9) benefits from trade increase when

a) Trading partners have different PPC s

b) Each party acts in accordance with his or her absolute advantage

c) " each party s PPC coincides with each other, i.e.. Corresponds to that of the others

d) Trading partners have similar opportunity costs

10) Which of the following is an example of physical capital?

a) AUS builds a new school

b) You inherit a million dollar from a relative

c) You win a lottery

d) You find $100 in the street

11) the cost-benefit principle predicts that people will take anaction when

a) marginal benefits exceed marginal costs

b) Average costs exceed average benefits

c) Average benefits exceed average costs

d) Costs exceed benefits

12) the demand and supply for a particular product are P=74-0.3Q and P=4+0.6Q. What is the equilibrium quantity exchanged in that market?

a) 0.3 b) 77.78 c) 50.67 d) 0.01

13) why does the PPC of two goods have a concave shape?

a) To represent the scarcity of two goods

b) Because only demand curves have a concave shape

c) Because only supply curves have a convex shape

d) Because only demand curves have a convex shape

14) What economic principle dictates specialization, and eventually trade?

a) The principle of comparative advantage

b) The low hanging fruit principle

c) The principles of incentives

d) The principle of increasing opportunity cost

15) a supplier is willing to sell a good in the market if

a) Marginal cost is larger than the price

b) Marginal cost is larger than marginal revenue

c) Marginal cost is no larger than marginal revenue

d) Markets are not centrally controlled

16) Narnia (a country in Mars :-), the CPI in year 1878 was 13, and in 1879 it was 16. Henry, a resident of the country, borrowed money in 1878, and repaid back it in 1879. If the nominal interest rate on the loan was 5 percent, then the real interest rate was.

a) Impossible to determine without knowing the base year

b) -18.08

c) 5

d) 23.08

17) when the government sets a maximum rental price that is below the equilibrium price, this represents an example of a

a) Price floor; shortage of rental housing

b) Price ceiling; discriminiation

c) Price floor; unemployment

d) Price ceiling; surplus of rental housing

18) payments by the government to the public for which the government rreceiives no current goods or services in return are called

a) Public bonds

b) Private savings

c) Transfer payments

d) Public stocks

19) for a given good while keeping everything else constant, the law of demand implies that

a) As the demand for the good increases, the price of the good will fall

b) As the price of the good rises, the quantity demanded of the good will increase

c) As income rises the quantity demanded of the good will increase if the good is a normal

good

d) Once the price of the good in question increases, the quantity demanded of that good

decreases

21) rational people

a) Always consider sunk costs in decision making

b) Are those whose decisions are linked to cause and effect or true and false

c) Do not omit sunk costs in decision making

d) Might correctly calculate marginal benefits