Exam 2: Economic Models: Trade-Offs and Trade

Trade takes the form of _____ when people directly exchange goods they have for goods they want.

The relation between two variables that move in the same direction is said to be:

Use the following to answer questions: \\ -(Table: Bongos and Frisbees) Use Table: Bongos and Frisbees. Bill and Mickey make bongos and Frisbees. Who has the comparative advantage in producing Frisbees?

If an economy is producing at a point on its production possibilities frontier, it is:

The effect of a natural disaster can be shown by a(n) _____ the production possibility frontier.

Use the following to answer questions: \\ -(Figure: Strawberries and Submarines) Use Figure: Strawberries and Submarines. Suppose the economy is operating at point G. This implies that:

Use the following to answer questions: \\ -(Figure: Production Possibility Frontier for Tealand) Use Figure: Production Possibility Frontier for Tealand. Tealand can produce at point E only if:

Use the following to answer questions: \\ -(Figure: Bicycles and Radishes I) Use Figure: Bicycles and Radishes I. The figure shows production possibility frontiers for two countries that produce only radishes and bicycles. The axes of the two graphs are measured in equivalent units. Country A is operating at point M, and country B is operating at point N. Suppose country A discovers a new technology that greatly increases its ability to produce bicycles but has no effect on its ability to produce radishes. This would:

The value of a mortgage-backed security is tied to the interest on the national debt paid by the Federal Reserve.

In the circular-flow diagram, an organization that produces goods or services for sale is a:

Economists usually assume that production is subject to increasing opportunity costs because:

The basis of the circular-flow diagram is that the money flowing into each sector or market is equal to the money that flows out.

A _____ graph shows how the value of one or more variables has changed over some period.

The circular-flow diagram illustrates how firms _____ goods and services and _____ factors of production.

As long as people have different _____, everyone has a comparative advantage in something.

Use the following to answer questions: \\ -(Table: Comparative Advantage I) Use Table: Comparative Advantage I. The opportunity cost of producing 1 box of cell phones for Finland is _____ box(es) of herring.

On a two-dimensional graph representing two variables:

Fertilizer, used to grow pumpkins, is a factor of production.

The opportunity cost of production:

In movement along a production possibility frontier, the opportunity cost to society of getting more of one good: