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

What is economic growth?

Table 2-2 Production choices for Billie's Bedroom Shop -Refer to Table 2-2.Assume Billie's Bedroom Shop only produces pillows and blankets.A combination of 5 pillows and 21 blankets would appear

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 ________ could occur because of an influx of immigrant labor.

According to the production possibility model,if more resources are allocated to the production of physical and human capital,then which of the following is likely to happen?

All of the following are critical functions of the government in facilitating the operation of a market economy except

Figure 2-6 -Refer to Figure 2-6.If the economy is currently producing at point D,what is the opportunity cost of moving to point B?

An outward shift of a nation's production possibilities frontier represents

Adam Smith's behavioral assumption about humans was that people

Crude oil is not an example of a factor of production,but when crude oil is processed into gasoline,it is a factor of production.

A decrease in the unemployment rate may be represented as a movement from a point on the production possibilities frontier to a point outside the frontier.

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.an increase in a nation's money supply c.an influx of immigrant workers Which of the events listed above could cause a movement from X to Z?

Figure 2-6 -Refer to Figure 2-6.If the economy is currently producing at point A,what is the opportunity cost of moving to point B?

Which of the following is an example of spending on goods and services in the circular flow model?

As women's wages have risen relative to men's wages,the opportunity cost to women of doing housework has ________ than has the opportunity cost to men.

Table 2-4 -Refer to Table 2-4.The Fruit Farm produces only apples and pears.The table above shows the maximum possible output combinations of the two fruits using all resources and currently available technology. a. Graph The Fruit Farm's production possibilities frontier.Put apples on the horizontal axis and pears on the vertical axis.Be sure to identify the output combination points on your diagram. b. Suppose The Fruit Farm is currently producing at point D.What is the opportunity cost of producing an additional 8,000 pounds of pears? c. Suppose The Fruit Farm is currently producing at point D.What happens to the opportunity cost of producing more and more pears? Does it increase,decrease or remain constant? Explain your answer. d. Suppose The Fruit Farm is currently producing at point G.What happens to the opportunity cost of producing more and more apples? Does it increase,decrease or remain constant? Explain your answer. e. Suppose The Fruit Farm is plagued by the apple maggot infestation which destroys apple trees but not pears.Show in a graph what happens to its PPF.

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 Serena's opportunity cost of making a bracelet?

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 60 dozen orchids per period.How many roses is it also producing,assuming that resources are fully utilized?

Figure 2-7 Mercedes Benz recently decided to introduce its B-class automobile in the U.S. market, an electric car that is has designed and developed in a partnership with Tesla Motors. Assume Mercedes Benz chooses to produce both electric-engine vehicles and gasoline-engine vehicles. Figure 2-7 shows changes to its production possibilities frontier in response to new developments and different strategic production decisions. -Refer to Figure 2-7.Assume a technological advancement greatly reduces the cost to produce electric-engine vehicles.This is best represented by the

Figure 2-10 Figure 2-10 shows the production possibilities frontiers for Tahiti and Bora Bora. Each country produces two goods, milk and honey. -Refer to Figure 2-10.If the two countries have the same amount of resources and the same technological knowledge,which country has an absolute advantage in the production of milk?

Without an increase in the supplies of factors of production,how can a nation achieve economic growth?