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

Table 2-21 -Refer to Table 2-21. This table shows the number of labor hours required to produce a digital camera and a bushel of wheat in China and South Korea. a. If each country has a total of 9,000 labor hours to devote to the production of the two goods, draw the production possibilities frontier for each country. Put "Digital Camera" on the horizontal axis and "Wheat" on the vertical axis. Be sure to identify the intercept values on your graphs. b. Suppose each country allocates 60% its labor hours to wheat production and 40% to the production of digital cameras. Complete Table 2-22 below to show each country's output of the two products. Table 2-22: 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 China's consumption point "C" and South Korea's consumption point, "K." d. Suppose the two countries specialize and trade. Who should produce digital cameras and who should produce wheat? Explain your answer. e. Complete Table 2-23 below to show each country's output with specialization. Table 2-23: 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 China and South Korea agree to trade so that in exchange for 1,200 bushels of wheat, the exporter of wheat receives 48 digital cameras. Complete Table 2-24 below to show each country's consumption bundle after trade. Table 2-24: Consumption with Trade h. Show the consumption points after trade on each country's production possibilities frontier. Label these points "B" for China and "J" for South Korea. i. Has trade made the two countries better off? Explain your answer.

Figure 2-15 Figure 2-15 shows the production possibilities frontiers for Greenland and Iceland. Each country produces two goods, snow cones and popsicles. -Refer to Figure 2-15. What is the opportunity cost of producing 1 popsicle in Greenland?

Table 2-12 Table 2-12 shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras. -Refer to Table 2-12. If the two countries specialize and trade, who should export sailboats?

Identify whether each of the following transactions will take place in the factor market or in the product market: a. Shondra buys a Harley-Davidson Softail motorcycle. b. Aimee works 20 hours a week at a grocery store. c. Gustavo sells a warehouse to a produce delivery company. d. Ocean Spray increases employment at its Middleboro, Massachusetts plant.

Table 2-10 Table 2-10 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 2-10. What is Barney's opportunity cost of making a unicycle?

In the desire to have a celebrity's image protected to prevent it from being used in ways he would not approve, a celebrity's estate

Table 2-1 Production choices for Tomaso's Trattoria -Refer to Table 2-1. Assume Tomaso's Trattoria only produces pizzas and calzones. Tomaso faces ________ opportunity costs in the production of pizzas and calzones.

Figure 2-5 -Refer to Figure 2-5. If the economy is currently producing at point X, what is the opportunity cost of moving to point W?

Figure 2-7 Mercedes Benz recently decided to introduce its B-class automobile in the U.S. market, an electric car that is has designed and developed in a partnership with Tesla Motors. Assume Mercedes Benz chooses to produce both electric-engine vehicles and gasoline-engine vehicles. Figure 2-7 shows changes to its production possibilities frontier in response to new developments and different strategic production decisions. -Refer to Figure 2-7. Assume that in response to changing consumer demands, Mercedes cuts back on the production of electric vehicles and increased its production of gasoline-powered vehicles. This strategy is best represented by the

A production possibilities frontier with a bowed outward shape indicates

Pierre can produce either a combination of 20 bow ties and 30 neckties or a combination of 35 bow ties and 15 neckties. If he now produces 35 bow ties and 15 neckties, what is the opportunity cost of producing an additional 15 neckties?

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 patent protection period to 75 years B. a hurricane that destroys a substantial portion of a nation's capital stock C. the implementation of a secure and enforceable property rights system Which of the events listed above could cause a movement from W to Z?

Why are music, television, and movie companies concerned about their products being posted to Internet websites such as YouTube?

Table 2-13 Table 2-13 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 2-13. What is Horace's opportunity cost of bathing a cat?

Figure 2-1 -Refer to Figure 2-1. Point B is

Table 2-14 Table 2-14 shows the number of labor hours required to produce a motorcycle and a guitar in Ireland and Scotland. -Refer to Table 2-14. What is Ireland's opportunity cost of producing one guitar?

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

The ________ demonstrates the roles played by households and firms in the market system.

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. 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 secure and enforceable property rights system Which of the events listed above could cause a movement from W to V?

Table 2-18 Table 2-18 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 2-18. Which of the following statements is true?