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

It is possible to have an absolute advantage in producing a good or service without having a comparative advantage.

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 milk in Tahiti?

A successful market economy requires

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 guitar?

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 unicycle?

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.What is Haley's opportunity cost of making a necklace?

Figure 2-14 -Refer to Figure 2-14.Which two arrows in the diagram depict the following transaction: Dorian Gray hires "Wild Oscar," a professional portrait artist, to paint his picture.

Suppose there is no unemployment in the economy and society decides that it wants more of one good.Which of the following statements is true?

Adam Smith's invisible hand refers to

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.What is Haley's opportunity cost of making a bracelet?

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.Suppose Mendonca is currently producing 60 pounds of vegetables per period.How much meat is it also producing, assuming that resources are fully utilized?

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 sailboats?

How does Adam Smith's idea of the "invisible hand" apply to the various parts, made by many different manufacturers in many different countries, that are used by Apple to produce an iPad?

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 bolt of cotton in Indonesia?

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

If a brewery wants to raise funds to purchase a new fermenting vat, it does so in the

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.an increase in the unemployment rate B.a decrease in a nation's money supply C.a war that kills a significant portion of a nation's population Which of the events listed above could cause a movement from Y to W?

In a free market there are virtually no restrictions, or at best few restrictions on how factors of production can be employed.

Figure 2-7 Apple recently announced that the company is exploring the electric vehicle market, and is looking to produce vehicles as early as 2020.Assume Apple chooses to produce both traditional electric-engine vehicles and self-driving electric-engine vehicles.Figure 2-7 shows changes to its production possibilities frontier in response to new developments and different strategic production decisions. -Refer to Figure 2-7.Assume that in 2022, Apple temporarily shuts down one of its factories for an extensive renovation, and this reduces the amount of production capacity available for both types of vehicles.This is best represented by the

In a two-good, two country world, if one country has an absolute advantage in the production of both goods, it cannot benefit by trading with the other country.