Exam 2: The Production Possibility Model, Trade, and Globalization

Which of the following is an example of the law of one price?

If U.S. workers are paid $16 an hour and Indian workers are paid the equivalent of $4 an hour but U.S. workers can produce four times as many goods as Indian workers in the same amount of time:

Given the production possibility curve shown below, the opportunity cost of listening to each additional album when moving from point B to point A is on average:

In China, many farmers have switched from producing rice to producing vegetables and fruit because they can earn a great deal more money from these specialty crops. Within China, there are some who applaud this change, but others worry that China soon may become dependent on rice imports. Even with the low cost of Chinese labor, does the fact that China is importing rice suggest that other countries now have a comparative advantage in rice production?

If the principle of increasing marginal opportunity cost holds, the opportunity cost of producing each additional unit of a good should fall as production of that good rises.

If a country takes advantage of the comparative advantage of some resources over others, its production possibility curve is likely to be:

Refer to the graph below. Which of the shifts explains what would happen to the production possibility curve if improved technologies increased the production of prekindergarten (Pre-K) toys by 25 percent and the production of children's toys by 50 percent?

Given the production possibility tables for First and Second Bakeries shown, we can determine that:

Countries gain from trade by producing:

Refer to the graph below. As you move from point A to point B:

Up through the early decades of the 20th century, many countries remained closed to trade, charging high tariffs or imposing strict quotas on imported goods. In 1948, 23 countries joined the General Agreement on Tariffs and Trade (GATT), which sought to set out rules for trade and enhance future negotiations. The reduction in tariffs as a result of GATT probably brought about:

If there is a direct relationship between two variables, the graph relating those two variables will be:

Refer to the graph shown. If Countries X and Y face the production possibility curves A and B, respectively, Country Y has a comparative advantage in the production of:

In election campaigns, presidents often promise more of everything (that is, more guns and more butter). What would help those elected presidents fulfill that promise?

The slope of a line is the:

The production possibility frontiers of Northland and Southland are given. Without trade, Northland produces and consumes 20 apples and 5 bananas and Southland produces and consumes 10 apples and 40 bananas. Could they increase their consumption bundle by optimizing production and trading?

Laissez-faire is an economic:

If you move from a point inside the production possibility curve to a point on the production possibility curve, it follows that efficiency is:

To graphically demonstrate the principle of increasing marginal opportunity cost, the production possibility curve must be:

What kind of relationship exists between the price of gas and the quantity demanded for gas if the quantity demanded for gas falls when the price of gas increases?