Exam 2: The Economic Problem

Dynamic comparative advantage arises from

The production possibilities frontier illustrates

-The table above lists six points on the production possibilities frontier for grain and cars. Given this information, which of the following combinations is unattainable?

In an hour, Andy can make either 5 pizzas or 12 pies and Chris can make either 6 pizzas or 18 pies. Advantage in making pizzas.

-Refer to the production possibilities frontier in the figure above. If the country moves from point a To point c, the opportunity cost of the move is

Production possibilities -Based on the above table, as the production of pizza increases, the opportunity cost of pizza in terms of forgone cases of soda

Jane produces only corn and cloth. Taking account of her preferences for corn and cloth

BAe, a British defense company, has the contract to produce Tornado aircraft for the Royal Air Force. The BBC produces high- quality mystery shows for the British government. Both produce at the lowest possible cost. On a PPF with aircraft and mystery shows on the axes,

Production possibilities -The table above shows the production possibilities frontier for the economy of Sauria. The opportunity cost of increasing gun production from 3 hundred guns to 4 hundred guns is

We have achieved production efficiency if we can produce more of one good without producing less of some other good.

Marginal benefit is the benefit one more unit of the good and _ of the good increases.

Why is it likely that the United States has an absolute advantage in goods and yet it still ends up importing them from other countries?

A factor market is a market in which

Production possibilities -The table above shows the production possibilities frontier for the economy of Sauria. As this economy increases its production of guns along the production possibilities frontier, the opportunity cost of guns

-In the figure above, which of the curves shows a production possibilities frontier with increasing opportunity cost in the production of VCRs and telephones?

Before the first Gulf War in 1991, Kuwait had the capacity to produce a certain amount of oil from its oil wells. After the war, it found that capacity greatly diminished because the oil wells had been set on fire. Draw Kuwait's PPF before and after the war, assuming that the only two goods produced are oil and food. Further assume that setting the oil wells on fire did not affect Kuwait's ability to produce food. Explain why the PPF before the war is different from the PPF after the war.

-At one point along a PPF, 50 tons of coffee and 100 tons of bananas are produced. At another point along the same PPF, 30 tons of coffee and 140 tons of bananas are produced. The opportunity cost of a ton of coffee between these points is

Blue Violet's Sweet Pansy's -Two countries, Blue Violet and Sweet Pansy, produce only two goods: teapots and coffeepots. The table above gives their production possibilities.

The production possibilities frontier represents

The production possibilities frontier itself shows