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

Any output combination inside a production possibility frontier is associated with unused or underutilized resources.

Figure 2-11 -Refer to Figure 2-11. Which two arrows in the diagram depict the following transaction: Lizzie Haxem hires "The Paint Pros," a professional painting company,to paint her home.

Adam Smith's ________ refers to the process by which individuals acting in their own self-interest bring about a market outcome that benefits society as a whole.

Figure 2-6 General Motors recently approved for production the Cadillac Converj, an electric car based on its Chevy Volt. The Converj will feature a "Generation 1.5 Voltec" powertrain, with a hybrid engine that runs on a combination of electricity and gasoline. Suppose GM chooses to produce both a coupe version and an SUV version of this hybrid-engine vehicle for its Cadillac brand. Figure 2-6 shows changes to its production possibilities frontier in response to new developments and different strategic production decisions. -Refer to Figure 2-6. In response to changing consumer demands,Cadillac cuts back on the production of SUVs and increases its production of coupes.This strategy is best represented by

Table 2-3 Table 2-3 shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens. -Refer to Table 2-3.Which of the following statements is true?

Households

Figure 2-7 Figure 2-7 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts. -Refer to Figure 2-7.Which country has a comparative advantage in the production of pineapples?

If society decides it wants more of one good and ________,then it has to give up some of another good and incur some opportunity costs.

In the desire to have a celebrity's image protected to prevent it from being used in ways he would not approve,a celebrity's estate

Firms

The slope of a production possibilities frontier measures the ________ of producing one more unit of a good.

The production possibilities frontier model assumes all of the following except

Figure 2-9 -Refer to Figure 2-9. In the circular flow diagram,who are economic agents A and who are economic agents B?

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

Figure 2-7 Figure 2-7 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts. -Refer to Figure 2-7.Which country has a comparative advantage in the production of coconuts?

Should countries specialize in producing goods and services based on having a comparative advantage or an absolute advantage? Why?

A successful market economy requires well defined property rights and

Figure 2-7 Figure 2-7 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts. -Refer to Figure 2-7.What is the opportunity cost of producing 1 ton of coconuts in Costa Rica?

Increasing opportunity cost along a bowed out production possibilities frontier occurs because

Which of the following is not a flow in the circular flow model?