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

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

The production possibility frontier is bowed out because:

Which of the following is a normative statement?

Which of the following is NOT a factor of production?

Explain why economists believe that production possibility frontiers have a bowed-out curvature rather than a straight line.

Use the following to answer questions: Figure: Comparative Advantage Eastland and Westland produce only two goods, boxes of peaches and boxes of oranges, and this figure shows each nation's production possibility frontier for the two goods. -(Figure: Comparative Advantage) Look at the figure Comparative Advantage. Eastland has a comparative advantage in producing:

In the factor market, firms buy resources.

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

Positive economics:

Smallville has a linear production possibility frontier in the production of good X and good Y. It can produce 6 of X per hour or 8 of Y per hour. Suppose it has 240 hours of labor and divides labor hours equally between production of good X and good Y. What is the MAXIMUM amount of good Y it can produce?

A normative statement deals with:

Use the following to answer questions: -(Table: Comparative Advantage I) Look at the table Comparative Advantage I. Finland has a comparative advantage in producing:

Suppose Oklahoma decides to produce only two goods, oil and football helmets. If Oklahoma is producing on its production possibility frontier, as oil production increases, the production of football helmets will:

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

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

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

Suppose Indiana produces only steel and corn, with fixed amounts of land, labor, and capital resources. Which of the following best sets the stage for economic growth?

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 capital that used to flow to firms producing coconuts now flows to firms producing fish. This adjustment in the economy would be best represented in the production possibilities figure by a move from point A toward:

Use the following to answer questions: Figure: Comparative Advantage Eastland and Westland produce only two goods, boxes of peaches and boxes of oranges, and this figure shows each nation's production possibility frontier for the two goods. -(Figure: Comparative Advantage) Look at the figure Comparative Advantage. The opportunity cost of producing 1 box of peaches for Eastland is _____ box(es) of oranges.

The models used in economics: