Exam 2: Economic Models: Trade-Offs and Trade

"The unemployment rate should be higher" is a normative statement.

The production possibility frontier will shift outward because of:

An economy is said to have a comparative advantage in the production of one good if it:

The ratio of the change in the variable on the vertical axis to the change in the variable on the horizontal axis, measured between two points on the curve, is the:

Abe starts exercising regularly, and after a few months he can do twice as much of everything. In a single day, Abe can now make 10 hamburgers or 8 milkshakes, rather than the 5 hamburgers and 4 milkshakes he made in the past. We now know that Abe's production possibility frontier has _____, but his opportunity costs of making milkshakes have _____.

Because models make simplifying assumptions, they are of very little use in the real world.

Use the following to answer questions: \\ -(Figure: Comparative Advantage) Use Figure: Comparative Advantage. The opportunity cost of producing 1 box of oranges for Westland is _____ box(es) of peaches.

The fact that a society's production possibility frontier is bowed out, or concave to the origin of a graph, demonstrates the law of _____ opportunity cost.

Professor Macro wants to use a numerical graph to show the percentage of government spending accounted for by its various components. Which graph is MOST suitable for this purpose?

The importance of an economic model is that it allows us to:

(Table: Wages and Hours Willing to Work) Use Table: Wages and Hours Willing to Work. If it was graphed, the relationship between wage per hour and hours willing to work would be:

If they spend all night writing computer programs, Laurence can write 10 programs, and Carrie Anne can write 5. If they spend all night making sunglasses, Laurence can make 6 pairs, and Carrie Anne can make 4. We know that:

If the opportunity cost of manufacturing automobiles is higher in the United States than in Britain and the opportunity cost of manufacturing airplanes is lower in the United States than in Britain, then the United States will:

Use the following to answer questions: \\ -(Figure: Consumer and Capital Goods) Use Figure: Consumer and Capital Goods. If the economy is operating at point Y and its relevant production possibility frontier is curve 1:

The assumption ceteris paribus in a model means "other things equal."

Use the following to answer questions: \\ -(Figure: Production Possibility Frontier) Use Figure: Production Possibilities Frontier. If the economy is operating at point B, producing 16 cars and 12 computers per period, a decision to move to point E and produce 18 computers:

The concept of comparative advantage is based on:

In the circular-flow diagram, the product market is where:

In terms of the production possibility frontier, the inefficient use of available resources is shown by:

Economic models are: