Exam 2: The Economic Problem

-The table above gives the production possibilities frontier for a nation that produces wheat and soybeans. Use the information in that table to complete the table below, which has in it the opportunity costs of moving from one production point to another. Do not forget to note the units of the opportunity costs.

By specialization and trade, two individuals can

As an economy's capital stock increases, the economy

Explain why the production possibilities frontier bows outward.

-Using the values for the marginal benefit and the marginal cost of a bushel of apples given in the table above, what is the allocatively efficient quantity of apples? Suppose 10 million bushels of apples are produced. Should the quantity be increased or decreased? What if 20 million bushels are produced; should the quantity be increased or decreased?

-In the figure above, suppose that Mac and Izzie specialize and trade to reach point c. Mac sends Izzie

In one week Alice can produce 5 pairs of shoes or 4 bookshelves while Roger can produce 10 pairs of shoes or 6 bookshelves. Alice has ________ advantage in producing ________.

President Obama has proposed a goal that everyone complete at least one year of formal education or training beyond high school. This policy would

In the movie Cast Away, Tom Hanks plays a FedEx efficiency expert stranded on a deserted island. While on the island, he divides his time between catching fish, gathering coconuts, painting, and building a raft. Suppose that these were Mr. Hanks' only activities. Did he face an opportunity cost from pursuing any of these activities? Why or why not?

When the production possibilities frontier bows outward from the origin

-Refer to the production possibilities frontier in the figure above. Which production point indicates that resources are NOT fully utilized or are misallocated?

Ted can study for his economics exam or go to a concert. He decides to study for his economics exam instead of going to the concert. The concert he will miss is Ted's ________ of studying for the exam.

Scarcity is represented on a production possibilities frontier figure by

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

If marginal benefit is greater than marginal cost for the production of cars, to reach the allocative efficient quantity of cars, the production of cars must be increased.

Moving from one point on the production possibilities frontier to another ________.

Production possibilities -In the above table, the opportunity cost of the 2nd pizza is

In general, the more resources that are devoted to technological research, the

Why is it likely that the United States has an absolute advantage in goods and yet it still ends up importing them from other countries?

-In the production possibilities frontier depicted in the figure above, which of the following combinations of hats and bananas is inefficient?