Exam 2: The Economic Problem

Why does it make sense for economies to specialize according to comparative advantage and trade?

Quantity (pizzas per day) Marginal benefit (cans per day) Marginal cost (cans per day) 10 26 14 20 24 16 30 22 18 40 20 20 50 18 22 60 16 24 70 14 26 -The table above shows the marginal benefit from pizza and the marginal cost of pizza in cans of soda forgone. If ________pizzas are produced, the quantity of soda that people are willing to give up to get an additional pizza is more than the quantity of soda that they must give up to get that additional pizza.

Opportunity cost is represented on the production possibilities frontier by

Point Production of X Production of Y A 0 40 B 3 36 C 6 28 D 9 16 E 12 0 -The above table shows production combinations on a country?s production possibilities frontier. Which of the following is an example of a point that is unattainable?

-In the production possibilities frontier depicted in the figure above, what is the opportunity cost of increasing the production of bananas from two million pounds to three million pounds?

-The above figure illustrates that if this country wishes to move from its current production point labeled ʺCurrentʺ) and have 10 more tons of food, it can do this by producing

Suppose the United States discovers a way to produce clean nuclear fuel. The effect of this discovery would be to

-Refer to the above figure. Mario is self-sufficient and so is Mia. Each produces 6 dishes of pasta and 4 pizzas. Mario and Mia decide to specialize and trade. After they have specialized and traded, compared to the initial situation, Miaʹs opportunity cost of pasta has___________ and Marioʹs opportunity cost of a pizza has_________ .

-Refer to the production possibilities frontier in the figure above. Which of the following movements requires the largest opportunity cost, in terms of good Y forgone, per extra unit of good X?

ʺAllocative efficiency requires that the maximum number of people have access to all of the goods and services that our economy produces.ʺ Is this statement true or false? Explain your answer.

Economic growth is the result of all of the following EXCEPT

-According to the diagram in the figure above, an allocatively efficient use of resources requires that production and consumption of gasoline be

Suppose the country of Popcorn produces only jets and corn. If Popcorn cannot produce any more jets without giving up corn, we say that Popcorn has achieved

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

Moving downward along a PPF, the opportunity cost of another unit of the good measured along the horizontal axis decreases.

-Molly just graduated from high school. The figure shows her possibilities frontier. If Molly goes to college, she will move from point M to point K. In terms of consumption goods, Mollyʹs opportunity cost of going to college is

-In the figure above, what can be said about point B?

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

-The bowed outward shape of the production possibilities frontier in the above figure indicates that

U.S. production possi bilities France's production possibilities Steel 100 25 Concrete 200 100 -The data in the above table demonstrates that gains from trade can be captured if