Exam 2: Production possibilities and opportunity cost

Suppose that Spain has a comparative advantage in hats and Portugal has a comparative advantage in doormats.Under a system of free trade,each country specialises and then trades with the other.If the price starts at 4 hats per doormat,and then increases to 5 hats per doormat,then:

Exhibit 2-8 Production possibilities frontier data -Suppose an economy is faced with the production possibilities table shown in Exhibit 2-8.The first unit of capital goods will cost the economy _____ units of consumption goods.

If more of one good can be produced without producing less of another output,the economy must have been operating efficiently.

Exhibit 2-8 Production possibilities frontier data -Suppose an economy is faced with the production possibilities table shown in Exhibit 2-8.The second unit of capital goods production will cost _____ units of consumption goods and the third unit of capital goods production will cost _____ units of consumption goods.

Which of the following statements is false?

Production possibilities frontier analysis allows us to identify:

Exhibit 2-10 Production possibilities frontier -From the information in Exhibit 2-10,which of the following points on the production possibilities curve are attainable with the resources and technology currently available?

The 'For whom to produce' question:

A country has a comparative advantage in producing a good when it has the lowest opportunity cost of producing that good.

Opening trade between nations enables each nation's consumption possibilities to go beyond the confines of its own production possibilities curve.

The theory of comparative advantage:

Marginal analysis:

Exhibit 2-5 Production possibilities frontier -For the economy shown in Exhibit 2-5 to operate at point C,it must:

Exhibit 2-9 Production possibilities frontier -In Exhibit 2-9,which of the following is not true regarding point H? Point H:

Economic growth may be represented by a/an:

If an economy is producing at full employment,it means that:

For the economy to operate efficiently,it must shift workers from producing consumer goods to producing capital goods.

Increased productivity leads to:

The author of the article in the case study on immigration (in Chapter 2,pp.45-6)argues for an increase in which category of migrants?

Exhibit 2-2 Production possibilities frontier -The production possibilities in Exhibit 2-2 indicates that the opportunity cost of corn is: