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

Figure 2-9 Figure 2-9 shows the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews. -Refer to Figure 2-9.What is the opportunity cost of producing 1 pound of cashews in Pakistan?

Suppose in the Germany,the opportunity cost of producing a gallon of beer is 5 gallons of wine.In Italy,the opportunity cost of producing a gallon of beer is 3 gallons of wine. a. What is the opportunity cost of producing a gallon of wine for Germany? b. What is the opportunity cost of producing a gallon of wine for Italy? c. Which country has a comparative advantage in the production of beer? d. Which country has a comparative advantage in the production of wine?

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.Suppose Mendonca is currently producing 60 pounds of vegetables per period.How much meat is it also producing,assuming that resources are fully utilized?

In a free market there are virtually no restrictions,or at best few restrictions on how factors of production can be employed.

The term "property rights" refers 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 events: a.an increase in the unemployment rate b.a decrease in a nation's money supply c.a war that kills a significant portion of a nation's population Which of the events listed above could cause a movement from Y 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.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?

All of the following are examples of spending on goods and services in the circular flow model except

Figure 2-8 Figure 2-8 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. -Refer to Figure 2-8.Suppose Vidalia is currently producing 120 dozen roses per period.How many orchids is it also producing,assuming that resources are fully utilized?

Table 2-10 Table 2-10 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 2-10.Which of the following statements is true?

Comparative advantage means the ability to produce a good or service

What is a production possibilities frontier? What do points along the frontier represent? What do points inside and outside the frontier represent?

Table 2-7 Table 2-7 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 2-7.What is Fred's opportunity cost of making a unicycle?

It is possible to have an absolute advantage in producing a good or service without having a comparative advantage.

Table 2-8 Table 2-8 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 2-8.What is South Korea's opportunity cost of producing one pound of wheat?

Table 2-6 Table 2-6 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 2-6.What is Haley's opportunity cost of making a bracelet?

Table 2-9 Table 2-9 shows the number of labor hours required to produce a canoe and a sailboat in Guatemala and Honduras. -Refer to Table 2-9.What is Honduras's opportunity cost of producing one canoe?

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.

Rayburn Reed is a highly talented photographer.He has chosen to specialize in photography because of all of the following except

If additional units of a good could be produced at an increasing opportunity cost,the production possibility frontier would be linear.