Answer the following questions to test your knowledge of economists, economic concepts, and terminology.  Click on the answer link for solutions to these questions.

Question 1:  The economist who developed the concept of comparative advantage was:
(a)  David Ricardo
(b)  John Maynard Keynes
(c)  Karl Marx
(d)  Adam Smith
(e)  Donn Pescatrice
Answer?

Question 2:  Econometric estimates are like sausage for the following reason(s):
(a)  you don't want to watch either one being made.
(b)  both should be served well-cooked.
(c)  when marketing either one sell the sizzle.
(d)  when consuming either one you don't want to hear about the ingredients.
(e)  All of the above.
Answer?

Question 3:  Vending machines that offer newspapers for sale at train stations and bus stops work as follows:  a purchaser inserts the  amount of money equal to the price of the newspaper and a door opens revealing a stack of papers.  The purchaser could, in fact, take more than one paper.  Other vending machines don't work this way.  Why not?
(a)  The companies that sell newspapers have a high estimate of people's honesty.
(b)  The companies that sell newspapers rely on peer pressure to keep people honest.
(c)  The companies that sell newspapers believe that for most people the marginal utility of a second newspaper is zero and therefore most people will only take one.
(d)  The marginal cost of producing one more newspaper is so insignificant that the companies don't have much loss exposure by using this type of vending machine.
(e)  All of the above.
Answer?

Question 4:  I have a friend who does his family's grocery shopping each week.  He will go to one supermarket because they have a particular item he wants on sale.  He will then go to another store because they have another item on sale, and they will double his coupon for that item.  He might go to five different stores in one day completing his shopping.  He tells me how much money he saves by this system.  As an economist, I tell him that he:
(a)  has overlooked the opportunity cost of his time; think of how many hours he has spent on this task and what else he could have been doing!
(b) has not considered the gasoline expense he has incurred by travelling to all of these stores.
(c) has not considered the wear and tear on his car from the added mileage from travelling to all of these stores.
(d) All of the above.
(e) should get a life.
Answer?

Question 5:  The current economy puzzles economists because:
(a)  it is a time when both inflation and unemployment are very high.
(b) it is a time when both inflation and unemployment are very low.
(c) inflation is high but unemployment is low.
(d) unemployment is low but inflation is high.
(e) why should this economy be different than any other one in the past?
Answer?

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