Exam 2: The Economic Problem

If a country operates on its PPF, it achieves production efficiency.

Abe can catch 10 pounds of fish an hour or pick 10 pounds of fruit. Zeb can catch 30 pounds of fish an hour or pick 20 pounds of fruit. The opportunity cost of fish is for Abe than for Zeb, and the opportunity cost of fruit is for Abe than for Zeb.

Dynamic comparative advantage is a result of

A production possibilities frontier figure does NOT illustrate

As we move along a bowed- out production possibility frontier, producing more tacos and less pizza, the opportunity cost of a pizza _ .

A tradeoff is illustrated by

-In the figure above, the point labeled C in the production possibilities frontier

-The table above lists six points on the production possibilities frontier for grain and cars. What is the opportunity cost of producing the 26th car?

-A nation can consume at a point outside its PPF

Missouri can produce 10,000 tons of pecans per year or 5,000 tons of pears per year. Washington can produce 12,000 tons of pecans per year or 48,000 tons of pears per year. If these two states were to engage in trade, which of the following is true?

-In the figure above, the curve is known as the

The production possibilities frontier is the boundary between

Markets in which firms sell their output of goods and services are called

If a society is operating at a point inside its production possibilities frontier, then this society's

Points outside the production possibilities frontier illustrate production points that cannot be attained.

-According to the diagram in the figure above, what is the marginal cost of producing the 3 millionth gallon of gasoline per month?

If Tom and Di specialize in producing the goods in which he and she have a comparative advantage and they exchange goods, then _ .

The principle of increasing opportunity cost occurs because

As long as the marginal benefit from a good is greater than its marginal cost, an economy is operating efficiently.

In the movie Cast Away, Tom Hanks plays a FedEx efficiency expert stranded on a deserted island. While on the island, he divides his time between catching fish, gathering coconuts, painting, and building a raft. Suppose that these were Mr. Hanks' only activities. Did he face an opportunity cost from pursuing any of these activities? Why or why not?