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

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. What is Mickey's opportunity cost of making a hat?

Figure 2-12 Figure 2-12 shows the production possibilities frontiers for Tahiti and Bora Bora. Each country produces two goods, milk and honey. -Refer to Figure 2-12. What is the opportunity cost of producing one gallon of milk in Bora Bora?

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

A decrease in the labor force shifts the production possibilities frontier inwards over time.

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. Thailand has a comparative advantage in the production of

Increasing opportunity cost along a bowed-out production possibilities frontier occurs because

Which of the following statements is true about a simple circular flow model?

The concept of opportunity cost is that

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. Which of the following statements is true?

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 a nation's money supply c. an influx of immigrant workers Which of the events listed above could cause a movement from X to Z?

Each person goes about her daily business seeking to maximize her own self interests. In doing so, she contributes to the welfare of society at large. This is the idea underlying Adam Smith's "invisible hand."

Any output combination along a production possibilities frontier is associated with fully utilized resources.