QUESTION 1

1. A country has a comparative advantage in producing some good X if it:
2. a.uses fewer resources to produce good X than its trading partners do.
3. b.produces good X at a lower opportunity cost than its trading partners.
4. c.has more experience producing good X than its trading partners do.
5. d.has more resources at its disposal than its trading partners do. 

QUESTION 2

1. In discussing the historical evolution from feudalism to market-based society, Heilbroner suggests that there were several "forces of change" that played a role. These forces included:
2. a.Urbanization, interest rates, and usury.
3. b.Itinerant merchants, urbanization, and Calvinism. 
4. c.Demand, monetization, and fiscal policy. 
5. d.Guilds, manorial estates, and the Catholic Church. 

QUESTION 3

1. According to Heilbroner, the solutions to the two basic economic problems/tasks are:
2. a.tradition, markets, and interest rates.
3. b.production and distribution.
4. c.manorial estates, guilds, and the Catholic Church.
5. d.command, markets, and tradition.

QUESTION 4

1. If a society has a linear production possibilities frontier, it must be the case that it faces:
2. a.Increasing opportunity costs.
3. b.Decreasing opportunity costs.
4. c.Constant opportunity costs.
5. d.No opportunity costs.

QUESTION 5

1. Adam Smith's famous invisible hand passage in the Wealth of Nations was used to:
2. a.describe the process by which market prices serve to allocate resources in a society/economy. 
3. b.describe the process by which fiscal policies are carried out in a society/economy.
4. c.describe the process by which monetary policies are carried out in a society/economy.
5. d.describe the process by which command-based economic systems allocate resources in a society/economy.

QUESTION 6

1. The basic concepts highlighted by the production possibilities model are:
2. a.Scarcity and interest rates.
3. b.Demand and factors of production.
4. c.Supply and demand. 
5. d.Scarcity and opportunity costs.

QUESTION 7

1. According to Heilbroner, there are two key tasks/problems that all societies face. These are:
2. a.Maintaining low interest rates and low inflation.
3. b.Maintaining demand and supply. 
4. c.Production and distribution.
5. d.The law of demand and the law of supply.

QUESTION 8

1. As a consultant, you get $100 an hour. Instead of working one night, you go to a concert that costs $100 and lasts two hours. The opportunity cost of the concert is:
2. a.$0
3. b.$300
4. c.$200
5. d.$100

QUESTION 9

1. Assume an economy is experiencing a high rate of unemployment. It must be the case that this economy is:
2. a.operating on its production possibilities frontier.
3. b.operating beyond its production possibilities frontier.
4. c.operating inside of its production possibilities frontier.
5. d.operating at one of the endpoints of its production possibilities frontier.

QUESTION 10

1. Any point on the production possibilities frontier represents a point of:
2. allocative efficiency
3. unemployment 
4. infeasibility
5. productive efficiency