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

Figure 2-3 -Refer to Figure 2-3. Sergio Vignetto raises cattle and llamas on his land. His land is equally suitable for raising either animal. Which of the graphs in Figure 2-3 represent(s) his production possibilities frontier?

Figure 2-16 -Refer to Figure 2-16. One segment of the circular flow diagram in the figure shows the flow of labor services from market K to economic agents J. What is market K and who are economic agents J?

Figure 2-6 -The opportunity cost of taking a semester-long economics class is

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. -If a country is producing efficiently and is on the production possibilities frontier, the only way to produce more of one good is to produce less of the other.

On a diagram of a production possibility frontier, economic growth is represented by the slope of the production possibility frontier.

Scarcity

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

The term "property rights" refers to

Figure 2-19 -Refer to Figure 2-19. Which two arrows in the diagram depict the following transaction: LaDonna sells 20 pairs of sunglasses at the Oakley store.

Table 2-4 Production Choices for Dina's Diner -Refer to Table 2-4. Assume Dina's Diner only produces sliders and hot wings. A combination of 40 sliders and 50 hot wings would appear

Figure 2-4 Figure 2-4 shows various points on three different production possibilities frontiers for a nation. -Refer to Figure 2-4. A movement from ________ could occur because of an influx of immigrant labor.

If a country produces only two goods, it is possible to have an absolute advantage in the production of both those goods.

In a two-good, two country world, if one country has a comparative advantage in the production of one good, it can benefit by trading with other countries.

Each person goes about her daily business seeking to maximize her own self interests. In doing so, she contributes to the welfare of society at large. This is the idea underlying Adam Smith's "invisible hand."

Table 2-3 Production Choices for Dina's Diner -Refer to Table 2-3. Assume Dina's Diner only produces sliders and hot wings. A combination of 120 sliders and 100 hot wings would appear

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. Suppose Vidalia is currently producing 20 dozen orchids per period. How many roses is it also producing, assuming that resources are fully utilized?

Figure 2-16 -Refer to Figure 2-16. One segment of the circular flow diagram in the figure shows the flow of wages and salaries from market K to economic agents M. What is market K and who are economic agents M?

Table 2-30 -Refer to Table 2-30. This table shows the number of labor hours required to produce a wristwatch and a bushel of rice in Japan and Thailand. a. Which country has an absolute advantage in the production of wristwatches? b. Which country has an absolute advantage in the production of rice? c. What is Japan's opportunity cost of producing one wristwatch? d. What is Thailand's opportunity cost of producing one wristwatch? e. What is Japan's opportunity cost of producing one pound of rice? f. What is Thailand's opportunity cost of producing one pound of rice? g. If each country specializes in the production of the product in which it has a comparative advantage, who should produce wristwatches? h. If each country specializes in the production of the product in which it has a comparative advantage, who should produce rice?

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

The production possibilities frontier model assumes which of the following?