Exam 2: The Economic Problem

A country that must decrease production of one good in order to increase the production of another

Moving along a bowed-out PPF between milk and cotton, as more milk is produced the marginal cost of an additional gallon of milk

-In the above figure, in order for this country to move from production possibilities frontier PPF₁ to PPF₂, it might

In one day, Sue can change the oil on 20 cars or change the tires on 20 cars. In one day, Fred can change the oil on 20 cars or change the tires on 10 cars. Sue and Fred can gain from trade if Sue changes the ________ and Fred changes the ________.

Explain why the production possibilities frontier bows outward.

We are using resources efficiently if we can produce more of one good without producing less of some other good that we value more highly.

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

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

If Sam is producing at a point on his production possibilities frontier, then he

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.

-Leisure Land produces only sunscreen and camel rides. The table shows the marginal benefit and marginal cost schedules for sunscreen and camel rides. The allocatively efficient number of camel rides is

A key factor that leads to economic growth is

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

-In the figure above, if Mac and Izzie both completely specialized and traded with one another, their joint output would be

Tom takes 20 minutes to cook an egg and 5 minutes to make a sandwich. Jerry takes 15 minutes to cook an egg and 3 minutes to make a sandwich. If Tom and Jerry trade

When we choose a particular option, we must give up alternative options. The highest-valued alternative forgone is the ________ of the option chosen.

Blue Violet's Sweet Pansy's production possibilities production possibilities -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 ________.

Marginal benefit curves slope ________ and marginal cost curves slope ________.

What economic concepts are represented in the production possibilities model?

We have achieved production efficiency if we can produce more of one good without producing less of some other good.