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

Figure 2-13 Figure 2-13 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts. -Refer to Figure 2-13. If the two countries have the same amount of resources and the same technological knowledge, which country has an absolute advantage in the production of both pineapples and coconuts?

An organization of producers that limits the amount of a good produced is known as a

Figure 2-8 Figure 2-8 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. -Refer to Figure 2-8. If Vidalia chooses to produce 80 dozen roses, how many orchids can it produce to maximize production?

Suppose your expenses for this term are as follows: tuition: $12,000, room and board: $6,500, books and other educational supplies: $1,500. Further, during the term, you can only work part-time and earn $3,500 instead of your full-time salary of $14,000. What is the opportunity cost of going to college this term, assuming that your room and board expenses would be the same even if you did not go to college?

Figure 2-2 Figure 2-2 above shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables. -Refer to Figure 2-2. If Mendonca chooses to produce 120 pounds of meat, how much vegetables can it produce to maximize production?

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 guitar?

Figure 2-5 -Refer to Figure 2-5. If the economy is currently producing at point Y, what is the gain in production if the economy moves to point X?

Identify whether each of the following transactions will take place in the factor market or in the product market: a. Shondra buys a Harley-Davidson Softail motorcycle. b. Aimee works 20 hours a week at a grocery store. c. Gustavo sells a warehouse to a produce delivery company. d. Ocean Spray increases employment at its Middleboro, Massachusetts plant.

Figure 2-2 Figure 2-2 above shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables. -Refer to Figure 2-2. What is the opportunity cost of one pound of meat?

Table 2-9 Table 2-9 shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. -Refer to Table 2-9. Which of the following statements is true?

Table 2-17 Table 2-17 shows the output per week of two people, James and Lucy. They can either devote their time to making wagons or making tricycles. -Refer to Table 2-17. What is James's opportunity cost of making a tricycle?

The production possibilities frontier shows the ________ combinations of two products that can be produced in a particular time period with available resources.

A redwood forest is not an example of a factor of production but the harvested and processed redwood is a factor of production.

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 cultivating a garden?

Table 2-16 Table 2-16 shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland. -Refer to Table 2-16. What is Estonia's opportunity cost of producing one cell phone?

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

For each bottle of wine that Italy produces, it gives up the opportunity to make 10 pounds of cheese. France gives up the opportunity to produce of 1 bottle of wine for every 25 pounds of cheese it produces. Which of the following is true about the comparative advantage between the two countries?

Table 2-12 Table 2-12 shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras. -Refer to Table 2-12. If the two countries specialize and trade, who should export sailboats?

If the best surgeon in town is also the best at cleaning swimming pools, then according to the theory of comparative advantage, this person should

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. a decrease in the unemployment rate b. an increase in technology with respect to both food and plastic production c. a war that kills a significant portion of a nation's population Which of the events listed above could cause a movement from W to Y?