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

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

Figure 2-4 Figure 2-4 shows various points on three different production possibilities frontiers for a nation. -Refer to Figure 2-4.Consider the following events: A.a decrease in the unemployment rate B.an increase in a nation's money supply C.an influx of immigrant workers Which of the events listed above could cause a movement from X to Z?

The slope of a production possibilities frontier

Table 2-12 -Refer to Table 2-12.This table shows the number of labor hours required to produce a digital camera 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 bushel of wheat? f.What is South Korea's opportunity cost of producing one pound of wheat? 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?

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 Guatemala's opportunity cost of producing one sailboat?

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.If Mendonca chooses to produce 120 pounds of meat, how much vegetables can it produce to maximize production?

Table 2-7 Table 2-7 shows the output per month of two people, Fred and Barney.They can either devote their time to making pogo sticks or making unicycles. -Refer to Table 2-7.What is Fred's opportunity cost of making a pogo stick?

Table 2-7 Table 2-7 shows the output per month of two people, Fred and Barney.They can either devote their time to making pogo sticks or making unicycles. -Refer to Table 2-7.What is Barney's opportunity cost of making a pogo stick?

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

Suppose your expenses for this term are as follows: tuition: $28,000, room and board: $9,000, books and other educational supplies: $2,500.Further, during the term, you can only work part-time and earn $16,000 instead of your full-time salary of $42,000.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?

Households

Which of the following would shift a nation's production possibilities frontier outward?

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

In a production possibilities frontier model, a point ________ the frontier is productively inefficient.

In a free market there are significant restrictions on how a good or service can be produced or sold.

Figure 2-9 Figure 2-9 shows the production possibilities frontiers for Pakistan and Indonesia.Each country produces two goods, cotton and cashews. -Refer to Figure 2-9.What is the opportunity cost of producing 1 pound of cashews in Indonesia?

If the best surgeon in town is also the best at cleaning swimming pools, then according to economic reasoning, this person should

Households ________ final goods and services in the ________ market.

How do firms and households interact in markets?

What is comparative advantage? What is absolute advantage?