Exam 2: The Economic Problem

An increase in the production of capital goods

-The table above shows the marginal benefit from pizza and the marginal cost of pizza in cans of soda forgone. The allocatively efficient quantity of pizza is ________ pizzas per day.

Because of the existence of comparative advantage, the total output of goods is higher when each producer

Production efficiency occurs when production

Most students attending college pay tuition and are unable to hold a full-time job. For these students, tuition is

-In the above figure, which of the following is TRUE regarding the movements from point A to B and from point C to D? I) The movement from point A to B shows that the economy has chosen to produce 100 more jets. II) The movement from point C to D shows that the economy has chosen to produce 100 more jets. III) The movement from point A to B and from point C to D have the same opportunity cost.

Over the past several decades, the United States has devoted a greater fraction of its resources to consumption than Hong Kong, which is why the U.S. economy grew faster than Hong Kong's economy.

-In the figure above, moving from point B to point D

Explain the connection between opportunity cost and the PPF.

-The table above shows the amounts of cloth and cheese that China and Pakistan can produce in an hour. Which country has the comparative advantage in cloth and which country has the comparative advantage in cheese?

If the marginal benefit of consuming another unit of a good is positive, then to reach the allocatively efficient level of output more of the good should be produced and consumed

Susan likes to drink sodas. The ________ soda Susan drinks, the ________ of the last soda.

-In the figure above, point E could be obtained if

-In the figure above, the marginal cost of the second computer is

Why does it make sense for economies to specialize according to comparative advantage and trade?

The production possibilities frontier is the boundary between those combination of goods and services that can be

-The bowed outward shape of the production possibilities frontier in the above figure indicates that

When economists state that the opportunity cost of a product increases as more of it is produced, what do they mean? What is the opportunity cost?

Moving from one point on the production possibilities frontier to another

Abe can catch 15 pounds of fish an hour or pick 30 pounds of fruit an hour. He works an 8-hour day, spending 5 hours picking fruit and 3 hours catching fish. Calculate Abe's opportunity cost of a pound of fruit.