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

Identify whether each of the following transactions will take place in the factor market or in the product market: a.Shondra buys a Harley-Davidson Softail motorcycle. b.Aimee works 20 hours a week at a grocery store. c.Gustavo sells a warehouse to a produce delivery company. d.Ocean Spray increases employment at its Middleboro,Massachusetts plant.

List the four broad categories of factors of production.

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 Mickey's opportunity cost of making an umbrella?

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

Consider a country that produces only two goods: bird feeders and binoculars.Suppose it is possible for this country to increase its production of bird feeders without producing fewer binoculars.In this case,its current output combination is inefficient.

If additional units of a good could be produced at a constant opportunity cost,the production possibility frontier would be bowed outward (concave).

Suppose your expenses for this term are as follows: tuition: $10,000,room and board: $6,000,books and other educational supplies: $1,000.Further,during the term,you can only work part-time and earn $8,000 instead of your full-time salary of $20,000.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?

Figure 2-13 Figure 2-13 shows the production possibilities frontiers for Tahiti and Bora Bora. Each country produces two goods, milk and honey. -Refer to Figure 2-13.Which country has a comparative advantage in the production of milk?

Figure 2-13 Figure 2-13 shows the production possibilities frontiers for Tahiti and Bora Bora. Each country produces two goods, milk and honey. -Refer to Figure 2-13.Which country has a comparative advantage in the production of honey?

Published in 1776,________ was written by Adam Smith.

Table 2-9 Serena Haley Bracelets 8 9 Necklaces 16 12 Table 2-9 shows the output per week of two jewelers, Serena and Haley.They can either devote their time to making bracelets or making necklaces. -Refer to Table 2-9.Which of the following statements is true?

A successful market economy requires

What shape does a production possibilities frontier take if it displays increasing opportunity costs? What shape does a production possibilities frontier take if it displays constant opportunity costs? Which shape is most common in production situations?

The resource income earned by those who supply labor services is called

Table 2-19 Wilrn Betty Statues 12 14 Benches 4 7 Table 2-19 shows the output per month of two people, Wilma and Betty.They can either devote their time to making marble statues or making marble benches. -Refer to Table 2-19.What is Betty's opportunity cost of making a statue?

All of the following are examples of spending on goods and services in the circular flow model except

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 Scotland's opportunity cost of producing one guitar?

If you can produce more of something than others with the same resources,you have

Any output combination outside a production possibility frontier is associated with unused or underutilized resources.

The ________ production points on a production possibility curve are the points along and inside the production possibility frontier.