Exam 3: Exchange and Markets

The phenomenon which occurs when markets do not produce the most efficient outcome on their own is known as

An import is a product

A rich nation will trade with a poor nation because the

A centrally planned economy has a planning authority that decides

Define the term "import."

An export is a product

In a market economy, what provides potential investors with reliable information about the financial performance of a firm?

An economy in which government bureaucracy decides how much of a good to produce, how to produce the good, and who gets the good is known as a

A U.S. company is attempting to cut costs by shifting some of its services to Thailand. This process of shifting production of products or services overseas to cut costs often results in

Explain why contracts are beneficial to markets.

Providing unemployment insurance is one way a government can

Prisoners in World War II POW camps traded products for other products, a process referred to as

Explain why insurance has been beneficial to markets.

If Libby can produce 20 gallons of beer or 5 gallons of wine per hour, her opportunity cost of one gallon of beer is 4 gallons of wine.

When a U.S. company shifts its call-center operations overseas to reduce costs, it is applying the economic concept of

One of the most obvious clues to the relative scarcity of a product is

In An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith listed three reasons for productivity to increase with specialization. What are these three reasons?

Table 3.1 -Consider two individuals, Jesse and April, who hand paint kites and snowboards. Table 3.1 shows how much of each good Jesse and April can paint in one hour. April's opportunity cost of painting one snowboard is painting

If Eddie can produce 40 milk shakes or 20 banana splits in an hour, and Tina can produce 30 milk shakes or 16 banana splits in an hour, then Tina has a comparative advantage in producing banana splits.

One common source of market failure is