Exam 2: The Economic Problem

-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?

The production possibilities frontier itself shows

-The above table shows the tons of steel and concrete that can be produced by the United States and France in an hour. From the data in the table

The principle of decreasing marginal benefit means that as the quantity of a good consumed

Country A Country B -In the table above, country B is producing 4 units of X and 6 units of Y. For country B, the opportunity cost of producing an additional unit of Y is

-Two nations can produce computers and software in the amounts given in the table above. Does either nation have an absolute advantage in producing the products? Which nation has a comparative advantage in computers? Which nation has a comparative advantage in software? Explain your answers.

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

In a world lacking property rights, it would be ________ to realize the gains from trade and there would be ________ specialization.

-In the figure above, Jill is producing at point A. Jill's opportunity cost producing one pair of pants is

Economic growth is shown on the production possibilities frontier as

Allocative efficiency occurs when it is

Property rights facilitate the development of trade.

-In the figure above, point A is undesirable because

Draw a production possibilities frontier between beans and peas. Label the unattainable points, the attainable points with fully employed resources, and the attainable points with unemployed resources.

The production possibilities frontier bows outward because

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

"If Mexico is currently operating at a point inside its production possibilities frontier, then there are unemployed resources in Mexico." Is this statement true or false? Briefly explain your answer.

A circular flow diagram shows the flows from the goods and resources markets.

A point inside a production possibilities frontier

In goods markets ________ and in factor markets ________.