Exam 2: Choices and Trade Offs in the Market

An Inquiry into the Nature and Causes of the Wealth of Nations, published in 1776, was written by:

Table 2.8 Table 2.8 shows the number of labour hours required to produce a motorcycle and a guitar in Ireland and Scotland. -Refer to Table 2.8. Ireland has a comparative advantage in the production of:

On a diagram of a production possibility frontier, economic growth is represented by the slope of the production possibility frontier.

Each person goes about her daily business seeking to maximise her own self-interests. In doing so, she contributes to the welfare of society at large. This is the idea underlying Adam Smith's 'invisible hand'.

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

If Tanisha can audit more tax returns in one hour than Libby, then Tanisha has an absolute advantage in auditing tax returns.

An example of a factor of production is:

If a country produces only two goods, it is possible to have a comparative advantage in the production of both of those goods.

Is it possible for a firm to have an absolute advantage in producing something without having a comparative advantage? Why or why not? _____________________________________________________________________________________________ _____________________________________________________________________________________________

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

Economic growth is represented on a production possibility frontier model by the production possibility frontier:

For each surfboard that Australia produces, it gives up the opportunity to make 25 boomerangs. New Zealand can produce 1 surfboard for every 15 boomerangs it produces. Which of the following is true about the comparative advantage between the two countries?

Table 2.6 Table 2.6 shows the number of labour hours required to produce a digital camera and a kilo of wheat in China and South Korea. -Refer to Table 2.6. South Korea has a comparative advantage in the production of:

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

Table 2.2 Production choices for Billie's Bedroom Shop -Refer to Table 2.2. Assume Billie's Bedroom Shop only produces pillows and blankets. A combination of 18 pillows and 14 blankets would appear:

Table 2.1 Production choices for Tomaso's Trattoria -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.

The opportunity cost of taking a semester-long economics class is:

Table 2.6 Table 2.6 shows the number of labour hours required to produce a digital camera and a kilo of wheat in China and South Korea. -Refer to Table 2.6. If the two countries specialise and trade, who should export digital cameras?

Table 2.3 Production Choices for Dina's Cafe -Refer to Table 2.3. Dina faces ________ opportunity costs in the production of sliders and hot wings.

An example of a 'factor of production' is: