Exam 3: The Economic Problem

-Suppose that Germany, France, Estonia, and India all have the same production possibilities, illustrated in the figure above.Based on the production points in the figure, Germany is most likely to expand its PPF to

Why is the production possibilities frontier bowed out?

-The figure above shows the production possibilities frontier for a country.If the economy is operating at point B, then the opportunity cost of another million gallons of milk is

If John can produce 10 chairs or 20 lamps during a week while Mary can produce 12 chairs or 22 lamps in the same time, who has the absolute advantage in producing each good?

Scott and Cindy both produce only pizza and tacos.In one hour, Scott can produce 20 pizzas or 40 tacos.In one hour, Cindy can produce 30 pizzas or 40 tacos.Cindy's opportunity cost of producing 1 taco is

-The figure above shows the production possibilities frontier for a country.In order for it to move from producing at point A to producing at point B, the country would need to incur an opportunity cost of

Production efficiency occurs

Moving between two points on a PPF, a country gains 6 automobiles and forgoes 3 trucks.The opportunity cost of 1 automobile is

Possibility Capital goods Consumption goods A 0 60 B 2 55 C 4 45 D 6 25 E 8 0 -The table above presents the production possibilities frontier for a nation.Using the information in the table, when moving from possibility A to B to C to ultimately E, the cost of a unit of capital goods in terms of consumption goods

-The figure above illustrates a small country's production possibilities frontier.Based on the figure, we can tell that the nation's resources are

If a society moves from a period of time with significant unemployment to a time with full employment, its production possibilities frontier will

-The figure above shows Prakash's and Gail's production possibilities frontiers for writing books and magazine articles. a. What is Prakash's opportunity cost of a book? What is Gail's opportunity cost? Who has the comparative advantage in writing books? b. Who has the comparative advantage in writing magazine articles? c. According to their comparative advantages, who should write books and who should write magazine articles?

-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 spends all her time assembling packets, how many can she assemble?

Why does a nation experience increasing opportunity cost?

On a production possibilities frontier diagram, where are production points that have tradeoffs? Where are production points with a free lunch?

Alice and Gene work in the mailroom, sorting and delivering mail.In order for them to benefit from specialization and trade, Alice must

Are all points inside the production possibilities frontier unattainable?

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

Possibility Capital goods Consumption goods A 0 60 B 2 55 C 4 45 D 6 25 E 8 0 -The table above presents the production possibilities frontier for a nation.Using the information in the table, when moving from possibility C to D, the cost of 1 unit of a capital good in terms of the consumption goods forgone is ________ consumption goods per capital good.

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.