Exam 2: Economic Models: Trade-Offs and Trade 25

Mark and Julie are going to sell brownies and cookies for their third annual fundraiser bake sale. In one day, Mark can make 40 brownies or 20 cookies, and Julie can make 15 brownies or 15 cookies. What is Mark's opportunity cost to produce one brownie?

The concept of comparative advantage is based upon:

If an economy has to sacrifice increasing amounts of good X for each additional unit of good Y produced, then its production possibility frontier is:

"Unemployment of 5% is too high" is:

Use the following to answer questions: Figure: Production Possibilities and Circular-Flow Diagram -(Figure: Production Possibilities and Circular-Flow Diagram) Look at the figure Production Possibilities and Circular-Flow Diagram. Assume the two figures represent the same economy. Suppose that in the circular-flow diagram there is a significant decrease in the amount of labor flowing to the firms that produce coconuts. If all other variables remain unchanged, this adjustment in the economy would be best represented in the production possibilities figure by a move from point A toward:

(Figure: Production Possibility Frontier for Tealand) Look at the figure Production Possibility Frontier for Tealand. Tealand can produce at point E only if the government:

Which of the following offices of the U.S. government is a major employer of economists?

Use the following to answer questions: Figure: Consumer and Capital Goods -(Figure: Consumer and Capital Goods) Look at the figure Consumer and Capital Goods. Point Z:

Mark and Julie are going to sell brownies and cookies for their third annual fundraiser bake sale. In one day, Mark can make 40 brownies or 20 cookies, and Julie can make 15 brownies or 15 cookies. Based on this information, _____ has the absolute advantage in making brownies and _____ has the absolute advantage in making cookies.

Use the following to answer questions: Scenario: Countries A and B Two countries, A and B, produce two goods, wheat (W) and steel (S). Each has a linear production possibility frontier in both goods. If country A spends all of its available resources to produce wheat, it can produce 500 tons of wheat and no steel. If it uses all of its resources to produce steel, it can produce 250 tons of steel and no wheat. If country B spends all of its available resources producing wheat, it can produce 400 tons of wheat, and if it spends all of its resources on the production of steel, it can produce 400 tons of steel. -(Scenario: Countries A andB) Look at the scenario Countries A and B. If each country devotes half of its resources to the production of wheat and half to the production of steel, then their combined total production of wheat will be _____ tons and their combined total production of steel will be _____ tons.

Use the following to answer questions: -(Table: Coffee and Salmon Production Possibilities II) Look at the table Coffee and Salmon Production Possibilities II. This table shows the maximum amounts of coffee and salmon, both measured in pounds, that Brazil and Alaska can produce if they just produce one good. Alaska has an absolute advantage in producing:

The opportunity cost of production:

All points outside the production possibility frontier are:

The fact that two variables always move together over time:

The economy with the lowest opportunity cost of producing a particular good is said to have:

Use the following to answer questions: -(Table: Production Possibilities Schedule II) Look at the table Production Possibilities Schedule II. The production of eight units of consumer goods and two units of capital goods per period would result in:

Which of the following statements is TRUE?

Jim is being paid $7.25 an hour to work at a restaurant. In the circular flow this is an example of a:

In a time-series graph, large changes can be made to appear trivial by:

Use the following to answer questions: -(Table: Production of Good Z and Good X in Urbanville) Look at the table Production of Good Z and Good X in Urbanville. If this table shows the production possibility frontier and Urbanville is producing at combination F, what is the opportunity cost of a move to combination E?