Exam 2: The Economic Problem

When we choose a particular option, we must give up alternative options. The highest- valued alternative forgone is the of the option chosen.

Microsoft's marginal cost of the 100th copy of Windows Vista is .

A situation in which some resources are NOT fully utilized is represented in a production possibilities frontier diagram by

What is comparative advantage? Give an example.

-Employees at Bank of America are good at providing banking services and workers at Ben & Jerry's are good at making ice cream. The figure above shows the marginal cost and marginal benefit curves for ice cream. A movement from point a to point b reflects

The principle of increasing opportunity cost leads to

In a world lacking property rights, it would be to realize the gains from trade and there would be specialization.

-In the figure above, a point showing an inefficient production point is point

A country has a comparative advantage in the production of a good if its opportunity cost is lower compared to another country.

-In the figure above, if 4 million computers are produced per year then the should be produced to achieve the allocatively efficient use of resources

Production possibilities -In the above table, the production of 3 pizzas and 35 cases of soda is

Suppose that a typical German factory can produce 20 cameras or 1 computer in an hour, and that a typical American factory can produce 10 cameras or one computer in an hour. The opportunity cost of 20 cameras in terms of computers in Germany is

Production possibilities -The table above shows the production possibilities frontier for the economy of Sauria. If this economy were to produce 3 hundred guns and 12 tons of butter, it

-The figure above shows the production possibilities frontiers for four nations that have identical production possibilities frontiers in the present. The one that will grow most rapidly in the future is most likely to be producing at point

A country that has a comparative advantage in producing capital goods will _ a country that has a comparative advantage in consumption goods.

In 2008, Angelina Jolie and Brad Pitt sold the rights to pictures of their children to People and Hello! magazines for $14 million. This transaction reflects

-Employees at Bank of America are good at providing banking services and workers at Ben & Jerry's are good at making ice cream. The figure above shows the marginal cost and marginal benefit curves for ice cream. If 3 million gallons of ice cream are produced, marginal cost marginal benefit and _ _ produced.

As long as technology increases occur, economic growth is considered "free".

-Suppose that, for given resources and production technology, the above table shows the production relationship between soda and pizza. For the sake of simplicity, assume the relationship is linear. Which of the following production possibilities is not attainable?

The country whose production possibilities frontier is illustrated above is currently at position A on the production possibilities frontier. If it wishes to move to position B, it will