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

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 W?

All of the following countries come close to the free market benchmark except

Figure 2-11 -Refer to Figure 2-11.Which two arrows in the diagram depict the following transaction: Dorian Gray hires "Wild Oscar",a professional portrait artist,to paint his picture.

Table 2-4 Table 2-4 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 2-4.Does either China or South Korea have an absolute advantage and if so,in what product?

If a commercial dairy farm wants to raise funds to purchase feeding troughs,it does so in the

Households ________ final goods and services in the ________ market.

The production possibilities frontier shows the ________ combinations of two products that may be produced in a particular time period with available resources.

Table 2-3 Table 2-3 shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. -Refer to Table 2-3.What is Haley's opportunity cost of making a bracelet?

The production possibilities frontier model assumes which of the following?

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.

Table 2-3 Table 2-3 shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. -Refer to Table 2-3.What is Haley's opportunity cost of making a necklace?

Figure 2-8 -Refer to Figure 2-8.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?

Figure 2-7 Figure 2-7 shows the production possibilities 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 bolt of cotton in Indonesia?

Table 2-5 -Refer to Table 2-5.This table shows the number of labor hours required to produce a digital cameras and a bushel of wheat in China and South Korea. a.Which country has an absolute advantage in the production of digital cameras? b.Which country has an absolute advantage in the production of wheat? c.What is China's opportunity cost of producing one digital camera? d.What is South Korea's opportunity cost of producing one digital camera? e.What is China's opportunity cost of producing one pound of wheat? f.What is South Korea's opportunity cost of producing one pound of what? g.If each country specializes in the production of the product in which it has a comparative advantage,who should produce digital cameras? h.If each country specializes in the production of the product in which it has a comparative advantage,who should produce wheat?

If opportunity costs are constant,the production possibilities frontier would be graphed as

In the circular flow model,producers

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.

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

What is comparative advantage? What is absolute advantage?

Consider a country that produces only two goods: kayaks and coconuts.Suppose it is possible for this country to increase its production of kayaks without producing fewer coconuts.In this case,its current output combination is efficient.