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

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?

A decrease in the unemployment rate may be represented as a movement from a point on the production possibilities frontier to a point outside the frontier.

All of the following are examples of spending on goods and services in the circular flow model except

Scarcity

Table 2-4 Production Choices for Dina's Diner Choice Quantity of Sliders Produced Quantity of Hot Wings Produced A 80 0 B 60 25 C 40 50 D 20 75 E 0 100 -Refer to Table 2-4.Assume Dina's Diner only produces sliders and hot wings.A combination of 50 sliders and 50 hot wings would appear

Identify whether each of the following transactions will take place in the factor market or in the product market. a.Graciela buys a Tesla Motors Model X. b.Lashan works 60 hours a week at a law firm. c.Tito sells his family's farmland to a housing developer. d.Tesla Motors increases employment at its Fremont,California plant.

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.Does either Ireland or Scotland have an absolute advantage and if so,in what product?

It is possible to have a comparative advantage in producing a good or service without having an absolute advantage.

Households

Adam Smith's behavioral assumption about humans was that people

To increase gas mileage,automobile manufacturers make cars small and light.Large cars absorb more of the impact of an accident than small cars but yield lower gas mileage.These facts suggest that a negative relationship exists between safety and gas mileage.

How do firms and households interact in markets?

Figure 2-10 -Refer to Figure 2-10.If the economy is currently producing at point D,what is the opportunity cost of moving to point B?

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.If Vidalia chooses to produce 80 dozen roses,how many orchids can it produce to maximize production?

Sarita can bake either a combination of 25 cakes and 15 pies or a combination of 10 cakes and 20 pies.If she now bakes 10 cakes and 20 pies,what is the opportunity cost of baking an additional 15 cakes?

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 mowing a lawn?

When you purchase a new set of spurs you do so in the

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.What is the opportunity cost of one dozen orchids?

Any output combination along a production possibilities frontier is associated with fully utilized resources.

Consider a country that produces only two goods: kayaks and coconuts.Suppose it is possible for this country to increase its production of kayaks without producing fewer coconuts.In this case,its current output combination is efficient.