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

The Apple Watch was designed by Apple in the United States, manufactured in factories in Asia, and sold throughout the world. Many other firms, both American and foreign, began to try to develop alternatives to the Apple Watch. The Apple Watch is an example of American comparative advantage in:

Refer to the graph below. In which curve does the opportunity cost of an additional unit of good Y decrease as more units of good Y are produced?

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:

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

Below is the production possibilities table for the country of Lavaland. \% resources devoted to production of tanks Number of tanks \% resources devoted to production of pizza Number of pizzas Row 0 0 100 15 20 4 80 14 40 7 60 12 60 9 40 9 80 11 20 5 100 12 0 0 (a)Use the information in the table to draw the production possibilities curve (PPC)for Lavaland.Put tanks on the horizontal axis. (b)What is the cost to Lavaland of moving from point A to point B on its PPC? And of moving from point E to point F? (c)What general economic principle is being illustrated by your answers to part (b)above? Explain.

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

The text attributes the growth of economies over the last 200 years largely to:

In the graph shown, what change would increase production efficiency?

Two nations with differing comparative advantages will be able to consume more if each produces the good for which the opportunity cost is highest and trades for the good for which opportunity cost is lowest.

Refer to the graph shown. In the graph, the opportunity cost of good X in terms of good Y is:

Consider the table below, in which each production choice represents a point on a production possibility curve. Choice 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:

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.

The production possibility curves of two countries are given below: Legaland Elmaland Chacolate Textiles Chaculate Textiles 30 0 60 0 20 20 30 15 15 30 20 20 0 60 0 30 Refer to the production possibility curves of the two countries. Without trade, the most each country could produce would be:

Suppose that in Colombia one unit of labor can produce 8 tons of papayas or 2 tons of bananas and in Brazil, one unit of labor can produce either 2 tons of papayas or 4 tons of bananas. If each country has two units of labor, which of the following consumption combinations can be attained only with trade?

Refer to the graph below. Given the production possibility curve, which point is unattainable?

The production possibility curves of two countries are given below: Legaland Elmaland Chacolate Textiles Chaculate Textiles 30 0 60 0 20 20 30 15 15 30 20 20 0 60 0 30 Refer to the production possibility curves of the two countries. If they specialized and traded, which of the following is the largest bundle each country could have?

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

If a country has a comparative advantage in the production of a good, its resources are better suited to the production of that good than are the resources of other countries.

What is 25 percent of 200?

The principle of increasing marginal opportunity cost holds in which of the following cases?