If using the same resources, the U.S. workers can produce more of any good than Mexican workers, then the United States should produce every good.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 2The existence of externalities in a market implies that:
a. resources are being used efficiently.
b. there is no other allocation of resources that would make society as a whole better off.
c. consumers cannot be excluded from consuming the good once it is provided.
d. resources are not being used in their highest valued activity.
e. the social welfare is maximized.
QUESTION 3Individuals, firms, and nations should specialize in those activities which have the highest marginal cost.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4When there is a divergence between social costs and private costs in a market, _____.
a. the market will always provide an efficient allocation of resources
b. there will be too much or too little production and consumption in the market
c. there will be an acute shortage of goods and services in the market
d. there will be an excess supply of goods and services in the market
e. all resources are being used in their highest-valued activity
QUESTION 5Julio makes wine and beer. Last year he made 20 bottles of wine and 20 cases of beer. If the price of grapes goes down (making wine cheaper to make), Julio will be able to make the same amount of wine and more beer.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 6Which of the following is true of an externality?
a. An externality enhances the efficiency of the market system.
b. An externality is not an economic problem because it is external to the market.
c. An externality is a cost borne by the people who are directly or indirectly involved in the production of a good or service.
d. An externality accrues to someone who had nothing to do with the production or consumption of a good or service.
e. An externality refers to some unexpected change in the equilibrium price or quantity of a product.
QUESTION 7Economic growth can be illustrated by an outward shift of the PPC.
a. True
b. False
Indicate whether the statement is true or false
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