Chapter 1

Question 1

England can benefit from trade

Answer 1

with any nation

Question 2

In the ordered pair (20, 30), 20 is the

Answer 2

the x-coordinate & the horizontal location of the point

Question 3

Trade between countries tends to

Answer 3

increase both competition and specialization

Question 4

When two variables move in opposite directions, the curve relating them is

Answer 4

downward sloping, and we say the variables are negatively related.

Question 5

Which of the following is not one of the four principles of individual decision making?
-People face trade-offs.
-Trade can make everyone better off.
-People respond to incentives.
-Rational people think at the margin.

Answer 5

-Trade can make everyone better off.

Question 6

The slope of a steep upward-sloping line will be a

Answer 6

large positive number

Question 7

What is the most important factor that explains differences in living standards across countries?

Answer 7

Productivity

Question 8

Efficiency means that

Answer 8

Society is getting the maximum benefits from its scarce resources

Question 9

When two variables have a positive correlation,

Answer 9

both variables increase

Question 10

The term market failure refers to

Answer 10

A situation in which the market on its own fails to allocate resources effeciently.