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

Which of the following would shift a nation's production possibilities frontier outward?

Figure 2-7 Tesla opened its Gigafactory near Sparks, Nevada to produce lithium-ion batteries for both its automobiles and its Powerwall energy storage products. Figure 2-7 shows changes to its production possibilities frontier at the Gigafactory in response to new developments and different strategic production decisions. -Refer to Figure 2-7. Suppose worker productivity increases so that the total number of batteries produced increases as Tesla adds more machinery and workers, and changes the layout of the factory. This is best represented by the

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 Japan's opportunity cost of producing one wristwatch?

Figure 2-7 Tesla opened its Gigafactory near Sparks, Nevada to produce lithium-ion batteries for both its automobiles and its Powerwall energy storage products. Figure 2-7 shows changes to its production possibilities frontier at the Gigafactory in response to new developments and different strategic production decisions. -Refer to Figure 2-7. Assume a technological advancement greatly reduces the cost to produce batteries for its automobiles. This is best represented by the

If additional units of a good could be produced at a constant opportunity cost, the production possibilities frontier would be bowed outward (concave).

Figure 2-18 -Refer to Figure 2-18. Which two arrows in the diagram depict the following transaction: Lizzie Haxem hires "The Paint Pros," a professional painting company, to paint her home.

Crude oil is not an example of a factor of production, but when crude oil is processed into gasoline, it is a factor of production.

A production possibilities frontier with a bowed-outward shape indicates

When Feeding America changed its food allocation system to one that resembled a market, each food program was given a number of "shares" that they could use in bidding against other food programs for the types of food that best met the needs of the people using their programs. This is an example of how the market leads firms to provide consumers with the goods they want, which Adam Smith described by using the metaphor

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. What is Tammi's opportunity cost of bathing a cat?

Table 2-11 Table 2-11 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea. -Refer to Table 2-11. What is South Korea's opportunity cost of producing one pound of wheat?

Table 2-3 Production Choices for Dina's Diner -Refer to Table 2-3. Assume Dina's Diner only produces sliders and hot wings. A combination of 120 sliders and 100 hot wings would appear

Table 2-15 Table 2-15 shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens. -Refer to Table 2-15. What is Jack's opportunity cost of mowing a lawn?

Figure 2-14 Figure 2-14 shows the production possibilities frontiers for Greenland and Iceland. Each country produces two goods, snow cones and popsicles. -Refer to Figure 2-14. What is the opportunity cost of producing 1 snow cone in Iceland?

The production possibilities frontier assumes all of the following except

Is it possible for a firm to have an absolute advantage in producing something without having a comparative advantage? Why or why not?

In 18th century Europe, governments gave guilds legal authority to limit production of goods. How did this authority either obstruct or improve the market mechanism?

If a country produces only two goods, then it is not possible to have an absolute advantage in the production of both goods.

The attainable production points on a production possibilities frontier are

The basis for trade is absolute advantage, not comparative advantage.