Exam 2: Economic Models: Trade-Offs and Trade

When a nation's economy grows:

Greta starts using a new baking technique,and she can now do twice as much of everything.In a single day,Greta can now make 10 cakes or 8 pies,rather than the 5 cakes and 4 pies she could previously bake.Greta's production possibility frontier has _____,and her opportunity cost of making pies _____.

Use the following to answer question: -(Table: Coffee and Salmon Production Possibilities II)Use Table: Coffee and Salmon Production Possibilities II.This table shows the maximum amounts of coffee and salmon,both measured in pounds,that Brazil and Alaska can produce if they just produce one good.Alaska has an absolute advantage in producing:

Suppose Poland is producing on its production possibilities frontier,and it decides to increase the production of steel and decrease the production of vodka.The bowed-out production possibility frontier suggests that there will be a(n)_____ opportunity cost of producing more steel.

A production possibility frontier that is a straight line sloping down from left to right suggests that:

Bangladesh produces much of the clothing we wear because it can produce more clothes than can the United States.

If an economy has to sacrifice only one unit of good X for each unit of good Y produced throughout the relevant range,then its production possibility frontier has a(n):

Use the following to answer question: -(Figure: Comparative Advantage)Use Figure: Comparative Advantage.The opportunity cost of producing 1 box of peaches for Westland is _____ box(es)of oranges.

If a production possibility frontier is a straight line,it tells us that the opportunity cost of producing one more unit of good X is:

"Teachers in northern New Hampshire should earn more money" is a normative statement.

Use the following to answer question: -(Table: Production Possibilities Schedule I)Use Table: Production Possibilities Schedule I.If the economy produces two units of consumer goods per period,it also can produce,at MOST,_____ units of capital goods per period.

An economy that has the LOWEST opportunity cost of producing a particular good is said to have a(n):

In building models,economists avoid making any assumptions that might leave out any aspect of reality.

Which statement is normative?

Which of the following is sold in the factor market?

If countries engage in international trade:

An economy is said to have a comparative advantage in the production of a good if it can produce that good:

The models that economists construct:

Mark and Julie are going to sell brownies and cookies for their third annual fundraiser bake sale.In one day,Mark can make 40 brownies or 20 cookies,and Julie can make 15 brownies or 15 cookies.Based on this information,_____ has the absolute advantage in making brownies and _____ has the absolute advantage in making cookies.

Trade takes the form of _____ when people directly exchange goods they have for goods they want.