A world-renowned brain surgeon can type twice as fast as her secretarial assistant. Which of the ...

A world-renowned brain surgeon can type twice as fast as her secretarial assistant. Which of the following statements is true in this situation?
 a. The secretary has an absolute advantage in typing.
  b. The surgeon should do her own typing to save money.
  c. The surgeon should fire the assistant and work weekends and evenings to stay up on her typing.
  d. The surgeon should spend her time doing brain surgery and allow her secretary to do the typing because the secretary has a comparative advantage in typing.
  e. The surgeon should spend her time doing brain surgery and allow her secretary to do the typing because the surgeon has a comparative advantage in typing.

QUESTION 2

The free rider problem occurs because:
 a. it is easy to exclude others from consuming a good.
  b. consumption is rivalrous, so the consumption of a product by one individual diminishes the amount available for others.
  c. exclusion is costly or impossible, so a consumer or producer can use a good without having to pay for it.
  d. external costs are imposed on others not directly involved in the transaction.
  e. individuals are not required to pay for those goods which do not yield any utility to them.

QUESTION 3

A person has a comparative advantage in producing a good if:
 a. that person can produce the good at a lower absolute cost than anyone else.
  b. that person can produce the good at a lower opportunity cost than anyone else.
  c. that person has a perfectly elastic demand curve for her good.
  d. that person spends less on advertizements.
  e. that person can produce the good at a higher opportunity cost than anyone else.

QUESTION 4

The free rider problem arises when a good is:
 a. rivalrous.
  b. excludable.
  c. nonexcludable.
  d. nonrivalrous.
  e. an absolute necessity.

QUESTION 5

Economists refer to the ability of one person or nation to do something with a lower opportunity cost than another as _____.
 a. voluntary trade
  b. specialization
  c. gains from trade
  d. absolute advantage
  e. comparative advantage

QUESTION 6

The consumption of a club good like cable television:
 a. is nonexcludable and nonrivalrous.
  b. is excludable and rivalrous.
 c. is excludable and nonrivalrous.
 d. is nonexcludable and rivalrous.
 e. gives rise to the free rider problem.

QUESTION 7

Voluntary free trade results in:
 a. population growth.
  b. inflation.
  c. higher living standards.
  d. income disparity.
  e. unemployment.

QUESTION 8

The good for which neither the principle of mutual excludability nor the principle of rivalry applies is referred to as a:
 a. public good.
  b. commons good.
  c. club good.
  d. normal good.
  e. private good.