Exam 2: Trade-Offs, Comparative Advantage, and 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 decrease in the unemployment rate B. general technological advancement C. an increase in consumer wealth Which of the events listed above could cause a movement from V to W ?

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 ________ is the result of additional government restrictions on the pollution that results from plastic production.

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 X to Y

Figure 2-9 -Refer to Figure 2-9. Carlos Vanya grows tomatoes and strawberries on his land. A portion of his land is more suitable for growing tomatoes and the other portion is better suited for strawberry cultivation. Which of the graphs in Figure 2-3 represent his production possibilities frontier?

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 grooming a dog?

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 D?

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 additional units of a good could be produced at a constant opportunity cost, the production possibility frontier would be bowed outward (concave).

Economic decline (negative growth) is represented on a production possibilities frontier model by the production possibility frontier

Comparative advantage means the ability to produce a good or service

Is it possible for a firm to have a comparative advantage in producing something without having an absolute advantage? Why or why not?

What does the term "increasing marginal opportunity cost" mean? How are increasing marginal opportunity costs represented on a bowed out production possibilities frontier?

For a person to have a comparative advantage in producing a product, she must be able to produce that product at a lower opportunity cost than her competitors.

Households

If the production possibilities frontier is ________, then opportunity costs are constant as more of one good is produced.

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

Figure 2-16 -Refer to Figure 2-16. In the circular flow diagram, market K represents

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. Which of the following statements is true?

Table 2-16 Table 2-16 shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland. -Refer to Table 2-16. What is Finland's opportunity cost of producing one cell phone?

A worker is hired in a

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 Scotland's opportunity cost of producing one guitar?