Exam 2: Trade-Offs, Comparative Advantage, and the Market System

If a country produces only two goods, it is possible to have a comparative advantage in the production of both those goods.

Table 2.4 One Digital Camera Wheat (per pound) China 100 hours 4 hours South Korea 60 hours 3 hours Table 2.4 shows the number of labour hours required to produce a digital camera and a pound of wheat in China and South Korea. -Refer to Table 2.4.What is China's opportunity cost of producing one pound of wheat?

The natural resources used in production are made available in the

Figure 2.2 Figure 2.2 above shows the production possibilities frontier for Atikamekw Cree (ca. 1600)with a historical tradition of fishing and farming. Assume they produce two goods: fish and grains -Refer to Figure 2.2.The linear production possibilities frontier in the figure indicates that

The payment received by suppliers of entrepreneurial skills is called interest.

Figure 2.2 Figure 2.2 above shows the production possibilities frontier for Atikamekw Cree (ca. 1600)with a historical tradition of fishing and farming. Assume they produce two goods: fish and grains -Refer to Figure 2.2.What is the opportunity cost of one kilogram of grain?

Figure 2.4 Figure 2.4 shows various points on three different production possibilities frontiers for a nation. -Refer to Figure 2.4.Consider the following movements: a)from point V to point W b)from point W to point Y c)from point Y to point Z Which of the movements listed above represents economic growth?

For each bottle of wine that Italy produces, it gives up the opportunity to make 10 pounds of cheese.France can produce 1 bottle of wine for every 25 pounds of cheese it produces.Which of the following is true about the comparative advantage between the two countries?

Figure 2.4 Figure 2.4 shows various points on three different production possibilities frontiers for a nation. -Refer to Figure 2.4.Consider the following events: a)an increase in the unemployment rate b)a decrease in a nation's money supply c)a war that kills a significant portion of a nation's population Which of the events listed above could cause a movement from Y to W?

How does Adam Smith's idea of the "invisible hand" apply to the various parts, made by many different manufacturers in many different countries, that are used by Apple to produce an iPad?

For a person to have a comparative advantage in producing a product, she must be able to produce that product at a lower opportunity cost than her competitors.

Table 2.4 One Digital Camera Wheat (per pound) China 100 hours 4 hours South Korea 60 hours 3 hours Table 2.4 shows the number of labour hours required to produce a digital camera and a pound of wheat in China and South Korea. -Refer to Table 2.4.Does either China or South Korea have an absolute advantage and if so, in what product?

Increasing opportunity cost is represented by a ________ production possibilities frontier.

If the production possibilities frontier is ________, then opportunity costs are constant as more of one good is produced.

Suppose your expenses for this term are as follows: tuition: $5,000, room and board: $6,500, books and other educational supplies: $1,500.Further, during the term, you can only work part-time and earn $3,500 instead of your full-time salary of $14,000.What is the opportunity cost of going to college this term, assuming that your room and board expenses would be the same even if you did not go to college?

The points outside the production possibilities frontier are

What is the difference between product markets and factor markets?

On a diagram of a production possibility frontier, opportunity cost is represented by the production possibility frontier shifting outward.

Table 2.1 Production choices for Tomaso's Trattoria Choice Quantity of Pizzas Produced Quantity of Calzones Produced A 48 0 B 36 15 C 24 30 D 12 45 E 0 60 -Refer to Table 2.1.Assume Tomaso's Trattoria only produces pizzas and calzones.A combination of 24 pizzas and 15 calzones would appear

Table 2.4 One Digital Camera Wheat (per pound) China 100 hours 4 hours South Korea 60 hours 3 hours Table 2.4 shows the number of labour hours required to produce a digital camera and a pound of wheat in China and South Korea. -Refer to Table 2.4.South Korea has a comparative advantage in the production of