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

An inward shift of a nation's production possibilities frontier can occur due to

For each watch that Switzerland produces, it gives up the opportunity to make 50 pounds of chocolate.Germany can produce 1 watch for every 100 pounds of chocolate it produces.Which of the following is true about the comparative advantage between the two countries?

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

Table 2.11 Table 2.11 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 2.11.What is George's opportunity cost of mowing a lawn?

Comparative advantage means the ability to produce a good or service

How do firms and households interact in markets?

If additional units of a good could be produced at a constant opportunity cost, the production possibility frontier would be linear.

Firms

If a commercial dairy farm wants to raise funds to purchase feeding troughs, it does so in the

A successful market economy requires

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

Susan 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 2.2 Figure 2.2 above shows the production possibilities frontier for Atikamekw Cree (ca.1600)with a historical tradition of fishing and farming.Assume they produce two goods: fish and grains. Alt text for Figure 2.2: In figure 2.2, a graph compares production of grains and fish. Long description for Figure 2.2: The x-axis is labelled, grains in kilograms, and the y-axis is labelled, fish in kilograms.The x-axis is marked from 0 to 180, in increments of 20.The y-axis is marked from 0 to 140, in increments of 20.A line slopes down from the point 0, 120 to the point 160, 0. -Refer to Figure 2.2.Suppose Atikamekw Cree are currently producing 60 kilograms of grain per period.How much fish is it also producing, assuming that resources are fully utilized?

The recession of 2008-2009 would most likely be represented in a production possibilities frontier graph by

If property rights are not well enforced, which of the following is not likely to occur?

Individuals who have never been the best at doing anything

Comparative advantage means

Figure 2.5 Alt text for Figure 2.5: In figure 2.5, a graph compares paper and steel production. Long description for Figure 2.5: The x-axis is labelled, steel in millions of tons and the quantities 14, 16, 19, and 20 are marked.The y-axis is labelled, paper in millions of tons, and the quantities 4, 9, and 11 are marked.Points Y(14, 9), W(16, 9), (19, 4), and an unnamed point (14, 11)are plotted on the graph, and joined to the respective axes using dotted lines.A concave curve is drawn from the y-axis to the x-axis, passing through the unnamed point (14, 11), and points W(16, 9), and X(19, 4).Point Y is between the curve and the axes. -Refer to Figure 2.5.If the economy is currently producing at point W, what is the opportunity cost of moving to point X?

Figure 2.10 Figure 2.10 shows various points on three different production possibilities frontiers for a nation. Alt text for Figure 2.10: In figure 2.10, a graph comparing 3 different production possibilities frontiers for a nation. Long description for Figure 2.10: The x-axis is labelled, plastic products, and the y-axis is labelled, food products.3 convex curves are shown, with points V, W, X, Y, and Z plotted.The first curve begins just past the half-way point on the y-axis, and ends just past the half-way point on the x-axis.Points W and X are plotted along the curve, with point W approximately 1 third of the way from the start of the curve, and point X more than 2 thirds of the way along the curve.The second curve begins almost 3 quarters of the way up the y-axis and ends just past the termination of the first curve on the x-axis.Point Y is plotted on the second curve, approximately 2 thirds of the way along the curve.The third curve begins at the same point as the second curve, and ends approximately 3 quarters of the way along the x-axis.Point Z is plotted on the third curve, a little less than half-way along the curve.Point V is plotted between the first curve and the origin. -Consider the following events: a.a reduction in the patent protection period to no more than 2 years b.a war that destroys a substantial portion of a nation's capital stock c.the lack of a secure and enforceable property rights system Refer to Figure 2.10.Which of the events listed above could cause a movement from W to V?

Figure 2.13 Figure 2.13 shows the production possibilities frontiers for Pakistan and Indonesia.Each country produces two goods, cotton and cashews. Alt text for Figure 2.13: In figure 2.13, 2 graphs, show the production possibilities frontiers for Pakistan and Indonesia. Long description for Figure 2.13: The graph on the left represents Pakistan.The x-axis is labelled, cotton in bolts, and the amount 240 marked.The y-axis is labelled, cashews in pounds, and the amount 150 is marked .A slanted line is drawn from point 150 on the y-axis to point 240 on the x-axis.The graph on the right represents Indonesia.The x-axis is labelled, cotton, in bolts, and the amount 320 is marked.The y-axis is labelled, cashews, in pounds, and the amount 120 marked.A slanted line is drawn from point 120 on the y-axis to point 320 on the x-axis. -Refer to Figure 2.13.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 cotton?