Exam 3: The Economic Problem

Using the figure above, suppose with no trade Liz and Joe each produce at point A on their respective PPFs. Then, Joe suggests that they specialize and trade. He would produces only salads and Liz would produce only smoothies. Then, Joe says, he would buy 16 smoothies from Liz at a price of 1.5 salads per smoothie. Liz should

-The above figure shows the production possibility frontier for a country. Suppose the country is producing at point E. What would be the opportunity cost to increase the production of wine to 9 thousand bottles?

Moving between two points on a PPF, a country gains 8 desktop computers and forgoes 4 laptop computers. The opportunity cost of 1 desktop computer is

-In the table above, how many jackets must Mary forgo for every dress she makes?

As an economy increasingly specializes in producing one good, the opportunity cost of that good increases. The opportunity cost increases because

What is the opportunity cost of economic growth?

-The figure above shows the production possibilities frontier for a country. If the country is producing at point D, then the

How can a combination of goods be unattainable?

-The figure above shows how the PPF for cell phones and new cell-phone factories can expand. In the figure, if the economy chose the point on this year's PPF that is above point K, the next year's PPF would

Which of the following is an assumption used when drawing a production possibilities frontier? I. Human wants and desires are limited to what is available. Ii. Only two goods are considered. Iii. The level of technology is fixed and unchanging.

To find the opportunity cost of producing one more unit of any product while on the production possibilities frontier requires

A country produces only apples and bananas. Moving from point A to point B along its production possibilities frontier, 5 apples are forgone and 4 bananas are gained. What is the opportunity cost of a banana?

-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,

On a production possibilities frontier, 500 pounds of apples and 1,200 pounds of bananas can be produced while at another point on the same frontier, 300 pounds of apples and 1,300 pounds of bananas can be produced. Between these points, what is the opportunity cost of producing a pound of bananas?

A bowed out PPF reflects which of the following ideas? I. increasing opportunity cost Ii. resources are not equally productive in all activities Iii. prices of goods increase over time

A country produces only apples and bananas. Moving from point A to point B along its production possibilities frontier, 5 apples are gained and 4 bananas are forgone. What is the opportunity cost of an apple?

-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

Specialization and trade

Possibility Bread (number) Books (number) A 0 1,000 B 100 900 C 200 700 D 300 400 E 400 0 -The table above shows the production possibilities for an economy. The opportunity cost of a loaf of bread is ________ when moving from possibility B to possibility C.

-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