ECO quiz 1

If one person can perform a task in fewer hours than another, you know the person has ___________in performing the task.

• an absolute advantage.

• . a comparative advantage.

• both a comparative advantage and an absolute advantage.

• neither an absolute nor a comparative advantage.

• either an absolute or a comparative advantage

If a person's opportunity cost of performing a task is lower than another person's, you know the person has ______in performing the task.

• an absolute advantage

• a comparative advantage

• both a comparative advantage and an absolute advantage

• neither an absolute nor a comparative advantage

• either an absolute or a comparative advantage.

Which of the following can be a source of comparative advantage for an individual?

• inborn talent

• education

• training

• experience

• all of the above

Which of the following can be a source of comparative advantage for a nation?

• natural resources

• entrepreneurship

• speaking the English language

• standards of production quality

• all of the above

The largest component of GDP measured by the expenditures approach is

• consumption

• investment

• government spending

• net exports

• compensation of employees

GDP understates the total value of all final goods and services produced for all the following reasons except

• the costs of environmental problems are not included

• quality improvements in products are not included c. the value of leisure is not included

• the value of housework is not included

• the value of the underground economy is not included

All of the following are considered to be components of investment in calculating GDP except

• new residential construction

• net increases in inventory

• new factories

• purchases of new equipment by firms

• financial investment

. If C = $500, I = $200, G = $150, and X- M = -5, what is GDP?

• $850

• $855

• $845

• $845

• $745

One difference between GDP and GNP is that

• factor incomes to foreign-owned firms in the United States are included in GNP

• depreciation is excluded from GNP

• the corporate profits tax is excluded from GDP

• indirect business taxes are counted twice in GDP

• factor incomes to foreign-owned firms in the United States are included in GDP

Which of the following is the basis for an argument against free trade?

• The Principle of Comparative Advantage

• the change in the total value of goods and services resulting from trade

• the distribution of the benefits from trade

• The Principle of Increasing Opportunity Costs

• all of the above