Exam 2: Trade-Offs, Comparative Advantage, and the Market System

The basis for trade is comparative advantage,not absolute advantage.

In a free market there are significant restrictions on how a good or service can be produced or sold.

The payment received by suppliers of entrepreneurial skills is called wages.

Table 2-17 James Lucy Wagons 16 18 Tricycles 32 24 Table 2-17 shows the output per week of two people, James and Lucy. They can either devote their time to making wagons or making tricycles. -Refer to Table 2-17.Which of the following statements is true?

Table 2-3 Production Choices for Dina's Diner Choice Quantity of Sliders Produced Quantity of Hot Wings Produced A 160 0 B 120 50 C 80 100 D 40 150 E 0 200 -Refer to Table 2-3.Dina faces ________ opportunity costs in the production of sliders and hot wings.

Table 2-16 One Cell Phone Lumber (per board foot) Estonia 40 hours 8 hours Finland 16 hours 4 hours Table 2-16 shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland. -Refer to Table 2-16.What is Estonia's opportunity cost of producing one cell phone?

Carmelita can perform either a combination of 35 manicures and 70 pedicures or a combination of 50 manicures and 45 pedicures.If she now performs 35 manicures and 70 pedicures,what is the opportunity cost of performing an additional 15 manicures?

Figure 2-4 Figure 2-4 shows various points on three different production possibilities frontiers for a nation. -Refer to Figure 2-4.A movement from ________ could occur because of an influx of immigrant labor.

Table 2-6 Possible Output Combinations Apples (thousands of pounds) Pears (thousands of pounds) A 70 0 B 60 20 C 50 36 D 40 48 E 30 56 F 20 60 G 10 63 H 0 65 -Refer to Table 2-6.The Fruit Farm produces only apples and pears.The table above shows the maximum possible output combinations of the two fruits using all resources and currently available technology. a.Graph the Fruit Farm's production possibilities frontier.Put apples on the horizontal axis and pears on the vertical axis.Be sure to identify the output combination points on your diagram. b.Suppose the Fruit Farm is currently producing at point D.What is the opportunity cost of producing an additional 8,000 pounds of pears? c.Suppose the Fruit Farm is currently producing at point D.What happens to the opportunity cost of producing more and more pears? Does it increase,decrease,or remain constant? Explain your answer. d.Suppose the Fruit Farm is currently producing at point G.What happens to the opportunity cost of producing more and more apples? Does it increase,decrease,or remain constant? Explain your answer. e.Suppose the Fruit Farm is plagued by the apple maggot infestation which destroys apple trees but not pear trees.Show in a graph what happens to its PPF.

Table 2-19 Wilma Betty Statues 12 14 Benches 4 7 Table 2-19 shows the output per month of two people, Wilma and Betty. They can either devote their time to making marble statues or making marble benches. -Refer to Table 2-19.Which of the following statements is true?

Stricter laws and regulations to protect intellectual property rights

Table 2-16 One Cell Phone Lumber (per board foot) Estonia 40 hours 8 hours Finland 16 hours 4 hours Table 2-16 shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland. -Refer to Table 2-16.Finland has a comparative advantage in the production of

Figure 2-12 Figure 2-12 shows the production possibilities frontiers for Tahiti and Bora Bora. Each country produces two goods, milk and honey. -Refer to Figure 2-12.If the two countries have the same amount of resources and the same technological knowledge,which country has an absolute advantage in the production of milk?

Two U.S. Senators have introduced a bipartisan bill to strengthen patent protection in the United States. The STRONGER Patents Act, designed to improve the patent system, includes provisions which would permit injunctions to protect patent owners against infringement both during and after court cases and guarantee fairness in administrative proceedings by limiting repetitive and harassing challenges against inventors. Changes over the last decade have lessened some U.S. patent rights, while countries such as China and Germany have moved to strengthen their own patent protections. In 2016, the United States fell to 10th place in the U.S. Chamber of Commerce's international ranking of patent system strength. Source: Brian Pomper, "Senators Coons and Cotton Introduce STRONGER Patents Act of 2017," ipwatchdog.com, June 21, 2017. -Refer to the Article Summary.If the STRONGER patents Act of 2017 does not become law and patent protection in the United States continues to fall further behind patent protection in other countries,which of the following would most likely occur in the United States?

Table 2-12 One Canoe One Sailboat Guatemala 10 hours 60 hours Honduras 15 hours 75 hours Table 2-12 shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras. -Refer to Table 2-12.If the two countries specialize and trade,who should export canoes?

________ exists because unlimited wants exceed the limited resources available to fulfill those wants.

Figure 2-1 -Refer to Figure 2-1.________ is (are)inefficient in that not all resources are being used.

What is economic growth?

Figure 2-4 Figure 2-4 shows various points on three different production possibilities frontiers for a nation. -Refer to Figure 2-4.Consider the following events: A.an increase in the unemployment rate B.general technological advancement C.an increase in consumer wealth Which of the events listed above could cause a movement from Z to V?

Figure 2-4 Figure 2-4 shows various points on three different production possibilities frontiers for a nation. -Refer to Figure 2-4.Consider the following movements: A.from point V to point W B.from point W to point Y C.from point Y to point Z Which of the movements listed above represents advancements in technology with respect to both plastic production and food production?