ECON 2030 Exam 1 (Ch. 1-4) Questions with Correct Answers
(Grade A+)
Question 1: looking at behaviors of individuals
Answer: Microeconomics
Question 2: looks at the economy as a whole
Answer: Macroeconomics
Question 3: what is recieved
Answer: benefit
Question 4: what is given up = benefit from the *best* alternative not chosen
Answer: opportunity cost
Question 5: do something if the benefit is at least as great as the opportunity cost at the time the
decision is taken; benefit > (or equal to) opportunity cost
Answer: rationality
Question 6: a monetary expenditure incurred regardless of the option chosen; irrelevant to the decision
Answer: sunk cost
Question 7: the extra cost (i.e. change in total cost) of doing one more unit of something
Answer: marginal cost
Question 8: Opportunity cost of what get = Productivity give up / Productivity get OC = give up/ get
Answer: opportunity cost calculation
Question 9: if "workers in the US are the most productive in the world" why do we consume so many
imported goods?
Answer: the goods are cheap and as a buyer you don't care about productivity, you care about the
opportunity cost
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, Question 10: if "trade can make everyone better off" why is there so much opposition to it?
Answer: because in macroeconomics the entire country will benefit but in micro economics some people
will have greater costs and lower costs ( people could lose their jobs and this is where opposition comes
from bc they are more worried about their own benefit and not the country's)
Question 11: when talking about trade, will the benefits always exceed the cost for all countries
trading?
Answer: yes
Question 12: true or false, Engaging in trade with other countries allows the US to consume outside of
its production possibilities frontier
Answer: true
Question 13: Romania is said to have the ___________ advantage over Serbia in producing a good if
Romania produces ______________ of the good per worker hour
Answer: absolute; more
Question 14: you produce more compared to the other person
Answer: Absoulte Advantage
Question 15: you sell goods at lower price compared to the other person
Answer: comparitve advantage
Question 16: Romania is said to have the ________________ advantage over Serbia in producing a good
if Romania has a ____________ opportunity cost of producing the good than Serbia does
Answer: comparative; lower
Question 17: if a chart is labeled "output per worker per hour" you are looking at what?
Answer: production and that means you are looking at absolute advantage
Question 18: if a chart is labeled "opportunity cost per unit" you are looking at what?
Answer: cost and that means you are looking at comparative advantage
Question 19: How is it possible for mutually beneficial trade to occur between two groups?
Answer: each group has to have a different comparative advantage on different items
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(Grade A+)
Question 1: looking at behaviors of individuals
Answer: Microeconomics
Question 2: looks at the economy as a whole
Answer: Macroeconomics
Question 3: what is recieved
Answer: benefit
Question 4: what is given up = benefit from the *best* alternative not chosen
Answer: opportunity cost
Question 5: do something if the benefit is at least as great as the opportunity cost at the time the
decision is taken; benefit > (or equal to) opportunity cost
Answer: rationality
Question 6: a monetary expenditure incurred regardless of the option chosen; irrelevant to the decision
Answer: sunk cost
Question 7: the extra cost (i.e. change in total cost) of doing one more unit of something
Answer: marginal cost
Question 8: Opportunity cost of what get = Productivity give up / Productivity get OC = give up/ get
Answer: opportunity cost calculation
Question 9: if "workers in the US are the most productive in the world" why do we consume so many
imported goods?
Answer: the goods are cheap and as a buyer you don't care about productivity, you care about the
opportunity cost
Page 1
, Question 10: if "trade can make everyone better off" why is there so much opposition to it?
Answer: because in macroeconomics the entire country will benefit but in micro economics some people
will have greater costs and lower costs ( people could lose their jobs and this is where opposition comes
from bc they are more worried about their own benefit and not the country's)
Question 11: when talking about trade, will the benefits always exceed the cost for all countries
trading?
Answer: yes
Question 12: true or false, Engaging in trade with other countries allows the US to consume outside of
its production possibilities frontier
Answer: true
Question 13: Romania is said to have the ___________ advantage over Serbia in producing a good if
Romania produces ______________ of the good per worker hour
Answer: absolute; more
Question 14: you produce more compared to the other person
Answer: Absoulte Advantage
Question 15: you sell goods at lower price compared to the other person
Answer: comparitve advantage
Question 16: Romania is said to have the ________________ advantage over Serbia in producing a good
if Romania has a ____________ opportunity cost of producing the good than Serbia does
Answer: comparative; lower
Question 17: if a chart is labeled "output per worker per hour" you are looking at what?
Answer: production and that means you are looking at absolute advantage
Question 18: if a chart is labeled "opportunity cost per unit" you are looking at what?
Answer: cost and that means you are looking at comparative advantage
Question 19: How is it possible for mutually beneficial trade to occur between two groups?
Answer: each group has to have a different comparative advantage on different items
Page 2
