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

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 5 pillows and 21 blankets would appear

Consider a country that produces only two goods: kayaks and coconuts.Suppose it is possible for this country to increase its production of kayaks without producing fewer coconuts.In this case, its current output combination is efficient.

Consider the following items: A.the novel "The Girl On The Train" by Paula Hawkins B.the "The Spirited Shipper," an innovative wine shipping box C.a Swiss chef's award-winning recipe D.an original fabric design, for example, the fabric used for "Coach" bags and luggage Which of the items listed is an example of intellectual property?

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 canoe?

________ marginal opportunity cost implies that the more resources already devoted to any activity, the payoff from allocating yet more resources to that activity increases by progressively smaller amounts.

If the opportunity cost of producing more of one good remains the same as more of that good is produced, then the production method is inefficient.

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 Scotland's opportunity cost of producing one motorcycle?

Which of the following statements is true?

Once the copyright on a book expires,

An outward shift of a nation's production possibilities frontier represents

The term "property rights" refers to

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

If opportunity costs are constant, the production possibilities frontier would be graphed as

Table 2-5 -Refer to Table 2-5.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?

Table 2-4 -Refer to Table 2-4.The Fruit Farm produces only apples and pears.The table above shows the maximum possible output combinations of the two fruits using all resources and currently available technology. a.Graph The Fruit Farm's production possibilities frontier.Put apples on the horizontal axis and pears on the vertical axis.Be sure to identify the output combination points on your diagram. b.Suppose The Fruit Farm is currently producing at point D.What is the opportunity cost of producing an additional 8,000 pounds of pears? c.Suppose The Fruit Farm is currently producing at point D.What happens to the opportunity cost of producing more and more pears? Does it increase, decrease, or remain constant? Explain your answer. d.Suppose The Fruit Farm is currently producing at point G.What happens to the opportunity cost of producing more and more apples? Does it increase, decrease, or remain constant? Explain your answer. e.Suppose The Fruit Farm is plagued by the apple maggot infestation which destroys apple trees but not pear trees.Show in a graph what happens to its PPF.

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 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 2-4 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.general technological advancement C.an increase in consumer wealth Which of the events listed above could cause a movement from V to W?

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.If the two countries specialize and trade, who should export canoes?

a.Draw a production possibilities frontier for a country that produces two goods, beer and pretzels.Assume that resources are equally suited to both tasks. b.Define opportunity costs. c.Use your production possibilities frontier graph to demonstrate the principle of opportunity costs.