Exam 2: The Economic Problem

The slope of a production possibilities frontier that displays increasing opportunity cost is

Homer and Teddy are stranded on a desert island. To feed themselves each day they can either catch fish or pick fruit. In a day, Teddy could pick 60 pieces of fruit or catch 20 fish. Homer could pick 100 pieces of fruit or catch 150 fish. Which of the following is correct?

Point Production of X Production of Y a 0 40 b 4 36 c 8 28 12 16 e 16 0 -Refer to the table above, which gives five points on a nation?s PPF. The opportunity cost of increasing the production of Y from 16 to 36 units is a total of

When operating on its PPF, a country can produce 2 tons of butter and 200 cars OR 3 tons of butter and 150 cars. The opportunity cost of 1 ton of butter is ________cars per ton of butter.

Blue Violet's $\quad$$\quad$$\quad$ Orange Rose's production possibilities production possibilities Teapots (number Coffee pots (number Teapots (number Coffee pots (number perweek) perweek) perweek) perweek) 150 \&0 75 \&75 100 \&25 50 \&50 50 \&50 25 \&100 0 \&75 0 \&150 -Two countries, Blue Violet and Sweet Pansy, produce only two goods: teapots and coffeepots. The table above gives their production possibilities.

The United States uses tax funds to build and repair the interstate highway system and to provide health care services via Medicare. Suppose Medicare services are on the horizontal axis and highway miles are on the vertical axis of a PPF. If the government decides to reduce funding to Medicare, this change would be shown as

The production possibilities frontier is the boundary between

An increase in the nationʹs capital stock will

A production possibilities frontier figure does NOT illustrate

Production points inside the PPF are

-In the figure above,

-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

The principle of decreasing marginal benefit means that as the quantity of a good consumed

Which of the following is TRUE regarding markets? I. Economists define a market as a geographic location where trade occurs. II. A market enables buyers and sellers to get information about each other and to buy and sell from each other. III. Markets coordinate decisions through prices.

The social arrangements that govern the ownership, use, and disposal of property are referred to as

The United States has an absolute advantage in producing sugar over all of the other sugar producing countries. Does this fact mean that we should not import any sugar from the other countries?

-In the figure above, how can the economy represented by the production possibilities frontier move from point C to point F ?

-Refer to the production possibilities frontier in the figure above. Production point_____________ represents an ___________production point.

-In 2006, Country X and Country Y had the same production possibilities, illustrated in the figure above. Country X chose to produce at point A, while country Y chose to produce at point B. In 2012, most likely, Country X will be at point such as __________while Country Y will be at point such as__________ .

Chinaʹs State Council has encouraged more spending to ʺimprove transportation links and other infrastructure... .ʺ It will also ʺstep up its spending on vocational training and other educational programs for adults.ʺ Suppose that capital goods are on the vertical axis while consumption goods are on the horizontal axis of Chinaʹs PPF. As a result of enacting the policies, we would expect i. an expansion of Chinaʹs production possibilities. ii. capital accumulation. iii. an increase in human capital