Exam 2: Trade-Offs, Comparative Advantage, and the Market System

In 18th century Europe, governments gave guilds legal authority to limit production of goods. This authority obstructed the market mechanism because the guild's actions prevented the forces of ________ from coordinating the self-interested decisions of producers and consumers.

Figure 2-17 -Refer to Figure 2-17. One segment of the circular flow diagram in the figure shows the flow of funds from economic agents E to market F. Who are economic agents E and what is market F?

Figure 2-15 -Refer to Figure 2-15. In the circular flow diagram, market K represents

Published in 1776, ________ was written by Adam Smith.

Table 2-13 Table 2-13 shows the output per day of two pet groomers, Tammi and Horace. They can either devote their time to grooming dogs or bathing cats. -Refer to Table 2-13. Which of the following statements is true?

Article Summary Two U.S. Senators have introduced a bipartisan bill to strengthen patent protection in the United States. The STRONGER Patents Act, designed to improve the patent system, includes provisions which would permit injunctions to protect patent owners against infringement both during and after court cases and guarantee fairness in administrative proceedings by limiting repetitive and harassing challenges against inventors. Changes over the last decade have lessened some U.S. patent rights, while countries such as China and Germany have moved to strengthen their own patent protections. In 2016, the United States fell to 10th place in the U.S. Chamber of Commerce's international ranking of patent system strength. Source: Brian Pomper, "Senators Coons and Cotton Introduce STRONGER Patents Act of 2017," ipwatchdog.com, June 21, 2017. -Refer to the Article Summary. If the STRONGER patents Act of 2017 becomes law, all of the following would most likely occur except

Table 2-14 Table 2-14 shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland. -Refer to Table 2-14. Ireland has a comparative advantage in the production of

Figure 2-11 Figure 2-11 shows the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews. -Refer to Figure 2-11. What is the opportunity cost of producing 1 pound of cashews in Indonesia?

If additional units of a good could be produced at an increasing opportunity cost, the production possibilities frontier would be linear.

It is possible to have a comparative advantage in producing a good or service without having an absolute advantage.

Consider the following items: a. the novel "A Gentleman in Moscow" by Amor Towles b. the "The Spirited Shipper," an innovative wine shipping box c. a Swiss chef's award-winning recipe d. an original fabric design, for example, the fabric used for "Coach" bags and luggage Which of the items listed is an example of intellectual property?

Figure 2-4 Figure 2-4 shows various points on three different production possibilities frontiers for a nation. -Refer to Figure 2-4. Consider the following events: a. an increase in the unemployment rate b. a decrease in a nation's money supply c. a war that kills a significant portion of a nation's population Which of the events listed above could cause a movement from Z to X?

To compete in the automobile market, Tesla must make many strategic decisions such as whether to introduce a new car model, how to sell and service its cars, and where to advertise. At Tesla's Fremont, California plant, managers must decide on the monthly production quantities of their S and X models. In making this decision, the managers

Table 2-20 Table 2-20 shows the number of labor hours required to produce a wristwatch and a pound of rice in Japan and Thailand. -Refer to Table 2-20. What is Thailand's opportunity cost of producing one wristwatch?

To increase gas mileage, automobile manufacturers make cars small and light. Large cars absorb more of the impact of an accident than small cars but yield lower gas mileage. These facts suggest that a negative relationship exists between safety and gas mileage.

Figure 2-4 Figure 2-4 shows various points on three different production possibilities frontiers for a nation. -Refer to Figure 2-4. A movement from ________ is the result of negative technological change in plastic production.

Table 2-18 Table 2-18 shows the output per week of two people, Minnie and Mickey. They can either devote their time to making hats or making umbrellas. -Refer to Table 2-18. Which of the following statements is true?

Table 2-20 Table 2-20 shows the number of labor hours required to produce a wristwatch and a pound of rice in Japan and Thailand. -Refer to Table 2-20. Japan has a comparative advantage in the production of

Figure 2-15 -Refer to Figure 2-15. One segment of the circular flow diagram in the figure shows the flow of labor services from market K to economic agents J. What is market K and who are economic agents J?

If the opportunity cost of producing more of one good remains the same as more of that good is produced, then the production method is inefficient.