Exam 2: Choices and Trade-Offs in the Market

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

What assumption is made by the production possibility frontier model?

Table 2.2 Production choices for Billie's Bedroom Shop Choice Quantity of Pillows Produced Quantity of Blankets Produced A 36 0 B 27 7 C 18 14 D 9 21 E 0 28 -Refer to Table 2.2.Assume Billie's Bedroom Shop only produces pillows and blankets.Billie faces ________ opportunity costs in the production of pillows and blankets.

When you purchase a new set of spurs you do so in the________.

You have an absolute advantage whenever you________.

What does an outward shift of a nation's production possibility frontier represent?

In a free market there are virtually no restrictions or,at best,few restrictions on how factors of production can be employed.

If society decides it wants more of one good and all resources are fully utilised,then________.

If Sanjaya can shuck more oysters in 1 hour than Tatiana,then Sanjaya has a comparative advantage in shucking oysters.

Figure 2.1 -Refer to Figure 2.1.Point C is __________.

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.Scotland has a comparative advantage in the production of _________.

Jane can bake either a combination of 25 cakes and 15 pies or a combination of 10 cakes and 20 pies.If she now bakes 10 cakes and 20 Pies,the opportunity cost of baking an additional 15 cakes is _________.

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.a decrease in the unemployment rate B.general technological advancement C.an increase in consumer wealth Which of the events listed above could cause a movement from V to W?

a.Draw a production possibility frontier for a country that produces two goods,beer and pretzels.Assume that resources are equally suited to both tasks. b.Define opportunity costs. c.Use your production possibility frontier graph to demonstrate the principle of opportunity costs. __________________________________________________________________________________________________________________________________________________________________________________________

Table 2.5 Fred Barney Pogo Sticks 24 28 Unicycles 8 14 Table 2.5 shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles. -Refer to Table 2.5.Which of the following statements is true?

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.What is Ireland's opportunity cost of producing one motorcycle?

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.Does either Ireland or Scotland have an absolute advantage and if so,in what product?

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.a reduction in the patent protection period to no more than 2 years B.a war that destroys a substantial portion of a nation's capital stock C.the lack of a secure and enforceable property rights system Which of the events listed above could cause a movement from W to V?

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 100 dozen roses?

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?