Exam 2: The Economic Problem

Suppose the country of Popcorn produces only jets and corn. If Popcorn cannot produce any more jets without giving up corn, we say that Popcorn has achieved

-In the above figure, which of the following is TRUE regarding the movements from point A to B and from point C to D? I) The movement from point A to B shows that the economy has chosen to produce 100 more jets. II) The movement from point C to D shows that the economy has chosen to produce 100 more jets. III) The movement from point A to B and from point C to D have the same opportunity cost.

"Allocative efficiency requires that the maximum number of people have access to all of the goods and services that our economy produces." Is this statement true or false? Explain your answer.

-The table above shows the marginal benefit from pizza and the marginal cost of pizza in cans of soda forgone. The allocatively efficient quantity of pizza is ________ pizzas per day.

Which of the following is NOT illustrated by a production possibilities frontier?

-In the figure above, if Mac and Izzie both completely specialized and traded with one another, their joint output would be

Marginal benefit curves slope ________ and marginal cost curves slope ________.

When a nation has a comparative advantage in the production of a particular good

Resource use is allocatively efficient when

A person has a comparative advantage in an activity if that person can

In a world lacking property rights, it would be ________ to realize the gains from trade and there would be ________ specialization.

-A PPF, such as the one above, that bows outward illustrates

-Refer to the production possibilities frontier figure above. Which of the following movements requires the largest opportunity cost, in terms of good X forgone, per extra unit of good Y?

Markets

What economic concepts are represented in the production possibilities model?

Are all points inside the production possibilities frontier unattainable?

Consider a PPF for tapes and soda. If the opportunity cost of a tape increases as the quantity of tapes produced increases and also the opportunity cost of a soda increases as the quantity of soda produced increases, then the PPF between the two goods will be

-Based on the above, which figure shows the impact of a decrease in the population available to work?

-According to the diagram in the above figure, what is the marginal benefit of consuming the 3 millionth gallon of gasoline per month?

-The above table shows production points on Sweet-Tooth Land's production possibilities frontier. What is the opportunity cost of one can of cola if Sweet-tooth Land moves from point C to point B?