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

Figure 2.8 Figure 2.8 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. Alt text for Figure 2.8: In figure 2.8, a graph illustrates the production possibilities frontier for roses and orchids in Vidalia. Long description for Figure 2.8: The x-axis is labelled, orchids, in dozens, and is marked from 0 to 80 in increments of 20.The y-axis is labelled, roses, in dozens, and is marked from 0 to 200 in increments of 40.Five points (0, 200), (20, 150), (40, 100), (60, 50), and (80, 0)are plotted on the graph and joined to form a line, which slants from the top left corner and slopes down to the bottom right corner. -Refer to Figure 2.8.What is the opportunity cost of one dozen orchids?

Figure 2.16 Alt text for Figure 2.16: In figure 2.16, a circular flow diagram. Long description for Figure 2.16: 4 circles arranged in a circle, labelled as follows, clockwise from the top center: Economic Agents A, an unmarked circle, Economic Agents B, and Market C.The diagram shows the flow of goods and services from Market C to Economic Agents A.The flow of spending on goods and services goes from Market C, to Economic Agents B. -Refer to Figure 2.16.One segment of the circular flow diagram in the figure shows the flow of goods and services from market C to economic agents A.What is market C and who are economic agents A?

Define the term "property rights." Explain why the lack of well-defined and enforceable property rights is detrimental to the smooth functioning of a market system.

________ behavioural assumption about humans was that people usually act in a rational, self-interested way.

A student comments to his roommate that the only way he will be able to pass his final exams is to not sleep for the next three days.This statement suggests that

In a production possibilities frontier model, a point inside the frontier is

Which of the following statements about a simple circular flow model is false?

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

If a nation changes its laws to more actively enforce intellectual property rights, all of the following will most likely take place except

Figure 2.14 Figure 2.14 shows the production possibilities frontiers for Costa Rica and Guatemala.Each country produces two goods, pineapples and coconuts. Alt text for Figure 2.14: In figure 2.14, 2 graphs show the production possibilities frontiers for Costa Rica and Guatemala. Long description for Figure 2.14: The graph on the left represents Costa Rica.The x-axis is labelled, coconuts, and is marked from 20 to 200 in increments of 20.The y-axis is labelled, pineapples, and is marked from 20 to 200 in increments of 20.A slanted line is drawn from point 100 on the y-axis to point 150 on the x-axis.The graph on the right represents Guatemala.The x-axis is labelled, coconuts, and is marked from 20 to 200 in increments of 20.The y-axis is labelled, pineapples, and is marked from 20 to 200 in increments of 20.A slanted line is drawn from point 90 on the y-axis to point 180 on the x-axis. -Refer to Figure 2.14.What is the opportunity cost of producing 1 tonne of coconuts in Guatemala?

Figure 2.4 Figure 2.4 shows various points on three different production possibilities frontiers for a nation. Alt text for Figure 2.4: In figure 2.4, a graph illustrates 3 different production possibilities. Long description for Figure 2.4: 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. -Refer to Figure 2.4.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 Which of the movements listed above represents economic growth?

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

Figure 2.3 Alt text for Figure 2.3: In figure 2.3, 3 graphs, A, B and C comparing production of cattle and llamas. Long description for Figure 2.3: Graph A: the x-axis is labelled, llamas, and y-axis is labelled, cattle.A line slopes down from the top left corner of the quadrant, near the top of the y-axis to the bottom right corner, near the end of the x-axis.Graph B: the x-axis is labelled, llamas, and y-axis is labelled, cattle.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 x-axis.Graph C: the x-axis is labelled, llamas, and y-axis is labelled, cattle.A concave 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 x-axis. -Refer to Figure 2.3.Sergio Vignetto raises cattle and llamas on his land.Half the land is more suitable for raising cattle and half the land is better suited for raising llamas.Which of the graphs in Figure 2.3 represent his production possibilities frontier?

Figure 2.8 Figure 2.8 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. Alt text for Figure 2.8: In figure 2.8, a graph illustrates the production possibilities frontier for roses and orchids in Vidalia. Long description for Figure 2.8: The x-axis is labelled, orchids, in dozens, and is marked from 0 to 80 in increments of 20.The y-axis is labelled, roses, in dozens, and is marked from 0 to 200 in increments of 40.Five points (0, 200), (20, 150), (40, 100), (60, 50), and (80, 0)are plotted on the graph and joined to form a line, which slants from the top left corner and slopes down to the bottom right corner. -Refer to Figure 2.8.The linear production possibilities frontier in the figure indicates that

Figure 2.11 Alt text for Figure 2.11: In figure 2.11, a graph compares paper and steel production. Long description for Figure 2.11: 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 2.11.If the economy is currently producing at point Y, what is the opportunity cost of moving to point X?

The production possibilities frontier model shows that

a. Draw a production possibilities frontier for a country that produces two goods, wine and cheese.Assume that resources are not equally suited to both tasks. b. Define opportunity costs. c. Use your production possibilities frontier graph to demonstrate the principle of opportunity costs.

When you purchase a bicycle you do so in the

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 a technological advancement greatly reduces the cost to produce hybrid-engine vehicles.This is best represented by the

________ exists because unlimited wants exceed the limited resources available to fulfill those wants.