Question

1.	Trade creates value because:
	A)	people get what they want.
	B)	raw materials are transformed into finished products.
	C)	people exchange things they do not want for things they do.
	D)	idle resources are put to use.

2.	Division of knowledge refers to:
	A)	dividing tasks into different subtasks and having one person perform all these subtasks.
	B)	people learning different tasks in which they specialize.
	C)	assigning one person to learn all the different ways to perform the same task.
	D)	limiting what each person knows about another person.

3.	The main reason why specialization can raise productivity is that:
	A)	knowledge in human brains is limited.
	B)	some persons have more knowledge than others.
	C)	it is always good to know less than more.
	D)	it is impossible to learn anything well.

4.	Recall Chapter 1's opening story about the British sea captains and the convicted felons. In what way were incentives used to solve the problem of the high mortality rate on board the ships?
	A)	Payment (to ship captains) was to be offered for each prisoner that was taken aboard the ships.
	B)	Payment (to ship captains) was made independent of the regulations passed for prisoner welfare.
	C)	Regulations were passed so that prisoners could get better food, water, and medical care.
	D)	Payment (to ship captains) was made dependent on the survival rate of prisoners.

5-	In several cities around the country, schools are paying cash awards to students who do well on English and Math tests. This practice highlights the idea of:
	A)	pedagogical economics—the continuous assessment of student performance in an effort to maximize student efficiency.
	B)	hidden costs—the costs borne by taxpayers in the form of wasteful school spending.
	C)	incentives—the rewards and penalties that motivate behavior.
	D)	screening theory—the identification of individuals or groups based on various performance measures.

Answer 1

Answer for 1)

Trade provides an avenue that people exchange things they dont want with the things they need.

Hence Option C is correct response

Answer for 2)

Division of Kowledge is about human learning new tasks in which they want to specialise

Hence option B is correct

Answer for 3)

For this question Option A is correct response

Answer for 4)

Option D is correct response as it was straight forward answer from paragraphs

Answer for 5)

Option C is correct response