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

Should countries specialize in producing goods and services based on having a comparative advantage or an absolute advantage? Why?

The idea underlying Adam Smith's "invisible hand" is that people tend to behave in ways that go unnoticed in society.

Which of the following is an examples of spending on factors of production in the circular flow model?

Adam Smith,the father of modern economics wrote in his book,An Inquiry into the Nature and Causes of the Wealth of Nations,"It is not from the benevolence of the butcher,the brewer,or the baker,that we expect our dinner but from their regard to their own interest." Explain what he meant by that statement and how such behavior promotes the wealth of a nation.

a.Draw a production possibilities frontier for a country that produces two goods,wine and cheese.Assume that resources are not equally suited to both tasks. b.Define opportunity costs. c.Use your production possibilities frontier graph to demonstrate the principle of opportunity costs.

If the best lawyer in town is also the best at operating a word processor,then according to economic reasoning,this person should

The primary purpose of patents and copyrights is to

Comparative advantage means

A student comments to his roommate that the only way he will be able to pass his final exams is to not sleep for the next three days.This statement suggests that

Table 2-2 -Refer to Table 2-2.The Nut House produces only cashews and almonds.The table above shows the maximum possible output combinations of the two nuts using all resources and currently available technology. a.Graph The Nut House's production possibilities frontier.Put almonds on the horizontal axis and cashews on the vertical axis.Be sure to identify the output combination points on your diagram. b.Suppose The Nut House is currently producing at point C.What is the opportunity cost of producing an additional 12,000 pounds of almonds? c.Suppose The Nut House is currently producing at point C.What happens to the opportunity cost of producing more and more almonds? Does it increase,decrease or remain constant? Explain your answer. d.Suppose The Nut House is currently producing at point F.What happens to the opportunity cost of producing more and more cashews? Does it increase,decrease or remain constant? Explain your answer. e.Suppose The Nut House is plagued by a variety of white root-rot disease,which destroys cashew trees but not almond trees.Show in a graph what happens to its PPF.

An increase in the unemployment rate may be represented as a movement from a point on the production possibilities frontier to a point inside the frontier.

Published in 1776,________ was written by Adam Smith.

If the opportunity cost of producing more of one good increases as more of that good is produced,then the production method is inefficient.

The ________ production points on a production possibility curve are the points along and inside the production possibility frontier.

________ behavioral assumption about humans was that people usually act in a rational,self-interested way.

If property rights are not well enforced,all of the following are likely to occur except

Table 2-1 Production Choices for Dina's Diner -Refer to Table 2-1.Assume Dina's Diner only produces sliders and hot wings.A combination of 60 sliders and 50 hot wings would appear

In a two-good,two country world,if one country has an absolute advantage in the production of both goods,it can still benefit by trading with the other country.

If opportunity costs are ________,the production possibilities frontier would be graphed as a negatively sloped straight line.

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 movements: a.from point V to point W B.from point W to point Y C.from point Y to point Z Which of the movements listed above represents advancements in technology with respect to both plastic production and food production?