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

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

Households

A worker is hired in a

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

The primary purpose of patents and copyrights is to

"An Inquiry into the Nature and Causes of the Wealth of Nations" published in 1776 was written by

Which of the following is a factor of production?

If a nation changes its laws to more actively enforce intellectual property rights, all of the following will most likely take place except

Consider a country that produces only two goods: kayaks and coconuts. Suppose it is possible for this country to increase its production of kayaks without producing fewer coconuts. In this case, its current output combination is efficient.

Specializing in the production of a good or service in which one has a comparative advantage enables a country to do which of the following?

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 one dozen orchids?

Figure 2-1 -Refer to Figure 2-1. ________ is (are) technically efficient.

In a two-good, two country world, if one country has an absolute advantage in the production of both goods, it must also have a comparative advantage in the production of both goods.

What is meant by the term "opportunity cost"?

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. The linear production possibilities frontier in the figure indicates that

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. Does either China or South Korea have an absolute advantage and if so, in what product?

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

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 reduction in the patent protection period to no more than 2 years b. a war that destroys a substantial portion of a nation's capital stock c. the lack of secure and enforceable property rights system Which of the events listed above could cause a movement from W to V?

What is a circular flow diagram and what does it demonstrate?

All of the following are examples of spending on goods and services in the circular flow model except