Exam 2: The Economic Problem

-The figure above shows Freda's PPF. Freda currently produces 10 packets of fudge and no cookies. If Freda decides to produce 1 packet of cookies, her opportunity cost of the packet of cookies is ________ of fudge.

The production possibilities frontier separates

Suppose that a typical German factory can produce 20 cameras or 1 computer in an hour, and that a typical American factory can produce 10 cameras or 1 computer in an hour. The opportunity cost of 20 cameras in terms of computers in Germany is

The principle of increasing opportunity cost leads to

-Refer to the production possibilities frontier in the figure above. If the country moves from point a to point c, the opportunity cost of the move is

-A PPF, such as the one above, that bows outward illustrates

As long as the marginal benefit from a good is greater than its marginal cost, an economy is operating efficiently.

On the vertical axis, the production possibilities frontier shows ________; on the horizontal axis, the production possibilities frontier shows ________.

-In the figure above, what can be said about point B?

Which of the following statements regarding the production possibilities frontier is TRUE?

When an economy produces at its allocatively efficient production point

In order to societies to reap the gains from trade, it is necessary to

-In the above figure, which point represents an unattainable production combination of the two goods?

When resources are assigned to inappropriate tasks, that is, tasks for which they are not the best match, the result will be producing at a point

The idea of comparative advantage implies that people or countries

Moving along a PPF, marginal cost is

-Refer to the table above, which gives five points on a nation's PPF. The production of 7 units of X and 28 units of Y is

In one day, Brandon can either plow 10 acres or plant 20 acres. In one day, Christopher can either plow 14 acres or plant 14 acres. Which of the following statements about comparative advantage is CORRECT?

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. What is the opportunity cost of one chocolate bar if Sweet-tooth Land moves from point C to point D?

The principle of decreasing marginal benefit implies that the