Exam 2: Trade-Offs, comparative Advantage, and the Market System

Table 2-5 -Refer to Table 2-5.This table shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland. a.Which country has an absolute advantage in the production of cell phones? b.Which country has an absolute advantage in the production of lumber? c.What is Estonia's opportunity cost of producing one cell phone? d.What is Finland's opportunity cost of producing one cell phone? e.What is Estonia's opportunity cost of producing one board foot of lumber? f.What is Finland's opportunity cost of producing one board foot of lumber? g.If each country specializes in the production of the product in which it has a comparative advantage,who should produce cell phones? h.If each country specializes in the production of the product in which it has a comparative advantage,who should produce lumber?

Table 2-4 Table 2-4 shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland. -Refer to Table 2-4.Does either Estonia or Finland have an absolute advantage and if so,in what product?

Which of the following is a factor of production?

Table 2-4 Table 2-4 shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland. -Refer to Table 2-4.If the two countries specialize and trade,who should export lumber?

In a free market there are virtually no restrictions,or at best few restrictions,on how a good or service can be produced or sold.

In the circular flow model,households

Figure 2-7 Figure 2-7 shows the production possibilities frontiers for Costa Rica and Guatemala.Each country produces two goods,pineapples and coconuts. -Refer to Figure 2-7.Which country has a comparative advantage in the production of coconuts?

Specializing in the production of a good or service in which one has a comparative advantage enables a country to do which of the following?

Which of the following are represented by the same flow in the circular flow model?

If additional units of a good could be produced at a constant opportunity cost,the production possibility frontier would be linear.

A critical function of the government in facilitating the operation of a market economy is

________ exists because unlimited wants exceed the limited resources available to fulfill those wants.

________ a nation's production possibilities frontier represents economic growth.

Which of the following statements about an entrepreneur is true?

Suppose your expenses for this term are as follows: tuition: $5,000,room and board: $3,000,books and other educational supplies: $500.Further,during the term,you can only work part-time and earn $4,000 instead of your full-time salary of $10,000.What is the opportunity cost of going to college this term,assuming that your room and board expenses would be the same even if you did not go to college?

Table 2-4 Table 2-4 shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland. -Refer to Table 2-4.If the two countries specialize and trade,who should export cell phones?

Figure 2-4 Figure 2-4 shows various points on three different production possibilities frontiers for a nation. -Refer to Figure 2-4.A movement from ________ is the result of advancements in plastic production technology.

Figure 2-2 Figure 2-2 above shows the production possibilities frontier for Vidalia,a nation that produces two goods,roses and orchids. -Refer to Figure 2-2.What is the opportunity cost of one dozen roses?

Figure 2-7 Figure 2-7 shows the production possibilities frontiers for Costa Rica and Guatemala.Each country produces two goods,pineapples and coconuts. -Refer to Figure 2-7.What is the opportunity cost of producing 1 ton of coconuts in Costa Rica?

Households