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

If two variables are negatively related, they will always be represented by:

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

Nations can gain from trade with other nations even if they are less productive in all industries than the nations they trade with.

In one day, Kessy can bake 10 cookies or mix 15 glasses of lemonade. His friend Ava can make 10 cookies or 10 glasses of lemonade. His other friend, Ian, can make 10 cookies or 20 glasses of lemonade. Who has the lowest opportunity cost in cookie production?

In the circular-flow diagram, a household is:

All points on the production possibility frontier are:

If farmer Sam MacDonald can produce 200 pounds of cabbages and no potatoes or no cabbages and 100 pounds of potatoes and if he faces a linear production possibility frontier, the opportunity cost of producing an additional pound of potatoes is _____ pound(s) of cabbage.

Suppose residents of Montana operate on their production possibility frontier, and they want to increase production of both wheat and fly-fishing rods. According to the production possibility frontier, this cannot happen without new resources or technological improvement.

Use the following to answer questions: -(Figure: Wine and Wheat) Look at the figure Wine and Wheat. The opportunity cost of moving from producing ONLY wheat to producing at point D is _____ tons of wheat.

In the simplest circular-flow model, households supply _____ and demand _____.

Use the following to answer questions: Figure: Production Possibility Frontier Curve for Tealand -(Figure: Production Possibility Frontier for Tealand) Look at the figure Production Possibility Frontier for Tealand. If Tealand is producing 10 million scones and 10 million cups of tea (point A), we know that the economy:

The process observed when an economy's production possibility frontier shifts outward is:

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

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 _____.

Which of the following is a positive statement?

Use the following to answer questions: -(Figure: Wine and Wheat) Look at the figure Wine and Wheat. If this economy is producing on the production possibility frontier, what would allow it to produce at point C?

In the circular-flow diagram households buy _____ in the _____ market.

Use the following to answer questions: Scenario: Linear Production Possibility Frontier Largetown has a linear production possibility frontier, and it produces socks and shirts with 80 hours of labor. The table shows the number of hours of labor necessary to produce one pair of socks or one shirt. -(Scenario: Linear Production Possibility Frontier) Look at the scenario Linear Production Possibility Frontier. Largetown CANNOT produce _____ shirts and _____ pairs of socks.

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 comparative advantage in making brownies and _____ has the comparative advantage in making cookies.

Use the following to answer questions: Figure: Illustrating Slope -(Figure: Illustrating Slope) Look at the figure Illustrating Slope. In the graph, line 1 depicts X and Y to be: