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

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 this economy is currently producing at point X, what is the opportunity cost of moving to point W?

Table 2.14 -Refer to Table 2.14.This table shows the number of labour hours required to produce a cell phone and a cubic metre of lumber in Estonia and Finland. a. If each country has a total of 3,600 labour hours to devote to the production of the two goods, draw the production possibilities frontier for each country.Put "Cell Phone" on the horizontal axis and "Lumber" on the vertical axis.Be sure to identify the intercept values on your graphs. b. Suppose each country allocates 55% of its labour hours to lumber production and 45% to the production of cell phones.Complete Table 2.15 below to show each country's output of the two products. Table 2.15: Production and Consumption With No Trade 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 Estonia's consumption point "E" and Finland's consumption point "F." d. Suppose the two countries specialize and trade.Who should produce cell phones and who should produce lumber? Explain your answer. e. Complete Table 2.16 below to show each country's output with specialization. Table 2.16: Output With Specialization f. Did specialization increase the combined output for the two countries without any increase in resources? If so, by how much? g. Suppose Estonia and Finland agree to trade so that in exchange for 400 cubic metres of lumber, the exporter of lumber receives 90 cell phones.Complete Table 2.17 below to show each country's consumption bundle after trade. Table 2.17: Consumption With Trade h.Show the consumption points after trade on each country's production possibilities frontier.Label these points "X" for Estonia and "Y" for Finland. i.Has trade made the two countries better off? Explain your answer.

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: LaDonna sells 20 pairs of sunglasses at the Oakley store.

All of the following are examples of spending on factors of production in the circular flow model except

A guild is

Scarcity

List the four broad categories of factors of production.

What is comparative advantage? What is absolute advantage?

Figure 2.9 Alt text for Figure 2.9: In figure 2.9, 3 graphs, A, B, and C depict production possibilities frontier for Carlos Vanya. Long description for Figure 2.9: Graph A: The x-axis is labelled, strawberries, and the y-axis is labelled, tomatoes.A line slopes from the top left corner of the quadrant, near the end of the y-axis, down to the bottom right corner, near the end of the x-axis.Graph B: The x-axis is labelled, strawberries, and the y-axis is labelled, tomatoes.A concave curve begins in the top left corner of the quadrant, near the top of the y-axis, and ends near the end of the y-axis.Graph C: The x-axis is labelled, strawberries, and the y-axis is labelled, tomatoes.A convex curve begins in the top left corner, near the top of the y-axis, and ends in the bottom right corner, near the end of the y-axis. -Refer to Figure 2.9.Carlos Vanya grows tomatoes and strawberries on his land.His land is equally suited for growing either fruit.Which of the graphs in Figure 2.9 represents his production possibilities frontier?

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.

Adam Smith's ________ refers to the process by which individuals acting in their own self-interest bring about a market outcome that benefits society as a whole.

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.The linear production possibilities frontier in the figure indicates that

Table 2.1 Production choices for Tomaso's Trattoria -Refer to Table 2.1.Assume Tomaso's Trattoria only produces pizzas and calzones.A combination of 24 pizzas and 15 calzones would appear

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 movements: a.from point V to point W b.from point W to point Y c.from point Y to point Z Refer to Figure 2.10.Which of the movements listed above represents advancements in technology with respect to both plastic production and food production?

Figure 2.6 Toyota found the emission standards too difficult to meet to bring its diesel-engine offerings to North America.They have instead focused their research on hybrid-engine technology.Assume Toyota chooses to produce both hybrid-engine vehicles and diesel-engine vehicles (for markets outside North America)for its Prius brand.Figure 2.6 shows changes to its production possibilities frontier in response to new developments and different strategic production decisions. Alt text for Figure 2.6: In figure 2.6, 3 graphs, A, B and C show the changes to Toyota's production possibilities frontier. Long description for Figure 2.6: Graph A: The x-axis is labelled, diesel-engine automobiles, and the y-axis is labelled, hybrid-engine automobiles.2 convex curves are shown.The first curve begins slightly above the half-way point of the y-axis and ends near the end of the x-axis.The curve passes through point E about 1 third of the way along the curve.The second curve begins slightly above the first, on the y-axis.It finishes at the exact same point on the x-axis.The second curve passes through point F about 1 third of the way along the curve.Graph B: The x-axis is labelled, diesel-engine automobiles, and the y-axis is labelled hybrid-engine automobiles.2 convex curves are shown.The first curve begins slightly above the half-way mark on the y-axis and finishes about 2 thirds of the way along the x-axis.The curve passes through the point G, about halfway along the curve.The second curve begins slightly above the first on the y-axis, and finishes just past the end of the first on the x-axis.The curve passes through point J about 1 third of the way along the curve, and point H about 3 fourths of the way along the curve.Graph C: The x-axis is labelled, diesel-engine automobiles, and the y-axis is labelled hybrid-engine automobiles.A convex curve begins near the top of the y-axis and finishes near the end of the x-axis.It passes through point K about half-way along the curve.Point L is plotted between the curve and the axes. -Refer to Figure 2.6.Assume that in 2019, after extensive research and development Toyota builds a new factory that can produce both types of vehicles that meet emission standards.This is best represented by the

Adam Smith's invisible hand refers to

Published in 1776, ________ was written by Adam Smith.

Figure 2.1 Alt text for Figure 2.1: In figure 2.1, a graph compares roadsters and S U Vs. Long description for Figure 2.1: The x-axis is labelled, S U Vs, and the y-axis is labelled, roadsters.3 points A, B, and C are plotted on the graph.A concave curve is drawn between the y-axis and the x-axis, from near the top of the y-axis, to near the end of the y-axis.Near the mid-point of the curve, it passes through point B.Point A is between the curve and the origin, and point C is outside the curve, midway along the x-axis and near the top of the y-axis. -Refer to Figure 2.1.Point B is

Without an increase in the supplies of factors of production, how can a nation achieve economic growth?

Households