Exam 3: The Economic Problem

The United States can use all of its resources to produce 50 computers or 4,000 shoes.Suppose that at world market prices, one computer exchanges for 100 shoes.Explain how the United States can gain from trade.

The production possibilities frontier is a graph showing the

David takes 10 minutes to process a customer, and 20 minutes to stock the shelves.Danny takes 15 minutes to process a customer, and 15 minutes to stock the shelves.Which of the following statements is true?

The opportunity cost of a good increases as more of it is produced because

How can a nation that is at an absolute disadvantage gain from trade?

Gains from trade

-Gabriel operates a ranch in Idaho where he raises cattle and grows potatoes.The figure above illustrates his production possibilities frontier.What is Gabriel's opportunity cost of raising another 100 cows?

As an economy moves down along a straight line production possibilities frontier, what happens to the opportunity cost of producing the good on the horizontal axis?

As an economy grows,

Why is it likely that the United States has an absolute advantage in goods and yet it still ends up importing them from other countries?

Production efficiency is represented by ________ a production possibilities frontier.

Possibility Fish (pounds) Fruit (pounds) A 37 56 B 31 78 C 20 90 D 9 99 -Robinson Crusoe divides his time between catching fish and gathering fruit.Part of his production possibilities frontier is given in the above table.Mr.Crusoe, while lonesome, is efficient and always stays on his PPF.Mr.Crusoe is consuming 20 pounds of fish.Then he decides to slowly become a vegetarian and decrease his consumption of fish to 9 pounds.This decision means that Mr.Crusoe will

Why do nations engage in international trade?

-The figure above shows the production possibilities frontiers for the United Kingdom and France.What is the opportunity cost of one bushel of wheat in France?

The opportunity cost of producing more of one good on a production possibilities frontier is

Rika's opportunity cost of producing 100 t-shirts is 50 jackets.Jeff's opportunity cost of producing 75 t-shirts is 25 jackets.Who should specialize in jackets?

If a nation devotes a larger share of its current production to consumption goods, then

-Suppose Puerto Rico and Hawaii currently have the same production possibilities so that the above figure is the PPF for hotels and consumption goods in the two areas. Hotels are a capital good that,once built, will help produce still more consumption goods.If Puerto Rico produces more hotels than Hawaii,

The above figure shows the PPF for a country that produces computers and computer factories. Which of the following would most likely shift the PPF from PPF₀ in one year to PPF₁ in the next?

Explain why a movement from a point inside a production possibilities frontier to the production possibilities frontier is described as a free lunch and a movement along a production possibilities frontier is described as a tradeoff.