Exam 2: The Economic Problem

In markets, people's decisions are coordinated by

If a society is operating at a point inside its production possibilities frontier, then this society's

-The above table shows production combinations on a country's production possibilities frontier. What is the opportunity cost of increasing the production of X from 0 to 3 units?

-Two countries, Blue Violet and Sweet Pansy, produce only two goods: teapots and coffeepots. The table above gives their production possibilities. With specialization and trade, Sweet Pansy produces ________ and Blue Violet produces ________.

A person has a comparative advantage in producing a particular good if that person

Japan can use all of its resources to produce 100 videos or 400 shoes. China can use all of its resources to produce 25 videos or 200 shoes. Which nation has the comparative advantage in shoes and which nation has the comparative advantage in videos?

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. Which of the following is an example of a point that is inefficient?

-Refer to the table above, which gives five points on a nation's PPF. The opportunity cost of increasing the production of Y from 16 to 36 units is a total of

-According to the diagram in the figure above, what is the marginal cost of producing the 3 millionth gallon of gasoline per month?

As we increase the production of computers, we find that we must give up larger and larger amounts of DVD players per computer.

"Allocative efficiency in the production of cherries means that consumers can eat all of the cherries they desire." Is this statement true or false?

-In the figure above, at the allocatively efficient level of computer production consumers are willing to give up

"The United States is more productive in most activities than are most of other countries because it has an absolute advantage in the production of most goods and services. Therefore we should restrict international trade as it only benefits other countries at the expense of the United States." Comment on this statement.

The production possibilities frontier is

-The table above shows the production possibilities frontier for the nation of Isolanda. a) Find the marginal cost of a pound of fish using the above PPF. b) How does the marginal cost of a pound of fish change as more fish are caught?

-Based on the above, which figure shows the impact of a decrease in the population available to work?

-The data in the above table demonstrates that gains from trade can be captured if

4 Economic Growth -An expansion of the production possibilities frontier is

When a nation is producing the allocatively efficient quantity of a product, the marginal benefit of producing the good equals the marginal cost of producing that good.

Economic growth can be pictured in a production possibilities frontier diagram by