Exam 2: The Economic Problem

A president of the United States promises to produce more defense goods without any decreases in the production of other goods. This promise can be valid

Homer and Teddy are stranded on a desert island. To feed themselves each day they can either catch fish or pick fruit. In a day, Teddy could pick 60 pieces of fruit or catch 20 fish. Homer could pick 100 pieces of fruit or catch 150 fish. Which of the following statements is CORRECT?

The social arrangement that gives John Grisham, the writer of best-selling novels, the ownership of his novels is

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

The United States uses tax funds to build and repair the interstate highway system and to provide health care services via Medicare. Suppose Medicare services are on the horizontal axis and highway miles are on the vertical axis of a PPF. If the government decides to reduce funding to Medicare, this change would be shown as

Betty and Ann live on a desert island. With a day's labor, Ann can produce 6 fish or 4 coconuts; Betty can produce 3 fish or 1 coconut. Betty's opportunity cost of producing 1 fish is ________, and she should specialize in the production of ________.

-In the figure above, at the allocatively efficient level of computer production the marginal cost of producing a computer is

An increase in the nation's capital stock will

The most anyone is willing to pay for another purse is $30. Currently the price of a purse is $40, and the cost of producing another purse is $50. The marginal benefit of a purse is

As long as the marginal benefit from a good is greater than its marginal cost, an economy is operating efficiently.

Missouri can produce 10,000 tons of pecans per year or 5,000 tons of pears per year. Washington can produce 12,000 tons of pecans per year or 48,000 tons of pears per year. If these two states were to engage in trade, which of the following is TRUE?

Specialization and trade allow countries to consume beyond their PPFs.

Suppose that a typical German factory can produce 20 cameras or 1 computer in an hour, and that a typical American factory can produce 10 cameras or one computer in an hour. The opportunity cost of 20 cameras in terms of computers in the United States is

A system of property rights

Any production point outside the production possibilities frontier is

-In the figure above, point D is

-In the figure above, the curve is known as the

-The table above shows the production possibilities frontier for the nation of Isolanda. a)Find the marginal cost of a pound of fish using the above PPF. b)How does the marginal cost of a pound of fish change as more fish are caught?

-In the above figure, curve b shows the

Marginal cost is the opportunity cost