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

Table 2-18 Minnie Mickey Hats 40 50 Urmbrellas 10 5 Table 2-18 shows the output per week of two people, Minnie and Mickey.They can either devote their time to making hats or making umbrellas. -Refer to Table 2-18.What is Minnie's opportunity cost of making a hat?

In economics,the term "free market" refers to a market where no sales tax is imposed on products sold.

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 advancements in technology with respect to only plastic production?

In a free market there are virtually no restrictions,or at best few restrictions,on how a good or service can be produced or sold.

a.Draw a production possibilities frontier for a country that produces two goods,wine and cheese.Assume that resources are not equally suited to both tasks. b.Define opportunity costs. c.Use your production possibilities frontier graph to demonstrate the principle of opportunity costs.

Figure 2-6 -Refer to Figure 2-6.If the economy is currently producing at point C,what is the opportunity cost of moving to point B?

Table 2-14 One Motorcycle One Guitar Ireland 20 hours 4 hours Scotland 8 hours 2 hours Table 2-14 shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland. -Refer to Table 2-14.What is Ireland's opportunity cost of producing one motorcycle?

Figure 2-2 Figure 2-2 above shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables. -Refer to Figure 2-2.If Mendonca chooses to produce 160 pounds of vegetables,how much meat can it produce to maximize production?

Identify whether each of the following transactions will take place in the factor market or in the product market: a.Graciela buys a Tesla Motors Model X. b.Lashan works 60 hours a week at a law firm. c.Tito sells his family's farmland to a housing developer. d.Tesla Motors increases employment at its Fremont,California plant.

Which of the following is an examples of spending on factors of production in the circular flow model?

Suppose there is no unemployment in the economy and society decides that it wants more of one good.Which of the following statements is true?

In the circular flow model,households demand resources such as labor services in the factor market.

If additional units of a good could be produced at a constant opportunity cost,the production possibility frontier would be linear.

The natural resources used in production are made available in the

Table 2-25 One Motarcycle One Guitar Ireland 10 hours 2.5 hours Scotland 9 hours 2 hours -Refer to Table 2-25.This table shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland. a.Which country has an absolute advantage in the production of motorcycles? b.Which country has an absolute advantage in the production of guitars? c.What is Ireland's opportunity cost of producing one motorcycle? d.What is Scotland's opportunity cost of producing one motorcycle? e.What is Ireland's opportunity cost of producing one guitar? f.What is Scotland's opportunity cost of producing one guitar? g.If each country specializes in the production of the product in which it has a comparative advantage,who should produce motorcycles? h.If each country specializes in the production of the product in which it has a comparative advantage,who should produce guitars?

What is a production possibilities frontier? What do points along the frontier represent? What do points inside and outside the frontier represent?

Table 2-3 Production Choices for Dina's Diner Choice Quantity of Sliders Produced Quantity of Hot Wings Produced A 160 0 B 120 50 C 80 100 D 40 150 E 0 200 -Refer to Table 2-3.Assume Dina's Diner only produces sliders and hot wings.A combination of 80 sliders and 50 hot wings would appear

Figure 2-15 Figure 2-15 shows the production possibilities frontiers for Greenland and Iceland. Each country produces two goods, snow cones and popsicles. -Refer to Figure 2-15.What is the opportunity cost of producing 1 popsicle in Iceland?

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 36 pizzas and 30 calzones would appear

If a country is producing efficiently and is on the production possibilities frontier,the only way to produce more of one good is with an advance in technology.