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FSU MICROECONOMICS FINAL EXAMCALHOUN

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FSU MICROECONOMICS FINAL EXAMCALHOUN Economic analysis suggests that gains from specialization and exchange a. will not be realized unless business firms employ economists when making decisions about the proper combination of resources to utilize in the production process. b. will be realized if individuals place the public interest above the pursuit of their own selfinterest. c. will be realized if individuals are allowed to pursue goals that are in their own self-interest. d. will not be realized unless a central planning authority requires that all goods be produced by the low opportunity cost supplier. - ✔✔will be realized if individuals are allowed to pursue goals that are in their own self-interest. If Kim can either wash 10 cars or wax 2 cars during a day, and Vince can either wash 17 cars or wax 2 cars during a day, then according to the law of comparative advantage, a. their total output can be expanded if Kim specializes in waxing and Vince in washing. b. it would be impossible for Vince and Kim to increase their total output through specialization and mutual exchange. c. Vince's opportunity cost of waxing a car is less than Kim's. d. their total output can be expanded if Kim specializes in washing and Vince in waxing. - ✔✔their total output can be expanded if Kim specializes in waxing and Vince in washing. In order to prosper, what must entrepreneurs do? a. Have their own wealth with which to finance projects that they want to undertake. b. Undertake projects that create wealth and increase the value of resources. c. Find ways to prevent technological change. d. Undertake projects that use resources that are more valuable than is the output they produce. - ✔✔Undertake projects that create wealth and increase the value of resources. The difference between production possibilities curves that are bowed out and those that are straight lines is that a. bowed-out production possibilities curves illustrate increasing opportunity cost, whereas straight-line production possibilities curves illustrate constant opportunity cost. b. bowed-out production possibilities curves apply to economies that face tradeoffs, whereas straight-line production possibilities curves apply to economies that do not face tradeoffs. c. bowed-out production possibilities curves apply to economies in which resources are not specialized, whereas straight-line production possibilities curves apply to economies in which resources are specialized. d. straight-line production possibilities curves illustrate real-world conditions, whereas bowedout production possibilities curves illustrate more simplistic assumptions. - ✔✔bowed-out production possibilities curves illustrate increasing opportunity cost, whereas straight-line production possibilities curves illustrate constant opportunity cost

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