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

After 2000 the market for mortgage-backed securities grew rapidly because economists claimed they had a model that could predict the risk associated with them.

If they spend all night writing computer programs, Laurence can write 10 programs, and Carrie Anne can write 5. If they spend all night making sunglasses, Laurence can make 6 pairs, and Carrie Anne can make 4. We know that _____ has a comparative advantage in _____.

Which of the following is a positive statement?

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 cabbage is _____ pound(s) of potatoes.

Which of the following is a positive economic statement?

Use the following to answer questions: Figure: Strawberries and Submarines II -(Figure: Strawberries and Submarines II) Look at the figure Strawberries and Submarines II. Point F:

If a supply curve is represented by the equation Q = 10 + 2P, what is its slope?

A firm is an organization that produces goods and/or services.

An economy is said to have a comparative advantage if it:

Which of the following is sold in the product market?

A production possibility frontier illustrates the _____ facing an economy that _____ only two goods.

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. Westland has an absolute advantage in producing:

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. If the line labeled S shows how many shirts per week will be offered for sale at various prices, then it is clear that for supply, quantity and price are:

In building models, economists avoid making any assumptions that might leave out any aspect of reality.

The models that economists construct:

Investors will lose money on mortgage-backed securities if:

Because Casey can type reports faster and more accurately than Ahmet, Casey has a(n) _____ in typing reports.

The U.S. production possibility frontier would _____ if all computers using Microsoft operating systems contracted a virus that deleted all information on those computers.

A statement that the minimum wage should be increased is a:

If LeRoyce trades two cookies for one of Amir's brownies, we say that they are engaging in: