CHAPTER 4 TEST

_________ involves the development of special skills (or knowledge) in ONE aspect of a job/field.

• Division of Labor

• Voluntary Exchange

• Coincidence of Wants

• Specialization

TRUE OR FALSE? Specialization ENCOURAGES trade.

• TRUE

• FALSE

The breakfast pictured on the left reflects which concepts from Chapter 4?

• interdependence

• specialization

• coincidence of wants

• trade barriers

A ______________ ____________________ exists when both parties give up something in order to get something else they want.

• complete disaster

• voluntary exchange

• comparative advantage

• absolute advantage

Which is TRUE of voluntary exchanges?

• People agree to an exchange because they expect it to improve their well-being

• The foundation of trade is mutual gain

• BOTH OF THESE

• NEITHER OF THESE

Barter is the direct __________ of one good or service for another.

• destruction

• exchange

TRUE or FALSE? A farmer and a shepherd agreeing to exchange a basket of potatoes for a bag of wool is an example of BARTERING.

• TRUE

• FALSE

Which is true of MONEY?

• It is a medium of exchange

• It can be traded for goods and services

• It's generally accepted throughout society

• It's easy to carry

The characteristic of a society in which people rely on others for most of the goods and services they want is called _______________ __________________________.

• Economic Dependence

• Economic Interdependence

• Barter

• Voluntary Exchange

_____________________ ADVANTAGE is the condition that exists when someone can produce a good or service using fewer resources than someone else.

• COMPARATIVE

• ABSOLUTE

• IMMEDIATE

• ECONOMIC