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

________ exists because unlimited wants exceed the limited resources available to fulfill those wants.

Which of the following is an example of spending on factors of production in the circular flow model?

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 Thailand's opportunity cost of producing one pound of rice?

Figure 2-6 -Refer to Figure 2-6. If the economy is currently producing at point A, what is the opportunity cost of moving to point B?

Suppose that in Germany, the opportunity cost of producing a gallon of beer is 5 gallons of wine. In Italy, the opportunity cost of producing a gallon of beer is 3 gallons of wine. a. What is the opportunity cost of producing a gallon of wine for Germany? b. What is the opportunity cost of producing a gallon of wine for Italy? c. Which country has a comparative advantage in the production of beer? d. Which country has a comparative advantage in the production of wine?

Which of the following is a flow in the circular flow model?

What is comparative advantage? What is absolute advantage?

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

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. Which of the following statements is true?

If a brewery wants to raise funds to purchase a new fermenting vat, it does so in the

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

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. What is Serena's opportunity cost of making a bracelet?

In a free market there are significant restrictions on how a good or service can be produced or sold.

All of the following are examples of spending on factors of production in the circular flow model except

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 China's opportunity cost of producing one pound of wheat?

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. 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 popsicles?

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 George's opportunity cost of cultivating a garden?

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. What is the opportunity cost of 100 dozen roses?

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. Suppose Vidalia is currently producing 120 dozen roses per period. How many orchids is it also producing, assuming that resources are fully utilized?

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. What is the opportunity cost of 80 dozen orchids?