Exam 2: Scarcity and the World of Trade-Offs

John and Mary work at a bakery. John can decorate either 10 ice-cream cakes or 4 wedding cakes; Mary can decorate either 8 ice-cream cakes or 2 wedding cakes. According to this scenario

People always face trade-offs because

Assuming Vice President Smith has to sacrifice more than his assistant in order to engage in full-time typing, we would say that his assistant has a(n)________ advantage in typing versus Mr. Smith.

What does scarcity have to do with the fact that people must make choices?

The division of labor refers to

Would a country with an absolute advantage in the production of all goods and services trade with other countries? Explain.

All mutually beneficial trades have taken place. This implies that

Briefly explain the factors of production and give an example of each.

-Refer to the above figure. How do you describe what is happening as the economy moves from point A to point B?

Explain: "The law of increasing additional cost is an inevitable phenomenon in economics."

If a country increased the production of its capital goods, then

Production refers to

-In the above figure, what is the opportunity cost of one bushel of soybeans?

-In the above figure, as more ukuleles are produced, the opportunity cost in terms of guitars is

What does the slope of the production possibilities curve represent? Explain.

During periods of unemployment

Efficiency is defined as

The use of goods and services for personal satisfaction is known as

The curve that represents all possible combinations of goods that can be produced is called

Extremely cold winter weather has destroyed oranges in Florida. The freeze has caused