Exam 3: The Economic Problem

"Because the United States is the largest economy in the world and can produce anything it needs domestically, there are no gains from trade for the United States." Is the previous statement correct or incorrect?

John can make pizza at a lower opportunity cost than Allen, but Allen can make more pizzas per day than John.Therefore,

In one hour John can produce 20 loaves of bread or 8 cakes.In one hour Phyllis can produce 30 loaves of bread or 15 cakes.Which of the following statements is true?

-In the table above, Jill's opportunity cost for 1 pound of food is ________ and her opportunity cost for 1 pound of clothing is ________.

Suppose that after specializing according to comparative advantage, a country is trading with another nation that also specializes according to its comparative advantage.Which of the following statements are true for the first country? I.It enjoys gains from trade. Ii. It must have an absolute advantage in the production of the good it produces. Iii. It is producing at a point beyond its PPF.

-The figure above illustrates a small country's production possibilities frontier.Moving from point A to point B, the per unit opportunity cost of a VCR is ________ per VCR.

Production Pages point Wyped Web pages created A 0 and 4 B 40 and 3 C 70 and 2 D 90 and 1 E 100 and 0 -Jean can either type her term paper or create Web pages during the limited time she has available.The table above shows her PPF. a. Can Jean type 90 pages and create 2 Web pages? b. Use the above numbers to calculate the opportunity cost of a typed page as she increases her time typing and decreases time creating a Web page.

-Deb and Pete have volunteered to help their favorite charity mail out fundraiser information.The figure above shows their production possibilities frontiers for assembling packets and stuffing envelopes.If Deb and Pete specialize and trade, how many packets will be assembled?

-The figure above shows how the PPF for cell phones and new cell-phone factories can expand.In the figure, if the economy produced 4 million cell phones using the resources efficiently, the PPF would

Which of the following is correct about comparative advantage?

Potatoes (pounds) Tomatoes (pounds) Huey 12 or 8 Steve 6 or 2 -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

If an economy cannot produce more of one good without producing less of another good, this implies that which of the following has been achieved?

-The figure above shows a production possibilities frontier.In the figure, which of the following combinations of the two goods are efficient?

In the movie Cast Away, Tom Hanks plays a FedEx efficiency expert stranded on a deserted island.While on the island, he divides his time between catching fish, gathering coconuts, painting, and building a raft.Suppose that these were Mr.Hanks' only activities.Did he face an opportunity cost from pursuing any of these activities? Why or why not?

-The above figure shows the production possibility frontier for a country. What is the opportunity cost to move from point D to point B?

To achieve gains from trade, a country

While moving along a production possibilities frontier, the amount of labor ________, the amount of capital ________, and the level of technology ________.

The production possibilities frontier illustrates the

A country produces only cans of soup and ink pens.If the country produces on its bowed outward PPF and increases the production of cans of soup, the opportunity cost of additional

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,