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

Table 2-5 -Refer to Table 2-5.This table shows the number of labor hours required to produce a digital camera and a bushel of wheat in China and South Korea.

Which of the following would shift a nation's production possibilities frontier outward?

a.Draw a production possibilities frontier for a country that produces two goods,beer and pretzels.Assume that resources are equally suited to both tasks. b.Define opportunity costs. c.Use your production possibilities frontier graph to demonstrate the principle of opportunity costs.

The resource income earned by those who supply ________ is called wages.

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

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."

If Sanjaya can shuck more oysters in one hour than Tatiana,then Sanjaya has a comparative advantage in shucking oysters.

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

An organization of producers that limits the amount of a good produced is known as a

Which of the following is not a factor of production?

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 Serena's opportunity cost of making a bracelet?

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 Pakistan?

An example of a factor of production is

Figure 2-6 General Motors recently approved for production the Cadillac Converj, an electric car based on its Chevy Volt. The Converj will feature a "Generation 1.5 Voltec" powertrain, with a hybrid engine that runs on a combination of electricity and gasoline. Assume GM chooses to produce both hybrid-engine vehicles and gasoline-engine vehicles for its Cadillac brand. Figure 2-6 shows changes to its production possibilities frontier in response to new developments and different strategic production decisions. -Refer to Figure 2-6.Assume that in 2011,GM was able to reopen one of its factories after an extensive remodelling which now allows for the production of both types of vehicles.This is best represented by the

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.What is South Korea's opportunity cost of producing one digital camera?

________ marginal opportunity cost implies that the more resources already devoted to any activity,the payoff from allocating yet more resources to that activity increases by progressively smaller amounts.

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.Which of the following statements is true?

"An Inquiry into the Nature and Causes of the Wealth of Nations" published in 1776 was written by

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

Figure 2-6 General Motors recently approved for production the Cadillac Converj, an electric car based on its Chevy Volt. The Converj will feature a "Generation 1.5 Voltec" powertrain, with a hybrid engine that runs on a combination of electricity and gasoline. Assume GM chooses to produce both hybrid-engine vehicles and gasoline-engine vehicles for its Cadillac brand. Figure 2-6 shows changes to its production possibilities frontier in response to new developments and different strategic production decisions. -Refer to Figure 2-6.In response to changing consumer demands,GM has cut back on the production of hybrids and increased its production of gasoline-powered vehicles.This strategy is best represented by the