Exam 3: The Economic Problem

Before the first Gulf War, Kuwait had the capacity to produce a certain amount of oil from its oil wells.After the war, it found that capacity greatly diminished because the oil wells were on fire.Draw Kuwait's PPF before and after the war, assuming that the only two goods produced are oil and food.Further assume that setting the oil wells on fire did not affect Kuwait's ability to produce food.Explain why the PPF before the war is different from the PPF after the war.

-The table above gives the production possibilities frontier for two countries, Anaconda and Bear.The opportunity cost of moving from production point B to production point C for Anaconda equals ________ and for Bear equals ________.

What is the opportunity cost of economic growth?

-Huey and Steve can grow potatoes or tomatoes.The table above shows the pounds of potatoes and tomatoes Huey and Steve can grow in a week.Based on the table, Huey's opportunity cost of producing one pound of tomatoes is

Are all points inside the production possibilities frontier unattainable?

Japan can use all of its resources to produce 100 videos or 400 shoes.China can use all of its resources to produce 25 videos or 200 shoes.Which nation has the comparative advantage in shoes and which nation has the comparative advantage in videos?

The figure above show Liz's and Joe's production possibilities for Salads and Smoothies. -Using the figure above, suppose with no trade Liz and Joe each produce at point A on their respective PPFs.Then, Liz suggests that they specialize and trade.She would produces only smoothies and Joe would produce only salads.Then she would sell 10 smoothies to Joe at a price of 2.5 salads per smoothie.In this scenario,

Economic growth depends upon which of the following? I∙Improving the quality of labor Ii∙Technological advancement Iii∙Increasing the amount of capital

-The table above gives the production possibilities frontier for two countries, Anaconda and Bear.The table shows that

What is gained when people engage in specialization and trade?

Mac can bake more cookies than Monica per hour.It must be true that

If Wendy can produce more of all goods than Tommy in an hour, then

"When a person has an absolute advantage in producing a good, the person necessarily has a lower opportunity cost of producing it." Is this assertion true or false?

-In the above figure, Jill's opportunity cost of producing 1 gallon of soda is ________ of bottled water.

The figure above show Liz's and Joe's production possibilities for Salads and Smoothies. -Given the information in the figure above, Joe can benefit from trade as far as the price at which he buys Liz's smoothies is

Other things equal, if Mexico devotes more resources to train its population than Spain,

-The figure above shows the production possibilities frontiers for the United Kingdom and France.If the United Kingdom and France specialize and engage in trade, the United Kingdom will export ________ and France will export ________.

Why does a nation experience increasing opportunity cost?

"If Mexico is currently operating at a point inside its production possibilities frontier, then there are unemployed or misallocated resources in Mexico." Is this statement true or false? Briefly explain your answer.

With no international trade, a country ________ consume at a point outside of its PPF; with international trade, a country ________ consume at a point outside of its PPF.