Exam 2: The Economic Problem

-According to the diagram in the figure above, an allocatively efficient use of resources requires that production and consumption of gasoline be

-Anna and Maria produce shirts and ties. The figure above shows Anna's PPF and Maria's PPF. Anna and Maria can achieve the gains from trade if Anna produces ________ and Maria produces ________.

-In the figure above, the marginal cost of producing a computer

-Molly just graduated from high school. The figure shows her possibilities frontier. If Molly goes to college, she will move from point M to point K. In terms of consumption goods, Molly's opportunity cost of going to college is

-The above figure illustrates Mary's production possibilities frontier. Which of the following movements show opportunity costs increasing?

The more we have of a good or service, the smaller is its marginal benefit and the less we are willing to pay for an additional unit of it.

When operating on its PPF, a country can produce 2 tons of butter and 200 cars OR 3 tons of butter and 150 cars. The opportunity cost of 1 ton of butter is ________ cars per ton of butter.

Marginal cost

Increasing opportunity cost implies that

Jane produces only corn and cloth. Taking account of her preferences for corn and cloth

If two countries specialize in the production of goods in which they have a comparative advantage, they can experience gains from trade.

Production efficiency means that

The marginal benefit from a good is the amount a person is willing to pay for

BAE, a British defense company, has the contract to produce Tornado aircraft for the Royal Air Force. BAE is producing the aircraft at the lowest possible cost. If the RAF orders one more Tornado, there will be

Claire and Dag are farmers who produce beef and corn. In a year, Claire can produce 16 tons of beef or 40 bushels of corn, while Dag can produce 5 tons of beef or 25 bushels of corn. The opportunity cost of producing a ton of beef is

-Consider the PPF for office buildings and housing shown in the figure above. Which point in the diagram shows that resources to produce office buildings and housing are being misallocated, unused, or both?

Economic growth comes from

Marginal benefit is the

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. A movement from ________ represents the greatest opportunity cost of increasing cola production.

-In the figure above, suppose that Mac and Izzie trade and reach point c. Then