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

In economics, the term "free market" refers to a market where products are traded but not sold.

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

Table 2-3 Production Choices for Dina's Diner -Refer to Table 2-3.Dina faces ________ opportunity costs in the production of sliders and hot wings.

Scarcity

For each bottle of wine that Italy produces, it gives up the opportunity to make 10 pounds of cheese.France can produce 1 bottle of wine for every 25 pounds of cheese it produces.Which of the following is true about the comparative advantage between the two countries?

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

Pierre can produce either a combination of 20 bow ties and 30 neckties or a combination of 35 bow ties and 15 neckties.If he now produces 35 bow ties and 15 neckties, what is the opportunity cost of producing an additional 15 neckties?

Table 2-10 Table 2-10 shows the output per day of two pet groomers, Tammi and Horace.They can either devote their time to grooming dogs or bathing cats. -Refer to Table 2-10.What is Horace's opportunity cost of grooming a dog?

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. -Sarita can bake either a combination of 25 cakes and 15 pies or a combination of 10 cakes and 20 pies.If she now bakes 10 cakes and 20 pies, what is the opportunity cost of baking an additional 15 cakes?

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

An inward shift of a nation's production possibilities frontier can occur due to

The primary purpose of ________ is to encourage the expenditure of funds on research and development to create new products.

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 2-8 Figure 2-8 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. -Refer to Figure 2-8.What is the opportunity cost of 100 dozen roses?

A bed of oysters is not an example of a factor of production but the shucked oysters used to make oyster stew are a factor of production.

If a country is producing efficiently and is on the production possibilities frontier, the country can produce more of one good without producing less of the other good.

What is meant by the term opportunity cost?

Which of the following is an example of spending on goods and services in the circular flow model?

Suppose in the Germany, the opportunity cost of producing a gallon of beer is 5 gallons of wine.In Italy, the opportunity cost of producing a gallon of beer is 3 gallons of wine. a.What is the opportunity cost of producing a gallon of wine for Germany? b.What is the opportunity cost of producing a gallon of wine for Italy? c.Which country has a comparative advantage in the production of beer? d.Which country has a comparative advantage in the production of wine?

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.The linear production possibilities frontier in the figure indicates that