Exam 3: The Economic Problem

Suppose that after specializing according to comparative advantage,a country is trading with another nation that also specializes according to its comparative advantage.Which of the following statements are true for the first country? i.It enjoys gains from trade. ii.It must have an absolute advantage in the production of the good it produces. iii.It is producing at a point beyond its PPF.

Why does the production possibilities frontier have a bowed out shape rather than being a straight line?

-The figure above shows the production possibilities frontiers for the United Kingdom and France.What is the opportunity cost of one bushel of wheat in France?

The sustained expansion of production possibilities is called

-The above figure shows the production possibility frontier for a country.What is the opportunity cost per ton of rice to move from point B to point D?

-The figure above shows a production possibilities frontier.In the figure,when the economy moves from point C to point B,what is the opportunity cost of a DVD?

-Deb and Pete have volunteered to help their favorite charity mail out fundraiser information.The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes.If Deb spends all her time assembling packets,how many can she assemble?

Specialization and trade

Moving along a country's PPF,a reason opportunity costs increase is that

The figure above show Liz's and Joe's production possibilities for Salads and Smoothies. -Using the figure above,suppose with no trade Liz and Joe each produce at point A on their respective PPFs.Then,Joe suggests that they specialize and trade.He would produces only salads and Liz would produce only smoothies.Then,Joe says,he would buy 16 smoothies from Liz at a price of 1.5 salads per smoothie.Liz should

-Point D in the above PPF figure is

The United States is one of the richest nations in the world,

-The figure above illustrates a small country's production possibilities frontier.Moving from point A to point B,the per unit opportunity cost of a VCR is ________ per VCR.

The production possibilities frontier is a graph showing the

Gains from trade

While moving along a production possibilities frontier,the amount of labor ________,the amount of capital ________,and the level of technology ________.

How can a nation that is at an absolute disadvantage gain from trade?

-Robinson Crusoe divides his time between catching fish and gathering fruit.Part of his production possibilities frontier is given in the above table.Mr.Crusoe,while lonesome,is efficient and always stays on his PPF.Mr.Crusoe is consuming 20 pounds of fish.Then he decides to slowly become a vegetarian and decrease his consumption of fish to 9 pounds.This decision means that Mr.Crusoe will

With no international trade,a country ________ consume at a point outside of its PPF; with international trade,a country ________ consume at a point outside of its PPF.

Why does a nation experience increasing opportunity cost?