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

If society decides it wants more of one good and all resources are fully utilized,then

________ behavioral assumption about humans was that people usually act in a rational,self-interested way.

Article Summary Since 2008, the United States has been involved in trade negotiations over the Trans-Pacific Partnership (TPP), a free trade agreement with 11 other countries on both sides of the Pacific Ocean. One area of the negotiations involves patents and intellectual property rights in the pharmaceutical industry. A number of developing countries have ignored international agreements concerning patents and intellectual property rights as a way to benefit their domestic pharmaceutical industries, to the detriment of those companies which have spent considerable time and money developing new medicines. For every 5,000 to 10,000 experimental drugs contemplated, only one will typically gain FDA approval, and this occurs only after up to 15 years of research at an average cost of more than $1 billion. Also, 30 percent of the U.S. workforce is either directly or indirectly employed in the pharmaceutical industry, so protection of these intellectual property rights is very important for the U.S. economy. -Refer to the Article Summary.If more developing countries began abiding by international agreements which protect intellectual property rights,all of the following would most likely occur except

All of the following are critical functions of the government in facilitating the operation of a market economy except

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

Table 2-4 Production Choices for Dina's Diner Choice Quantity of Sliders Produced Quantity of Hot Wings Produced A 80 0 B 60 25 C 40 50 D 20 75 E 0 100 -Refer to Table 2-4.Dina faces ________ opportunity costs in the production of sliders and hot wings.

What causes a production possibilities frontier to shift outward?

Any output combination along a production possibility frontier is associated with overused or unattainable resources.

Table 2-21 Digital Carner a Wheat (bushels) China 100 hours 5 hours South Korea 90 hours 3 hours -Refer to Table 2-21.This table shows the number of labor hours required to produce a digital cameras and a bushel of wheat in China and South Korea. a.Which country has an absolute advantage in the production of digital cameras? b.Which country has an absolute advantage in the production of wheat? c.What is China's opportunity cost of producing one digital camera? d.What is South Korea's opportunity cost of producing one digital camera? e.What is China's opportunity cost of producing one pound of wheat? f.What is South Korea's opportunity cost of producing one pound of what? g.If each country specializes in the production of the product in which it has a comparative advantage,who should produce digital cameras? h.If each country specializes in the production of the product in which it has a comparative advantage,who should produce wheat?

Adam Smith's behavioral assumption about humans was that people

Scarcity

Specializing in the production of a good or service in which one has a comparative advantage enables a country to do all of the following except

What is economic growth?

In a report made to the U.S.Congress in 2001,the National Academy of Sciences cautioned that if fuel economy encourages the production of smaller and lighter cars,"Some additional traffic fatalities would be expected." This statement suggests that

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.Finland has a comparative advantage in the production of

Table 2-32 Cell Phone Lumber (board foot ) Estonia 20 hours 5 hours Finland 18 hours 4 hours -Refer to Table 2-32.This table shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland. h.Show the consumption points after trade on each country's production possibilities frontier.Label these points "X" for Estonia and "Y" for Finland. i.Has trade made the two countries better off? Explain your answer.

According to the production possibility model,if more resources are allocated to the production of physical and human capital,then which of the following is likely to happen?

A decrease in population shifts the production possibility frontier outwards over time.

Which of the following is not a flow in the circular flow model?

________ exists because unlimited wants exceed the limited resources available to fulfill those wants.