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

For each bottle of wine that Italy produces, it gives up the opportunity to make 10 pounds of cheese. France can produce 1 bottle of wine for every 25 pounds of cheese it produces. Which of the following is true about the comparative advantage between the two countries?

Figure 2-4 Figure 2-4 shows various points on three different production possibilities frontiers for a nation. -Suppose there is no unemployment in the economy and society decides that it wants more of one good. Which of the following statements is true?

Figure 2-8 Figure 2-8 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. -Refer to Figure 2-8. The linear production possibilities frontier in the figure indicates that

It is not possible to have an absolute advantage in producing a good or service without having a comparative advantage.

Figure 2-6 -Refer to Figure 2-6. If the economy is currently producing at point E, what is the opportunity cost of moving to point B?

Suppose your expenses for this term are as follows: tuition: $10,000, room and board: $6,000, books and other educational supplies: $1,000. Further, during the term, you can only work part-time and earn $8,000 instead of your full-time salary of $20,000. 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?

Which of the following is a factor of production?

Table 2-11 Table 2-11 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea. -Refer to Table 2-11. China has a comparative advantage in the production of

Figure 2-14 Figure 2-14 shows the production possibilities frontiers for Costa Rica and Guatemala. Each country produces two goods, pineapples and coconuts. -Refer to Figure 2-14. What is the opportunity cost of producing 1 ton of coconuts in Costa Rica?

Which of the following are separate flows in the circular flow model?

If additional units of a good are produced at an increasing opportunity cost, the production possibility frontier would be bowed outward (concave).

Figure 2-11 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 2-11 shows changes to its production possibilities frontier in response to new developments and different strategic production decisions at this factory. -On a diagram of a production possibility frontier, opportunity cost is represented by the production possibility frontier shifting outward.

Table 2-2 Production choices for Billie's Bedroom Shop -Refer to Table 2-2. Assume Billie's Bedroom Shop only produces pillows and blankets. Billie faces ________ opportunity costs in the production of pillows and blankets.

Consider the following items: a. the album "21" by Adele B. a Dutch horticulturalist's new method for cultivating hybrid tulips C. Rolls Royce's "Spirit of Ecstasy" hood ornament design D. the sale of Tumi luggage at a Macy's department store. Which of the items listed is an example of intellectual property?

Table 2-5 Production choices for Nadia's Neckware -Refer to Table 2-5. Assume Nadia's Neckware only produces ascots and bowties. A combination of 8 ascots and 18 bowties would appear

Figure 2-10 -Refer to Figure 2-10. If the economy is currently producing at point E, what is the opportunity cost of moving to point D?

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. Ireland has a comparative advantage in the production of

Table 2-15 Table 2-15 shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens. -Comparative advantage means

The production possibilities frontier model shows that

The attainable production points on a production possibility curve are