Exam 2: The Economic Problem

The existence of the tradeoff along the PPF means that the PPF is

Resource use is allocatively efficient when

Abe can catch 10 pounds of fish an hour or pick 10 pounds of fruit. Zeb can catch 30 pounds of fish an hour or pick 20 pounds of fruit. The opportunity cost of fish is ________ for Abe than for Zeb, and the opportunity cost of fruit is ________ for Abe than for Zeb.

A circular flow diagram shows the flows from the goods and resources markets.

-The country whose production possibilities frontier is illustrated above is currently at position A on the production possibilities frontier. If it wishes to move to position B, it will

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. Which of the following statements is TRUE?

If the marginal benefit from another computer exceeds the marginal cost of the computer, then to use resources allocatively efficiently

-In the figure above, both Joe and Jill initially produce at point A. If Joe and Jill realize that they each possess a comparative advantage, which outcome can we expect?

As a country that has a bowed-out production possibilities frontier produces more of one good, the opportunity cost of a unit of that good

-In the above figure, in order for this country to move from production possibilities frontier PPF₁ to PPF₂, it might

-In the figure above, an economy would grow fastest if it produces at point

What economic concepts are represented in the production possibilities model?

A tradeoff is

-An economy produces at point a on the PPF shown in the above figure. A drought reduces the amount of wheat produced and the economy produces at point b. The opportunity cost of a unit of wheat

President Obama has proposed a goal that everyone complete at least one year of formal education or training beyond high school. This policy would ________ the production of current consumption goods and services and ________ the future production of consumption goods and services.

-As output moves from point a to point b to point c along the PPF in the above figure, the opportunity cost of one more unit of good X

As an economy's capital stock increases, the economy

"If Mexico is currently operating at a point inside its production possibilities frontier, then there are unemployed resources in Mexico." Is this statement true or false? Briefly explain your answer.

A president of the United States promises to produce more defense goods without any decreases in the production of other goods. This promise can be valid

Individuals A and B both produce good X. A has a comparative advantage in the production of good X if A