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

A successful market economy requires

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 meat?

Table 2-9 Table 2-9 shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras. -Refer to Table 2-9.What is Honduras's opportunity cost of producing one canoe?

Table 2-11 Table 2-11 shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland. -Refer to Table 2-11.Scotland has a comparative advantage in the production of

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 ________ is the result of negative technological change in plastic production.

As women's wages have risen relative to men's wages, the opportunity cost to women of doing housework has ________ than has the opportunity cost to men.

Households

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

Figure 2-10 Figure 2-10 shows the production possibilities frontiers for Tahiti and Bora Bora. Each country produces two goods, milk and honey. -Refer to Figure 2-10.What is the opportunity cost of producing one gallon of honey in Tahiti?

The natural resources used in production are made available in the

Figure 2-13 -Refer to Figure 2-13.One segment of the circular flow diagram in the figure shows the flow of funds from economic agents E to market F.Who are economic agents E and what is market F?

An increase in the unemployment rate may be represented as a movement from a point on the production possibilities frontier to a different point on the frontier.

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

Table 2-3 Production Choices for Dina's Diner -Refer to Table 2-3.Assume Dina's Diner only produces sliders and hot wings.A combination of 120 sliders and 100 hot wings would appear

Table 2-17 -Refer to Table 2-17.This table shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland. a.Assume each country has a total of 2,700 labor hours to devote to the production of the two goods and draw the production possibilities frontier for each country.Put "Motorcycle" on the horizontal axis and "Guitar" on the vertical axis.Be sure to identify the intercept values on your graphs. b.Suppose each country allocates 55% of its labor hours to guitar production and 45% to the production of motorcycles.Complete Table 2-18 below to show each country's output of the two products. Table 2-18: Production and Consumption with no Trade c.If the two countries do not trade and consume whatever they produce, identify the current production and consumption point for each country on their respective production possibilities frontiers.Label Ireland's consumption point "I" and Scotland's consumption point "S." d.Suppose the two countries specialize and trade.Which country should produce motorcycles and which should produce guitars? Explain your answer. e.Complete Table 2-19 below to show each country's output with specialization. Table 2-19: Output with Specialization f.Did specialization increase the combined output for the two countries without any increase in resources? If so, by how much? g.Suppose Ireland and Scotland agree to trade so that in exchange for 600 guitars, the exporter of guitars receives 140 motorcycles.Complete Table 2-20 below to show each country's consumption bundle after trade. Table 2-20: Consumption with Trade h.Show the consumption points after trade on each country's production possibilities frontier.Label these points "X" for Ireland and "Y" for Scotland. i.Has trade made the two countries better off? Explain your answer.

Table 2-6 Table 2-6 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 2-6.Which of the following statements is true?

Suppose that in Belize, the opportunity cost of producing a sailboat is 5 hang gliders.In Honduras, the opportunity cost of producing a sailboat is 8 hang gliders. a.What is the opportunity cost of producing a hang glider for Belize? b.What is the opportunity cost of producing a hang glider for Honduras? c.Which country has a comparative advantage in the production of hang gliders? d.Which country has a comparative advantage in the production of sailboats?

Figure 2-6 -Refer to Figure 2-6.If the economy is currently producing at point C, what is the opportunity cost of moving to point B?

Table 2-11 Table 2-11 shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland. -Refer to Table 2-11.What is Ireland's opportunity cost of producing one motorcycle?

What is economic growth?