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

In a simple circular flow diagram, who supplies factors of production in markets and who buys these factors of production? Who supplies goods and services in markets and who buys these goods and services?

The federal government supports health care spending through the Canada Health Transfer.As the population ages and the number of people who are over 65 continues to rise, government spending on health care will

Increasing opportunity cost along a bowed out production possibilities frontier occurs because

Is it possible for a firm to have a comparative advantage in producing something without having an absolute advantage? Why or why not?

Why are music, television, and movie companies concerned about their products being posted to Internet websites such as YouTube?

According to the production possibility model, if more resources are allocated to the production of physical and human capital, then which of the following is likely to happen?

If Sanjaya can shuck more oysters in one hour than Tatiana, then Sanjaya has a comparative advantage in shucking oysters.

The ________ demonstrates the roles played by households and firms in the market system.

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)unattainable with current resources.

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 Serena's opportunity cost of making a necklace?

Without technological advancement, how can a nation achieve economic growth?

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.If the two countries specialize and trade, who should export cell phones?

If a country produces only two goods, then it is not possible to have a comparative advantage in the production of both those goods.

Economic decline (negative growth)is represented on a production possibilities frontier model by the production possibility frontier

Which of the following are separate flows (shown in different parts of the model)in the circular flow model?

What shape does a production possibilities frontier take if it displays increasing opportunity costs? What shape does a production possibilities frontier take if it displays constant opportunity costs? Which shape is most common in production situations? Why are both types presented in the text?

If the opportunity cost of producing more of one good increases as more of that good is produced, then the production method is inefficient.

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 decrease in the unemployment rate b.general technological advancement c.an increase in consumer wealth Refer to Figure 2.10.Which of the events listed above could cause a movement from V to X ?

a.Draw a production possibilities frontier for a country that produces two goods, beer and pretzels.Assume that resources are equally suited to both tasks. b.Define opportunity costs. c.Use your production possibilities frontier graph to demonstrate the principle of opportunity costs.

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