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

A successful market economy requires

Which of the following is not a factor of production?

Adam Smith's invisible hand refers to

Table 2-5 Table 2-5 shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles. -Refer to Table 2-5.What is Fred's opportunity cost of making a unicycle?

Entrepreneurs bring together the factors of production to produce goods and services.

Table 2-1 Production choices for Tomaso's Trattoria -Refer to Table 2-1.Assume Tomaso's Trattoria only produces pizzas and calzones.Tomaso faces ________ opportunity costs in the production of pizzas and calzones.

Table 2-9 -Refer to Table 2-9.This table shows the number of labour hours required to produce a motorcycle and a guitar in Ireland and Scotland. a. Which country has an absolute advantage in the production of motorcycles? b. Which country has an absolute advantage in the production of guitars? c. What is Ireland's opportunity cost of producing one motorcycle? d. What is Scotland's opportunity cost of producing one motorcycle? e. What is Ireland's opportunity cost of producing one guitar? f. What is Scotland's opportunity cost of producing one guitar? g. If each country specialises in the production of the product in which it has a comparative advantage,who should produce motorcycles? h. If each country specialises in the production of the product in which it has a comparative advantage,who should produce guitars?

Table 2-8 Table 2-8 shows the number of labour hours required to produce a motorcycle and a guitar in Ireland and Scotland. -Refer to Table 2-8.Ireland has a comparative advantage in the production of

Table 2-7 Table 2-7 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 2-7.What is Tammi's opportunity cost of bathing a cat?

Table 2-4 Table 2-4 shows the output per week of two jewellers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. -Refer to Table 2-4.What is Haley's opportunity cost of making a necklace?

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

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

Figure 2-7 Figure 2-7 shows the production possibility frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews. -Refer to Figure 2-7.What is the opportunity cost of producing 1 kilogram of cashews in Pakistan?

An inward shift of a nation's production possibility frontier can occur due to

Consider the following items: a.the novel The DaVinci Code by Dan Brown b.the 'The Spirited Shipper',an innovative wine shipping box c.a Swiss chef's award-winning recipe d.an original fabric design,for example,the fabric used for 'Coach' bags and luggage Which of the items listed is an example of intellectual property?

Table 2-6 Table 2-6 shows the number of labour hours required to produce a digital camera and a kilogram of wheat in China and South Korea. -Refer to Table 2-6.If the two countries specialise and trade,who should export wheat?

In a two-good,two-country world,if one country has an absolute advantage in the production of both goods,it must also have a comparative advantage in the production of both goods.

Table 2-6 Table 2-6 shows the number of labour hours required to produce a digital camera and a kilogram of wheat in China and South Korea. -Refer to Table 2-6.What is South Korea's opportunity cost of producing one digital camera?

An example of a factor of production is

Figure 2-3 Figure 2-3 shows various points on three different production possibility frontiers for a nation. -Refer to Figure 2-3.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?