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

A production possibilities frontier with a ________ shape indicates increasing opportunity costs as more and more of one good is produced.

Which of the following is an examples of spending on factors of production in the circular flow model?

A decrease in the unemployment rate may be represented as a movement from a point inside the production possibilities frontier to a point on the frontier.

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. -Refer to Table 2-15. What is Jack's opportunity cost of cultivating a garden?

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. If the two countries have the same amount of resources and the same technological knowledge, which country has an absolute advantage in the production of milk?

The payment received by suppliers of entrepreneurial skills is called interest.

Figure 2-2 Figure 2-2 above shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables. -Refer to Figure 2-2. What is the opportunity cost of one pound of meat?

An inward shift of a nation's production possibilities frontier can occur due 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 movements: a. from point V to point W B. from point W to point Y C. from point Y to point Z Which of the movements listed above represents economic growth?

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

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. -Specializing in the production of a good or service in which one has a comparative advantage enables a country to do which of the following?

Figure 2-12 Figure 2-12 shows the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews. -Refer to Figure 2-12. What is the opportunity cost of producing 1 pound of cashews in Pakistan?

Figure 2-12 Figure 2-12 shows the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews. -Refer to Figure 2-12. Which country has a comparative advantage in the production of cashews?

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 an umbrella?

If a nation changes its laws to more actively enforce intellectual property rights, all of the following will most likely take place except

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. Which country has a comparative advantage in the production of snow cones?

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. If the two countries specialize and trade, who should export wheat?

Any output combination along a production possibility frontier is associated with overused or unattainable resources.

Table 2-17 Table 2-17 shows the output per week of two people, James and Lucy. They can either devote their time to making wagons or making tricycles. -Refer to Table 2-17. What is Lucy's opportunity cost of making a wagon?

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. Which country has a comparative advantage in the production of popsicles?