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

An increase in population shifts the production possibilities frontier inwards over time.

Figure 2-10 -Refer to Figure 2-10. If the economy is currently producing at point A, what is the opportunity cost of moving to point B?

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. What is Scotland's opportunity cost of producing one motorcycle?

In a free market there are virtually no restrictions, or at best few restrictions, on how a good or service can be produced or sold.

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

All of the following are considered intellectual property except

Table 2-21 -Refer to Table 2-25. This table shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland. a. Which country has an absolute advantage in the production of motorcycles? b. Which country has an absolute advantage in the production of guitars? c. What is Ireland's opportunity cost of producing one motorcycle? d. What is Scotland's opportunity cost of producing one motorcycle? e. What is Ireland's opportunity cost of producing one guitar? f. What is Scotland's opportunity cost of producing one guitar? g. If each country specializes in the production of the product in which it has a comparative advantage, which country should produce motorcycles? h. If each country specializes in the production of the product in which it has a comparative advantage, which country should produce guitars?

An inward shift of the production possibilities frontier represents

Table 2-5 Production choices for Nadia's Neckware -Refer to Table 2-5. Assume Nadia's Neckties only produces ascots and bowties. Nadia faces ________ opportunity costs in the production of ascots and bowties.

Rayburn Reed is a highly talented photographer. He has chosen to specialize in photography because of all of the following except

Stricter laws and regulations to protect intellectual property rights

The payment received by suppliers of entrepreneurial skills is called interest.

Table 2-19 Table 2-19 shows the output per month of two people, Wilma and Betty. They can either devote their time to making marble statues or making marble benches. -Refer to Table 2-19. What is Wilma's opportunity cost of making a bench?

Figure 2-6 -Refer to Figure 2-6. If the economy is currently producing at point E, what is the gain in production if the economy moves to point D?

Figure 2-10 -Refer to Figure 2-10. If the economy is currently producing at point D, what is the opportunity cost of moving to point B?

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. Which country has a comparative advantage in the production of popsicles?

For a person to have a comparative advantage in producing a product, she must be able to produce that product at a lower opportunity cost than her competitors.

In the circular flow model, households supply resources such as labor services in the factor market.

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. If the two countries specialize and trade, who should export wheat?

The ________ production points on a production possibilities frontier are the points along and inside the production possibilities frontier.