Exam 2: The Economic Problem

Homer and Teddy are stranded on a desert island. To feed themselves each day they can either catch fish or pick fruit. In a day, Teddy could pick 60 pieces of fruit or catch 20 fish. Homer could pick 100 pieces of fruit or catch 150 fish. Which of the following statements is CORRECT?

Agnes can produce either 1 unit of X or 1 unit of Y in an hour, while Brenda can produce either 2 units of X or 4 units of Y in an hour. The opportunity cost of producing a unit of X is

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

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

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

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

Consider a PPF for tapes and soda. If the opportunity cost of a tape increases as the quantity of tapes produced increases and also the opportunity cost of a soda increases as the quantity of soda produced increases, then the PPF between the two goods will be

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

Which of the following is NOT illustrated by a production possibilities frontier?

What is the relationship between the bowed out shape of the production possibilities frontier and the increasing opportunity cost of a good as more of it is produced?

As an economy's capital stock increases, the economy

The bowed-outward shape of a PPF

Compare and contrast production efficiency and allocative efficiency.

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

The state of Georgia offers free college tuition to high school students with a "B" average. In 2007, the state raised the requirement so that fewer students qualified for the scholarship. At the same time, Georgia increased state spending on health care. Suppose that college education is on the vertical axis and health care is on the horizontal axis of a PPF. Georgia's change in spending would be shown as

-In the figure above, which of the following movements has the largest opportunity cost?

As we move along a bowed-out production possibility frontier, producing more tacos and less pizza, the opportunity cost of a pizza

BAE, a British defense company, has the contract to produce Tornado aircraft for the Royal Air Force. The BBC produces high-quality mystery shows for the British government. Both produce at the lowest possible cost. On a PPF with aircraft and mystery shows on the axes

-Jean can either type her term paper or create Web pages during the limited time she has available. The table above shows her PPF. a) Can Jean type 90 pages and create 2 Web pages? b) Use the above numbers to calculate the opportunity cost of a typed page as she increases her time typing and decreases time creating a Web page.

If Hong Kong continues to devote more resources to accumulating capital than the United States, Hong Kong will continue to grow more rapidly than the United States.