Quiz 3
Name: __________________________
1.The most obvious benefit of specialization and trade is that they allow us to
a. work more hours per week than we otherwise would be able to work.
b. consume more goods than we otherwise would be able to consume.
c. spend more money on goods that are beneficial to society, and less money on goods that
are harmful to society.
d. consume more goods by forcing people in other countries to consume fewer goods.
2.Specialization and trade are closely linked to
a. absolute advantage.
b. comparative advantage.
c. gains to some traders that exactly offset losses to other traders.
d. shrinkage of the economic pie.
3.Trade can make everybody better off because it
a. increases cooperation among nations.
b. allows people to specialize according to comparative advantage.
c. requires some workers in an economy to be retrained.
d. reduces competition among domestic companies.
4.Adam Smith asserted that a person should never attempt to make at home
a. what it will cost him more to make than to buy.
b. any good in which that person does not have an absolute advantage.
c. any luxury good.
d. any necessity.
5..By definition, imports are
a. people who work in foreign countries.
b. goods in which a country has an absolute advantage.
c. limits placed on the quantity of goods leaving a country.
d. goods produced abroad and sold domestically.
6. By definition, exports are
a. limits placed on the quantity of goods brought into a country.
b. goods in which a country has an absolute advantage.
c. people who work in foreign countries.
d. goods produced domestically and sold abroad.
7.Total output in an economy increases when each person specializes because
a. there is less competition for the same resources.
b. each person spends more time producing that product in which he or she has a
comparative advantage.
c. a wider variety of products will be produced within each country due to specialization.
d. government necessarily plays a larger role in the economy due to specialization.
8.Policies such as rent control and trade barriers persist in spite of the fact that economists are virtually
united in their opposition to such policies, probably because
a. economists have not yet convinced the general public that the policies are undesirable.
b. economists engage in positive analysis, not normative analysis.
c. economists have values that are different from the values of most non-economists.
d. economists’ theories are not easily confirmed or refuted in laboratory analysis.
9.When two variables have a positive correlation,
a. when the x-variable increases, the y-variable decreases.
b. when the x-variable decreases, the y-variable increases.
c. when the x-variable increases, the y-variable increases.
d. More than one of the above is correct.