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

When Feeding America changed its food allocation system to one that resembled a market,each food program was given a number of "shares" that they could use in bidding against other food programs for the types of food that best met the needs of the people using their programs.This is an example of how the market leads firms to provide consumers with the goods they want,which Adam Smith described by using the metaphor

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

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 20 sliders and 60 hot wings would appear

In a report made to the U.S.Congress in 2001,the National Academy of Sciences cautioned that if fuel economy encourages the production of smaller and lighter cars,"Some additional traffic fatalities would be expected." This statement suggests that

Each person goes about her daily business seeking to maximize her own self interests.In doing so,she contributes to the welfare of society at large.This is the idea underlying Adam Smith's "invisible hand."

If a country is producing efficiently and is on the production possibilities frontier,the only way to produce more of one good is to produce less of the other.

Suppose your expenses for this term are as follows: tuition: $28,000,room and board: $9,000,books and other educational supplies: $2,500.Further,during the term,you can only work part-time and earn $16,000 instead of your full-time salary of $42,000.What is the opportunity cost of going to college this term,assuming that your room and board expenses would be the same even if you did not go to college?

Table 2-11 One Digital Camera Wheat (per pound) China 100 hours 4 hours South Korea 60 hours 3 hours Table 2-11 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea. -Refer to Table 2-11.What is South Korea's opportunity cost of producing one pound of wheat?

What is comparative advantage? What is absolute advantage?

In a production possibilities frontier,a point ________ the frontier is productively inefficient.

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.What is Scotland's opportunity cost of producing one guitar?

Suppose your expenses for this term are as follows: tuition: $5,000,room and board: $3,000,books and other educational supplies: $500.Further,during the term,you can only work part-time and earn $4,000 instead of your full-time salary of $10,000.What is the opportunity cost of going to college this term,assuming that your room and board expenses would be the same even if you did not go to college?

Which of the following is a factor of production?

Figure 2-5 -Refer to Figure 2-5.If the economy is currently producing at point Y,what is the gain in production if the economy moves to point X?

In the circular flow model,households supply resources such as labor services in the factor market.

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 ________ is the result of advancements in plastic production technology.

Table 2-11 One Digital Camera Wheat (per pound) China 100 hours 4 hours South Korea 60 hours 3 hours Table 2-11 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea. -Refer to Table 2-11.South Korea has a comparative advantage in the production of

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 pogo stick?

Which of the following statements about an entrepreneur is false?

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