patients. Colgate; absolute; answering phones B Ms. Crest; comparative; answering phones C Ms. Crest; absolute; cleaning patients' teeth D Dr. Colgate; comparative; answering phones.

The United States and Germany can produce both wheat and aluminum. The table shows, in tonnage, the maximum annual output combinations of wheat and aluminum that can be produced. Which of the following choices represents a possible trade based upon specialization and comparative advantage? A Germany would trade 2 tons of wheat to the United States for 1 ton of aluminum. B Germany would trade 2 tons of aluminum to the United States for 0. C The United States would trade 1 ton of wheat to Germany for 1 ton of aluminum. D The United States would trade 1 ton of wheat to Germany for 1.

The table shows the maximum annual output combinations of wheat and aluminum that can be produced. Based on the table: A the United States has a comparative advantage in wheat and an absolute advantage in wheat. B Germany has an absolute advantage in aluminum and a comparative advantage in wheat. C the United States has a comparative advantage in both aluminum and wheat. D Germany has a comparative advantage in aluminum and an absolute advantage in aluminum.

In one day, Kessy can bake 10 cookies or mix 15 glasses of lemonade. His friend Ava can make 10 cookies or 10 glasses of lemonade. His other friend, Ian, can make 10 cookies or 20 glasses of lemonade. Who has the lowest opportunity cost in cookie production? A comparative advantage B absolute advantage C opportunity cost D specialization. Mark and Julie are going to sell brownies and cookies for their third annual fundraiser bake sale. In one day, Mark can make 40 brownies or 20 cookies, and Julie can make 15 brownies or 15 cookies. What is Mark's opportunity cost to produce one brownie?

A 1 cookie B 1 brownie C 0. Bill and Mickey make bongos and Frisbees. Who has the comparative advantage in producing Frisbees? Who should specialize in the production of bongos? If the opportunity cost of manufacturing automobiles is lower in the United States than in Britain and the opportunity cost of manufacturing airplanes is higher in the United States than in Britain, then the United States will: A export both airplanes and automobiles to Britain.

B import both airplanes and automobiles from Britain. C export airplanes to Britain and import automobiles from Britain. D import airplanes from Britain and export automobiles to Britain. If the opportunity cost of manufacturing automobiles is higher in the United States than in Britain and the opportunity cost of manufacturing airplanes is lower in the United States than in Britain, then the United States will: A export both airplanes and automobiles to Britain.

Assume that Colombia gives up three motorcycles for each ton of coffee it produces, while Bolivia gives up seven motorcycles for each ton of coffee it produces. A motorcycle; coffee B coffee; motorcycles C coffee; coffee D motorcycle; motorcycles. Economists are generally in support of: A government restrictions on trade. B free international trade. C tariffs to restrict trade. D subsidizing exports. A exploitation B benevolence C barter D the zero-sum game.

The simplest circular-flow model shows the interaction between households and firms. In this model: A only barter transactions take place. B households and firms interact in the market for goods and services, but firms are the only participants in the factor markets. C firms supply goods and services to households, which in turn supply factors of production to firms.

D attention is focused on real flows of goods, services, and factors of production, but money flows between households and firms are ignored for simplicity.

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A high-school graduate who gets a college degree is adding to the economy's stock of: A labor. B capital. C human capital. D financial capital. Assume the two figures represent the same economy. Suppose that in the circular-flow diagram there is a significant decrease in the amount of labor flowing to the firms that produce coconuts.

If all other variables remain unchanged, this adjustment in the economy would be best represented in the production possibilities figure by a move from point A toward: A point A no movement. B point B a decrease in coconut production and an increase in fish production. C point C a decrease in coconut production. D point D an outward shift of the entire curve. Suppose that in the circular-flow diagram capital that used to flow to firms producing coconuts now flows to firms producing fish.

This adjustment in the economy would be best represented in the production possibilities figure by a move from point A toward: A point A no movement. Suppose that in the circular-flow diagram there is a significant increase in the amount of human capital flowing to both coconut producers and fish producers. If all other variables remain unchanged, then the adjustment in this economy would be best represented in the production possibilities figure by a movement from point A toward: A point A no movement.

Suppose that in the circular-flow diagram most firms undergo a significant increase in productivity. This results in a significant increase in the output of both coconuts and fish. If LeRoyce trades two cookies for one of Amir's brownies, we say that they are engaging in: A exploitation. B benevolence. C barter. D a zero-sum game. A Households are the primary demanders of goods and services. B Firms are the primary suppliers of goods and services. C Money flows from households to firms as households offer factors of production for sale.

D Money flows in the direction opposite to goods and services and factors of production. Which of the following is NOT a factor of production? A labor B machines and buildings C land D money. A buy; sell B buy; buy C own; buy D own; sell. A buy; sell B buy; buy C sell; buy D sell; sell. A capital; barter B wages and income; capital markets C factors of production; goods and services D firms; markets.

A goods and services; factors B households; firms C money; goods and services D factors; money. The circular-flow diagram shows how: A banks receive deposits and create money. B money, goods and services, and factors of production flow through the economy. C the various levels of government allocate tax revenues to meet the needs of society. D the work force is educated and trained to increase labor productivity.