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

The primary purpose of ________ is to encourage the expenditure of funds on research and development to create new products.

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

If a nation changes its laws to more actively enforce intellectual property rights,all of the following will most likely take place except

Figure 2-19 -Refer to Figure 2-19.Which two arrows in the diagram depict the following transaction: Myrna earns $450 for working at HempHill's Drug Store.

Figure 2-8 Figure 2-8 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. -Refer to Figure 2-8.What is the opportunity cost of one dozen orchids?

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 both plastic production and food production?

Adam Smith's ________ refers to the process by which individuals acting in their own self-interest bring about a market outcome that benefits society as a whole.

Figure 2-4 Figure 2-4 shows various points on three different production possibilities frontiers for a nation. -Refer to Figure 2-4.A movement from ________ could occur because of an influx of immigrant labor.

An inward shift of the production possibilities frontier represents

Which of the following statements about a simple circular flow model is false?

It is not possible to have an absolute advantage in producing a good or service without having a comparative advantage.

Table 2-16 One Cell Phone Lumber (per board foot) Estonia 40 hours 8 hours Finland 16 hours 4 hours Table 2-16 shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland. -Refer to Table 2-16.Estonia has a comparative advantage in the production of

Figure 2-16 -Refer to Figure 2-16.One segment of the circular flow diagram in the figure shows the flow of labor services from market K to economic agents J.What is market K and who are economic agents J?

Adam Smith,the father of modern economics wrote in his book,An Inquiry into the Nature and Causes of the Wealth of Nations,"It is not from the benevolence of the butcher,the brewer,or the baker,that we expect our dinner but from their regard to their own interest." Explain what he meant by that statement and how such behavior promotes the wealth of a nation.

In a production possibilities frontier model,a point inside the frontier is

What is an entrepreneur?

Figure 2-5 -Refer to Figure 2-5.If the economy is currently producing at point Y,what is the opportunity cost of moving to point X?

Figure 2-14 Figure 2-14 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts. -Refer to Figure 2-14.What is the opportunity cost of producing 1 ton of coconuts in Guatemala?

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 guitar?

What is comparative advantage? What is absolute advantage?