a. the value of the knowledge she would have received had she attended her classes.
b. the $40 she could have earned if she had worked at her job for those four hours.
c. the value of her time playing video games minus the value of attending classes.
d. nothing, since she valued playing video games more than attending classes.
ANSWER: a
57. Which of the following industries has a marginal cost that is close to zero?
a. Automobile
b. Aircraft
c. Software
d. Furniture
ANSWER: c
58. Which is the most accurate statement about trade?
a. Trade can make every nation better off.
b. Trade makes some nations better off and others worse off.
c. Trading for a good can make a nation better off only if the nation cannot produce that good itself.
d. Trade helps rich nations and hurts poor nations.
ANSWER: a
59. Which of the following statements about trade is false?
a. Trade increases competition.
b. With trade, one country must win and one country must lose.
c. Bulgaria can benefit, potentially, from trade with any other country.
d. Trade allows people to buy a greater variety of goods and services at lower cost.
ANSWER: b
60. If China decides to trade with France, we know that
a. France will benefit, but trade with a less developed country could not benefit China.
b. it will not benefit France because workers in China are more productive.
c. France and China can both benefit.
d. it will not benefit either country because their cultural differences are too vast.
ANSWER: c
61. Dee is an accomplished actress and a homeowner who pays a landscaper to maintain her lawn rather than do it herself. Dee has determined that she can earn more in the hour it would take her to work on her lawn than she must pay her landscaper. This scenario is an example of which principle of economics?
a. Trade can make everyone better off.
b. Markets are usually a good way to organize economic activity.
c. Governments can sometimes improve market outcomes.
d. Prices rise when the government prints too much money.
ANSWER: a
62. Dale is a guitar teacher and Terrence is a tile layer. If Dale teaches Terrence's daughter to play the guitar in exchange for Terrence tiling Dale's kitchen floor,
a. only Dale is made better off by trade.
b. only Terrence is made better off by trade.
c. both Dale and Terrence are made better off by trade.
d. neither Dale nor Terrence are made better off by trade.
ANSWER: c
63. Trade between countries tends to
a. reduce both competition and specialization.
b. reduce competition and increase specialization.
c. increase competition and reduce specialization.
d. increase both competition and specialization.
ANSWER: d
64. Trade
a. allows specialization, which increases costs.
b. allows specialization, which reduces costs.
c. reduces specialization, which increases costs.
d. reduces specialization, which reduces costs.
ANSWER: b
65. Central planning refers to
a. markets guiding economic activity. Today many countries that had this system have abandoned it.
b. markets guiding economic activity. Today many countries that did not have this system have implemented it.
c. government guiding economic activity. Today many countries that had this system have abandoned it.
d. government guiding economic activity. Today many countries that did not have this system have implemented it.
ANSWER: c
66. The basic principles of economics suggest that
a. markets are seldom, if ever, a good way to organize economic activity.
b. government should become involved in markets when trade between countries is involved.
c. government should become involved in markets when those markets fail to produce efficient or fair outcomes.
d. government should never become involved in markets.
ANSWER: c
67. Communist countries worked under the premise that