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

Table 2-13 Tammi Horace Dogs Groomed 20 12 Cats Bathed 10 8 Table 2-13 shows the output per day of two pet groomers, Tammi and Horace. They can either devote their time to grooming dogs or bathing cats. -Refer to Table 2-13.What is Tammi's opportunity cost of grooming a dog?

Table 2-13 Tammi Horace Dogs Groomed 20 12 Cats Bathed 10 8 Table 2-13 shows the output per day of two pet groomers, Tammi and Horace. They can either devote their time to grooming dogs or bathing cats. -Refer to Table 2-13.Which of the following statements is true?

If society decides it wants more of one good and ________,then it has to give up some of another good and incur some opportunity costs.

What shape does a production possibilities frontier take if it displays increasing opportunity costs? What shape does a production possibilities frontier take if it displays constant opportunity costs? Which shape is most common in production situations?

Suppose that in the United States,the opportunity cost of producing a motor engine is 4 auto bodies.In Canada,the opportunity cost of producing a motor engine is 2 auto bodies. A)What is the opportunity cost of producing an auto body for the United States? B)What is the opportunity cost of producing an auto body for Canada? C)Which country has a comparative advantage in the production of auto bodies? D)Which country has a comparative advantage in the production of motor engines?

Figure 2-8 Figure 2-8 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. -Refer to Figure 2-8.Suppose Vidalia is currently producing 120 dozen roses per period.How many orchids is it also producing,assuming that resources are fully utilized?

Table 2-15 George Jack Lawns Mowed 10 6 Gardens Cultivated 5 4 Table 2-15 shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens. -Refer to Table 2-15.What is Jack's opportunity cost of cultivating a garden?

Figure 2-14 Figure 2-14 shows the production possibilities frontiers for Greenland and Iceland. Each country produces two goods, snow cones and popsicles. -Refer to Figure 2-14.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 popsicles?

Table 2-26 One Motorcycle One Guitar Ireland 10 hours 2.5 hours Scotland 9 hours 2 hours -Refer to Table 2-26.This table shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland. a.Assume each country has a total of 2,700 labor hours to devote to the production of the two goods and draw the production possibilities frontier for each country.Put "Motorcycle" on the horizontal axis and "Guitar" on the vertical axis.Be sure to identify the intercept values on your graphs. b.Suppose each country allocates 55% of its labor hours to guitar production and 45% to the production of motorcycles.Complete Table 2-27 below to show each country's output of the two products. Table 2-27: Production and Consumption with no Trade Motorcycle Output Guitar Output Ireland Scotland Total c.If the two countries do not trade and consume whatever they produce,identify the current production and consumption point for each country on their respective production possibilities frontiers.Label Ireland's consumption point "I" and Scotland's consumption point "S." d.Suppose the two countries specialize and trade.Which country should produce motorcycles and which should produce guitars? Explain your answer. e.Complete Table 2-28 below to show each country's output with specialization. Table 2-28: Output with Specialization Motorcycle Output Guitar Output Ireland Scotland Total f.Did specialization increase the combined output for the two countries without any increase in resources? If so,by how much? g.Suppose Ireland and Scotland agree to trade so that in exchange for 600 guitars,the exporter of guitars receives 140 motorcycles.Complete Table 2-29 below to show each country's consumption bundle after trade. Table 2-29: Consumption with Trade Motorcycle Guitar Ireland Scotland h.Show the consumption points after trade on each country's production possibilities frontier.Label these points "X" for Ireland and "Y" for Scotland. i.Has trade made the two countries better off? Explain your answer.

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.Assume Dina's Diner only produces sliders and hot wings.A combination of 80 sliders and 50 hot wings would appear

Which of the following countries does not come close to the free market benchmark?

Figure 2-8 Figure 2-8 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. -Refer to Figure 2-8.Suppose Vidalia is currently producing 60 dozen orchids per period.How many roses is it also producing,assuming that resources are fully utilized?

If property rights are not well enforced,all of the following are likely to occur except

Table 2-9 Serena Haley Bracelets 8 9 Necklaces 16 12 Table 2-9 shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. -Refer to Table 2-9.What is Haley's opportunity cost of making a bracelet?

Which of the following is a factor of production?

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 sailboats?

If additional units of a good could be produced at a constant opportunity cost,the production possibilities frontier would be bowed outward (concave).

a.Draw a production possibilities frontier for a country that produces two goods,beer and pretzels.Assume that resources are equally suited to both tasks. b.Define opportunity costs. c.Use your production possibilities frontier graph to demonstrate the concept of opportunity costs.

Table 2-14 One Motorcycle One Guitar Treland 20 hours 4 hours Scotland 8 hours 2 hours Table 2-14 shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland. -Refer to Table 2-14.If the two countries specialize and trade,who should export motorcycles?

Table 2-10 Fred Barney Pogo Sticks 24 28 Unicycles 8 14 Table 2-10 shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles. -Refer to Table 2-10.What is Barney's opportunity cost of making a unicycle?