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

The payment received by suppliers of entrepreneurial skills is called rent.

The idea underlying Adam Smith's "invisible hand" is that people tend to behave in ways that go unnoticed in society.

The primary purpose of patents and copyrights is to

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.Suppose Vidalia is currently producing 20 dozen orchids per period.How many roses is it also producing,assuming that resources are fully utilized?

Table 2-6 Table 2-6 shows the output per week of two people,James and Lucy.They can either devote their time to making wagons or making tricycles. -Refer to Table 2-6.What is James's opportunity cost of making a wagon?

It is not possible to have an absolute advantage in producing a good or service without having a comparative advantage.

Table 2-4 Table 2-4 shows the output per day of two gardeners,George and Jack.They can either devote their time to mowing lawns or cultivating gardens. -Refer to Table 2-4.What is Jack's opportunity cost of cultivating a garden?

The opportunity cost of taking an on-line history class is

A decrease in the labor force shifts the production possibilities frontier inwards over time.

Table 2-8 Table 2-8 shows the output per month of two people,Wilma and Betty.They can either devote their time to making marble statues or making marble benches. -Refer to Table 2-8.What is Betty's opportunity cost of making a statue?

For a person to have a comparative advantage in producing a product,he must be able to produce that product at a higher opportunity cost than his competitors.

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

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.The linear production possibilities frontier in the figure indicates that

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

Which of the following is an example of spending on goods and services in the circular flow model?

Table 2-2 Production choices for Nadia's Neckware -Refer to Table 2-2.Assume Nadia's Neckware only produces ascots and bowties.A combination of 16 ascots and 6 bowties would appear

Table 2-5 Table 2-5 shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland. -Refer to Table 2-5.Estonia has a comparative advantage in the production of

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

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 concept of opportunity costs.

Suppose your expenses for this term are as follows: tuition: $9,000,room and board: $1,500,books and other educational supplies: $1,000.Further,during the term,you can only work part-time and earn $3,000 instead of your full-time salary of $8,000.What is the opportunity cost of going to college this term,assuming that your room and board expenses would be the same even if you did not go to college?