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

Table 2-12 One canoe One Sailboat Guaternala 10 hours 60 hours Monduras 15 hours 75 hours Table 2-12 shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras. -Refer to Table 2-12.If the two countries specialize and trade,who should export sailboats?

Table 2-20 One Wristwatch Rice (per pound) Japan 50 hours 2 hours Thailand 30 hours 1.5 hours Table 2-20 shows the number of labor hours required to produce a wristwatch and a pound of rice in Japan and Thailand. -Refer to Table 2-20.What is Japan's opportunity cost of producing one wristwatch?

Table 2-5 Production choices for Nadia's Neckware Choice Quantity of Ascots Produced Quantity of Bowties Produced A 32 0 B 24 6 C 16 12 D 8 18 E 0 24 -Refer to Table 2-5.Assume Nadia's Neckties only produces ascots and bowties.Nadia faces ________ opportunity costs in the production of ascots and bowties.

If a commercial dairy farm wants to raise funds to purchase feeding troughs,it does so in the

Table 2-7 Possible Output Combinations Shrimp (thousands of pounds) Oysters (thousands of pounds) A 35 0 B 30 20 C 25 35 D 20 47 E 15 57 F 10 64 G 5 68 H 0 70 -Refer to Table 2-7.The Shellfish Shack produces only shrimp and oysters.The table above shows the maximum possible output combinations of the two types of shellfish using all resources and currently available technology. a.Suppose The Shellfish Shack is currently producing at point E.What is the opportunity cost of producing an additional 11,000 pounds of oysters? b.Suppose The Shellfish Shack is currently producing at point E.What happens to the opportunity cost of producing more and more shrimp? Does it increase,decrease or remain constant? Explain your answer. c.Suppose The Shellfish Shack is currently producing at point B.What happens to the opportunity cost of producing more and more oysters? Does it increase,decrease or remain constant? Explain your answer. d.Suppose The Shellfish Shack is plagued by a disease which destroys oyster beds but not shrimp habitats.What would happen to its PPF?

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 additional government restrictions toward allowing immigrant labor.

Comparative advantage means the ability to produce a good or service

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

What is the difference between product markets and factor markets?

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.What is the opportunity cost of one pound of vegetables?

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?

Table 2-12 One canoe One Sailboat Guaternala 10 hours 60 hours Monduras 15 hours 75 hours Table 2-12 shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras. -Refer to Table 2-12.Does either Guatemala or Honduras have an absolute advantage and if so,in what product?

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.Scotland has a comparative advantage in the production of

The basis for trade is absolute advantage,not comparative advantage.

In 18th century Europe,governments gave guilds legal authority to limit production of goods.Did this authority obstruct or improve the market mechanism and how?

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 motorcycle?

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.Tomaso faces ________ opportunity costs in the production of pizzas and calzones.

A production possibilities frontier with a ________ shape indicates increasing opportunity costs as more and more of one good is produced.

When you purchase a new pair of jeans you do so in the

Table 2-11 One Digital Camera Wheat (per pound) China 100 hours 4 hours South Korea 60 hours 3 hours Table 2-11 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea. -Refer to Table 2-11.What is South Korea's opportunity cost of producing one pound of wheat?