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

An increase in population shifts the production possibility frontier inwards over time.

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 ________ could occur because of an influx of immigrant labor.

Individuals who have never been the best at doing anything

The slope of a production possibilities frontier measures the ________ of producing one more unit of a good.

If a vineyard wants to raise funds to purchase a new bottling machine,it does so in the

Table 2-3 Table 2-3 shows the output per day of two gardeners,George and Jack.They can either devote their time to mowing lawns or cultivating gardens. -Refer to Table 2-3.Which of the following statements is true?

To compete in the automobile market,BMW must make many strategic decisions such as whether to introduce a new car model,whether to produce alternative-fuel vehicles,and where to advertise.At BMW's Spartanburg,South Carolina plant,managers must decide on the monthly production quantities of their X3,X5 ,and X6 models.In making this decision,the managers

A worker is hired in a

Figure 2-8 -Refer to Figure 2-8.In the circular flow diagram,market K represents

Figure 2-11 -Refer to Figure 2-11.Which two arrows in the diagram depict the following transaction: Stanley purchases the novel,"Night of Sorrows" for his summer reading pleasure.

When you purchase a new surfboard you do so in the

List the four broad categories of factors of production.

Table 2-6 -Refer to Table 2-6.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.If each country has a total of 3,600 labor hours to devote to the production of the two goods,draw the production possibilities frontier for each country.Put "Cell Phone" on the horizontal axis and "Lumber" on the vertical axis.Be sure to identify the intercept values on your graphs. b.Suppose each country allocates 55% its labor hours to lumber production and 45% to the production of cell phones.Complete Table 2-7 below to show each country's output of the two products. Table 2-7: Production and Consumption with no Trade c.If the two countries do not trade and consume whatever they produce,identify the current production and consumption point for each country on their respective production possibilities frontiers.Label Estonia's consumption point "E" and Finland's consumption point,"F." d.Suppose the two countries specialize and trade.Who should produce cell phones and who should produce lumber? Explain your answer. e.Complete Table 2-8 below to show each country's output with specialization. Table 2-8: Output with Specialization f.Did specialization increase the combined output for the two countries without any increase in resources? If so,by how much? g.Suppose Estonia and Finland agree to trade so that in exchange for 400 board feet of lumber,the exporter of lumber receives 90 cell phones.Complete Table 2-9 below to show each country's consumption bundle after trade. Table 2-9: Consumption with Trade h.Show the consumption points after trade on each country's production possibilities frontier.Label these points "X" for Estonia and "Y" for Finland. i.Has trade made the two countries better off? Explain your answer.

The circular flow model demonstrates

The production possibilities frontier shows

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.The linear production possibilities frontier in the figure indicates that

Figure 2-4 Figure 2-4 shows various points on three different production possibilities frontiers for a nation. -Refer to Figure 2-4.Consider the following events: a.an increase in the unemployment rate B.a decrease in a nation's money supply C.a war that kills a significant portion of a nation's population Which of the events listed above could cause a movement from Z to X ?

A successful market economy requires well defined property rights and

Is it possible for a firm to have a comparative advantage in producing something without having an absolute advantage? Why or why not?

In economics,the term "free market" refers to a market where no sales tax is imposed on products sold.