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

Table 2-11 -Refer to Table 2-11.This table shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland. a.Which country has an absolute advantage in the production of cell phones? b.Which country has an absolute advantage in the production of lumber? c.What is Estonia's opportunity cost of producing one cell phone? d.What is Finland's opportunity cost of producing one cell phone? e.What is Estonia's opportunity cost of producing one board foot of lumber? f.What is Finland's opportunity cost of producing one board foot of lumber? g.If each country specializes in the production of the product in which it has a comparative advantage,who should produce cell phones? h.If each country specializes in the production of the product in which it has a comparative advantage,who should produce lumber?

Figure 2-5 -Refer to Figure 2-5.If the economy is currently producing at point X,what is the opportunity cost of moving to point W?

Table 2-7 Table 2-7 shows the output per week of two people,Minnie and Mickey.They can either devote their time to making hats or making umbrellas. -Refer to Table 2-7.Which of the following statements is true?

Figure 2-4 Figure 2-4 shows various points on three different production possibilities frontiers for a nation. -Refer to Figure 2-4.A movement from ________ is the result of additional government restrictions on the pollution that results from plastic production.

The production possibilities frontier assumes all of the following except

To compete in the automobile market,Tesla must make many strategic decisions such as whether to introduce a new car model,how to sell and service its cars,and where to advertise.At Tesla's Fremont,California plant,managers must decide on the monthly production quantities of their S and X models.In making this decision,the managers

Consider a country that produces only two goods: pineapples and tractors.Suppose it is possible for this country to increase its production of pineapples without producing fewer tractors.In this case,its current output combination is inefficient.

The ability to exercise control over one's own resources within the confines of the law refers to

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

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

A worker is hired in a

According to the production possibilities model,if more resources are allocated to the production of physical and human capital,then all of the following are likely to happen except

Table 2-9 Table 2-9 shows the number of labor hours required to produce a wristwatch and a pound of rice in Japan and Thailand. -Refer to Table 2-9.What is Thailand's opportunity cost of producing one pound of rice?

Figure 2-9 Figure 2-9 shows the production possibilities frontiers for Greenland and Iceland.Each country produces two goods,snow cones and popsicles. -Refer to Figure 2-9.What is the opportunity cost of producing 1 popsicle in Iceland?

Table 2-10 -Refer to Table 2-10.This table shows the number of labor hours required to produce a wristwatch and a bushel of rice in Japan and Thailand. a.Which country has an absolute advantage in the production of wristwatches? b.Which country has an absolute advantage in the production of rice? c.What is Japan's opportunity cost of producing one wristwatch? d.What is Thailand's opportunity cost of producing one wristwatch? e.What is Japan's opportunity cost of producing one bushel of rice? f.What is Thailand's opportunity cost of producing one bushel of rice? g.If each country specializes in the production of the product in which it has a comparative advantage,who should produce wristwatches? h.If each country specializes in the production of the product in which it has a comparative advantage,who should produce rice?

Table 2-1 Production Choices for Dina's Diner -Refer to Table 2-1.Assume Dina's Diner only produces sliders and hot wings.A combination of 60 sliders and 50 hot wings would appear

Figure 2-4 Figure 2-4 shows various points on three different production possibilities frontiers for a nation. -Refer to Figure 2-4.Consider the following events: a.an increase in the patent protection period to 75 years B.a hurricane that destroys a substantial portion of a nation's capital stock C.the implementation of a secure and enforceable property rights system Which of the events listed above could cause a movement from W to Z?

Figure 2-2 Figure 2-2 above shows the production possibilities frontier for Vidalia,a nation that produces two goods,roses and orchids. -Refer to Figure 2-2.If Vidalia chooses to produce 60 dozen orchids,how many roses can it produce to maximize production?

If a country produces only two goods,it is possible to have an absolute advantage in the production of both goods.

Suppose that in Belgium,the opportunity cost of producing a trombone is 8 clarinets.In Denmark,the opportunity cost of producing a trombone is 6 clarinets. a.What is the opportunity cost of producing a clarinet for Belgium? b.What is the opportunity cost of producing a clarinet for Denmark? c.Which country has a comparative advantage in the production of clarinets? d.Which country has a comparative advantage in the production of trombones?