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

According to the production possibility model, if more resources are allocated to the production of physical and human capital, which of the following is not likely to occur?

Table 2.12 Table 2.12 shows the number of labour hours required to produce a cell phone and a cubic metre of lumber in Estonia and Finland. -Refer to Table 2.12.Estonia has a comparative advantage in the production of

A stand of redwood trees is not an example of a factor of production but the harvested and processed redwood is a factor of production.

Which of the following is not a flow in the circular flow model?

Should countries specialize in producing goods and services based on having a comparative advantage or an absolute advantage? Why?

Figure 2.7 Alt text for Figure 2.7: In figure 2.7, a graph compares production possibility frontiers of S U Vs and Roadsters. Long description for Figure 2.7: The x-axis is labelled, S U Vs, and the y-axis is labelled, Roadsters.A convex curve begins near the top of the y-axis and ends approximately 3 quarters of the way down the x-axis.The point B is plotted midway along the curve.Point A is plotted between the curve and the y-axis.Point C is plotted outside the curve, near the top of the y-axis and approximately midway along the x-axis. -Refer to Figure 2.7. ________ is (are)inefficient in that not all resources are being used.

How does Adam Smith's idea of the "invisible hand" apply to the various parts, made by many different manufacturers in many different countries, that are used by Apple to produce an iPad?

Table 2.5 Table 2.5 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 2.5.What is Haley's opportunity cost of making a necklace?

Adam Smith, the father of modern economics, wrote in his book, An Inquiry into the Nature and Causes of the Wealth of Nations, "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner but from their regard to their own interest." Explain what he meant by that statement and how such behaviour promotes the wealth of a nation.

Which of the following is a flow in the circular flow model?

In most provinces, provincial property rights law is known as

The opportunity cost of taking a semester-long economics class is

In the circular flow model, households supply resources such as labour services in the product market.

Table 2.2 -Refer to Table 2.2.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 pears.Show in a graph what happens to its PPF.

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

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.Which country has a comparative advantage in the production of cashews?

In a free market there are virtually no restrictions, or at best few restrictions on how factors of production can be employed.

Figure 2.19 Alt text for Figure 2.19: In figure 2.19, a circular flow diagram. Long description for Figure 2.19: 4 circles arranged in a circle, labelled as follows, clockwise from the top center: Economic Agents M, Market Economic Agents J, and an unmarked circle.The flow of wages and salaries goes from market K to Economic agents M.The flow of labor services goes from Market K to Economic Agents J. -Refer to Figure 2.19.In the circular flow diagram, Market K represents

Figure 2.15 Alt text for Figure 2.15: In figure 2.15, a circular flow diagram. Long description for Figure 2.15: 4 circles arranged in a circle, labelled as follows, clockwise from the top center: Economic Agents M, Market K, and Economic Agents J.The fourth circle is empty unmarked.The diagram shows the flow of wages and salaries from Market K to Economic Agents M.The flow of labor services goes from Market K to Economic Agents J. -Refer to Figure 2.15.One segment of the circular flow diagram in the figure shows the flow of wages and salaries from market K to economic agents M.What is market K and who are economic agents M?

Figure 2.18 Alt text for Figure 2.18: In figure 2.18, a circular flow diagram. Long description for Figure 2.18: 4 circles arranged in a circle, labelled as follows, clockwise from the top center: Households, Factor Markets, Firms, and Product Markets.The flow between the circles is marked by arrows J, G K and M as follows: Arrow M: Households to Factor Markets Arrow J: Factor Markets to Households Arrow M: Factor Markets to Firms Arrow J: Firms to Factor Markets Arrow K: Firms to Product Markets Arrow G: Product Markets to Firms Arrow K: Product Markets to Households Arrow G: Households to Product Markets -Refer to Figure 2.18.Which two arrows in the diagram depict the following transaction: Barney earns $250 for selling scissors and razors to Floyd's Barber Shop.