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

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. What is Guatemala's opportunity cost of producing one canoe?

Figure 2-16 -Refer to Figure 2-16. One segment of the circular flow diagram in the figure shows the flow of goods and services from market C to economic agents A. What is market C and who are economic agents A?

All of the following are critical functions of the government in facilitating the operation of a market economy except

Identify whether each of the following transactions will take place in the factor market or in the product market. a. Graciela buys a Tesla Motors Model X. b. Lashan works 60 hours a week at a law firm. c. Tito sells his family's farmland to a housing developer. d. Tesla Motors increases employment at its Fremont, California plant.

In a report made to the U.S. Congress in 2001, the National Academy of Sciences cautioned that if fuel economy encourages the production of smaller and lighter cars, "Some additional traffic fatalities would be expected." This statement suggests that

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 80 sliders and 50 hot wings would appear

Figure 2-5 -Refer to Figure 2-5. If the economy is currently producing at point W, what is the opportunity cost of moving to point X?

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. Does either Ireland or Scotland have an absolute advantage and if so, in what product?

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 digital cameras?

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 Y to W?

All of the following countries come close to the free market benchmark except

Define the term "property rights." Explain why the lack of well-defined and enforceable property rights is detrimental to the smooth functioning of a market system.

Table 2-31 -Refer to Table 2-31. This table shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland. a. Which country has an absolute advantage in the production of cell phones? b. Which country has an absolute advantage in the production of lumber? c. What is Estonia's opportunity cost of producing one cell phone? d. What is Finland's opportunity cost of producing one cell phone? e. What is Estonia's opportunity cost of producing one board foot of lumber? f. What is Finland's opportunity cost of producing one board foot of lumber? g. If each country specializes in the production of the product in which it has a comparative advantage, who should produce cell phones? h. If each country specializes in the production of the product in which it has a comparative advantage, who should produce lumber?

An increase in the unemployment rate may be represented as a movement from a point on the production possibilities frontier to a point inside the frontier.

When a celebrity has the desire to have his image protected following his death, this is best described as an example of the protection of

The idea underlying Adam Smith's "invisible hand" is that people tend to behave in ways that go unnoticed in society.

Table 2-4 Production Choices for Dina's Diner -Refer to Table 2-4. Dina faces ________ opportunity costs in the production of sliders and hot wings.

If a country is producing efficiently and is on the production possibilities frontier, producing more of one good would result in a movement along the frontier.

What is an entrepreneur?

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 bolt of cotton in Indonesia?