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

Alexander has a straight-line, or linear, production possibility frontier when he produces soybeans and corn. If he uses all of his resources to grow soybeans, he can produce 200 bushels of soybeans; if he uses all of his resources for corn production, he can produce 400 bushels of corn. Alexander CANNOT produce _____ bushels of soybeans and _____ bushels of corn.

The relation between two variables that move in the same direction is said to be:

Use the following to answer questions: Figure: Good X and Good Y -(Figure: Good X and Good Y) Look at the figure Good X and Good Y. If we move from point C to point B in the figure, the x-variable has ______ units and the y-variable has ______ units.

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 the 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. The opportunity cost of producing an additional ton of radishes would be greater in:

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 and B) Look at the scenario Countries A and B. If countries A and B both specialize and trade:

Your boss asks you to graph company profits for the past 10 years. The best way to show this information is with:

Use the following to answer questions: -(Table: Wheat and Aluminum) Look at the table Wheat and Aluminum. The United States and Germany can produce both wheat and aluminum. The table shows, in tonnage, the maximum annual output combinations of wheat and aluminum that can be produced. Which of the following choices represents a possible trade based upon specialization and comparative advantage?

Use the following to answer questions: Figure: Tom's Production Possibilities -(Figure: Tom's Production Possibilities) Look at the figure Tom's Production Possibilities. Which point or points represent(s) a combination of coconuts and fish that is efficient in production?

The production possibility frontier will shift outward because of:

Use the following to answer questions: -(Table: Fish and Coconut Production Possibilities) The table Fish and Coconut Production Possibilities shows the maximum amount of fish or coconuts that Tom and Hank can produce when each produces only one of the goods. The table implies that Tom has a comparative advantage in the production of both goods.

If the production possibility frontier is a straight line:

In building models, economists often assume that opportunity costs don't matter.

If the United States is more productive than Mexico in all lines of production, then the United States cannot benefit from trade with Mexico.

Use the following to answer questions: -(Table: Comparative Advantage I) Look at the table Comparative Advantage I. Sweden has an absolute advantage in producing:

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 increase in the amount of human capital flowing to both coconut producers and fish producers. If all other variables remain unchanged, then the adjustment in this economy would be best represented in the production possibilities figure by a movement from point A toward:

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 A on the curve to point B is:

Use the following to answer questions: -(Table: Price, Quantity Demanded, and Quantity Supplied) Look at the table Price, Quantity Demanded, and Quantity Supplied. The data in the figure suggest a nonlinear relation between:

If Jim buys a lunch at a restaurant, he has bought a factor of production in the factor market.

Economists are generally in support of:

Positive economics is the branch of economics that makes prescriptions about the way the economy should work.