Exam 2: The Economic Problem

Resource use is allocatively efficient if the

A society that is producing on its production possibilities frontier is

The opportunity cost of producing one ton of wheat for Country Gamma is 4 tons of corn. The opportunity cost of producing one ton of wheat for Country Beta is 8 tons of corn. Which country has the comparative advantage in the production of wheat?

Blue Violet's Orange Rose's production possibilities production possibilities -Two countries, Blue Violet and Orange Rose, produce only two goods: teapots and coffeepots. The table above gives their production possibilities. ________ has a comparative advantage in teapots and ________ has a comparative advantage in coffeepots.

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

BAE, a British defense company, has the contract to produce Tornado aircraft for the Royal Air Force. BAE is producing the aircraft at the lowest possible cost. If the RAF orders one more Tornado, there will be

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

The figure above illustrates that if this country wishes to have F? - F? additional food by moving from point A to point B, it will

Generally, opportunity costs increase and the production possibilities frontier bows outward. Why?

Over the past several decades, the United States has devoted a greater fraction of its resources to consumption than Hong Kong, which is why the U.S. economy grew faster than Hong Kong's economy.

-A (very, very small)country produces milk and shirts and its production possibilities frontier is in the table above. The nation is currently producing at point B. What is the opportunity cost of two additional gallons of milk? At point C? At point D? What do your results show?

-The figure above shows Prakash's and Gail's production possibilities frontiers for writing books and magazine articles. a)What is Prakash's opportunity cost of a book? What is Gail's opportunity cost? Who has the comparative advantage in writing books? b)Who has the comparative advantage in writing magazine articles? c)According to their comparative advantages, who should write books and who should write magazine articles?

-In the above figure, at point a what is the opportunity cost of producing one more audio tape?

Moving along a PPF, marginal cost is

A nation can produce at a point outside its PPF

A country that must decrease production of one good in order to increase the production of another

The opportunity cost of more capital goods today is

-The above table shows production combinations on a country's production possibilities frontier. Which of the following points signifies efficient production?

The production possibilities frontier separates ________.

China's State Council has encouraged more spending to "improve transportation links and other infrastructure...." It will also "step up its spending on vocational training and other educational programs for adults." www.nytimes.com, Keith Bradsher, October 19, 2008 Suppose that capital goods are on the vertical axis while consumption goods are on the horizontal axis of China's PPF. As a result of enacting the policies, we would expect i.an expansion of China's production possibilities. iI.capital accumulation. iII.an increase in human capital.