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

In the circular flow model,households

The principle of ________ is that the economic cost of using a factor of production is the alternative use of that factor that is given up.

On a diagram of a production possibility frontier,opportunity cost is represented by the slope of the production possibility frontier.

Table 2-9 Table 2-9 shows the number of labor hours required to produce a wristwatch and a pound of rice in Japan and Thailand. -Refer to Table 2-9.What is Thailand's opportunity cost of producing one pound of rice?

Table 2-7 Table 2-7 shows the output per week of two people,Minnie and Mickey.They can either devote their time to making hats or making umbrellas. -Refer to Table 2-7.Which of the following statements is true?

What causes a production possibilities frontier to shift outward?

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

The primary purpose of patents and copyrights is to

How are efficiency and inefficiency represented on a production possibilities frontier?

To increase gas mileage,automobile manufacturers make cars small and light.Large cars absorb more of the impact of an accident than small cars but yield lower gas mileage.These facts suggest that a positive relationship exists between safety and gas mileage.

Table 2-4 Table 2-4 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 2-4.What is Jack's opportunity cost of cultivating a garden?

Suppose your expenses for this term are as follows: tuition: $9,000,room and board: $1,500,books and other educational supplies: $1,000.Further,during the term,you can only work part-time and earn $3,000 instead of your full-time salary of $8,000.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?

Because the copyright on the L.Frank Baum book The Wonderful Wizard of Oz expired many years ago,the actual written words from the book are in the public domain,which means

For a person to have a comparative advantage in producing a product,he must be able to produce that product at a higher opportunity cost than his competitors.

Table 2-3 -Refer to Table 2-3.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.

Figure 2-7 Mercedes Benz produces a full line of luxury automobiles,including coupes,sedans,and SUVs,at a variety of manufacturing plants across the globe.Assume Mercedes Benz produces both coupes and SUVs at its Tuscaloosa,Alabama factory.Figure 2-7 shows changes to its production possibilities frontier in response to new developments and different strategic production decisions at this factory. -Refer to Figure 2-7.Suppose worker productivity increases so that the total number of vehicles produced increases as the company adds more machinery,workers and changes the layout of the factory.This is best represented by the

A successful market economy requires well defined property rights and

Table 2-5 Table 2-5 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 2-5.Estonia has a comparative advantage in the production of

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.

A decrease in the labor force shifts the production possibility frontier inwards over time.