Exam 2: The Economic Problem

Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. The opportunity cost of producing a unit of Y is

Economic growth

-Consider the PPF for milk and corn in the above figure. If currently no corn is being produced, what is the total opportunity cost of producing another 2 bushels of corn?

George and Michael can gain from exchange

A country that has an absolute advantage in producing all goods will usually .

Jane produces only corn, measured in tons, and cloth, measured in bolts. For her, the opportunity cost of one more ton of corn is

-Vicky currently produces at point a in the figure above. If Vicky moves from point a to point b to point c, her opportunity cost of a modem _.

The idea of comparative advantage implies that people or countries

Production efficiency means that

-In the above figure, at point a what is the opportunity cost of producing one more audio tape?

Two social institutions that are essential for trade to be organized are .

Learning- by- doing is a basis for

A production point beyond the production possibilities frontier represents what?

-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 efficient?

Economic growth is shown on the production possibilities frontier as

When a nation is producing the allocatively efficient quantity of a product, the marginal benefit of producing the good equals the marginal cost of producing that good.

-The table above gives the production possibilities frontier for a nation that produces wheat and soybeans. Use th information in that table to complete the table below, which has in it the opportunity costs of moving from one production point to another. Do not forget to note the units of the opportunity costs.

In the figure above, which of the following movements has the largest opportunity cost?

-The above table shows production combinations on a country's production possibilities frontier. What is the opportunity cost of increasing the production of Y from 16 to 28 units?

When producing goods and services, tradeoffs exist because