Exam 2: Choices and Trade-Offs in the Market

To what does Adam Smith's invisible hand refer?

Figure 2.6 Figure 2.6 above shows the production possibility frontier for Vidalia, a nation that produces two goods, roses and orchids. -Refer to Figure 2.6.What is the opportunity cost of 80 dozen orchids?

Which of the following is an example of a factor or production?

What is comparative advantage? What is absolute advantage? __________________________________________________________________________________________________________________________________________________________________________________________

What is a production possibility frontier? What do points along the frontier represent? What do points inside and outside the frontier represent? __________________________________________________________________________________________________________________________________________________________________________________________

Table 2.1 Production choices for Tomaso's Trattoria Choice Quantity of Pizzas Produced Quantity of Calzones Produced A 48 0 B 36 15 C 24 30 D 12 45 E 0 60 -Refer to Table 2.1.Assume Tomaso's Trattoria only produces pizzas and calzones.Where would a combination of 24 pizzas and 15 calzones appear?

Figure 2.7 Figure 2.7 shows the production possibility frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews. -Refer to Figure 2.7.Which country has a comparative advantage in the production of cotton?

To what does the term 'property rights' refer?

Table 2.7 Tammi Horace Dogs Groomed 20 12 Cats Bathed 10 8 Table 2.7 shows the output per day of two pet groomers, Tammi and Horace. They can either devote their time to grooming dogs or bathing cats. -Refer to Table 2.7.Which of the following statements is true?

What shape does a production possibility frontier take if it displays increasing opportunity costs? What shape does a production possibility frontier take if it displays constant opportunity costs? Which shape is most common in production situations? __________________________________________________________________________________________________________________________________________________________________________________________

It is possible to have a comparative advantage in producing a good or service without having an absolute advantage.

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

The principle of opportunity cost is that _______.

The Great Depression of the 1930s,with a large number of workers and factories unemployed,would be represented in a production possibility frontier graph by __________.

Table 2.8 One Motorcycle One Guitar Ireland 20 hours 4 hours Scotland 8 hours 2 hours Table 2.8 shows the number of labour hours required to produce a motorcycle and a guitar in Ireland and Scotland. -Refer to Table 2.8.If the two countries specialise and trade,who should export motorcycles?

Any output combination outside a production possibility frontier is associated with unused or underutilised resources.

Table 2.6 One Digital Camera Wheat (per kilogram) China 100 hours 4 hours South Korea 60 hours 3 hours Table 2.6 shows the number of labour hours required to produce a digital camera and a kilogram of wheat in China and South Korea. -Refer to Table 2.6.China has a comparative advantage in the production of __________.

In a production possibility frontier model,a point ________ the frontier is productively inefficient.

What are the attainable production points on a production possibility curve?

Figure 2.3 Figure 2.3 shows various points on three different production possibility frontiers for a nation. -Refer to Figure 2.3.Consider the following events: A.an increase in the patent protection period to 30 years B.an increase of a nation's capital stock C.an improved property rights system Which of the events listed above could cause a movement from V to W?