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

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. What is Mickey's opportunity cost of making a hat?

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. -Refer to Figure 2-11. 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

List the four broad categories of factors of production.

Figure 2-13 Figure 2-13 shows the production possibilities frontiers for Tahiti and Bora Bora. Each country produces two goods, milk and honey. -Refer to Figure 2-13. What is the opportunity cost of producing one gallon of honey in Tahiti?

Which of the following would shift a nation's production possibilities frontier outward?

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. Does either Ireland or Scotland have an absolute advantage and if so, in what product?

Table 2-20 Table 2-20 shows the number of labor hours required to produce a wristwatch and a pound of rice in Japan and Thailand. -Refer to Table 2-20. What is Thailand's opportunity cost of producing one pound of rice?

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.

Figure 2-19 -Adam Smith's behavioral assumption about humans was that people

If Sanjaya can shuck more oysters in one hour than Tatiana, then Sanjaya has a comparative advantage in shucking oysters.

What causes a production possibilities frontier to shift outward?

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 snow cone in Greenland?

Adam Smith's invisible hand refers to

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 decrease in the unemployment rate B. an increase in technology with respect to both food and plastic production C. a war that kills a significant portion of a nation's population Which of the events listed above could cause a movement from W to Y ?

Table 2-1 Production choices for Tomaso's Trattoria -Refer to Table 2-1. Assume Tomaso's Trattoria only produces pizzas and calzones. A combination of 36 pizzas and 30 calzones would appear

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

________ marginal opportunity cost implies that the more resources already devoted to any activity, the payoff from allocating yet more resources to that activity increases by progressively smaller amounts.

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. If Vidalia chooses to produce 80 dozen roses, how many orchids can it produce to maximize production?

Table 2-20 Table 2-20 shows the number of labor hours required to produce a wristwatch and a pound of rice in Japan and Thailand. -Refer to Table 2-20. What is Thailand's opportunity cost of producing one wristwatch?

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. What is the opportunity cost of one dozen orchids?