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

Given the production possibility tables for First and Second Bakeries shown, we know that the opportunity cost of producing pies:

Refer to the graph shown. Suppose Country X exports agricultural goods to Country Y in exchange for industrial goods. This pattern of trade increases consumption in both countries only if:

The slopes of the curve at points A and B (maximum and minimum) are:

Refer to the graph below. Which of the shifts explains what would happen to the production possibility curve if a cyclone destroys five major garment factories in the Philippines?

An inverse relationship occurs between two variables when as one goes:

Trade based on comparative advantage benefits:

Suppose each of the following rows represents the choice faced by policy makers given the current set of U.S. institutions and technology. What is the opportunity cost of reducing unemployment from 8 percent to 4 percent? Unemployment Inflation 10 3 8 4 6 5 5 7 4 10

Productive efficiency is not achieved at any point inside the production possibility curve.

If the hourly wage of U.S. workers is $16, the hourly wage of Mexican workers is $2, and U.S. workers produce 5 times as much output per hour as Mexican workers, then, other things equal, it would be efficient to locate production facilities in:

Juan works at Texas Burgers in El Paso and earns $8.00 per hour. His twin brother Felipe works in Mexico Burgers in Ciudad Juarez just across the border and earns $3.00 per hour for exactly the same work. An economist looking at this situation sees:

Suppose that in Colombia one unit of labor can produce 8 tons of papayas or 2 tons of bananas. In Brazil, one unit of labor can produce either 4 tons of papayas or 1 ton of bananas. Given this information, which of the following statements is true?

Consider the table below, in which each production choice represents a point on a production possibility curve. Thuice Eggs Rye A 10 0 B 8 10 C 6 20 D 4 30 E 2 40 F 0 50 This production possibility table could be graphed as a:

Increasing marginal opportunity cost means that the production possibility curve is:

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

Refer to the graph below. The graph indicates that as more eggs are produced, the marginal opportunity cost of:

Refer to the graph below. Productive efficiency is achieved at what points?

In the linear equation y = mx + b, m is the:

A downward-sloping line that makes a 45-degree angle with the horizontal and vertical axes has a slope of:

Refer to the graph below. Suppose that the opportunity cost of producing 10 chickens is always 8 turkeys. Given this, the relevant production possibility curve must be:

Refer to the graph below. In the 1980s, digital publishing reduced the cost of producing books. Assuming no change in the cost of producing DVDs, which of the shifts reflects this change in technology?