Question

5.People specialize in what they are good at and trade because:

Multiple Choice

• The opportunity costs for being self-sufficient are very low

• Others are able to produce better products at a lower cost than we can for ourselves

• Buying others’ goods and services is more expensive than making your own

• There is no cost differential between self-sufficiency and trading with others

16.Average World Income began to rise rapidly during the Industrial Revolution because:

Multiple Choice

Governments in Western Europe sharply cut taxes

Population growth outpaced technological development

Technological development outpaced Population Growth

There were fewer wars during that time period

8.Beef and leather, Honey and Tree fruit, or crude oil and natural gas are examples of what kinds of related products?

Multiple Choice

• Complementary in Consumption

• Joint Goods or Byproducts

• Substitutes in Consumption

• Substitutes in Production

18. All of the following are experiences around the peak of a business cycle EXCEPT:

Multiple Choice

• Production hits Potential GDP

• CPI keeps increasing

• Spending stops rising

• Inflation becomes more prevalent

Answer 1

b. Others are able to produce better products at a lower cost than we can for ourselves

Specialization itself means producing a particular product with minimum cost or lower cost than others. Products which are not our specialization should be purchased from others.

c. Technological development outpaced Population Growth

When technology development exceeds the population growth, income rises for whole world.

b. Joint Goods or Byproducts

By products are the products when one product is extracted or produced other comes as by product.

c. Spending stops rising

When the peak is attained, CPI increases due to increase in prices as it is case of expansion. Output is increased and inflation also rises and even spending should rise.