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

An inward shift in the U.S. economy's production possibility frontier could represent U.S.:

The production possibility frontier will shift outward for all of the following reasons EXCEPT:

Use the following to answer questions: Figure: Unemployment Rate over Time -(Figure: Unemployment Rate over Time) Look at the figure Unemployment Rate over Time. In the time-series graph, as we move from 1997 to 2001, we see that the unemployment rate has _____ from approximately _____ to approximately _____.

Use the following to answer questions: Figure: Tom's Production Possibilities -(Figure: Tom's Production Possibilities) Look at the figure Tom's Production Possibilities. The opportunity cost for Tom to move from point B on the curve to point A is:

The importance of an economic model is that it allows us to:

Which of the following is a normative statement?

Dr. Colgate is a dentist who employs an assistant, Ms. Crest. If Dr. Colgate worked all day at the front desk, she could answer 40 phone calls. If she worked all day with patients, she could clean the teeth of 40 patients. If Ms. Crest worked all day at the front desk, she could answer 60 phone calls. If she worked all day with patients, she could clean the teeth of 20 patients. _____ has a(n) _____ advantage in _____.

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

If an economy produces the desired mix of goods from its available resources, then this mix of goods is:

Use the following to answer questions: Figure: Bicycles and Radishes I -(Figure: Bicycles and Radishes I) Look at the figure Bicycles and Radishes I. It 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:

Use the following to answer questions: Figure: Demand and Supply of Shirts -(Figure: Demand and Supply of Shirts) Look at the figure Demand and Supply of Shirts. In the graph, if the line labeled D shows how many shirts per week will be demanded at various prices, then it is clear that as the price of shirts falls:

An economist wishes to build a model to explain the relationship between the number of diamonds purchased every year and the average income of consumers in that year. Which variable should be the dependent variable and which should be the independent variable? All else equal, do you expect this relationship to be positive or negative? Explain.

In the circular-flow diagram, a firm is:

Which of the following is a normative statement?

In 2000, financial experts announced that they:

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 if Urbanville is producing 5 of Z and 50 of X, this combination is:

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

Use the following to answer questions: -(Table: Production Possibilities Schedule II) Look at the table Production Possibilities Schedule II. The production of 14 units of consumer goods and 1 unit of capital goods per period would result in:

Unemployment decreased to its lowest level in 10 years last month. This statement is:

Use the following to answer questions: Figure: Production Possibility Frontier -(Figure: Production Possibility Frontier) Look at the figure Production Possibilities Frontier. This production possibility frontier is: